The globalising learning economy: Implications for ...

1 The globalising learning economy : Implications for innovation policyDecember 1997 Report based on contributions from seven projects under the TSER programmeDG XII, Commission of the European UnionBengt- ke LundvallSusana Borr s- 2 -- 3 -PREFACEThe European Union is mobilising considerable effort to cope with the major challenges confrontingEuropean society: in a context of increasing globalisation of the economic activities, the EU has toensure the implementation of a sustainable economic and social development which takes accountsimultaneously of the need to create jobs, to strengthen the level of competitiveness of companies, tofight social exclusion and to ensure the protection of environment and the quality of life of itscitizens. But, at the same time it has to anticipate and prepare for the needs for a new society basedincreasingly on knowledge and learning capacity of its research, carried out at the European level through the projects financed by theTargeted Socio-Economic Research Programme (TSER)

2 Aims to contribute to the current debateson these issues, and to provide the European, national and regional decision-makers with newknowledge which could enable them to improve the definition and the implementation of theirvarious report is the result of a specific pilot action to establish the dialogue between researchers anddecision-makers on the role that technology and innovation play in the as a starting point the work undertaken in seven current TSER projects, this action, directedby Professor Bengt- ke Lundvall, brought together a group of researchers from different disciplinesand schools of thought. Together with political decision-makers, they debated the results of theirresearch and sought to find answers to, and new insights into the following questions: What is the impact on innovation policies as a result of the emergence of a global economy , basedincreasingly on knowledge and learning ?

3 What are the effects of globalisation, including European integration, on national innovationsystems? Do innovation systems develop towards greater European integration or towards greaterfragmentation? What are the mechanisms which allow a better design of research and development policies takinginto account the phenomenon of globalisation and learning ? What is the most suitable political level of intervention in this new context?Conclusions stress the need for greater co-ordination of the various policies not only at the sectoralbut also at the transnational level in order to better face the challenges of the globalisation. Stresslaid on the co-ordination of the research, innovation and education policies supports the efforts ofthe European policy in these sectors which could find increased effectiveness if a similar approachwere followed in the Member States. These combined efforts would certainly contribute to betterpreparing us for the requirements of the European society of 4 -- 5 -Foreword and acknowledgementsThis report - a European Commission initiative - draws some provisional policy conclusions from theresearch currently being carried out in specific European projects under the Targeted Socio-Economic Research (TSER) Programme of the EU.

4 In late spring 1997 the unit in charge of theprogramme in DG XII asked Professor Bengt- ke Lundvall of Aalborg University (former DeputyDirector for DSTI at the OECD) to take the lead in a pilot action to inform policy-makers of findingsfrom seven ongoing TSER projects. This entailed two meetings with project participants and otherexperts, and more than 30 contributions from project members, and has resulted in the basic objective of the exercise has been to provide policy-makers with a reasonably coherent world view and with basic principles for policy-making on innovation in this new context. Anotherobjective has been to point out research areas where more work is needed. These objectives havedetermined the process for producing the report, as well as its content and structure. The firstmeeting in Brussels (24-25 April 1997) gave us the opportunity to present TSER project co-ordinators and other invited contributors with a brief sketch of what we regard as the most salienttransformations currently taking place in technological innovation at world level and in Europe.

5 Theparticipants suggested additional elements, features and corrections to this general framework, aswell as a number of specific topics to be addressed in the report. With this as a starting point, themajor lines of the report were drawn, and some of the participants agreed to write report has extensively benefited from these and other forms of contributions. Without them itwould never have been completed on time nor in its current form. When writing/editing the report,we were faced with the difficult task of trying to fit in the different contributions we received, whilefollowing a coherent line of argument. It has not been an easy task, and we have undertaken majorediting and writing in order to preserve the coherence of the overall report. This means that thereport is not based exclusively on the preliminary results and findings of the TSER projects and thatwe have also used other references and draft version of the report was submitted in mid-September.

6 This served as a basis for a secondmeeting in Brussels (29-30 September 1997) with TSER project co-ordinators, and other invitedexperts, academics and national and EU policy-makers. The contents of the draft report werediscussed, and the valuable and constructive comments made at these lengthy sessions served asinput for the authors producing this final this report was possible only because of the collaboration and enthusiasm of many people,first and foremost the commitment and vision of Achilleas Mitsos, Miroslav Bures, Virginia Vitorinoand Ronan O Brien, who launched and supported this initiative technically by organising themeetings in Brussels and with whom we have had on-going would like to thank all those who wrote special contributions for the report, namely Erik Arnold,Anthony Bartzokas, Patries Boekholt, Phillip Cooke, Johan Hauknes, Dylan Jones-Evans, Luis Sanz,- 6 -Gert Schienstock, Simone Strambach and Peter Wood.

7 Without them this report would not havebeen thanks should also go to Daniele Archibugi, Kristine Bruland, Fran ois Chesnais, JesperLindgaard Christensen, Giovanni Dosi, Charles Edquist, Dieter Ernst, Jan Fagerberg, DominiqueForay, Paul A. Geroski, Ken Guy, Erik Iversen, Alexis Jacquemin, Andrew Jamison, Bj rn Johnson,David Keeble, Mikel Landabaso, Franco Malerba, Keith Pavitt, Mario Pianta, Sven Otto Remoe,Margaret Sharp, Keith Smith, Rolf Sternberg, Michael Storper, Morris Teubal, Bart Verspagen andHans Westling, who kindly sent us recent published and unpublished material, as well as invaluablecomments on our draft are also in intellectual debt to the many experts who commented the report in earlier versions atmeetings and seminar. Still we are entirely responsible for the structure and content of the and CopenhagenDecember 1997 Bengt- ke LundvallSusana Borr s- 7 -The globalising learning economy : Implications for Innovation Policy- 8 -- 9 -Table of ContentsFOREWORD AND ACKNOWLEDGEMENTS.

8 3 TABLE OF 9 CHAPTER 1: INTRODUCTION ..13 THE CHALLENGES OF THE globalising learning economy FOR INNOVATION A NEW VISION AND POLICY CONTENTS OF THE I: CHALLENGES RAISED BY THE globalising learning 2: GLOBALISATION AND THE INNOVATION PROCESS .. FEATURES AND EFFECTS OF liberalisation and communication in the world market ..27 The effects of globalisation ..28 CHANGES IN THE INNOVATION nature of the innovation process ..29 What has changed in the 1980s? ..29 KNOWLEDGE PRODUCTION AND DISTRIBUTION IN THE NEW SOCIO-ECONOMIC and tacit codification limits of codification ..32 Knowledge creation and globalisation ..33 THE learning PROCESS AND THE learning AND REGIONAL , NATIONAL ANDEUROPEAN POLICY RESPONSIBILITIES IN THE learning 3: A NEW THEORETICAL RATIONALE FOR INNOVATION POLICY .. AND INNOVATION THEORY AND TECHNOLOGY ECONOMIC PECULIARITIES OF KNOWLEDGE AND failure in transacting codified knowledge ..44 Tacit knowledge and market failure.

9 45 THE KEY CHARACTERISTICS OF THE NEO-CLASSICAL and and innovation ..47 Representative firms in the learning economy ..48 learning in the neo-classical failure in the learning economy ..49 Spill-overs in the learning economy ..50 NEW GROWTH IN THE OLD THEORETICAL INSIGHTS AND MACRO-TRENDS IN POLICY NEW POLICY DIRECTIONS FOR INNOVATION POLICY OVER THE LAST TWO winners or creating general framework conditions? ..58 RECENT TRENDS AT NATIONAL 10 -CHAPTER 4: POLICY learning .. POLICY more extensive use of external and independent sources for policy (re) the social and political participation in the definition of technological alternatives ..67 learning from others ..68 The European dimension of policy learning ..69 CHANGE, CONTINUITY AND EFFECTIVENESS INS&T NEED FOR FURTHER SOCIO-ECONOMIC II: THE NEW THEORETICAL CONTEXT AND ITS POLICY 5: SCIENCE POLICY IN THE NEW ACTIVITIES TAKE PLACE IN AN ARTIFICIALLY SIMPLIFIED BETWEEN RESEARCH INSTITUTIONS AND INDUSTRY ARE FUNCTIONAL AND IT PAY FOR NATIONAL GOVERNMENTS TO INVEST IN BASIC SCIENCE?

10 80ON THE IMPORTANCE OF ADVANCED REGIONAL, NATIONAL ANDEUROPEAN LEVELS REGARDING 6: INNOVATION POLICY AND NEW WAYS OF ORGANISING THE FIRM .. COMPETITION FORCES FIRMS TO FIND NEW WAYS OF DOING TRENDS IN MODES OF ORGANISATION AND IN SKILL DO THE NEW ORGANISATIONAL PRINCIPLES COME FROM? ..92 THE NEW ORGANISATIONAL MODE AS A FRAMEWORK FOR PRODUCT TRENDS IN SKILL learning TO LEARN CAPABILITIES AND VERSUSUS PRINCIPLES OF PRINCIPLES AND NATIONAL SYSTEMS OF POLICIES TO SUPPORT THE INTRODUCTION OF NEW MODES OF ORGANISATION AND HUMAN POLICY IN RELATION TO HUMAN RESOURCE NEED FOR POLICY RESPONSIBILITIES BETWEEN REGIONS, NATIONS AND 7: CREATING NETWORKS AND STIMULATING INTERACTIVE AND INTER-FIRM REGIONAL AND LOCAL DIMENSION OF COSTS AND RISKS OF EXPERIENCES WITH OF SUPPORT SCHEMES- RATIONALE AND 8: KNOWLEDGE-INTENSIVE SERVICES IN THE learning economy .. INTERACTION BETWEEN SERVICES AND ARE KNOWLEDGE-INTENSIVE SERVICES?