Professor Bjørn Asheim, Deputy Director ,

1. Constructing Regional Innovation Systems: Perspectives and development tendencies in European regional innovation research and policy Professor Bjørn Asheim, Deputy Director, CIRCLE (Centre for Innovation, Research and Competence in the Learning Economy), Lund University, Sweden. Key note address at DIME International Workshop on ‘Reconsidering the Regional Knowledge Economy’, KITE, Newcastle, September 5th, 2008

2. CIRCLE (Centre for Innovation, Research and Competence in the Learning Economy) • New multidisciplinary centre of excellence in innovation system research at Lund University (July 2004) • CIRCLE is financed by the Swedish Agency for Innovation Systems (VINNOVA), Lund University and Blekinge Technical University 2004-2010, and from 2006 for 10 years by the Swedish Research Council (Linnaeus grant) • In autumn 2007 co-location of research and teaching in innovation and entrepreneurship together with LUIS (Lund University Innovation System) at LUCIE (Lund University Centre for Innovation and Entrepreneurship) • Becoming one of the largest centres in Europe • http://www.circle.lu.se/ Bjørn Asheim, 2008

3. Some empirical observations I • Promoting Innovation Systems approach: - Finland: Science and Technology Policy Council - Sweden: VINNOVA (Swedish Governmental Agency for Innovation Systems) • Share of R&D: - Finland: 3.5% - Sweden: 4.0% Bjørn Asheim, 2008

4. Some empirical observations II • Economic performance: Global competitiveness 2004 2005 2006-7 2007-8 • Finland: 1 1 2 6 • Sweden: 3 3 3 4 • Denmark: 5 4 4 3 Bjørn Asheim, 2008

5. Nordic innovation strategies • The technology-based strategy of process innovations and complex product improvements, through R&D investments in large industries, characteristic of the Swedish economy • The science-driven high tech strategy focusing on radical product innovations, with Finland as the champion (NOKIA) • The market (user)-driven entrepreneurialism of Denmark characterized by non-R&D based, incremental product innovations especially within consumer goods sectors Bjørn Asheim, 2008

6. Different modes of innovation • ’How Europe’s Economies Learn. Coordinating Competing Models’ : Different modes of innovation and forms of work organisation • STI (Science, Technology, Innovation) – high-tech (science push/supply driven) - LME • DUI (Doing, Using, Interacting) – Competence building and organisational innovations (learning work organisation) – market/demand/user driven - CME Bjørn Asheim, 2008

7. Finland’s National Innovation Strategy: New proposal • In order to meet global challenges, innovation policy must be broad-based and comprehensive: • Innovation activity in a world without borders • Demand and user orientation (DUI mode of innovation) • Innovative individuals and communities (creative class/talents) • Systemic approach Bjørn Asheim, 2008

8. Key governance policy measures • The central government’s corporate steering renewed for the purpose of becoming a worldwide pioneer of systemic reforms: The Science and Technology Policy Council to become a wider Research and Innovation Council (STI & DUI) • Content-oriented (strategic centres of science, technology and innovation) and regional centres of innovation (strategic strenghts of regions) driving renewal is to be formed (top down/bottom-up) Bjørn Asheim, 2008

9. VINNVÄXT: Regional Growth through Dynamic Regional Innovation Systems • ’To promote sustainable growth in the regions based on international competitive ability, by successively developing the functioning, dynamics and effectiveness of innovation systems in functional regions’ • VINNVÄXT is competition based (top-down program design) • The winners receive 10M SEK per year under a 10-year period (50% co-financing) • Focus on (potential) regional strengths • Triple-Helix based • Ongoing process support, education, monitoring Bjørn Asheim, 2008

10. What kind of support? • At least 50% R&D • Development organisation and process management • Mobilisation of regional actors (bottom-up) • Competence supply • Brand creation • Strategic work • Follow-up Bjørn Asheim, 2008

11. What is Regional Innovation Systems (RIS) – narrow definition (STI mode): • A RIS is constituted by two sub-systems and the systemic interaction between them (and with non-local actors and agencies): • The knowledge exploration and diffusing sub-system (universities, technical colleges, R&D institutes, technology transfer agencies, business associations and finance institutions) • The knowledge exploitation sub-system (firms in regional clusters as well as their support industries (customers and suppliers)) Bjørn Asheim, 2008

12. What is a RIS - broad defintion (DUI-mode): • A system of organisations and institutions supporting learning and organisational innovation, and their interactions with local firms (learning regions): • Developmental (creative) learning: competence building – learning work organisation • Reproductive (adaptive) learning: interactive learning (user-producer relationships) – inter-firm networks • A market/demand/user driven system mostly generating incremental innovations Bjørn Asheim, 2008

13. From competitive to constructed advantage: Regional Policy Challenges in a Globalising Knowledge Economy • Imitation and adaptation is not any longer a sufficient strategy for regions in the long run (cost-based, low road strategy). Unique advantages have to be actively constructed (innovation-based, high-road strategy). • Industrial renewal takes place in-between and beyond existing sectors – need for transcending traditional sector policies (platform policy) • Innovation through combining existing knowledge, technologies and competencies with new generic technologies (IT, biotech (green and white)) Bjørn Asheim, 2008

14. What is Constructing Regional Advantage • New regional development strategy • Advocating a more pro-active and collaborative approach • Addressing system failures of weak connectivity within and between (regional) innovation systems • Promoting innovativeness on individual and systems levels to meet challenges of the globalising knowledge economy Bjørn Asheim, 2008

15. From competitive to constructed advantage • Competitive advantage: too strong focus on markets and rivelry as selection mechanisms as well as a too narrow approach to the creation of endogenous capacity of regions to learn and innovate as primarily being based on co-location of firms in clusters and by placing the state in the same peripheral position as ’chance’ in Porter’s diamond model • Constructed advantage: acknowledges more the important interplay between industrial dynamics (knowledge bases) and institutional dynamics (i.e. different knowledge bases need different kinds of institutional support) as well as private-public complementarities in policy making by a stronger focus on actors, agencies and governance forms (addressing system failures – weak connectivity within and between IS). Bjørn Asheim, 2008

16. Content of policies for Constructing Regional Advantage • Proactive and trans-sectoral, platform oriented policies (transcending traditional industry or sector specific policies): • Related variety (spillover effects) • Differentiated knowledge bases (analytical, synthetic and symbolic) • Distributed knowledge networks • Regional innovation systems as creative knowledge environments Bjørn Asheim, 2008

17. Platform policies – Japan’s new cluster policy (2004): Ex: Strengthening policies for advanced component/materials industries Bjørn Asheim, 2008

18. 1) Related variety (knowledge spillover effects) • Urbanisation economies – diversity promoting creativity? However, can knowledge spillover take place between sectors that are unrelated (portfolio vs. knowledge spillover effects)? • Related variety is defined as sectors that are related in terms of shared or complementary knowledge bases and competences • Acknowledge that generic technologies have a huge impact on economic development (e.g. green and white biotech) • Related variety combines the strength of the specialisation of localisation economies and the diversity of urbanisation economies Bjørn Asheim, 2008

19. 2) Differentiated knowledge bases (analytical, synthetic, symbolic) Characterise the nature of the critical knowledge which the innovation activity cannot do without (hence the term ’knowledge base’ understood as an ideal type) Makes it wrong to classify some types of knowledge as more advanced, complex, and sophisticated than other knowledge (e.g. to consider science based (analytical knowledge) as more important for innovation and competitiveness of firms and regions than engineering based (synthetic) knowledge or artistic based (symbolic) knowledge). Different knowledge bases should rather be looked upon as complementary assets (STI vs. DUI) Bjørn Asheim, 2008

20. Differentiated knowledge bases: A typology Bjørn Asheim, 2008

21. 3) Distributed knowledge networks – open innovation • More and more highly complicated combinations of different knowledge types, e.g. codified and experience based, tacit knowledge, as well as synthetic/analytical/symbolic knowledge bases • As a result of the increasing complexity and diversity of knowledge creation and innovation processes, firms need to acquire new, external knowledge to supplement their internal, core knowledge base(s) • Transition from internal knowledge base(s) within firms to distributed knowledge networks across a range of firms, industries and sectors locally and globally Bjørn Asheim, 2008

22. 4) Regional Innovation Systems (RIS) as Creative Knowledge Environments Creative knowledge Environments (CKE) are: • Environments where new knowledge is generated by people, especially in their work settings (associating to the importance of talents (the creative class) and the policy implications of people climate complementing business climate) • CKE can be found on macro- (RIS), meso- (universities/firms) and micro-levels (research groups/work organisations) • Thus, the systemic interaction between the knowledge exploration (university) and exploitation (industry) subsystems of a RIS must be understood in a broader context and be embedded also on the meso and micro organisational levels Bjørn Asheim, 2008

23. Creative Knowledge Environments • CKE covers a void in innovation studies (traditionally focusing on how knowledge is exploited) by • Analyzing how creation of new knowledge occurs (i.e. on knowledge exploration), as well as • Focusing on what characterise the environments in which people carry out creative knowledge-producing activities (e.g. learning work organisations with autonomy in work and developmental (creative) learning in a RIS setting) Bjørn Asheim, 2008

24. Summing up: Broad-based innovation policy • User-driven innovation in addition to science driven (DUI+STI) • Knowledge creation and innovation in all types of industries with different knowledge bases • Exploitation of different modes of innovation and forms of learning • Linking firms and regions with distributed knowledge networks locally and globally (open innovation) • Achievement of related variety within and between industries (emerging as well as traditional) • Improving connectivity in regional innovation systems (RIS) to secure knowledge creation as well as knowledge exploitation • Turning RIS into creative knowledge environments • Platform oriented regional innovation policies transcending traditional science, technology and sectoral policies Bjørn Asheim, 2008

25. TYPOLOGY OF POLICIES Bjørn Asheim, 2008