Lecture 4 position the national and competitive environment

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Theme 4 Positions: The National and Competitive Environment Managing Innovation

Transcript of Lecture 4 position the national and competitive environment

Theme 4

Positions: The National and

Competitive Environment

Managing Innovation

Outline

1. An innovation system approach

2. National Systems of Innovation

3. Global Innovation Index 2015

An innovation system approach

An innovation system:

can be defined as a group of private firms, public

research institutes, and several of the facilitators of

innovation,

who in interaction promote the creation of one or a

number of technological innovations [within a framework

of] institutions…

which promote or facilitate the diffusion or application of

these technological innovations

An innovation system approach

The different SI approaches can be characterized and

compared by investigating how they deal with the

following six dimensions

System boundaries

Actors and networks

Institutions

Knowledge DynamicsPolicy

implications

An innovation system approach

SI approaches share certain characteristics:

Focus on innovation and they all place great emphasis on

the learning process in which all actors involved,

experience a 'learning‐by‐doing' process or learn from

each other by exchanging knowledge.

Systems of innovation are always defined as complex

systems, stressing their non‐linear, systemic, interactive

and evolutionary character

The performance of all SI approaches is analyzed in a

similar way, namely through historical analyses of

economic or innovative activity and knowledge diffusion.

National Systems of Innovation

Chris Freeman

1987

Bengt-Åke Lundvall

1992

Richard Nelson

1993

An innovation system approach

4 elements of the Japanese NSI:

the role of policy (in particular the role of the Ministry of

International Trade and Industry)

the role of corporate research and development (R&D) in

accumulating knowledge and developing advantages

from it

the role of human capital, the organization of work and

the development of related capabilities

the role of industrial conglomerates in being able to profit

from innovations emerging from developments along the

entire industrial value chain

An innovation system approach

National Systems of Innovation building blocks

according to Lundvall (1992)

An innovation system approach

National Systems of Innovation according to Soete

(2012)

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Sourse of innovation

Institutions

Interactive Learning

Interaction

Social capital

An innovation system approach

Source of innovation

Classical economics approaches to innovation had relied

mostly on an analysis of R&D. However, it is not only R&D

that is crucial in innovation. Producer‐consumer relations

provide a source of innovation, as do the purchase and

availability of equipment and the training of workers. Thus

innovation occurs in production, distribution, and

consumption

An innovation system approach

Institutions

Market and non‐market institutions constitute the national

innovation system, providing the framework for

governments to implement policies in order to influence the

process of innovation.

In a country without reliable governance structures,

somebody with the same talent who works just as diligently

might still end up extremely poor. The importance of

institutions must therefore not be underestimated.

An innovation system approach

It emphasizes the importance of continuous learning in

order to adapt to changes. This also demonstrates the

connection of the NSI (National System of Innovation) to

concepts such as human resource management, labour

market institutions and learning capacities of firms as well

as to absorptive capacities of firms and the economy as a

whole.

Interactive Learning

An innovation system approach

Since innovation is considered to take place almost

exclusively within interaction, successful systems of

innovations are capable of producing an environment of

continuous knowledge production, knowledge use and

innovation.

However, the interaction is mostly coordinated by

institutions and thus an institutional environment which

leads to inefficient coordination of interactions may cause

failure of the whole innovation system.

Interaction

An innovation system approach

It is argued that, the greater the degree to which

institutions in a system are advanced, the more social

capital in the form of trust they show. Trust in turn has a

positive influence on the rate of innovation since trust

reduces the risk that accompanies innovation and

especially the risk of financing innovation

Social capital

: The National Systems of Innovation Concept

National Systems of Innovation

Strong local ‘demand pull’ for certain types of

product generates innovation opportunities for local

firms, especially when the demand depends on

face-to-face interactions with customers.

Patterns of national demands

National Systems of Innovation

Factors in Examples

Local buyers’ tastes • Quality food and clothing in France and Italy

• Reliable machinery in Germany

Private investment

activities

• Automobile and other downstream investments

stimulating innovation in computer-aided design and robots

in Japan, Italy, Sweden and Germany

Public investment

activities

• Railways in France

• Medical instruments in Sweden

• Coal-mining machinery in the UK (<1979)

Input prices • Labour-saving innovations in the USA

• Europe–USA differences in automobile technology

• Environmental technology in Scandinavia

Local natural

resources

• Innovations in oil and gas, mineral ores, and food

and agriculture in North America, Scandinavia and

Australia

National Systems of Innovation

Case studies and statistical analysis show that

competitive rivalry stimulates firms to invest in

innovation and change, since their very existence

will be threatened if they do not.

Lack of competitive rivalry makes firms less fit to

compete on global markets through innovation.

Competitive rivalry

National Systems of Innovation

In many countries, national advantages in natural

resources and traditional industries have been

fused with related competencies in broad

technological fields that then become the basis for

technological advantage in new product fields.

Competencies in Production and Research

National Systems of Innovation

National Systems of Innovation

Firms’ innovative behaviours are strongly influenced

by the competencies of their managers and the

ways in which their performance is judged and

rewarded (and punished).

Institutions: Finance, Management and

Corporate Governance

National Systems of Innovation

1. They will be the sources of firms with a strong

capacity to compete through innovation.

2. They are also potential sources of improvement

in the corporate management of innovation, and in

national systems of innovation.

3. Firms can benefit more specifically from the

technology generated in foreign systems of

innovation.

Learning from Foreign Systems of Innovation

National Systems of Innovation

Outside sources of technical knowledge for large European

firms: percentage judging the source as very important

Global Innovation Index 2015

Global Innovation Index 2015

Ukraine Ranks #33 In Top 50 Innovative Countries 2015

Ukraine has made a huge leap in Bloomberg's Annual Global

Innovation Index 2015: in just one year, our country has jumped from

49th to 33rd spot and left behind such innovative countries as Hong

Kong, Iceland, Brazil, Turkey and others.

Global Innovation Index 2015

t's also interesting to note that Ukraine is currently featured

among Top 5 Countries by IT education.

Global Innovation Index 2015

And this year, Ukraine is also in Top 10 Countries by the

number of high-tech patents filings per 1 million population

and per $1 million of R&D spent.