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IM Week 8: Systems of innovation (Refer to different types of clusters and…
IM Week 8: Systems of innovation
Refer to NIS governance and the interaction among key players
a. Why focus on national systems of innovation in an era of globalisation?
b. National innovation systems
The network of agents and set of policies and institutions that affect the introduction of technology that is new to the economy… also comprises the network of public and private institutions and agents supporting and undertaking scientific and technological activities, including R&D, technology diffusion and creation of technical human capital. Daleman (1994)
c. NIS governance
Corporate governance: e.g. Anglo-Saxon v Nippon-Rhineland
Political governance: policy and regulating functions (IPR)
Network governance: relationships between firms, financial institutions, industry, government, education and science institutions
ex: involvement of banks,Porter's diamond, big purchases of projects, thus they also have impacts on directions
xm: why we care about NIS in the era of globalisation???
Learning objectives
Refer to NIS governance and the interaction among key players
Reflect on the role the state plays for innovation and the effectiveness of specific innovation policies
Refer to different types of clusters and what makes them efficient
Refer to specific sector innovation systems and how technological trajectories affect innovation
Reflect on the role the state plays for innovation and the effectiveness of specific innovation policies
a. Bottom of the pyramid Prahalad (2004)
b. What innovation policies do you know of?
Technology forecasting
Knowledge transfer
Location
R&D
Exploitation/licensing
Lead user
xm note:
Refer to different types of clusters and what makes them efficient
a. Regional systems: Clusters
“Geographical concentrations of interconnected companies and institutions in a particular field” Porter (1998: 78)
b. What characterises clusters?
Geographical concentration
High degree of specialisation
Large number of mainly small and medium-sized firms
Ease of entry and exit
High rate of innovation
c. What makes clusters so efficient?
Labour market pooling
Transmission of knowledge between nearby firms
Firms specialising in the intermediate stages of production
Supportive socio cultural attributes associated with working practices
A network of public and private institutions supporting firms
An intense set of backward, forward and horizontal linkages
Easy access to physical infrastructure
d. Different types of clusters
Different types of classifications found in the literature, e.g.:
i) Cohesive clusters, ii) New industrial districts and iii) innovative millieu
The framework presented here: Neo-Marshallian industrial districts, Satellite Platform cluster, State anchored cluster is taken from your textbook; Managing Innovations (Smith, 2010, 2015).
1. Neo-Marshallian industrial districts
Characterised by the presence of small, locally owned firms
Inputs sourced locally, creating strong inter-links between firms
Outputs may be exported from the region
Labour will be recruited locally
Presence of high proportion of workers engaged in design and development type activities ensures that such clusters are seedbeds for innovation
Examples: Silicon valley, Motor sport valley (Oxfordshire)
2. Hub and spoke cluster
Characterised by large firms or facilities that act as a hub around which many small firms are tied, either by origin or on-going relationship
Hub firms typically large firms
Vertically integrated, incorporating several distinct stages of the production process
Likely to be oligopolistic and dominate a single industry
Relations unlikely to be collaborative and cooperative. Instead Linkages between the hub firm and the smaller firms take form of supply contract
Examples: Seattle region, where Boeing acts as the hub firm
3. Satellite platform cluster
Characterised by a concentration of branch plants of large externally owned and headquartered organisations
The firms within the cluster can range from routine assembly to relatively sophisticated research
One distinguishing characteristic is that they are ‘stand alone’ facilities detached in spatial terms, with few linkages with other firms in the cluster
Despite the absence of many cluster features that foster innovation, satellite platform can nonetheless prove to be important centres of high technology activity
Examples: Bengalore software cluster
4. State-anchored cluster
Similar to hub and spoke clusters but where a public sector or not-for-profit organisation acts as an ‘anchor tenant’, e.g. a military base, large defence plant, public laboratory, government offices
Due to the anchor’s nature, it is likely to be immune to downturns in business cycles etc.
Indigenous firms are likely to play a smaller role than in neo-Marshallian industrial districts or in hub and spoke clusters, though supplier sectors are seen to group up to meet the demands of the anchor over time
Examples of anchor tenant: Cambridge university
e. Cluster development
Difficult to identify the emergence of a cluster before it occurs
Location factors, though element of chance to the initial location of geographical clusters of firms
Sometimes originate from a single fast-growing and successful new start-up firm
Firms have an incentive to cluster
In high-technology hot spots competitors form intricate networks of interdependencies
Ties to
research base
skilled labour pool
network of highly qualified suppliers
venture capitalists
Interrelationships encourage the initial formation and hold the cluster together over time
f. What are the advantages?
Networking
Specialisation
Ease of entry and exit
Resource mobility
g. As a result…
Advantages over non-clustered competitors
Agglomeration economies and shared resources increase the probability of economic survival of the cluster as a whole
Competitors outside of the cluster struggle to maintain competitive parity with the clustered competitors
h. Are there any disadvantages?
Refer to specific sector innovation systems and how technological trajectories affect innovation
a. Sector innovation systems
An industry-specific innovation system such as those of the pharmaceutical or aerospace industries
b. 5 Major technological trajectories
