Technology transfers are influenced greatly by what have been called "national systems of innovation," which are the networks of institutions that initiate, modify, import and diffuse new technologies (Freeman, 1987; OECD 1999). The term "national systems of innovation" started as an analytical tool but has also become a mobilising concept to drive policy. The term is given different emphases in the literature. One definition is: "the set of institutions to create, store and transfer the knowledge, skills and artifacts which define technological opportunities" (Metcalfe, 1995). National systems of innovation reflect a complex mixture of institutions (e.g., financial; legal; scientific and technological; educational), public policies (regarding, e.g., taxation; export/import promotion; science, technology and innovation), and business and social relationships.
National systems of innovation depend upon the development of so-called technology infrastructure, "a set of collectively supplied, specific, industry-relevant capabilities" such as technology centres and educational and skills development institutions (Justman and Teubal, 1995, p. 260). "Technology infrastructure consists of science, engineering and technical knowledge available to private industry. Such knowledge can be embodied in human, institutional, and facility forms. More specifically, technology infrastructure includes generic technologies, infratechnologies, technical information, and research and test facilities, as well as less technically-explicit areas including information relevant for strategic planning and market development, forums for joint industry-government planning and collaboration, and assignment of intellectual property rights. An important characteristic of technology infrastructure is that it depreciates slowly, but it requires considerable effort and long lead times to put in place and maintain." (Tassey, 1991, p.347)
Technology infrastructure may lack direct economic value to any one firm, and thus individual firms may lack adequate incentives to build technology infrastructure on their own. Thus policies to develop public technology infrastructure can build the capabilities that exist elsewhere but need to be imported, adapted, and absorbed in the local economy. Such policies include stimulating demand for technological capabilities through awareness-raising programmes and user-need determination; and building independent sources of such capabilities through learning-by-doing, training consultants and spinning off independent consulting services (Justman and Teubal, 1995, p.277). Institutional change and organisational development are critical to developing technology infrastructure, for example in promoting specific forms of networks through which capabilities can be acquired and disseminated.
National systems of innovation can influence a multitude of technologies simultaneously. But each technology may have it's own ''network(s) of agents interacting in each specific technology area under a particular institutional infrastructure for the purpose of generating, diffusing, and utilising technology'' (Carlsson and Stankiewicz, 1991, p.111). These networks may span across national boundaries, but are still subject to the influence of national culture, institutions, and policies (Dodgson and Bessant, 1996, p.25). "Empirical work...gives strong support to the view that it is the overall system and the quality of interconnections within it which affects successful innovation" (Dodgson and Bessant, 1996, p.54). And "the pattern of technological innovation depends on much more than the behaviour of individual firms." (Archibugi and Michie, 1997, p.291). In addition, there has to be social cohesion for the process to work well, as Lundvall (1999) states:
today industrial and technology policies must be devised more broadly than has been the case- the societal framework is imperative for the effects of the policy. Learning is necessarily an interactive and socially-embedded process. Without a minimum of social cohesion the capability to master new technologies and new and more flexible forms of social organisation will be weak (Lundvall, 1999, p. 19-20).
Some explain this new approach in orthodox economic terms as an increased focus on "social capital", i.e. a recognition that the ways in which actors organise themselves is important in explaining economic growth and development (World Bank, 1997b).
Policy interventions can address particular weaknesses in networks and support social cohesion. Policy objectives are not just to build firms' capabilities, but to facilitate the whole process of technological innovation by modifying the form or operation of networks (see Table 4.2). This can include considerations of finance, marketing, organisation, training, relationships with customers and suppliers, competitive positioning as well as the relationship between products and processes. Thus, much of the material in Chapters 4 and 5 relates indirectly back to the concepts of national systems of innovation discussed here.
|Table 4.2 Typology of good policy practices for National Systems of Innovation (Source: OECD, 1999, p.70.)|
|Securing appropriate framework conditions||To develop human resources in S&T
To close market gaps in the financing of innovation
|Reforms to post-secondary education.
Increased government and industry support to professional education.
Establishment of a legal framework for venture capital.
|Building an innovation culture||To reduce asymmetry in information.
To diffuse best practices in innovation management
To promote the creation of innovative firms.
|Internet-based business information network.
Funding greater use of benchmarking and diagnostic tools
Public investment in venture capital.
|Enhancing technology diffusion||To increase firms' absorptive capacity
To improve linkages between SMEs and public research
|Co-financing of consultants to upgrade firms' organisational ability.
Co-financing of technology uptake via public/private partnerships
|Promoting networking and clustering||To simulate the formation of innovative clusters of firms
To ensure a better match between the S&T infrastructure and industry needs.
|Brokering and procurement policies.
Competition among regions for funding of cluster initiatives.
Co-funding of centres of excellence to facilitate university-industry interactions.
Building networks between public research actors and firms.
|Leveraging research and development||To sustain technological opportunities in the long run.
To increase economic return from public research
|Increased government spending on basic R&D
Increased public support to R&D.
Technology foresight for policy setting.
Regulatory reform (university-industry interface).
|Responding to globalisation||To increase linkages between domestic and foreign-owned firms
To increase country's attractiveness as a location for knowledge-based activities.
|Building networks of competitive domestic firms.
Building innovative clusters (see above).
Systemic upgrading of the S&T infrastructure
|Improving policy making||To enhance policy coordination.
To improve policy evaluation
|Raising the coordination function to the highest policy level.
Making evaluation obligatory.
Developing new methodologies
Besides national-level systems of innovation, international (global) and subnational
(regional) levels of innovation merit consideration (Freeman, 1999). One might
think the trend towards globalisation might make national and regional systems
of innovation less significant, but there is a complex interplay between these
levels. New information technologies act as a powerful vehicle for the diffusion
of information across distant communities. However, the process of generating
and diffusing new technologies has been moulded and strengthened by flows of
information and capital. Technology has facilitated globalisation and vice versa;
technological change is both a factor in globalisation and one of its most important
outcomes (Archibugi et al., 1999). Globalisation facilitates transmission of
best-practice techniques and is also a vehicle for the international flow of
goods and services. Because location-specific advantages are still important
to multinational corporations, as they seek market niches with competitive advantages,
these corporations have a major influence on national systems of innovation.
Globalisation is causing the integration of disparate national systems of innovation
that are geographically dispersed and locally specialised (Cantwell, 1999).
The role of the local business environment on the competitive advantages of
firms was already recognised by Porter (1990).
The significance of the sub-national level (region) as a unit for economic analysis has long been recognised by economic geographers and has also been adopted in mainstream economics (Krugman, 1991; De Zooten-Dartenset, 1999). It is at the regional level that informal links between key personnel are formed and maintained and where economic decisions are most strongly influenced (Howells, 1999). Regional systems of innovation have been identified not to supplant the national systems of innovation approach, but rather to recognise that the national unit may be too large to allow a complete understanding of the dynamics of a technological system (Howells, 1999 after Metcalfe 1995). A concept similar to regional systems of innovation called "learning regions" has been used to elaborate how continuous social and technological learning can be established at the level of sub-national regions (Asheim, 1998; see Box 4.1). In a learning region, organisational (social) and institutional innovations to promote technological cooperation and learning can appear at a regional level rather than just at a company level. Such innovations can also serve as tools for regional development. In November 1999, the UK Government announced regional planning would identify innovative 'high-tech' cluster areas to boost business and encourage growth (Planning, 1999).
|BOX 4.1: LEARNING REGIONS (ASHEIM, 1998).|
| The concept of learning regions should be looked upon as a policy framework
or model for formulations of partnership-based development strategies. All
definitions of the concept emphasise the role played by cooperation and
collective learning in regional clusters and networks understood as regional
development coalitions. By the concept "development coalition"
is meant a bottom-up, horizontally based cooperation between different actors
in a local or regional setting, such as workers and managers within firms
or in a network of firms, but also generally the mobilisation of resources
in a broader societal context as such, to initiate a learning-based process
of innovation, change and improvement.
This definition of a learning region underlines the important role of innovation, understood as contextualised social processes of interactive learning, which highlights the significance of building social capital in order to foster cooperation, as well as transcending the artificial divide between high tech and low tech industries.
The concept of learning regions has become very popular with several international organisations, such as the OECD, as a strategy for institutional learning in order to promote regional development, as it at the same time promises growth and employment as well as social cohesion.
DG VI of the European Commission has launched learning regions as a policy instrument; and in Sweden three municipalities have been established as learning regions, understood as development coalitions, as a part of a bottom-up restructuring policy.
Technology transfers, both within a country and betweeen countries, are influenced greatly by national systems of innovation--the institutional and organisational structures which support technological development and innovation. Governments can build or strengthen scientific and technical educational institutions and modify the form or operation of technology networks: the interrelated organisations generating, diffusing, and utilising technologies. The presence of regional and global systems of innovation interacting with national-level systems also has important implications for policy makers.
Other reports in this collection