policy approaches for innovation

1
policy approaches for innovation
Presentation 10 UNU-MERIT Phd Programme
Innovation Studies and Development (2006-2007)

• René Kemp

2
Innovation is many things
3
Innovation is created in distributed systems of
knowledge and its success depends on economic
frame conditions and many other factors not under
the control of the innovator
4
Rationale for innovation policy market failure

• private markets provide too little incentive for
  innovation, because of
• knowledge spillovers
• Market entry barriers
• Information imperfections
• This is the traditional economic argument which
  is used by policy makers
• As a guide to policy it is poor

5
System failure as a rationale for innovation
policy

• System failures refer to inappropriate
  infrastructure of knowledge, poor capabilities to
  adapt, institutional barriers and lock-in
• Here it is not so much the divergence between
  private benefits and social benefits but the
  innovation system itself that is a hindering
  factors, by being insufficient developed for
  certain types of innovation

6

• Smith (2000) distinguishes the following forms of
  system failure
• Infrastructure problems about inadequacies in
  the physical infrastructure (transport, etc), the
  scientific infrastructure (high-quality
  universities and research labs, technical
  institutes, etc) and the network infrastructure
  (IT, telecom).
• Transition problems difficulties that arise when
  firms and other actors encounter technological
  problems or face changes in the prevailing
  technological paradigms that exceed their current
  capabilities.
• Lock-in problems derived from the
  socio-technological inertia
• Hard and soft institutional problems linked to
  formal rules (regulations, laws) as well as more
  informal and tacit ones (social and political
  culture for instance).

7
Because of the many factors shaping innovation

• Countries have multiple policies for innovation
• Support of RD
• Knowledge transfer
• Investment support
• Green taxes
• Science and technology programmes
• Skills and educational policies
• Competition policy
• Regulations for the uptake of clean technologies

8
Government policy and sustainable innovation in
the Netherlands
Courtesy of Geert van der Veen
9
There has been a shift towards more integrated
approaches

• Which combine push and pull
• having a long-term focus
• Involving a platform of interaction
• Bringing together different knowledge holders
• With government as a facilitator (asking the
  platforms to define programmes and offer
  suggestions to policy)

10
Long term programming
Courtesy of Geert van der Veen
11
Long term programming

• DTO-programme (Sustainable Technology
  Development) in the NL
• Scope 2040
• Factor 8-thinking
• Approach towards either functions in society
  (living, food, transport) or sectors (chemical
  sector)
• Backcasting
• Stake holder involvement in idea generation
• Technological focus

Courtesy of Geert van der Veen
12
The Dutch transition approach
13
Top-down elements

• 26 transition paths
• Platforms for energy transition themes
• new gas
• sustainable mobility
• green resources
• chain efficiency
• Sustainable electricity
• Interdepartmental programme directorate energy
  transition (IPE)

14
Improving the innovation system

• Butter argues for a three layered approach
• -  Layer 1 Innovation climate the creation of a
  supportive generic climate for sustainable
  innovations.
• Layer 2 Singular innovations the development,
  dissemination and adoption of singular
  innovations in individual organisations.
• Layer 3 System innovations the stimulation and
  alignment of singular (individual) innovations
  that will contribute to the system innovation.

15
Technology-specific innovation systems (TIS)

• network(s) of agents interacting in a specific
  technology area under a particular institutional
  infrastructure to generate, diffuse and utilize
  technology (Carlsson and Stankiewicz, 1991)
• Components are
• Actors
• Artefacts
• Networks
• Regulations
• Attitudes
• Formal knowledge
• (Bergek, Jacobsson and Sanden, 2006)

16
Key processes (functions) of TIS

• Informing the direction of search
• Market formation
• Development of formal knowledge
• Entrepreneurial experimentation
• Resource mobilisation
• Materialisation
• Legitimation
• Development of positive externalities

17
Niche policies

• A focal point for transition policy could be the
  creation of niches for promising technologies.
  Historical analysis of the innovation process
  across a large number of industries shows that
  new technologies typically commercialise
  initially through small niche markets, in which
  experience is gained and cost reductions through
  learning can be made (see Utterback, 1994 Kemp
  et al., 1998 Foxon, 2003)
• Market development is driven not just by price
  signals and expectation of profits, but also by
  the development of appropriate knowledge and
  skills bases, and the formation of institutional
  structures which support the emerging new
  technologies (cf. Norberg-Bohm, 1999a,b Hoogma
  et al., 2002).

18
Cartoon Paul Hoogma
Strategic niche management?
19
What is SNM? SNM is a method for introducing new
technologies in society, which relies on the real
use of new technologies in selected settings
(niches). The niches consist of selected domains
of application in which the technology (or new
mobility system) is already attractive to use due
to specific circumstances.   Experiences in the
niche are used to inform decisions about
technical improvement and support
policies.   Strategic niche management is thus a
concentrated effort to create niches for
promising technologies. The niche may be a
technological niche or market niche.  
20

• The aims of SNM are
•  
• to articulate the necessary changes in
  technology, and in the institutional framework
  that are necessary for the economic success of
  the new technology
• to learn more about the technical and
  economically feasibility and environmental gains
  of different technology options - i.e., to learn
  more about the social desirability of the
  options
• to stimulate the further development of these
  technologies, to achieve cost efficiencies in
  mass production, promote the development of
  complementary technologies and skills, and
  stimulate changes in social organisation that are
  important to the wider diffusion of the new
  technology
• to build a constituency' behind a product - of
  firms, researchers, public authorities - whose
  semi-coordinated actions are necessary to bring
  about a substantial shift in interconnected
  technologies and practices.

21
Innovation journey in context
22
Cartoon Paul Hoogma
23
Cartoon Paul Hoogma
the innovation should be able to survive without
protection measures
24
SNM is being used successfully in Bangladesh
for treadle pumps and for micro-irrigation

• (i) A research and technology development
  function. Identifying a niche technology and
  undertaking adaptive research and development to
  ensure that it works in the smallholder context.
• (ii) A marketing, production and distribution
  function. Establishing the mechanisms/facilities/
  skills by which the technology can be produced
  and distributed. Together with a marketing/
  promotion function, generating awareness of the
  technology and creating a demand for it among
  smallholders.
• (iii) A sustainability function. Disengaging
  itself from intensive involvement in facilitating
  both technology promotion and marketing
  functions, so that the program is ongoing even
  after IDEs involvement is fully withdrawn.

Source Clark, Hall, Sulaiman and Naik