Increasing the Innovative Capacity of the Country

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Increasing the Innovative Capacity of the Country
4 November 2003
Ing. Ray Muscat Jennifer Cassingena Harper
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Innovation is.

• all activities involving the transformation of
  new ideas (technology / process / product /
  service / organisation) to market and which
  generates wealth.
• a time-consuming process that is both management
  and resource intensive.
• pervasive and diverse, in firms of all sizes,
  regions and sectors, not just in naturally
  innovative high-tech sectors.
• an extensive thinking process and hard work to
  generate and foster societal innovations, to
  disseminate them and to sustain them.
• a crucial survival skill for society, especially
  during times of rapid change

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Innovation Competitiveness depend on ..

• the conditions that permit, encourage and sustain
  innovative creativity and investment, or those
  that impede or limit it.
• enterprises ability to
• meet fast-changing market needs as quickly and
  efficiently as possible through the application
  of new technology.
• assimilate and apply new technology in order to
  improve productivity and create new products.
• draw on their scientific inventiveness and
  entrepreneurial flair.

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Competitiveness is..

• Firms ability to produce better or cheaper
  products, processes and services and hence to
  defend or gain market share
• A countrys ability to provide the conditions
  which enable firms to achieve this
• Ref Metcalfe Georghiou (1991)
• the set of institutions, policies and regulations
  that support high levels of productivity..and
  drive productivity growth and sustained increases
  in output!!
• Ref Global Competitiveness Report (2002-03)

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Innovation and Job Creation

• In the manufacturing sector, RD focused on
  product innovation has the greatest
  employment-generating effect.
• Process innovation has the greatest job-creation
  impact in the service sector.
• Innovation tends to increase the need for
  highly-skilled workers.
• Innovation support measures for SMEs should
  increase the qualification levels of their
  employees.
• Micro-enterprises have a lot of potential for job
  creation through innovation.

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Innovation System

• Key Features of Innovation
• systemic (multidimensional iterative) rather
  than linear
• networking between different players
• knowledge transfer mechanisms for science
  /industry links
• proximity
• Key Features of Systems of Innovation
• Information flow across the interfaces (large
  firms, researchers, entrepreneurs, investors,
  customers, suppliers, consultants, patent agents,
  intermediaries, local authorities and other
  actors).
• general framework conditions the human potential
  (technology generators implementers) the
  overall knowledge base of the country sufficient
  incentives for business RD adequate networking
  the infrastructure and knowledge transfer
  mechanisms.

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Innovation Policy

• Definition
• Innovation Policy the integral of all state
  initiatives regarding science, education,
  research, technology policy and industrial
  modernisation, overlapping also with industrial,
  environmental, labour and social policies (It)
  aims to strengthen the competitiveness of an
  economy .. in order to increase societal welfare
  through economic success
• (S. Kuhlmann Research Policy 2001 Vol.30)
• Rationale
• Innovation policy aims to remedy deficits in
  firms or the environment in which they operate
  with the aim of increasing the rate and success
  of new and improved products, processes and
  services (L. Georghiou, PREST, University of
  Manchester)

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Guarantee Mechanisms

Indirect Measures

Direct Measures

Risk Capital


i
e
fiscal measures

Demand Side
Supply Side



Finance


Services
Support for
Support for

Grants for
Information
Networking
Systemic
Procurement

Regulation

public
training
industrial
brokerage
measures

policies

sector
and
RD

support

research

m
obility

-

University
-

T
ailored
-

Grants for
-

Contact
-

Support for
-

Cluster
-
RD
-

Use of

funding

courses for
RD

databases

clubs

policies

procurement

regulations
-

Laboratory
firms

-

Collaborative
-
Brokerage
-
Foresight
-
Supply
-
Public
and standards
funding

Entrepreneurs
grants

ev
e
nts

programmes
to
chain
procurement of
to set
C
ollaborative
hip training

-

Reimbursable
-
Advisory
build common
innovative
innovation
policies

grants

-

Subsidised
loans

services

goods

targets

Visions - Co-location
-

Strategic
secondments

-

Prizes to
-
International
-
Support for
-
Technology
programmes
-

Industrial
spend on RTD

technology
private
platforms to
for industry

research
watch

procurement

coordinate
-

Support for
studentships

-

Patent
d
evelopment
contract
-

Support for
databases

of technology
research

recruitment
and rel
ated
-

Equipment
regulation
of scientists

sharing

and standards

Framework conditions Science base - Contract
research - Human resources - IPR - State
Aid Regulations
Ref L Georghiou Report to the EU Commission on
Raising EU RD Intensity 2003
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Components of Innovation Policy Framework

• Interface between science and industry direct
  indirect measures co-operation between research,
  universities enterprises mobility of students,
  researchers teachers strengthening the
  absorption capacity of SMEs.
• The creation growth of innovative enterprises
  direct, indirect enabling measures measures
  for inventors measures to improve the financial
  environment support to new technology-based
  firms community entrepreneurship.
• Environment conducive to innovation
  intellectual property rights, laws support ICT
  use as an enabler, particularly the Internet
  administration simplification.
• Promotion of co-operation for innovation vision
  for research technological development public
  awareness of RTD regional policies clustering
  networks.

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Cooperation between the research system and
industry

• Innovation is most effectively undertaken within
  the context of a group interconnected by a set of
  common features, such as geographical location.
• The single factor contributing most towards
  spin-off creation is the stimulation of a social
  culture inclined to innovation and
  entrepreneurship.
• The four biggest barriers to spin-off creation
  are thought to be a poor entrepreneurial culture,
  lack of training in entrepreneurial skills, the
  lack of access to capital and the lack of
  mechanisms to move ideas to market.
• The most cost-effective types of support are
  intangible services such as training, monitoring
  and evaluating business plans, networking,
  marketing, registering intellectual property
  rights, and searching for potential business
  partners.

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Tools to enhance successful innovative firm
creation and survival

• Awareness-raising Develops a culture that
  encourages would-be entrepreneurs to step
  forward.
• Logistical support Includes both resident and
  virtual incubator services.
• Generation evaluation of ideas Idea-generation
  mechanisms, commercial appraisal of ideas,
  followed by business plans.
• Financing Includes grants, micro-credit, loan
  guarantees, royalty agreements, seed capital and
  angel / venture capital.
• Training Relates to developing the necessary
  entrepreneurial and managerial skills. This
  focuses on the human potential side of
  innovation.
• Expert advice and mentoring Particular emphasis
  is placed on drawing up and implementing the
  business plan.
• Dissemination Exchanging examples of good
  practice through networks.

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Increasing the Innovative Capacity (1)

• Policy should be balanced between high-techs and
  technology transfer assimilation in existing
  manufacturing enterprises.
• Emphasis on organisational innovation and on
  design and marketing of innovative products
  should be built into schemes.
• Policy should instil a sufficient level of
  understanding and confidence in innovation
  processes among enterprises. SMEs must feel the
  innovative environment.
• The creation of an innovation advisory committee
  operating at inter-ministerial level and with
  resources to prepare and issue consultative
  opinions addressed to Government ministries.
• An in-depth examination of the IPR framework and
  its influence on innovation performance.
• Encourage the rapid diffusion of ICT technologies
  to existing enterprises as a key driver for
  productivity growth.

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Increasing the Innovative Capacity (2)

• SME linkages with foreign direct investment
  firms, a key source of technology and
  organisational change, should be encouraged.
• Enhancement of industry-science relations is a
  major priority, to create an entrepreneurial
  culture in higher education and research
  establishments.
• Priority should be given to the creation and the
  reinforcement of networks. Encouraging the
  visibility between policy makers to entrepreneurs
  to academics to investors.
• Emphasis should be made to target also
  traditional and promising areas of strength and
  focusing efforts on the creation of clusters of
  excellence. Leveraging on pinnacles of strengths
  and harnessing the power of partnerships will
  assist in the capacity building required.
• Transition towards a more innovative economy will
  require, among others, positive tax regimes and
  financing schemes for early-stage enterprises.

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Increasing the Innovative Capacity (3)

• Create a culture of innovation in our academic
  institutions and the public sector. Encourage the
  elimination impediments to commercialisation. The
  process needs champions.
• Of course, investment in basic and applied
  research is a critical first step in the
  innovation process.
• More SE enrolments, scholarships, job placements
  programmes should be encouraged. Focus on the
  potential of women recruits. Target foreign SE
  graduates.
• The creation of an institute/s of technology to
  support specific niches.
• Policies should target a number of a competitive
  industry-pull long-running thematic measures in
  applied research, whereby successful bids are
  provided with funding and support.

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Thank you