The Role of Regional Innovation Systems in a Globalising Economy: Comparing Knowledge Bases and Institutional Frameworks of Nordic Clusters

Björn Asheim
Department of Social and Economic Geography and Centre for I

Lars Coenen
Department of Social and Economic Geography, Lund University

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     Last modified: April 28, 2004

Abstract
The analysis of the role and importance of different types of regional innovation systems must take place within a context of the actual knowledge base of various industries in the economy as well as the institutional framework, as the innovation processes of firms are strongly shaped by the specific knowledge base and institutional framework. In this paper we shall distinguish between two types of knowledge base: analytical and synthetic. These types indicate different mixes of tacit and codified knowledge, codification possibilities and limits, qualifications and skills, required organisations and institutions involved, as well as specific competitive challenges from a globalising economy.

The different knowledge bases of industries also have implications for the definitional relations and analytical distinctions between clusters and regional innovation systems. In the paper we make a distinction between the existence of ‘traditional’ clusters where regional innovation systems are build in order to support innovation and localised learning and the existence of relations between clusters and regional innovation systems from the emergence of the cluster as a necessary part of its development. The traditional constellation of industrial clusters surrounded by innovation supporting organisations is nearly always to be found in contexts of industries with a synthetic knowledge base (e.g. engineering based industries), while the existence of regional innovation systems as a necessary part of the development of an emerging cluster will normally be the case of industries based on an analytical knowledge base (e.g. science based industries such as IT and bio-tech) (Asheim and Gertler, 2004).

Furthermore, the question of governance structures and supporting regulatory and institutional frameworks regionally as well as nationally also has to be explored in order to gain a better understanding of the role and workings of different types of regional innovation systems in a globalising economy. Of especial importance is the linkage between the larger institutional frameworks of the national innovation system and national business system, and the character of regional innovation systems. This question has recently been addressed by Cooke (2003), who, based on studies of the biotechnology industry in the UK, the US and Germany, has introduced a distinction between the traditional regional innovation system (which he refers to as the institutional regional innovation system – IRIS) and the new economy system (NEIS), which he also refers to as an entrepreneurial regional innovation system (ERIS). The traditional IRIS (more typical of German regions or regions in the Nordic countries whose leading industries draw primarily from synthetic knowledge bases) is characterised by the positive effects of systemic relationships between the production structure and the knowledge infrastructure embedded in networking governance structures regionally and supporting regulatory and institutional frameworks on the national level. In contrast NEIS or ERIS (found in the US, UK and other Anglo-American economies) lacks these strong systemic elements, and instead gets its dynamism from local venture capital, entrepreneurs, scientists, market demand and incubators to support innovation that draws primarily from an analytical knowledge base. Thus, Cooke calls this a ‘venture capital driven’ system. Such a system will of course be more flexible and adjustable and, thus, will not run the same risk of ending up in ‘lock-in’ situations. On the other hand, new economy innovation systems do not seem to have the same long-term stability and systemic support for historical technological trajectories, raising important questions about their long-term economic sustainability.

In making these arguments about a general correspondence between the macro-institutional characteristics of the economy and the dominant form and character of its regional innovation systems a link is provided to another useful literature on ‘varieties of capitalism’ and national business systems (Hall and Soskice, 2001; Lam, 2000; Whitley, 1999). Placed within this framework the traditional institutional regional innovation system typified by a region such as Germany’s Baden-Württemberg is most compatible with the institutional frameworks of a coordinated market economy, while the new economy innovation system (e.g. Silicon Valley) reflects the institutional framework of a liberal market economy (Asheim and Gertler, 2004).

In the analyses of various types, roles and workings of regional innovation systems, applying the theoretical framework of different knowledge bases and institutional frameworks outlined above, empirical illustrations from a Nordic comparative project on SMEs and regional innovation systems will be used (Asheim et al. 2003).

References:

Asheim, B. T., L. Coenen and M. Svensson-Henning (2003): Nordic SMEs and Regional Innovation Systems. Final Report to Nordic Industrial Fund. Department of Social and Economic Geography, University of Lund, Lund.

Asheim, B. T. and M. Gertler (2004): Regional Innovation Systems and the Geographical Foundations of Innovation. In Fagerberg, J., D. Mowery and R. Nelson (eds.), Understanding Innovation. The Oxford Handbook in Innovation Studies. Oxford University Press, Oxford.

Cooke, P. (2003): Integrating global knowledge flows for generative growth in Scotland: Life sciences as a knowledge economy exemplar, in Potter, J. (ed.), Inward Investment, Entrepreneurship and Knowledge Flows in Scotland – International Comparisons. OECD, Paris.

Hall, P. and D. Soskice (eds.) (2001): Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford University Press, Oxford.

Lam, A. (2000): Tacit knowledge, organizational learning and societal institutions: an integrated framework. Organization Studies, 21, 3, 487-513.

Whitley, R. (1999): Divergent Capitalism: The Social Structuring and Change of Business Systems. Oxford University Press, Oxford.