The Governance and Policy of Local Innovation Systems

David A. Wolfe, Ph.D.

Program on Globalization and Regional Innovation SystemsMunk Centre for International Studies

University of Toronto

Presentation to the Conference“Regional Economies in a Globalising World:

Enhancing Intellectual Capacity and Innovation”Cardiff University, Wales, November 21, 2008

Unique Capabilities of Local Innovation Systems

• Regional Innovation Systems produce unique local capabilities, which become a key source of competencies for local firms in a variety of sectors

• Localised capabilities include:– The region’s specific institutional endowment– Local knowledge infrastructure– specialized knowledge and skills available in the region

• These capabilities develop and evolve slowly over time

• A region’s institutional endowment shapes: – Distinctive rules, practices, routines, habits, traditions,

customs and conventions– Entrepreneurial spirit, moral beliefs, political traditions

and decision-making practices– Regional ‘culture’

New Forms of Governance

• Multilevel governance draws on programs and resources of all three levels of government– Recognizes importance of ‘nested’ spatial scales

• Associative governance recognizes the importance of community actors as important sources of local knowledge

• Joined-up governance overcomes policy silos and improves coordination among policies at different levels of government

• Allows for economic development to be addressed holistically– Community level issues that are key to economic

development (e.g. transportation) can be addressed in decision-making.

• Overcomes policy/implementation dichotomy

From Social to Civic Capital• Social capital - shared norms and trust (Morgan)

– Features of social organization of a region that facilitate coordination and cooperation among economic actors

• Capital refers to asset• Social connotes that it is attained through community

• Civic capital consists of interpersonal networks and solidarity within a community based on a shared identity, expectations or goals and tied to a specific region or locality – Comprised of formal or informal networks between individual

community members, between communities, or between community and the state

– Critical role of local leaders in intensifying and formalizing collaborative networks within and between communities.

• Define civic capital as sense of solidarity or interpersonal ties – civic capital exists prior to agency but also accounts for how it

can be harnessed and intensified for meaningful regional governance by civic entrepreneurs.

How Do Institutions Shape Social Learning Processes?

• Learning is the most important social process– Innovation and creativity place a premium on the ability to

acquire, absorb and diffuse knowledge

• Challenge is to structure knowledge in social ways– Establish effective mechanisms for local social knowledge

management

• Requires higher order of learning– By institutions engaged in critical /reflexive self-monitoring

• ‘learning by learning’ – Three learning dynamics

• Civic learning • Administrative learning• Policy learning

• Learning regions are:– “collectors and repositories of knowledge and ideas (that)

provide an underlying environment or infrastructure which facilitates the flow of knowledge, ideas and learning” (Florida)

Strategic Management ofLocal Innovation Systems

• Regional response to globalization is emergence of strategic management policy– Not for firms, but for regions

• Development and enhancement of factors of production that cannot be transferred across geographic space at low cost

– “This strategic management of regions has harnessed the propensity for knowledge and innovative activity to concentrate geographically as a locomotive of regional economic development” (Audretsch, 2002)

• Collaborative institutions - formal and informal organizations that:– Facilitate exchange of information and technology– Foster cooperation and coordination– Enhance civic capital and improve competitiveness by:

• Creating relationships and establishing trust• Forming collective institutions • Identifying common strengths and developing common agenda

• Strategic planning exercises draw upon civic capital created by these institutions– Generate trust by engaging key social partners in ‘talk’ – builds set of

shared understandings and expectations

Strategic Planning at the Community Level

• Innovation-based strategic planning– Promotes innovative ideas in all aspects of regional

economy– Facilitate relationship-building

• Strategic assessment of local/regional assets– Workforce skills– Knowledge assets and R&D– Creative elements– Infrastructure– Quality of place– Collaborative institutions– Entrepreneurial networks and clusters

• Key Role of Community Leadership– Civic entrepreneurs

• bring civic interests together to collaborate• Create broad buy-in across all sectors of community

Emerging Role of Civic Associations

• Key Networking Institutions for Collaboration – Promote awareness of LIS– Engage in dialogue of LIS’ competitive position– Monitor and communicate market and technology trends– Develop training and management programs– Develop mentoring programs for new firms/business

people– Participate with multiple levels of government in strategic

management of the local innovation system– Link common assets across the local innovation system

• Emergence of local civic associations is critical step in the formation of cluster identity– OCRI – Ottawa– Communitech – Waterloo– Calgary Technologies Inc – Calgary– TRRA – Greater Toronto Area

Competitive or Collaborative?• Role and nature of local civic associations

– How constituted?– How competitive?– How inclusive?

• Relations with formal government bodies or agencies– Complementary or otherwise?– Do associational activities support government initiatives?– How effective?

• Inter-organizational dynamics– Competitive or collaborative?– Degree of involvement of key industry actors

• How effective are the results of strategic planning efforts– Have they successfully mobilized the local community?– Do concrete initiatives results from the planning activities?– Impact?

Waterloo Regional Initiatives

• Local Civic Associations build ‘civic’ capital– Canada’s Technology Triangle (1987)– Communitech Technology Association(1997)– The Prosperity Council (2003)

• Highly networked and inclusive set of community-based organizations

• University of Waterloo key institutional player– University of Waterloo Research and Technology Park

• Drawing on Federal and Provincial resources• Designed to house high tech industries in the region and

promote partnership between university and local industry

• Local business leaders fund major research institutes– Perimeter Institute for Theoretical Physics– Centre for International Governance Innovation

Policy Implications• Linkages between elements of the system

– Especially research infrastructure and clusters– Not just a ‘supply-push’ phenomenon

• Importance of demand side of innovation system– Absorptive capacity – at both firm and regional level– Knowledge is not a ‘free good’

• Growing role of networks and clusters– Talent as a key attractor – ‘Competing on Creativity’– Combination of educational resources and quality of life

factors

• Importance of social factors and institution building

• Gaps in capital markets at key stages of cluster evolution

• Critical role of strategic planning and regional foresight at the local and community level– Coordinate federal agencies at local level