This monthly selection of articles has been carried out by Philippe Gugler and Damiano Lepori, the Center for Competitiveness, University of Fribourg. The entire selection, carried out since 2013, can be consulted on the academic articles page of our web.

How Outward Looking is Smart Specialisation? Results from a survey on inter-regional collaboration in Smart Specialisation Strategies (RIS3)

By: J. Sörvik, I. Midtkandal, C. Marzocchi, E. Uyarra. S3 Policy Brief Series No. 16/2016; Luxembourg (Luxembourg): Publications Office of the European Union, EUR 27795 EN, doi:10.2791/943671.

Abstract: “Smart specialisation (S3) emphasises the identification of niches, cross-sectorial innovation and solving societal challenges. With this comes a need for an outward-looking dimension, to find a region’s potential advantages in international markets, and to identify partners to help deliver new solutions and solve common challenges. This is the case not only for industry and academia, but also for regional policy-makers who need to engage in inter-regional collaboration processes. The purpose of the survey presented in this report was to increase our understanding of the factors underlying successful inter-regional cooperation within S3. It builds on an analytical framework to better understand the multiple dimensions of inter-regional collaboration, developed in a previous working paper (Uyarra et al., 2014). The objectives of this study were to increase our knowledge of inter-regional collaboration in research and innovation (R&I), with the aim of supporting regions and Member States in their collaborative efforts in S3, but also to inform the S3 Platform (S3P) and other European Commission (EC) services on how to best support inter-regional collaboration in R&I policy. The answers from the survey respondents indicate that the EU’s new cohesion policy has led some regions and Member States to change their behaviour in collaboration in R&I policy. More than half of the respondents reported having prior collaboration experiences, of which 67 % reported increased collaboration in the previous 2 years and 30 % reported a stable level of collaborative effort. The factors driving collaboration and the perceived benefits of collaboration include information sharing, meeting a new orientation of regional policy and supporting linkages between R&I and industry. Collaboration largely involves low-intensity activities that bring direct and immediate benefits. Collaboration is most prominent in the first steps of the RIS3 process, analysis, design and decision-making. The criteria underlying the choice of partners are in line with the RIS3 concept; they are based on industry composition (similar or complementary), research capabilities that are complementary or similar, as well as similar societal challenges. In contrast, the survey findings regarding the geographical location of partnering regions, as regions most often collaborate with other regions in their own country. The main barriers to collaboration seem to be inter-related and include lack of resources, insufficient political commitment, insufficient engagement of regional stakeholders and lack of clarity of objectives. One interpretation is that it is challenging to communicate clearly to stakeholders and politicians the outcomes of an intervention, with the result that stakeholders are unwilling commit or mobilise resources. The rationale for innovation policy interventions quite often is to support activities that provide indirect and dynamic benefits that are not easily measured, divisible or attributable to individual actors or activities. In contrast, the least problematic barriers are socio-cultural issues, legal or administrative barriers and lack of trust. It is recommended that regions and Member States better prepare the evidence base for their projects and improve the materials they use to communicate to stakeholders the potential benefits of collaboration and how to achieve them. Regions should also engage more with private sector actors and civil society. The paper indicates the importance of the EC communicating a more complex picture of the dynamics of inter-regional collaboration. An oversimplification of the message might lead to underinvestment and less intensive collaboration than that which is needed to address the larger challenges with potential for longer-term benefits for Europe. The recommendations for S3P include that it should focus on learning activities and support the initiation of collaborative processes. However, it appears that the regions and Member States want S3P support to implement thematic collaboration, but then to be left to themselves to carry it out. Likewise, respondents considered it important that S3P should provide guidance, act as a knowledge hub and offer expert assistance. This indicates that S3P should continue to develop knowledge around inter-regional collaboration and assist regions and Member States in establishing and developing this.” [ABSTRACT FROM AUTHORS]

Regional Innovation Systems in China: A long-term perspective based on patent data at the prefectural level

By: G. Prodi, F. Frattini, F. Nicolli. Sustainability Environmental Economics and Dynamics Studies, Working Paper No. 01/2016.

Abstract: “This paper focuses on the connections between long-term development and Regional Innovation Systems (RIS) in China. It aims to investigate how the evolution of RIS fits with China’s overall process of economic upgrading. The analysis relies on Chinese patent applications filed to the EPO during the period 1981 to 2009, which authors have regionalised at a prefectural level. Conceptu-ally, the investigation concerns the relative prevalence of indexes derived from inventors’ and ap-plicants’ localisation to describe local innovation activities in terms of emergence, development and reinforcement. The hypothesis ranks higher those prefectures where indigenous applicants prevail, that is, the initiative, organisation and exploitation of innovation activities are foremost local (or endogenous). Results return the possibility of grouping Chinese prefectures into six clusters. On this basis, RIS features appear to diffuse, even while regional concentration of innovation activities is still increasing. This pattern is deemed to fit the process of industrial development in China very well. As it was in the past, RIS benefit from the opportunities that a long-term development strategy provides, but face its limits as well.” [ABSTRACT FROM AUTHORS]

The Diversity of Entrepreneurial Regimes in Europe

By: D. Selin, E. Niklas. Research Institute of Industrial Economics, IFN Working Paper No. 1118, 2016.

Abstract: “Although institutional reforms are necessary to increase rates of entrepreneurship in European countries, we argue that one-size-fits-all reform strategies are unlikely to be successful. Reform strategies must be informed by a better knowledge of the varieties of European capitalism and the institutional complementarities that drive these differences. We investigate these issues by gathering a number of potentially relevant entrepreneurial regime measurements as well as indicators of formal and informal institutions based on data available from the 2000s onward. We employ principal component analysis, factor analysis and cluster analysis to examine how 21 European countries and the United States cluster in the entrepreneurial and institutional dimensions. Our results reveal six country clusters, or entrepreneurial regimes, with a distinct bundle of entrepreneurial characteristics and institutional attributes. The main implication is that different reform strategies are appropriate to promote entrepreneurship and economic growth in European countries in different clusters.” [ABSTRACT FROM AUTHORS]

Innovation and collaboration patterns between research establishments

By: I. Hiroyasu, N. Kentarim, S. Yukiko Umeno. Institute of Economic Research, Hitotsubashi University, Research Paper No. 48.

Abstract: “This study empirically investigates the determinants of the productivity of knowledge creation by collaboration. By using the Japanese patent database, we extracted establishment-level patent co-invention information, and found the following results. First, we find an inverse U-shaped pattern in the relationship between the similarity of knowledge stocks and the quality of patents. That is, moderate diversity in knowledge stocks between establishments rather than extreme similarity or extreme diversity is important for knowledge creation. Second, focusing on the differences in technology class, we find inverse U-shaped pattern only in the high-technology class. This implies that the common knowledge between establishments is important in the invention of high technology patents. Third, we find that the physical distance between collaborating establishments has a negative effect on the quality of patents.” [ABSTRACT FROM AUTHORS]

Firms’ innovation benefiting from networking and institutional support: A global analysis of national and firm effects

By: T. Schøtt, K. Wickstrøm Jensen. Research Policy, Volume 45, Issue 6, 2016, Pages 1233–1246.

Abstract: “Firms’ networking for innovation is embedded in institutions of society, where national policies are increasingly designed to provide institutional support for firms’ networking and thereby benefit innovation. But, globally, what are the quantitative and qualitative effects of institutional support for networking and, in turn, for innovation? 68 countries with 18,880 firms were surveyed in the Global Entrepreneurship Monitor, enabling generalization to the firms in the countries around the world. Two-level modeling shows that firms’ networking benefits both process and product innovation. Institutional support does not significantly affect quantity of networking, but greatly enhances quality of networking in the sense that support for networking in a country enhances the benefits of networking for both process and product innovation. Contrasting low and high support for networking leads to estimating that institutional support for networking can increase the benefits of networking considerably for both process and product innovation.” [ABSTRACT FROM AUTHORS]

Spatial distribution of innovation networks, technological competencies and degree of novelty in emerging economy firms

By: M. Plechero, C. Chaminade. European Planning Studies, DOI:10.1080/09654313.2016.1151481.

Abstract: “This paper analyses the relationship of the accumulation of technological competencies at the firm level, the spatial distribution of the firm's innovation networks and the degree of novelty of product innovation. Firm-based primary data collected in two innovative regions in emerging economies are used to predict higher degrees of novelty in emerging economy firms. Similarly to advanced economy firms, the results show that international linkages are associated with higher degrees of novelty. However, new-to-the-world innovation in emerging country firms is fundamentally externally driven, suggesting that international linkages seem to be a compensating mechanism for the initially lower technological capabilities rather than a complementary source of knowledge.” [ABSTRACT FROM AUTHORS]

Does Geographical Proximity Matter in Small Business Lending? Evidence from Changes in Main Bank Relationships

By: O. Arito, S. Yukiko, S. Koji, U. Ichiro. Institute of Economic Research, Hitotsubashi University, Working Paper No. 40.

Abstract: “Using a unique and massive firm-bank matched panel dataset, this paper examines the causal link between the geographical distance between a firm and its main bank and the probably that a firm will switch its main bank. Utilizing the exogenous change in firm-main bank distances brought about by bank mergers and bank branch consolidations in Japan during 2000–2010, the analysis – the first of its kind – finds the following. First, an increase in lending distance positively affected switching of firm-main bank relationships. Second, the average lending distance for firms that switched to new main banks significantly decreased afterwards. Third, the lending distance of new firm-main bank relationships after the switch did not have a significant impact on firms' probability of ex-post default, suggesting that larger lending distance does not necessarily result in a deterioration in the quality of soft information.” [ABSTRACT FROM AUTHORS]

From theory to practice in smart specialization strategy: emerging limits and possible future trajectories

By: R. Capello, H. Kroll. European Planning Studies, DOI: 10.1080/09654313.2016.1156058.+

Abstract: “The smart specialization strategy is now a reality. With regions and nations having completed the technical fulfillment of the ex-ante conditionality and the related action plans, the first evaluation studies have been launched with the aim to assess the consistency of the concept, once moving from the design (theory) to the implementation phase (practice). From these first evaluation exercises, strengths and weaknesses emerge in the way the smart specialization strategy has been conceived that lead to reflections on its possible future adjustment trends. The paper highlights emerging bottlenecks (e.g. the lack of local pre-conditions in the local economy and limits of governance) as well as possible future trajectories to overcome such bottlenecks, like the shift from a compulsory to a voluntary RIS, and from an industry-focused to territorial development strategies.” [ABSTRACT FROM AUTHORS]

The Global Diffusion of Ideas

By: F. J. Buera, E. Oberfield. National Bureau of Economic Research, Working Paper No. 21844.

Abstract: “We provide a tractable theory of innovation and technology diffusion to explore the role of international trade in the process of development. We model innovation and diffusion as a process involving the combination of new ideas with insights from other industries or countries. We provide conditions under which each country's equilibrium frontier of knowledge converges to a Frechet distribution, and derive a system of differential equations describing the evolution of the scale parameters of these distributions, i.e., countries' stocks of knowledge. In particular, the growth of a country's stock of knowledge depends only on its trade shares and the stocks of knowledge of its trading partners. We use the framework to quantify the contribution of bilateral trade costs to cross-sectional TFP differences, long-run changes in TFP, and individual post-war growth miracles.” [ABSTRACT FROM AUTHORS]