The Perception of the National Innovation Systems - Essay Example

LEEDS BECKETT FACULTY OF BUSINESS & LAW SCHOOL OF STRATEGY, MARKETING AND COMMUNICATION SEMESTER TWO – WORK MODULE LEADING INNOVATION AND CHANGE TITLE OF ASSESSMENT: THE INNOVATIVE ORGANISATION – PROBLEMS AND SOLUTIONS COURSE(S): ACCOUNTANCY; ECOFB; ERASU;BHBMT DEADLINE DATE FOR SUBMISSION BY STUDENTS: 15 May 2015 (12 noon) SUBMISSION LOCATION: ON-LINE ASSESSOR(S): DR PHILIP TETHER AND TEACHING TEAM “Without tradition, art is a flock of sheep without a shepherd. Without innovation, it is a corpse.” Winston Churchill “Innovation distinguishes between a leader and a follower.” Steve Jobs The Perception of the National Innovation Systems It goes without saying that innovations are the keys to the future. The phenomenon of the innovation starts with a single idea being born and afterwards there is a long way ahead to bring it to life. Thus this study is aimed at detailed analysis of the innovations themselves along with complex structure of the framework as well as outlining the level of importance of the national innovation systems in shaping and promoting innovation (Godin, 2015). The NIS as a framework concentrates on the idea that in context of innovative process technological and information flows between people along with institutions occupy special positions. When talking about development of innovation and technology it is worth mentioning that they are the result of complicated relations between the components such as actors involved in process, universities, institutions and institutes dealing with research. As for the people involved in policy-making process, the comprehension of the national innovative systems will give much support in outlining theories and measures for improvement of the innovation process and performance in general (Godin, 2015). More than that, it can also help in outlining disadvantages of the system as well as points of disagreement between components that might result in deceleration of innovative process. However there are certain policies longing to enhance connections between people and institutions as well as giving guidelines in the long and complex process of absorbing technologies in order to increase innovative capacity of the firm. The main idea of the NIS can be described as the activities and relevant surroundings suitable for the innovations to flourish that dominate within a certain territory (Godin, 2015). Taking into account the word “National” apparently it means the topic is seen through a prism of a certain nation and the institutions involved are established by a particular state and more that that, despite of the globalization the nation state still play major role and influence the process to a great extent. In other words innovation in this context is a combination of the creation that is born with the already existing experience. As far as the word “system” is concerned, it mostly describes the net of institutions along with their steps taken to improve innovative performance; this word includes aspects such as financial sphere, educational system, detailed analysis and monitoring of behaviours within firms and the influence of the government. A person that deals with the process of innovation has to consider the vital importance of the public dimension which has it firm groundings. This very component arises due to the fact that innovation inputs and outputs practically are public (Godin, 2015). Talking about outputs they become public at the moment the innovation is spread through the economy which is followed by creating of new vacancies, institutions and overall flourishing. As for the inputs this component consists of training and education and rights concerning intellectual property which do have public characteristics (Afuah, 2003). And more that that the latest report by OECD seems to have provided the publicity dimension with a central position. Apparently it was done basing on the theory that the general economic performance greatly depends not only on separate institutions but also on their interaction, as the components of the system of knowledge creativity and use as well as their cooperation with social organizations. To sum the abovementioned statements one point is very clear – despite of the fact that creation in any field is usually presented by individuals or separate institutions the final product is the result of the collective tight cooperation between a number of institutions connected to each other by social and economic bonds. National Innovation Systems in UK The development of innovations plays a very important role in the economic performance of the UK. Thus it is essential to pay attention to verified opportunities and efforts in order to improve the capacity of the national innovations process as well as to consider scholars and policy-makers doing their best to improve overall performance of the researchers, markets and economy. When analyzing the innovation performance of the UK in comparison to it would be necessary to point out that relative to UK’s GDP it turns out that not much money is invested in research and development (R&D). In fact it is expenditure of R&D is dominated to a great extent by a number of large firms along with businesses controlled in foreign countries (Godin, 2015). The volume of overseas funding is significantly greater compared to any other economy and more that the innovation output of the United Kingdom is lagging behind of numerous competitors on an international level. In recent years a vast number of organizations and companies has adopted the scheme of “open innovation” in order to access experience, skills and technologies in pursuit of innovation process improvement. But nevertheless the commonly used form of openness intended for all companies still doesn’t exist as businesses such as manufacturing differ in attitude towards in the applying of open innovation practices; that is they are concentrated on knowledge in science and technology more than on market. This difference must encourage managers to work on schemes and certain strategies taking into account both company’s resources and needs paying attention on external circumstances. Sufficient and sound management is an important feature of cooperation as well when absorbing external skills and technologies and learning to gain benefit from this cooperation. It is worth mentioning that the openness has a contradictive nature. There is a certain paradox when an innovation feels the need of openness and at the same time the process of commercializing demands specific protection. This mismatch can be seen in cooperation between firms which are different in size. It goes without saying that innovation is an indicator of overall prosperity and flourishing. The effective use of the skills and knowledge improves the level of productivity and opens doors to new opportunities within market. UK displays stability in the world of innovations even being under challenging circumstances but the main issue is to maintain this position among other competitive countries. The ability of efficient cooperation with international partners along with accumulation of recourses all over the globe is gaining more and more importance to business in UK. In comparison to other countries the UK’s level of international connectivity is very high so are the levels of foreign investments, and UK has acquired the status of destination of choice for highly qualified scholars. The UK presents attractiveness for R&D and its expenditure by foreign companies is dominant in comparison to domestic firms. Thus UK is doing its best in efforts to sustain transparent and positive relationships with a number of countries all over the world in order to attract investors and also to allow the businesses of the UK to export. The surveys show that more than £600 million were invested in appearing technologies as this is an area where UK is provided with profound expertise in research along with ability of development of a number of applications and a great perspective of leadership. Further on around £270 were invested in development of the institutions to deal with research in quantum technologies which gives a chance to UK to maintain position as a world’s leader in this field. Research Councils UK point out the examples of spheres where UK has gained remarkable position during 2013: • Advanced manufacturing • Regenerative medicine • Satellites and space Leadership as the Component of National Innovation Systems The innovation forefront as researcher put it above is a complex organism which soaks life resources from a number of major factors. In the sphere of innovations such ingredients as the talent, innovation surroundings and demand are essential in any case (Godin, 2015). The innovation surroundings in their place do require a set of components for achievement of completeness, such as infrastructure, qualified talent in technical aspect, interaction of industry, access to market as well as efficient cooperation between climate of academia and entrepreneurship. However these components are not enough for sound innovative performance as environment of regulation greatly depends and is influenced by the phenomenon of leadership which is essential for firms at all levels. Consequently a major feature of leadership that is surely to influence innovation is policy making process. In order to create sound surroundings for the innovations to flourish adequate policies and framework concerning intellectual property have to be established. Thus people engaged in innovation process would gain much benefit after they are under protection of the law and provided with an opportunity to promote innovations avoiding ownership issues. The innovation life is impossible without adequate infrastructure in institutions and information. The development of the new knowledge requires well-developed research which is the key aspect of innovation and more than that, research cannot be considered as effective and sufficient with low level strategies for leadership. The phenomenon of leadership is greatly dependent on the process of establishing appropriate policies in the field of research as well as accumulation of sensible resources for the research purpose as well as creating of schemes in enhancing capacity. Sustainability of competitiveness is undoubtedly vital and to do so companies must be engaged in research to create space for innovations and product cycle diversifications (Godin, 2015). The presence of academia plays crucial role in the ecosystem of innovations. In order to take the advantage of the academia a country must reconsider policies in sphere of education to maintain global competitiveness. Thus the higher educational establishments should provide certain education to fit current trends and be relevant in contemporary circumstances; apart from that, these institutions are to create a specific atmosphere suitable for nature researchers. In order to give grounds for leadership development there has to be a strong connection between institutions of higher learning and the companies or markets requiring labor resources. A specified model has to be created in order to be competitive in world economy. As a result innovative field requires an adequate research and study to find the best way to make and apply long-term model of learning in order to upgrade the workforce with emerging knowledge and skills. Leadership plays a central role in establishing appropriate surroundings for innovator’s assistance in circumstances of capital lack when commercializing innovations. When venture capitalists are provided with advantageous surroundings it would facilitate the obtaining of the setup capital. When talking about information infrastructure it is meant to support the process of creation and further successful development of the ideas which are to be metamorphosed into products. The other feature that proves to play a crucial role in development of innovation forefront to flourish is the establishment of a sound entrepreneurial culture. Thus in order to form a sound market with favorable environment as well as to gain benefits an appropriate culture is vital (Godin, 2015). And it is prerogative of the leaders to accumulate resources in the amount which is necessary as well as to apply programs of supervision and monitoring training of entrepreneurs which will result in establishment of advantageous business environment on micro and macro economic level. Comparative Analysis of Porter’s Diamond Model The model called Porter’s model also known as Diamond Model has become a widely applied approach and more than that has become a topic for arguments and criticism in recent years. And this specific attitude appears to have reasonable groundings. Economists and scholars that are not engaged in mainstream made efforts to offer fresh frameworks for analysis in industrial sense and this resulted in creating Sectoral Innovation System or also known as SIS which has proved to be quite influential among the other ones. Giving a detailed analysis of the both models it is essential to point out that basically SIS model highlights the process of innovation and building of sound competence and it concentrates to a great extent on failures within system. At the same time Diamond model is provided with the advantage focusing on the process of production and the government role which is to influence the process. Both models are a topic of severe arguments when talking about outlining the aspects of sectoral development in reality. Taking into account different points of view of scholars it becomes clear that SIS model seems to have advantages, such as: a. SIS model is to describe the process of capability building as well as learning b. this model concentrates on the overall innovation process in wider sense taking into account diversified types c. SIS outlines major aspects within certain sectors along with their development d. The SIS method uses every opportunity to consider both non-firm players and non-market organizations e. The qualitative approach of the SIS turns out to be more adequate for the context of developing where hard and formal data is hard to find. f. In case the monitoring is established on a regular basis along with consideration of mechanisms of the market this method is the most appropriate. g. In case certain sectors are severely influenced by specific international issues like import and export and so on this method gives a chance for a better comprehension of the sector real position within a value chain on global scale and the influence of these aspects development taking into account domestic firms as well as cooperation between internal and external factors. h. The SIS method provided with its evolutionary perspective gives a chance to better comprehension of the historical aspect of the sectors in question along with the influence on the present and future development of the relations. i. Consequently the SIS method takes into account rationales and requirements for collaboration between companies Nevertheless, the SIS method apart from its benefits also has shortcomings which make it misleading in some cases. a. The fact that SIS method is concentrated on the practical innovations can drag away attention from types of innovations which are in strong connection to sound accumulation of resources b. Provided with certain restrictions this method can prevent a whole country from formation of the market measurements and drag away the focus on competitiveness among companies. c. Taking into consideration the SIS method the government does not play a crucial role. d. Consequently making stress on the innovation itself and bringing it on the central position results in the lack of attention to the process and the systems of production. e. Despite of the fact that SIS method takes into account all components in both sectoral and national level, there seems to be nothing that describes and specifies transparently enough how these components are connected and how they collaborate (Lundvall, 1999). As compared to the SIS method an approach known as Porters’s Diamond seems to have a number of advantages: a. Taking into consideration conditions on the national level and their impact on the development of the sectors. b. Much effort is made in order to concentrate on the overall impact of factor conditions which are considered to be appropriate in major industries. c. An opportunity to draw the light on the strategies of the company in question of development of the sectors. d. Much of the attention is given to the process of production rather than innovation itself which is to result on a short-term basis in imitation but not the innovation as it is. In a process of analyzing the merits of the Porter’s Diamond method there is the downside of it which makes this approach absolutely inappropriate in specific situations: a. The Porter’s Diamond method stresses on economic relationships and competitiveness capability which appear to have different levels of importance. b. This very approach shows failure in consideration of capability building process along with the allocation of the skills and knowledge over a certain period of time, which is very significant for the learning process and it is a long way from imitation up to innovation. So this method is generally focused on the final product as a perception of innovation but practically pay no attention to an interactive process. c. The concentration on mechanisms of the market is sure to drag away the attention from the necessity of identification d. This method’s hidden hypotheses on the industry as well as domestic economy makes this method not to be appropriate for the context of development. e. The Porter’s Diamond model by taking into consideration government as environmental aspect makes it complicated to describe and explain the local firms changes are made to policies and structure. f. Consequently, this approach shows practical failure in capturing the real role of international factors on a local scale taking into account the process of globalization and finally it may not give a well-prepared basis to analyze the real position of sectors in a value chain on a global scale. Taking into consideration the analysis made above this research has came to conclusion that both models are to be applied in order to explain and give detailed analysis of the sectors regarding their merits and shortcomings. Both approaches can be used on a supplementary basis collecting together main features of the SIS model which has significant pros when talking about issues related to innovations specifically the process as it is, building competence and development of the work force, institutions along with the relations of national innovation systems (Godin, 2015). At the same time Diamond approach is more appropriate in terms of analyzing aspects related to production. Nevertheless the analysis also shows that both approaches are to fail when thinking of the impact and general importance of the factors on international scale on domestic companies (McKelvey, 1999). Due to the fact that consumption of foreign experience and knowledge is the spine of the learning process in NIS (Viotti 2002), and it is impossible to underestimate the importance for them to look for their suitable position within the global value chain along with further promotion this research suggests that these two models have to be. To sum it up, Porter’s Diamond model has to be completed with certain political schemes of foreign relations and taking into consideration international variant of the diamond SIS might be consolidated into these approaches through increasing the magnitude of actor-network aspects far from economic and formal ones, through involving political institution as the main factor of influence. Conclusion The main aim of this research is to give sound description and definition of the National Innovation Systems regarding variations in this matter as well as overall complexity of its structure. This study has critical review of the literature on NIS which resulted in a number of findings based on previous researches and experience of the scholars. It would be suitable to outline the major statements which give a chance to comprehend the role of NIS in shaping innovations and their further journey to the world outside (Godin, 2015). First and foremost considering the circumstances of the UK in which national innovation systems greatly depend on foreign-owned companies, much effort and a number of measurements have to be taken in order to focus on establishing sound relationships with foreign partners. These policies are sure to result in attracting more investors in the development of NIS which is vitally important in this case. Additionally despite of the UK’s favorable position among the other countries in sphere of innovations there is still much to be done to maintain the success in performance and provide suitable circumstances for the ideas and their creators to feel comfortable. In this perspective a lot of attention has to be paid not solely to the perception of an innovation as a final product but also to a development of the innovation as a long interactive process. All the components of the NIS should operate displaying sound connection and collaboration regardless of the level whether it is a manager or an educational institution giving life for the innovators. To sum it up interaction is the key to successful development of the National Innovation Systems. One of the main findings of this research is that leadership plays a crucial role in NIS, it is a major aspect giving a solid grounds for the innovative ideas to appear. Competitiveness is a starting point of making steps forward into the future. Bringing new ideas into the product no matter what market it belongs to is essential in maintaining success and prosperity as well as attracting more interested people. As science and technology are changing everyday and almost every industry thrives with inventions and thus it is vital to keep up. Taking into account the future life of the innovations implying promotion and metamorphosing into final product, researcher came to conclusion that it is not just National Innovation Systems that make it possible. The external circumstances along with government policies are influential and might play a crucial role in the development of the innovations. Due to the complexion of the NIS researchers in this field have to focus on the enhancing of the educational systems and connection with the appropriate markets thus a sound feedback is sure to result in favorable ecosystem for the innovations to be born and brought into life. References Andrew Watkins. 2014. NATIONAL INNOVATION SYSTEMS, DEVELOPING COUNTRIES, AND THE ROLE OF INTERMEDIARIES: A CRITICAL REVIEW OF THE LITERATURE . [ONLINE] Available at: https://www.open.ac.uk/ikd/documents/working-papers/ikd-working-paper-70.pdf. [Accessed 08 May 15]. Bengt-Åke Lundvall . 2005. NATIONAL INNOVATION SYSTEMS - ANALYTICAL CONCEPT AND DEVELOPMENT TOOL . [ONLINE] Available at: http://www.druid.dk/conferences/Summer2005/Papers/Lundvall.pdf. [Accessed 08 May 15]. Benoit Godin. 2015. http://www.csiic.ca/PDF/Godin_36.pdf. [ONLINE] Available at: http://www.csiic.ca/PDF/Godin_36.pdf. [Accessed 08 May 15]. Capital Ideas. 2014. Four ways companies can encourage innovation. 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