Universities: Knowledge Partners for Intelligent Communities

University-Industry-Government interactions in the Knowledge Society: from “spheres” to “spaces”Dr. Marina RangaStanford University, H-STAR Institute, Triple Helix Research GroupSussex University, School of Business, Management and Economics Universities: Knowledge Partners for Intelligent Communities International Institute Casa de Mateus 23-25 September 2011

Outline • Triple Helix Systems: transition from ‘spheres’ to ‘spaces’ and relevance to regional development • ‘Setting the scene’ • Shifting loci of global innovation: the two-speed world • Increasing role of regions as the critical nexus for innovation • Increasing policy visibility of regional innovation and Triple Helix actors, e.g. Europe 2020

Tech 9/12/2011 “Innovation is dead! “, say PayPal Founders, Max Levchin and Peter Thiel • 40 years of stagnation outside computer and internet • Transportation speeds slowing down, back to the travel speeds of the 1960s, nothing new since 1976 Concord debut (high-speed trains still not largely used in the US!) • Clean tech is increasingly a large disaster. People in Silicon Valley aren’t even talking about it anymore! • None of the late 1950s and ’60s predictions of science fiction materialized: space travel, colonization, desalinization, desert reforestation, underwater cities. “Stalled technological innovation” Peter Thiel Net Worth: $1.5 B (as of September 2011) Age: 43 Source: Paypal, Facebook, self-made Education: PhD Law (Stanford); BA (Stanford) Forbes Rank: #293 Forbes 400, #297 in US

Innovation not dead! But very uneven... “When the world is flat, you can innovate without having to emigrate“ (Thomas Friedman, 2005) “Globalization has changed the economic playing field, but hasn’t levelled it“ (Richard Florida, 2005)

From Spiky World to Hot Springs... Innovation Heat Map (McKinsey and WEF, 2009)

...to simply ‘Innovators’ European Regional Innovation Scoreboard 2009 High innovators Average innovators Medium-high innovators Low innovators Medium-low innovators

Shifts in the innovation locus - the two-speed world • 2010 • Major advanced economies: modest economic growth (around 3% in the US and the euro area), high unemployment • • Many emerging and developing economies: robust growth (over 7%), low unemployment • Global imbalances expected to widen over the medium-term because of low growth of domestic demand. • Declining prospects in 2011 • Global activity weaker and more uneven, confidence fallen sharply, growing risks, stalled U.S. economy, major financial turbulence in the euro area, structural problems in advanced economies, complicated implementation of reforms • Uncertain prospects for emerging market economies, although growth is expected to remain fairly robust • (IMF, World Economic Outlook April and September 2011)

Increasing role of regions as the critical nexus for innovation • Widening disparities across and within countries after the crisis  a regional approach needed for maintaining national growth • The 10% top performing regions of OECD countries account for around 40% of OECD GDP, employment and population growth in the past 15 years • Narrowing gap between urban and rural areas in some countries slower growth rate in many large metropolitan regions, faster in rural regions • Around 10% of OECD regions account for 1/3 of total OECD expenditure in R&D and more than half of patent applications (JP, DE, US + DK, ES, ROK) • Several regions catching up with national leaders in high-tech manufacturing employment and knowledge-intensive sectors • Replication of regional experience beneficial for business creation and technological upgrading. • (OECD Regions at a Glance, 2011)

The regional innovation analytical framework • Provides a different perspective than a national one, given regional disparities within countries. • Better explains differences in sectoral innovation patterns by the ability of innovators to exploit technological trajectories, technology transfer, in-house R&D, spillovers, networking, demand factors, etc. • Regional proximity effects facilitate interactive learning between different local actors and knowledge circulation (closer relationships between industry and universities, between firms, suppliers and customers, faster responses to changes in market demand) • Regional businesses diversification provides safety from sector-specific economic shocks. • Regional differentiation is a precondition of competitive advantage: diversity of people, land types, services to support a variety of businesses, easy access to specialized infrastructure, educational institutions, workforce. .

Increasing policy visibility of regional objectives Europe 2020 .

Action lines derived from the Flagship Initiatives (1) Innovation Union - Foster excellence and smart specialisation, reinforce cooperation between universities, research and business, implement joint programmes and enhance cross-border co-operation in areas with value added, adjust national funding procedures to ensure technology diffusion; – Ensure a sufficient supply of STEM graduates and focus school curricula on creativity, innovation and entrepreneurship; – Prioritise knowledge expenditure, including by using tax incentives and other financial instruments to promote greater private R&D investments. Youth on the Move - Ensure efficient investment in education and training systems at all levels; - Improve educational outcomes, addressing each segment within an integrated approach, encompassing key competences and reducing early school leaving; - Enhance the openness and relevance of education systems by building national qualification frameworks and better gearing learning towards labour market needs.

Action lines derived from the Flagship Initiatives (2) • An industrial policy for the globalisation era • - Improve business environment especially for innovative SMEs, including through public procurement; • Enforcing intellectual property; • Reduce administrative burden on companies, and improve business legislation An Agenda for new skills and jobs - Reduce labour market segmentation, facilitate transitions; – Review and monitor tax benefit systems, with particular focus on the low skilled, whilst removing measures that discourage self-employment; – Promote new forms of work-life balance and increase gender equality; – Promote and monitor effective implementation of social dialogue; – Ensure acquisition and recognition of competences for further learning and the labour market throughout general, vocational, higher and adult education, including non formal and informal learning;

Strong Triple Helix role in Europe 2020. Regional shifts • Strong involvement of Triple Helix actors as key innovation actors • (the action lines are not only key TH objectives, but also key TH challenges) • Shift from traditional exogenous development strategy (attracting companies) to endogenous (investing in local talent and infrastructure) • Shift from undifferentiated regional innovation potential to ‘smart specialization’ of regions (identifying specific regional competitive advantages and investing in their development) • Shift from innovation as a process specific to the firm (esp. large firms) to innovation as a broad complex process with social and cultural implications, key role of SMEs, high emphasis on the social component (education, employment) • Shift from mono-disciplinary research, single occupations and linear professional development to multi/interdisciplinary research, hybrid occupations at U-I interface, non-linear professional development and career flexibility • Shift from strong top-down innovation strategies to increasingly important bottom-up partnerships, co-existence of top-down and bottom-up • Shift from competing regions (zero sum game) to collaborating regions (win-win, • value creation game), creation of regional consortia to combine strengths • Shift from closed to open innovation systems, networks, clusters

The Triple Helix concept • Innovation as a result of interactions within and between University, Industry, Government institutional spheres in the Knowledge Society • - University as equal partner to Industry and Government, or taking lead role  shift from secondary to primary institutional sphere • - Enhanced role in the production of scientific research over time + emergence of ‘entrepreneurial university/scientist’, ‘third mission’, etc. • “Innovation in innovation” at the intersections of the spheres • “Endless transition” to innovation through non-linear dynamics • Individual and organisational actors “take the role of the other” for promoting societal and economic innovation • (Etzkowitz, 1998, 2000) • Neo-classical and evolutionary economics do not provide a rationale for government intervention in the economy, only for discrete policy interventions in case of system or market failure. TH goes beyond firm- and market boundaries  knowledge-based linkages between innovation actors

Gaps in the Triple Helix concept • How do the U,I,G institutional spheres actually interact, who are the specific actors within each sphere? • What kind of relationships are established during the interaction? • What are the drivers of the interaction? • How is the interaction evolving over time? At which stages in a product life cycle is U-I most successful? • Can TH strategies be compared, at regional/national level? Can a ‘methodology for interaction’ be defined? • What can be considered as successful outcome of the interaction? (e.g. debate on the loss of academic freedom and ‘privatisation’ of research through commercial science) • How can the process be quantified/monitored, if TH indicators are only emerging (e.g. Leiden CWTS – U-I co-authorships)

From Triple Helix ‘spheres’ to ‘spaces’ State Consensus Space Industry Academia Knowledge Space Innovation in innovation Innovation Space time Etzkowitz and Leydesdorff (2000) Ranga and Etzkowitz (2011)

Triple Helix Systems: components, relationships, functions • Components: U-I-G institutional spheres and specific actors • R&D and non-R&D actors in universities, industry and government • Hybrid institutions at U-I-G interfaces: • - U-I interface: university TTOs, business support institutions (e.g. science parks, business/technology incubators, industry liaison offices, joint research centres, cooperative research centres, excellencecentres); • - U-G interface: university contracts and grants offices, academic advisory services to government; • I-G interface: chambers of commerce, professional associations, sectoral associations • Financial support institutions (public and private venture capital firms, angel networks, seed capital funds, etc.). • Formal and informal networks of the actors above innovation ecosystems

Triple Helix Systems: components, relationships, functions • 2. Relationships: • Collaboration and conflict moderation, turning tension and conflict of interest into convergence and confluence of interest through ‘win-win’ situations. Specific to triadic relationships, in contrast to dyadic ones. • Collaborative leadership: ensures the success of a heterogeneous team to accomplish a shared purpose. Essential role of ‘Innovation Organizer” + mix of top-down and bottom-up processes to build agreement, generate support for new ideas. • Substitution: institutional spheres fill gaps that emerge when another sphere is weak, e.g. government and public venture capital, universities, and technology transfer and firm formation, industry developing training and research. Internal substitution within the spheres also possible.

Triple Helix Systems: components, relationships, functions • 3. Functions: Knowledge, Innovation and Consensus , realised through: • Knowledge Space: knowledge generation, diffusion and use from R&D and non-R&D activities • Innovation Space: formation and functioning of hybrid organizations that promote innovation. • Consensus Space: formal and informal governance activities that bring together the U-I-G actors to brainstorm, discuss, evaluate advancement towards a knowledge-based regime. • TH Spaces consider time as the 4th dimension (four-dimensional spaces), describe the boundary-spanning diachronic interaction among the U-I-G institutional spheres in constructing innovation systems: • Triple Helix Spaces do not replace the ‘spheres’, they work in tandem to provide an engine for regional renewal  a new paradigm for regional development policy and practice.

(b) Formation of a Triple Helix Space (1) • Institutional spheres apart: a laissez-faire regime. • Institutional spheres getting closer together and starting to interact. Emergence of a space.

3. Institutional spheres increasingly overlapping – emergence of a balanced regime • 4. Institutional spheres overlapping: 3 processes • a. Formation of a ‘stem cell’ space • b. Differentiation of the ‘stem cell’ space into a K, I, C space • Determined by specific ‘signals’ from the TH spheres and local environment. • c. Consolidation of a K, I, C space Formation of a Triple Helix Space (2)

Differentiation of the “stem cell’ space into a Knowledge Space • Determined by specific needs of knowledge production, diffusion and use, which mobilize specific actors, relations and resources and creation of new institutional formats, • Aimed to create a ‘critical mass’ of regional knowledge resources, avoid fragmentation and reduce duplication of research efforts. • Can take place through relocation or dispersal of existing resources, creation of new ones through institution formation and creation of new resources, physical and virtual networking, etc.

Consolidation of a Knowledge Space • RDI and higher education policy measures • develop human resources for R&D in sciences and arts, improve labour market conditions for researchers (e.g. mobility for dual career couples), attract world-class researchers (‘scientific visa’) • ensure affordable access to HE of local youth (long-term world-class excellence cannot be maintained mainly with foreign students!) • improve employability of students, better match curriculum with labour market needs, improve retention of graduates • increase attractiveness and availability of research careers to the local population, esp. women, minorities (see the “leaky pipeline” of women academics) • reduce brain drain/ improve brain gain at various stages of education and research career, strengthen links with diaspora and encourage its involvement in regional projects (“the New Argonauts”)

Differentiation of a ‘stem cell’ space into an Innovation Space • Determined by the need to enhance the regional innovation environment, compensate declining industries or the lack of a regional industrial base, improve attractiveness for new industries to relocate in the region. • - The choice of appropriate organizational formats depends on the SWOT of the specific context, motivation, aptitude and level of local economic and technological performance, which can be strengthened by effective entrepreneurial training programmes performed by local universities or specialized agencies. • Takes place through joint efforts of institutional and individual Triple Helix actors coming together in a process of “public entrepreneurship”

Consolidation of an Innovation Space • Innovation and entrepreneurship policy measures • foster U-I partnerships, especially those involving SMEs • strengthen human capital (availability, management skills, e.g. professional TT or SP managers) • remove structural/institutional blockages in the mobility of scientists across U-I interface (e.g. spin-off firms, ‘1/5 rule’, ‘Professors of Practice’) • ensure availability of seed funds, venture capital funds and loans • improve local infrastructure as precondition for cluster formation • increase participation of industry and other private stakeholders in public research priority-setting • stimulate licensing and exploitation of intellectual property rights (IPR) resulting from publicly-funded research, IPR awareness and training activities • promote fiscal measures to encourage creation and growth of R&D-intensive firms

Differentiation of a ‘stem cell’ space into a Consensus space • Determined usually by conflict or crisis situations: • socio-economic crises caused by loss of manufacturing industries and failure to create alternative industries • economic and social stasis • delocalization of corporations and entrepreneurs abroad • persisting extremes of wealth and poverty, • followed by various government policy responses encouraging innovation as a renewal and growth strategy. • Driven by trust and the “public entrepreneurship” driving force, similarly to the Innovation Space differentiation

Consolidation of a Consensus Space • Governance policy measures • Strengthen dialogue and collaboration between national and regional innovation stakeholders, create new platforms for communication • Build trust and collaboration by promoting joint projects with clear objectives and benefits for all stakeholders • Make ‘smart investments’ for consolidating specific competitive advantages of the region and improve inter-regional alliances/ consortia for achieving critical mass • Promote collaborative governance measures, such as public consultation and feedback, and collaborative leadership models and practices • Ensure government financial commitment for successful projects beyond the 4-5 year policy cycle (e.g. UK Science Cities, @22 Barcelona) • Ensure adequate communication of innovation achievements to the society (innovation journalism, science communication, scientific attaches)

To conclude.... • While the theoretical value of TH interactions doesn’t need much more confirmation, the practical value is only at the beginning of realising its potential. • In order to do that, the TH Systems must move away from being a more or less sophisticated academic concept to being a ‘building brick’ of innovation policy and practice • TH Systems should be used to seek solutions to current major challenges in higher education, R&D, competitiveness, labour market: • bettertrain students, • produce better science and technology, • create more and better jobs • ensure sound an sustainable economic growth • solve structural problems arising from the shift from the Industrial Society to the Knowledge Society • Collaboration essential – no country for lone riders!

THANK YOU! marina.ranga@stanford.edu

Universities: Knowledge Partners for Intelligent Communities