Policy analysts

To what extent are systems views of innovation useful in helping policy analysts to understand or compare different national contexts? To what extent are they useful for guiding policy makers in designing and evaluating public policy? Do they have any weaknesses? Introduction ‘System views of innovation’ describe the interdependencies that shape the dynamic and creative relationships between particular actors in the environment, where innovative process takes place.

The actors to be considered mainly encompass firms and enterprises, naturally governments (with their policy generating and other departments) and universities (along with public laboratories), with their complex set of relationships in an environment of numerous variables that we may be refer to as a system. System, at whose centre are institutions, or institutional infrastructure involved in generation, diffusion, utilization of technology (Carlsson and Stankiewicz, 1995). Well functional systems promote effective mechanisms to (create and) distribute knowledge, utilize innovative potential and encourage (technological) development at level of enterprises, sectors and industries, local and international economies.

Origin of development and innovation In the modern views of innovation systems the environment with factors that affect development and knowledge production is understood as a rather complex structure. They [the modern views] focus in great extent on relationships between factors and information/ knowledge flows between particular social institutions. Their scope is the mechanisms that are crucial to process of development.

Mode 1 of knowledge production, as Gibbons (1994) indicates, encompasses mainly science and basic research. Traditionally, the basis of R&D is ascribed to researchers and scientists from universities or government funded labs. Socially distributed learning introduced by (focused on trans-disciplinary teams, heterogeneous and goal-oriented) mode 2 represents another dimension of development supporting structures. We may well view Mode 2 as an essential supplement of knowledge production in Mode 1.

Dimensions of Mode 1 and Mode 2 combined enhance the complexity of mechanisms that encourage development. Such environment shall be demonstrated by Triple helix model (of government, university and industry) which provides a model at the level of social structure for the explanation of mode 2 as an historically emerging structure for the production of scientific knowledge, and its relation to Mode 1. (Etzkowitz and Leydesdorff, 2000). Under triple helix the environment is projected with high degree of complexity and the role of universities is enhanced. They get much more involved with private sector and they compete for private funds. The model is focused on development in knowledge based economy which is produced by tri-lateral initiatives.

Within similar concept of environment it may as well be viewed as a system. ‘System views of innovation’ analyze interdisciplinary institutions and their relationships, which along with the institutions themselves influence (technological) development and distribution of knowledge. Innovation and system views Freeman (1987) introduces system as a network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies. Similarly to Triple Helix model, institutions are central to such system and learning and technology are at its centre.

Characteristics of NSI1 There is no specified limit to which elements a system shall comprise. Systems are meant to be open and flexible, evolve and respond to potentials (for development and to drive knowledge economy). Their conceptual frameworks vary across countries through their economic, technological, social, cultural contexts. In this sense systems differ from each other at the level of nations, even regions or industries. Development processes or innovations themselves, as combination of new or existing elements (Edquist, 1997) provided for by the environment, or system, with its (knowledge and progress) generation and selection mechanisms, do reflect upon the system itself. Ability of systems to respond to opportunities and potentials, crucial to competitiveness, should be guarded by policy makers.

Why are they are beneficial then for understanding of national contexts Governments are one of the crucial formal institutions (actors) in systems. Obviously, they command a variety of multiple tools to shape the structures that promote technological development in particular country and influence the behavior of other actors (institutions). Government institutions create country wide policies and build mechanisms supporting technological development and diffusion of knowledge throughout the society. Edquist (1997) considers existing differences between systems to be one of main characteristics of national systems.

The more obvious and easier to analyze factors contributing to the differences would be the legal (patent and copyright or other) and tax systems, norms, education system, scheme of budget distribution or even recognizable cultural values. Leydesdorff and Etzkowitz (1996) in this sense refer to essence of government as nested structure of reflexive controls. The measures that are in direct control of a government should aim to utilize the potential for development and direct knowledge flows among social groups to drive knowledge economy. Effect of such policies can be recognized in actions of other actors, corporations (or universities). They provide feedback for policy makers on how effectively their measures perform.

Universities, another key actor, traditionally represent teaching institutions and in sense isolated research centers. Modernized role of universities engage functions that strategies at university level or government policies may encourage, as: intensity of relations between public funded (at universities or government R&D laboratories) and private funded R&D initiatives; emphasis on higher education and scope of university programs. Do they aim to diffuse knowledge relevant to development of crucial industries? Do they concentrate on areas crucial to competitive position of a country, region?

The tendency to promote closer cooperation of government funded R&D with the R&D activities of private sector brings universities to offer (practical research) services to private companies. Universities partly take on a role of for profit research centers through which their traditional character is being enriched (Leydesdorff and Etzkowitz, 1996). Level of involvement in such concept may be visible from universities’ official strategies and assisted by government policies or directives.

Under NSI, firms are held to have crucial role in innovation. Activity in private sector – companies and industries – may well respond to range of government induced measures especially legal framework, tax system, scope and quality of education. Firms will provide higher financial flows for R;D if they feel more secure about pay offs of R;D activities (through patent or copyright protection). Tax allowances linked to R;D investments or linked to acquisitions of new technologies by firms encourage them to invest this way. Greater affirmation of existence of market for a product which is under development encourages such development (e.g. government order of yet not existing product being developed). They will be able to run R;D projects if the country can supply educated people and create skillful researchers.

Systems of innovation are structured over a number of objective measures and orders, along with subjective instances. Mainly the tangible (objective) aspects give basis for comparisons to be made between systems of particular countries. Increased interactions between main institutions (industries and those related to government and universities) generate new structures within and between them (Leydesdorff and Etzkowitz, 1996). Upon active study of such structures analysts and policy makers can respond to opportunities and seek competitive advantages.