INNOVATION & KNOWLEDGE MANAGEMENT Topic: Dynamics of Technological Change and Innovation

1. INNOVATION & KNOWLEDGE MANAGEMENT Topic: Dynamics of Technological Change and Innovation Broadening the Analysis of Innovation Systems – Competition, Organisational Change and Employment Dynamics in the Danish System (Lundvall & Christensen 2003)

2. Systems of Innovation Traditionally focused on • R&D System • Production System This paper looks at National (Danish) Production & Human Resource Development System • Friedrich List • National System of Political Economy - 1841 • Invest heavily in education • Develop stable government institutions and laws to maximize individual freedom

3. Characteristics of the Danish Innovation System • Denmark has the most equal income distribution in the world • Danish GDP per capita is high • Specialised in low and low medium technology • Use of human resources is biased towards public sector • Danish education system fosters independent and responsible workers with weak formal competencies • Danish labour market gives weak incentives to firms for investing in training their own personnel • Danish labour market is flexible and efficient but is also characterised polarisation to the disadvantage of unskilled and foreign workers in terms of job opportunities

4. What is the connection between: Intensified Competition in Product Markets X Changes in Labour Markets

5. Fundamental factors affecting transformation pressure Technical Change Competition Regime Governance Regime Macroeconomic Stance Firm reaction to transformation pressure Firing some of the personnel Functional Flexibility Process Innovation Product & Service Innovation Industrial Networking TRANSFORMATION PRESSURE Transformation Pressure Economic Structure Innovation and adaptation at the level of the firm

6. Results from DISKO survey • Technical and organizational change in firms that reported increased or unchanged competitive pressure during the years 1993-95

7. Impact on Employment • Firms that were exposed to strong competition resulted in a major impact on employment Flexible Firms Innovative Firms Job Creation? • Increased competition on average will tend to have a negative effect on the growth of employment in the short run. • Efforts to promote innovation in firms as well as in public policy need to have a certain time horizon.

8. Implications for Policy • Good policy mix seems to be one that promotes the diffusion of new organisational practises and enhances technological opportunities while also ensuring a suitable competitive pressure for the private sector Competition Innovation Functional Flexibility Relationships between competition, innovation and functional flexibility.

9. Changes in the Content of Work Share of firms that answer ‘greater’ to the question ‘Has the firm altered its demands for qualifications in connection with hiring 1993-95?’ by change in competitive pressure.

10. Employment of workers without vocational training • Report defines 2 types of firms: static and dynamic

11. Policy Implications • Difficult to change important characteristics in the innovation and production system without radical reform of the human resource development system. • Danish case requires special attention to invest in learning capacity of those without vocational training. • Need to focus European Policy on stimulating organizational change in European firms. • Danish case is alternative to US benchmark for Europe’s entrance into ‘the new economy’.