Innovation ( Describe how the ‘Innovation Systems’ analytical model…
Describe how the ‘Innovation Systems’ analytical model materializes differently in the reality of the SMEs in Ghana, Kenya and Uganda,
Reality in these countries
Interaction with technology institutions is virtually non-existent. Many SMEs indicated that they would like to cooperate with universities to do research at their premises, while sharing the research insights obtained
The banking system is not an attractive source of finance for SMEs, and very few have secured credit. They all complain about high interest rates and complex paperwork.
Most of the required technology is already available, but elsewhere in the world. Without too much difficulty, the owners and managers find the technology themselves by drawing on various sources of information (the internet, informal business contacts and trade fairs)
see slides 35-38/ 44
International exposure is key for support and benchmarking the business strategy and product quality
incubation of ike minded companies brings more knowledge exchange and spillover
governmets do not support
Stone company is a member of the Uganda Small-Scale industries association
In this country in looks like there is a much more active innovation system in place, as the owner says he receives help by other SMEs on various fields: legal, financial, technological
absence of government support
Although the interaction with international customers increased quality and technology standards, SMEs struggle to invest in staff skills and knowledge
the company has to build employees knowledge from scratch
problems that unable them to innovate
semi skilled labor
lack of support from govarnment
high interest and collateral asked by the banks make the banking system a poor financing source
Conclusion: the involvement and interactions with business networks and stakeholders, employer federations and labor unions is as essencial as the need for government support in these countries
Define and explain the ‘Innovation System’ idea and explain how it facilitates innovation. List and explain three arguments criticizing the concept
The innovation process within firms evolve in a network of public and private sectors actors: National Innovation Systems
The innovation process is a network of supporting institutions: financial and legal institutions, technology development and research agencies universities, education and training systems, governance structures and innovation polices (Freeman, 1987; Lundvall, 1992; Edquist 2005)
The innovation system considers innovation as an outcome of interactions among firms, organizations and institutions, in the context of historical, cultural and socioeconomic framework conditions.
a) The firm is placed at the centre and considered as the driving force for innovation
b) Innovation requires supportive institutional settings for knowledge diffusion and creation among the stakeholders
c) The system emphasizes the role of actors
d) The innovation systems framework is useful in capturing knowledge flows. These features of knowledge mean that market forces cannot work perfectly
how it facilitates innovation
The system of innovation provides key analytical insights to assist the policy-making process using a more holistic perspective.
The innovation system serves as a framework for policy development and monitoring (Soete et al. 2009).
To establish the right set of innovation systems institutions; the innovation system is to orchestrate the set-up of the required institutions.
The innovation systems concept suggests collective and coordinated action through policy.
NIS becomes less applicable in the globalizing world, global value chains, due to the fast development in communication technology
Lack of agreement on where to draw the lines around the innovation system makes the concept unclear
Most innovation policies are well suited when it comes to supporting existing innovation processes, but much less when it comes to stimulating the creation of new ones
(Archibugi and Lundvall, 2001.)
What is New Institutional Economics (NIE)’s explanation for the slow growing economies in developing countries?
In developing countries (and in developed countries), knowledge flows are not limited to ‘formal’ production networks
The private and informal adoption practices supported by informal channels are more important than those supported by the public and formal innovation policy efforts.
NIE explains underdevelopment from an institutional perspective
Weak formal institutions result in high transaction costs in DCs, and thus lower levels of development
NIE is an economic perspective that attempts to extend economics by focusing on the social and legal norms and rules (which are institutions) that underlie economic activity.
Institutions are agreements, rules, (social) contracts reducing transaction costs.
definition of transaction costs
• Transformation and further processing of materials and goods within firms and Transaction of intermediate goods and finalized products between economic
TCE argues that high transaction costs slow down economic growth
Humanly devised constraints that structure political, economic and social interactions.
Institutions that facilitate low transaction costs, boost economic growth
Officially established in one way or another, often by governments. Openly codified, written down and communicated through channels that are widely accepted as official
Laws and policies, Constitutions, Tax system and regulations
Socially shared rules: habits, customs, traditions, codes of conduct, social norms, taboos. Not officially established, practices commonly accepted throughout society, usually unwritten.
Cultural patterns, Standards of honesty
Discuss the three key differences between the STI and DUI approach.
Science-Technology-Innovation (STI) approach
Narrow - linking innovation to science and technology (S&T organizations, technical universities). Innovation is technological development.
Innovation based upon R&D efforts, experimentation in laboratories, codification of identified knowledge. STI only one pillar in learning and innovation process
Codified knowledge can be defined as knowledge that can be written down in the form of a document, manual, blueprint or operating procedure.
Doing, Using and Interacting (DUI/UDI) approach
Broader - linking innovation social institutions, business interactions, generic development policies, education, market conditions. Innovation is learning and competence building.
Innovation involves learning in DUI mode: through tacit and localized knowledge, learning at the job, on-going changes, daily new problems. The DUI approach is interactive learning through structures and relationships.
Tacit knowledge is the kind of knowledge that is difficult to transfer to another person by means of writing it down or verbalizing it.
pg. 4 Globelics 2009 paper Lundvall et al clean