Governance and Innovation Theory and Practice

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Governance and Innovation Theory and Practice
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Aim

• To explore challenges to governance associated
  with focus on innovation
• Assess conceptual differences with dominant (neo
  classical) paradigm
• Case study of Ireland for strategic governance
• Case study of wine industry for sectoral/regional
  governance

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Threshold Perspective

• 1983 on economic strategy based on deregulation
  and privatisation
• Focused economic governance primarily on
  regulatory structure an inward turn to
  governments own activity.
• Political, institutional and administrative
  patterns and political narratives have developed
  to match these preoccupations
• See Gary Banks and Ken Henry speeches for
  eloquent defence of these approaches

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Conceptual basis

• Grows from neo-classical economic paradigm a
  powerful and robust body of analysis
• Source of productivity gain in economy-wide
  patterns of relationship.
• Undistorted markets allocate factors of
  production to their most efficient uses.
• Market failure is a prime ground for remedial
  action
• Approach to innovation
• Science push view
• Focus on commercialisation
• Hi tech sectors

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Innovation approaches

• Also focus on productivity gain and thus
  complement conventional wisdom
• But attained through enhanced value theory
  demonstrates this is largely determined at
  sectoral/regional level
• Innovation analysis involves two basic steps
• At a strategic level, identify sectors that have
  the weight and potential to matter to the whole
  economy
• At a sectoral level, identify impediments to
  innovation that cannot be removed by firms acting
  alone

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Focus on sectors and impediments results from
differences in paradigms

• Is knowledge homogeneous or differentiated
  category? is diffusion seamless or problematic?
• Relative role of risk versus uncertainty
• Whole system versus market focus
• Method mechanics/equilibrium/modelling/ versus
  judgment under uncertainty

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Also, differences in approach to governance

• Model of rational actor fundamental to extension
  of economic analysis to political relationships
• In practice, these analyses recommend the
  insulation of economic management
• Public choice theory rent seeking is chronic.
• Partisan competition typically requires wasteful
  political bribes.
• Knowledge limitations limit capacity of state
• Picking winners is beyond state capacity
• By contrast, innovation and adjacent theories
  offer qualified endorsement of public-private
  engagement
• Ensure opportunities for innovation are exploited
  in sectors that matter
• Interest engagement can be a win-win
• Constructive institutionalism - preferences
  formed in inter-subjective contexts
• Organisational learning, myopia, double loop
  learning etc.
• Vast literature on collaboration, linkage,
  networks, knowledge management
• Literature on state strategic capacity
• Literature on state strategy
• .

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1. Innovation strategies distinct in scope and
analytic style

• See Forfas web site
• Picking winners in developing economies
• Identify sectors with weight and potential to
  matter and map impediments to innovation
• Uncertainties mean outcomes are provisional and
  corrigible contexts and circumstances change
• Can be more or less narrowly defined
• Technical analysis plus judgement like
  determinations of monetary policy

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2. The agency responsible for strategy needs to
be appropriately positioned

• Ireland, Denmark, Sweden, Finland, Singapore
  versus UK.
• Why partially separate strategy activity
• Middle manager resistance
• Paradigms, instruments, settings
• Qualifications
• Forfas established standing and legitimacy versus
  Commission on Future but elite focus
• Strategy Unit depended on Blair for political
  impact time pressures
• US Units attached to legislature - but distance
  from executive

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3. Interest engagement is a key element

• Public choice theory very pessimistic depends
  on instrumental model of choice,
• Other theories somewhat more sanguine
• logic of appropriate behaviour (March and
  Olsen)
• Constructive institutionalism key substantive
  role of ideas they are weopens!
• Partisan mutual adjustment (Lindblom)
• Contest myopia, lock-in, path dependence etc.
• Explore conditions for social learning in more
  complex organisational, social and political
  settings
• Conceive broader political system as a knowledge
  system writ large
• But conventions of ministerial and cabinet
  responsibility can hobble interest engagement.

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More strategy issues

• 4. A partially separated focus on strategy
  essential to realise synergies of joined up
  government
• 5. Strategy development is a continuous not
  one-off exercise (Forfas 30 reports in 2008)
• 6. A political consensus on at least the broad
  direction of development is desirable
• Demise of party id, party organisations
• Media as primary conduit but 24 hour news cycle,
  spin, sound bites, populism
• Media taste for sensationalism, short attention
  spans etc.

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Regional /sectoral strategies

• AWF Strategy Development
• Strategy 2025 1997
• Export development and R D strategies
• The Marketing Decade 1999
• Directions 2025 2002
• GWRDC 2002 2007 and 2007 2012
• Industry associations
• Industry media

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Figure 2.3 The Impact of Collaboration on
Firm-Level Competitiveness
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Lessons

• The industry bootstrapped its own success.
• Industry associations played critical brokerage,
  leadership and coalition building roles.
• 2. Success is a contingent and provisional
  category.
• 3. Government played critical catalytic and
  facilitating roles.
• 4. Can collaborative engagement be encouraged?

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To sum up

• Beyond neo-liberalism (Kevin Rudd)? Is innovation
  the next meta-strategy?
• Innovation paradigm presents fresh challenge.
  Differs from conventional wisdom in substantive
  aspects and in implications for governance.
• Innovation emphasises market system plus
  knowledge system. Impacts role of government at
  both strategic and regional/sectoral levels.
• Recent theory and experience can guide analysis
  and practice.
• But specific approaches must be shaped to
  specific contexts.