Kautonen inno work-9-5_2012

InnoWORK 9.5.2012, Tampere

Innovation without borders?
New forms of internationalization

Dr. Mika Kautonen
Adjunct Professor
Unit for Science, Technology and Innovation Studies [TaSTI]
University of Tampere, Finland
Trans-Nationalizing Innovation Systems: Channels and Platforms of Innovation and Competence (CHAPS)
Research Programme of TaSTI/UTA

Content

1. Globalization of innovation activities
a) some empirical evidence
b) forms of globalization

2. What will happen to national and local
innovation environments?

3. Discussion and conclusions



Some empirical evidence (I)
• International technology flows steadily grown faster than the GDP from
1997 to 2008 in a majority of the OECD countries (although in some large
economies the growth only on a same level than the growth of the GDP)
• Out of 25 countries, in 14 (mostly smaller) countries reported that
innovative firms collaboration on innovation at least as much with foreign
partners than with domestic partners (CIS-2006)
• Concerning co-operation on scientific articles during the last twenty
years, an evident tendency from single authorship to co-authorships but
international co-operation, although grown considerably, not caught up
domestic co-operation but the gap remained the same (the small countries
again more open to international co-operation)
• Likelihood to foreign co-authorship increases in case of the highly cited top
scientific articles; here the position of USA overwhelming.

(OECD “
Measuring Innovation –A New Perspective”online version, 2010;
Community Innovation Survey 2006 / Eurostat; Kautonen & Raunio 2011)



Some empirical evidence (II)
• Average share of international students seven per cent of all students on
the tertiary level within the OECD countries (English-speaking countries with a
stronghold as six countries in top-seven)
• Concerning the geographical pattern of patent collaboration (co-
invention), out of the total of 29 countries with the data, in ten countries
foreign co-inventors as usual for inventors than domestic co-inventors

Some evidence that the countries most involved in globalization of innovation
the smallest and the most technologically dynamic (c.f. Archibugi & Iammarino
2002, 111) due to e.g. limited size of their domestic markets.



Why BIC and some others are entering the
innovation game? (I)
Cost structures
• Wage rate differences: for highly skilled knowledge workers e.g. in
China and India 5-10 times below Western Europe and USA
(although the gap getting narrower)
• Production followed by R&D and other innovation activities

New fast-growing markets
• Four consumer ties (annual per capita incomes; millions of people)
• more than $20,000 75-100 (1. tier)
• $1,500-20,000 1,500-1,750 (2.&3. tiers)
• less than $1,500 4,000 (4. tier)
• Bottom of the pyramid, Prahalad 2004
• Comes with new needs and with new perspectives for innovation



Why BIC and some others are entering the
innovation game? (II)
New connections
• Share of imports and exports in global GDP increased from 40% in
1990 to 61% in 2006 (World Bank 2008)
• Mobile phones, WWW, fiber optic networks and digitalization

New collaborations
• Outsourcing, offshoring, global supply chains, unbundling
• New business and organizational models

• Scope of R&D activities carried out in emerging economies broadened in
recent years; earlier limited to adaptation or at the most product
development for the local market
• Since mid-1980s, several developing countries build up technological
capabilities supporting R&D activities (Reddy 2011)
• Emergence of global technology units focusing on worldwide products.



Spikes of innovation: IT industry perspective
(source: Grose 2008; 2007 Index of Silicon Valley)


Knowledge complexity:
Why going global is not that easy ” Creep into the mind”
• Movements/quality in Japan,
environment in Germany
Complex Existential knowledge • Cultural assumptions (fashion,
music, arts)
”
Feel and live” • R&D approach

” See through the eyes”
Endemic knowledge • Vision statements
• Management processes
”
Study and live”
• Customer service manuals
• Consumer behavior reports

Experiental knowledge ” Jump into the shoes”
• Practices and skills
”
Experience and practice”
• Simple procedural routines

Explicit knowledge ” Take a picture”
• Technical blueprints
”
See and study”
• Patents
Simple
(slightly modified from Doz, Santos, Williamson 2001)



Forms of cross-border innovation activities

• International exploitation of nationally produced
innovations
• Global generation of innovations
• Global techno-scientific collaborations
(Archibugi and Mitchie 1995, Archibugi et al. 1999, Archibugi and Iammarino 2002)

• Trans-national innovation community-building
(Kautonen & Raunio 2011, Raunio & Kautonen 2011)



Forms of cross-border innovation activities (I)
International exploitation of nationally produced innovations

• By profit-seeking firms and individuals in a form of 1) exports of
innovative goods, 2) cession of licenses and patents, 3) foreign
production of innovative goods internally designed and developed
• By public and non-profit organizations as a transfer of good practices
and social innovations (service models, operation practices, concepts,
policies etc.)
• Concerns the use by innovators to deploy their technological
competences in markets (or other geographical entities) other than the
domestic one
• Labeled ‘ international’ opposition to ‘
in global’because innovations
often preserve their own national identity, even when they are diffused
and marketed in more than one country.



Forms of cross-border innovation activities (II)
Global generation of innovations
• By multinational firms in a form of 1) R&D and innovative activities both
in the home and the host countries, 2) acquisitions of existing R&D
laboratories, 3) greenfield R&D investment in host countries
• By supranational organizations as a transfer of good practices and
social innovations (service models, operation practices, concepts,
policies etc.)
• By individuals and firms in a form of virtual development projects (Open
Source Software, user communities etc.). Internet has provided a new
platform for virtual cooperation over long distances and has helped to
create communities of specialists
• Focus on innovation generated on a global scale, often by multinational
enterprises (MNEs, see e.g. Bartlett & Ghoshal 1990); Innovations here
based on inputs from multiple locations in different countries and these
innovations conceived on a global scale from the beginning.



Forms of cross-border innovation activities (III)
Global techno-scientific collaborations
• By universities and public research centres with 1) joint scientific projects,
2) scientific exchanges or sabbatical years, 3) international flows of
students
• Always transmission of knowledge from one scholar to another in academic
world within a trans-national setting, but...
• Recently, activities of HEIs enormously expanded as not only knowledge
transfer to industry but HEIs entrepreneurial themselves e.g. setting up
campuses in foreign countries
• By national and multinational firms in a form of 1) joint ventures for
specific innovative projects, 2) productive agreements with exchange of
technical information and/or equipment
• Recently technological collaborations increased also within the private sector
• Driven by a necessity to reduce the costs and risks of innovation and to cope
with its increasing complexity.



Forms of cross-border innovation activities (IV)
Trans-national innovation community-building
• By “ scientific diasporas”and trans-national innovation-related networks
(immigration powered social spaces, etc.)
• By global innovation communities, brain circulation and “ trans-national
bridge builders”(expat-networks / associations, etc.)
• These are not necessarily directed to create innovations but they may
as “by-products”and they may have a potential to enable them in trans-
national settings
• The power these communities may have in terms of innovation is in
their capability to overcome the cultural and cognitive distance that
may be entailed in national borderlines or in lack of geographical
proximity.


2. National and local innovation environments

Demand Framework Conditions
Consumers (final demand) Financial environment; taxation and incentives;
Producers (intermediate demand) propensity to innovation and entrepreneurship;
mobility

Education and Political System
Industrial System Research System
Innovative users Government
Large companies
Professional
Governance
Intermediaries education, training
Mature SMEs
Institutes, Innovation
Higher education
brokers, KIBS related
New knowledge and research
policies
intensive firms
Public sector
research

Infrastructure
Banking, VC IPR, information Innovation & Standards
business support and norms

(Modified from den Hertog 2000; Arnold/Technopolis 2002; Smits & Kuhlman 2004)


e.g. global e.g. EMU, Schengen area
Demand demand & brands Framework Conditions
Consumers (final demand) Financial environment; taxation and incentives;
Producers (intermediate demand) propensity to innovation and entrepreneurship;
mobility

Education and Political System
Industrial System Research System
Innovative users Government
Large companies global user Professional
communities education, training
Governance
Mature SMEs Intermediaries Innovation
Higher education
Institutes, related
New knowledge and research
brokers, KIBS policies
intensive firms e.g.
GPNs & Public sector
ERA, European
GINs research
Bologna Process Structural
/ EHEA Funds
Infrastructure
Banking, VC IPR, information Innovation & Standards
Global
business support and norms International
EPO, patent standards
provision of VC databases


Questions and discussion (I)
Concerning the opening of innovation environments
/ systems…

… what kind of impacts can be considered due to
globalization of innovation for national or local
economies / innovation environments?

… what could be the key measures to take to sustain
their competitiveness?



Questions and discussion (II)
Concerning the four forms…
(International exploitation of nationally produced innovations Global generation of innovations
Global techno-scientific collaborations Trans-national innovation community-building)

… which one(s) is usually a target of policies?

… are there examples of successful policies?



Questions and discussion (III)
Concerning the four forms…
(International exploitation of nationally produced innovations Global generation of innovations
Global techno-scientific collaborations Trans-national innovation community-building)

… which one(s) is usually NOT a target of policies?

… why do you think this is the case?

… what could be done on a local/regional level?


3. Discussion and conclusions

Some conclusions
For our innovation environments, it seems that…

… they will be more open and global but also
fragmented than before

… therefore they cannot be easily governed

… policy focus may have to turn more towards
building different type of (innovation) communities
than fostering ‘systemicness’

… competences to operate in intercultural /
cosmopolitan environments needed.

Many thanks!

http://www.uta.fi/tasti/
Mika.Kautonen@uta.fi


Kautonen inno work-9-5_2012

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