Course Introduction
Introduction
Innovation is a collective act, influenced by many factors.
Three components of a system:
- Shared function or goal
- Comprised of components and interactions
- Has observable boundaries
Structural elements of innovation systems
STRUCTUCAL DIMENSIONS SUBCATEGORIES
ACTORS - Civil society
- Companies (start-ups, SMEs, large firms,
multinational companies)
- Knowledge institutes (Universities,
technology institutes, research centres, schools)
- Government
- NGOs
- Other parties (legal organisations, financial
organisations/banks, intermediaries, knowledge brokers,
consultants
INSTITUTIONS - Hard (rules, laws, regulations, instructions)
- Soft (customs, common habits, routines, established
practices, traditions, ways of conduct, norms, expectations
INTERACTIONS - At level of networks
- At level of individual contacts
INFRASTRUCTURE - Physical (artefacts, instruments, machines, roads,
buildings, networks, bridges, harbours)
- Knowledge (knowledge, expertise, know-how,
strategic information
- Financial (subsidies, fin programs, grants, etc.
, Structure of (National) Innovation System
National Innovation System
The concept of a national innovation system:
- Innovation: to process by which firms master and get into practice product designs
and manufacturing processes that are new to them, if not to the universe or even to
the nation.
o Schumpeterian innovator: the first firm to bring a new product to the market
Often not the firm that captures most of the economic rents
associated with the innovation.
- System: a set of institutions whose interactions determine the innovative
performance, in this case, of national firms.
o A set of institutional actors that, together, plays the major role in influencing
innovative performance
The Intertwining of Science and Technology
Science as Leader and Follower
Science gives rise to new technology (e.g. radio waves radio and television)
New technologies have given rise to new sciences (Steam engine thermodynamics)
With the rise of modern science-based technologies, much of science and much of
technology have become intertwined principal reason why university research is an
important contributor to technical advance, and they are essential parts of the innovation
system.
The Limits of Science, Learning by Trying, and Cumulative Incremental Technological
Advance
It is insufficiently appreciated that successful innovation in high technology industries often
is not so much a matter of invention as it is a matter of design subject to certain cost
constraints.
- Those aiming for a major design advance often don’t know if it will work out until
they test it.
- E.g. pilot plant (a prototype) in chemical industry increases confidence in technical
feasibility
- Technical uncertainties translate into huge financial losses if new designs are
prematurely introduced.
New scientific rather follows than leads.
Most R&D expenditures are on products that have long been in existence (e.g. aircrafts, cars)
,The Major Institutional Actors
Firms and Industrial Research Laboratories
Why industrial research laboratory, rather than university laboratories, became the
dominant locus of the R&D part of innovation in most fields:
- After a technology has been around for a period of time, one needs detailed
knowledge of its strengths and weaknesses for R&D. this knowledge tends to reside
with those who use the technology, generally firms and their customers and
suppliers.
- Over time firms tend to develop capabilities for doing certain kinds of R&D.
- Profiting from innovation requires integration of activity and planning of R&D,
production, and marketing, which tends to proceed better within an organization
that itself does all of these.
Important to recognize the lack of distinctness surrounding the concept R&D
lines between R&D, and other activities, such as designing products, problem
solving, etc. remain blurry.
R&D usually is only a small part of the resources and problem solving that go into innovation.
Other Institutional Actors
Universities in most countries are, first, the places where much of the basic research in
fundamental sciences such as physics is undertaken.
University based institutions have been directly oriented toward helping a particular industry
or other client advance its technologies.
Government laboratories are tied to public sector missions in contrast to being established
to help civilian industry. Every nation’s government works differently. E.g. Germany has
different institutes for different fields.
Interindustry Differences
There are important interindustry differences in the nature of technical change, the sources,
and how the involved actors are connected to each other. Nations differ in the mix of
industries and these differences alone strongly influence the shapes of a NIS.
In some systems technologies users of the system play a major role in inducing technical
advance, and they may directly support it.
Complex systems (aircrafts) input suppliers play a big role (may be in different
countries).
Not a complex system (industries producing fine chemical products) process equipment
suppliers play a big role. (they may cooperate)
Where the product suppliers are small, they may bond together to get work done on
production processes or modes of processing products (government may organize and fund
this)
Technological Communities, Boundaries, and National Innovation Systems
, Key interactions are:
- Component and system producers
- Upstream and downstream firms
- Universities and industry
- Government agencies and universities and industries
Networks are not the same in all industries.
The policies and programs of national governments, the laws of a nation, and the existence
of a common language and a shared culture define and inside and outside that can broadly
affect how technical advance proceeds. National differences and boundaries tend to
define national innovation systems.
National Systems and Transnational Technology
Transnational activity: involving inventors and companies in different countries, all building
on each other’s work.
A strong trend for manufacturing business firms to become multinational was set.
These developments partly result from internationalization of technology.
The internationalization of business and technology erodes the extent to which national
borders, and citizenship, define boundaries that are meaningful in analysing technological
capabilities and technical advance.
Although important national differences remain, it is not clear how much these matter to
“national” firms who often have the opportunity to set up shop in another country.
Systems of innovation: Main terms used
Innovations = product innovations as well as process innovation. Product innovations are
new-or better-material goods as well as new intangible services. Process innovations are
new ways of producing goods and services. They may be technological or organizational.
SI = System of innovation = the determinants of innovation processes = all important
economic, social, political, organizational, institutional, and other factors that influence the
development, diffusion, and use of innovations.
Constituents of SIs = components + relations among the components.
Main components in SI = organizations and institutions.
Organizations = formal structures that are consciously created and have an explicit purpose.
They are players or actors.
Institutions = set of common habits, norms, routines, established practices, rules, or laws
that regulate the relations and interactions between individuals, groups, and organizations.
They are the rules of the game.
Introduction
Innovation is a collective act, influenced by many factors.
Three components of a system:
- Shared function or goal
- Comprised of components and interactions
- Has observable boundaries
Structural elements of innovation systems
STRUCTUCAL DIMENSIONS SUBCATEGORIES
ACTORS - Civil society
- Companies (start-ups, SMEs, large firms,
multinational companies)
- Knowledge institutes (Universities,
technology institutes, research centres, schools)
- Government
- NGOs
- Other parties (legal organisations, financial
organisations/banks, intermediaries, knowledge brokers,
consultants
INSTITUTIONS - Hard (rules, laws, regulations, instructions)
- Soft (customs, common habits, routines, established
practices, traditions, ways of conduct, norms, expectations
INTERACTIONS - At level of networks
- At level of individual contacts
INFRASTRUCTURE - Physical (artefacts, instruments, machines, roads,
buildings, networks, bridges, harbours)
- Knowledge (knowledge, expertise, know-how,
strategic information
- Financial (subsidies, fin programs, grants, etc.
, Structure of (National) Innovation System
National Innovation System
The concept of a national innovation system:
- Innovation: to process by which firms master and get into practice product designs
and manufacturing processes that are new to them, if not to the universe or even to
the nation.
o Schumpeterian innovator: the first firm to bring a new product to the market
Often not the firm that captures most of the economic rents
associated with the innovation.
- System: a set of institutions whose interactions determine the innovative
performance, in this case, of national firms.
o A set of institutional actors that, together, plays the major role in influencing
innovative performance
The Intertwining of Science and Technology
Science as Leader and Follower
Science gives rise to new technology (e.g. radio waves radio and television)
New technologies have given rise to new sciences (Steam engine thermodynamics)
With the rise of modern science-based technologies, much of science and much of
technology have become intertwined principal reason why university research is an
important contributor to technical advance, and they are essential parts of the innovation
system.
The Limits of Science, Learning by Trying, and Cumulative Incremental Technological
Advance
It is insufficiently appreciated that successful innovation in high technology industries often
is not so much a matter of invention as it is a matter of design subject to certain cost
constraints.
- Those aiming for a major design advance often don’t know if it will work out until
they test it.
- E.g. pilot plant (a prototype) in chemical industry increases confidence in technical
feasibility
- Technical uncertainties translate into huge financial losses if new designs are
prematurely introduced.
New scientific rather follows than leads.
Most R&D expenditures are on products that have long been in existence (e.g. aircrafts, cars)
,The Major Institutional Actors
Firms and Industrial Research Laboratories
Why industrial research laboratory, rather than university laboratories, became the
dominant locus of the R&D part of innovation in most fields:
- After a technology has been around for a period of time, one needs detailed
knowledge of its strengths and weaknesses for R&D. this knowledge tends to reside
with those who use the technology, generally firms and their customers and
suppliers.
- Over time firms tend to develop capabilities for doing certain kinds of R&D.
- Profiting from innovation requires integration of activity and planning of R&D,
production, and marketing, which tends to proceed better within an organization
that itself does all of these.
Important to recognize the lack of distinctness surrounding the concept R&D
lines between R&D, and other activities, such as designing products, problem
solving, etc. remain blurry.
R&D usually is only a small part of the resources and problem solving that go into innovation.
Other Institutional Actors
Universities in most countries are, first, the places where much of the basic research in
fundamental sciences such as physics is undertaken.
University based institutions have been directly oriented toward helping a particular industry
or other client advance its technologies.
Government laboratories are tied to public sector missions in contrast to being established
to help civilian industry. Every nation’s government works differently. E.g. Germany has
different institutes for different fields.
Interindustry Differences
There are important interindustry differences in the nature of technical change, the sources,
and how the involved actors are connected to each other. Nations differ in the mix of
industries and these differences alone strongly influence the shapes of a NIS.
In some systems technologies users of the system play a major role in inducing technical
advance, and they may directly support it.
Complex systems (aircrafts) input suppliers play a big role (may be in different
countries).
Not a complex system (industries producing fine chemical products) process equipment
suppliers play a big role. (they may cooperate)
Where the product suppliers are small, they may bond together to get work done on
production processes or modes of processing products (government may organize and fund
this)
Technological Communities, Boundaries, and National Innovation Systems
, Key interactions are:
- Component and system producers
- Upstream and downstream firms
- Universities and industry
- Government agencies and universities and industries
Networks are not the same in all industries.
The policies and programs of national governments, the laws of a nation, and the existence
of a common language and a shared culture define and inside and outside that can broadly
affect how technical advance proceeds. National differences and boundaries tend to
define national innovation systems.
National Systems and Transnational Technology
Transnational activity: involving inventors and companies in different countries, all building
on each other’s work.
A strong trend for manufacturing business firms to become multinational was set.
These developments partly result from internationalization of technology.
The internationalization of business and technology erodes the extent to which national
borders, and citizenship, define boundaries that are meaningful in analysing technological
capabilities and technical advance.
Although important national differences remain, it is not clear how much these matter to
“national” firms who often have the opportunity to set up shop in another country.
Systems of innovation: Main terms used
Innovations = product innovations as well as process innovation. Product innovations are
new-or better-material goods as well as new intangible services. Process innovations are
new ways of producing goods and services. They may be technological or organizational.
SI = System of innovation = the determinants of innovation processes = all important
economic, social, political, organizational, institutional, and other factors that influence the
development, diffusion, and use of innovations.
Constituents of SIs = components + relations among the components.
Main components in SI = organizations and institutions.
Organizations = formal structures that are consciously created and have an explicit purpose.
They are players or actors.
Institutions = set of common habits, norms, routines, established practices, rules, or laws
that regulate the relations and interactions between individuals, groups, and organizations.
They are the rules of the game.
