11 The comprehensive role of knowledge and institutional endowments on regional transformation
Abstract
The evolutionary school has, over the last decades, provided a valid theoretical perspective which offers an integrated view for the processes of economic development, stressing the importance of institutions and organizations. This chapter draws on innovation systems literature with the aim of providing an interpretation on growth aspects, while integrating policy-oriented research into the field of innovation studies. Specifically, it attempts to examine institutional and policy methods for the enhancement of production and adoption of knowledge resources in the light of fostering capabilities and economic growth. The chapter contributes to the academic literature through the exploration of a regional innovation system in the Swedish region, Skåne, with a particular focus given to regional institutional and knowledge endowments and the role of innovation-supporting institutions and organizations. Throughout this chapter it is argued that innovation-supporting institutions and organizations are the key force in formulating a framework for technological advance, capabilities accumulation, and a region's resources development. Much of the institutional factors contributing to the agglomeration of innovation activity necessitate strategically robust innovation planning and policies enhancing key institutional endowments. In that respect, this chapter illustrates the path through which Skåne region has developed, in recent years, several regional institutional, policy, and organizational arrangements with the aim of formulating an integrated regional innovation system; in congruence to accumulated scientific and knowledge infrastructures.
Introduction
The evolutionary school has provided, in recent decades, a valid theoretical perspective which offers an integrated view for the processes of economic development, stressing the importance of institutions and social technologies (Nelson, 2003). Moreover, this approach highlights interaction among different economic actors, the role of proactive and system-oriented innovation policies (Verspagen, 2005), and the importance of integrated innovation systems (Soete et al., 2009). This chapter draws on innovation systems evolutionary literature with the aim of providing an interpretation on growth aspects. It also integrates policy-oriented research into the field of innovation and technological change studies. Specifically, it attempts the examination of institutional and policy methods for the enhancement of production and adoption of knowledge resources in the light of facilitating sustained economic growth.
The neo-Schumpeterian and evolutionary literature proposes a conceptualization of regional transformation based on the role of technological change (Schumpeter, 1934). Important elements for long-term growth in this approach are the introduction of radical or incremental innovations, institutional change, and the diffusion of new production technologies (Nelson and Winter, 1982). In tandem, the innovation systems literature underlines both the significance of increased interaction between knowledge generating institutions, industrial structure, and organization, and also the importance of knowledge transfer and intermediate institutions for regional innovative capability. This chapter provides insights for the understanding of regional integration processes, with a special emphasis on the role of innovation-supporting institutions, organizations, and innovation policies. The main argument is that public research organizations are likely to play an important role in the processes of technological accumulation and innovation (Perez and Soete, 1988; Mazzoleni and Nelson, 2006: 11), but also on the regional systems transformation and integration (“innovation systematism”1). To a considerable extent, the role of knowledge organizations is emerging as most prominent in the formulation, the functioning, and the integration of regional innovation systems. This role could be accomplished by strategically robust innovation planning and policies,2 enhancing key institutional endowments.
This chapter contributes to the academic literature through the exploration of regional innovation systems and innovation policies in the Swedish region, Skåne, with particular focus on institutional and knowledge endowments (Asheim, 2008; Benneworth et al., 2009). Institutions and organizations supporting knowledge generation, exchange, and exploitation are the key forces in formulating a framework for technological advances, capabilities accumulation, and development of a region's resources. For that reason, it seems that economic and innovation activities are mostly oriented to knowledge-conducive institutional and organizational conditions (Asheim and Gertler, 2005). Nevertheless, much of the success factors contributing to the improvement of innovation activity necessitate certain key institutional resources and endowments. Skåne region seems to have developed over the last few years several institutional, policy, and organizational arrangements with the aim of formulating an integrated innovation system. This process has been developed in congruence to the locally accumulated scientific and technological knowledge assets.
In that respect, the major working hypothesis addressed in this chapter is that the role of universities and public research institutes for regional development could be multiple and does not include traditional methods alone (e.g. licensing or patenting). The “linear” perspective of approaching third-level organizations just as sources of licensing and new business formation should form a more comprehensive and adaptive view for the varying roles of universities to local economies (Lester, 2005). Such a perspective includes more systemic functions for public research organizations with a direction towards actors' integration, collective learning, knowledge-pipeline, informal knowledge transfer, and joint ventures. This hypothesis will be addressed through a regional analysis in Skåne region. With an emphasis on a set of regional policy experiences, the chapter delves into empirical lessons for the generative and systemic role of knowledge organizations. This role involves policy or institutional arrangements related to research applicability, knowledge transfer institutions and knowledge absorption capacity. The research gap which is addressed in this chapter regards the multiple roles though which public research institutes could support regional innovation system-building. The novelty of this chapter concerns the incorporation of issues related to institutional integration within innovation policy. Thus, it is argued that the deployment of an integrated institutional environment that accommodates actors' propensity towards cooperative arrangements constitutes a fundamental prerequisite for enhancing regional innovation capacity. A major factor for these institutional and organizational arrangements is the development of strategically robust innovation planning and policy fostering regional institutional endowments. In this context, the empirical research provides valuable inputs to the exploration for the fundamental significance of institutional frameworks and integrated policies that will enable users and producers to acquire the necessary knowledge and competence (Bartzokas, 2000: 15). Next to this, the case study of Skåne shows that innovation strategies to enhance regional innovation capac-ity3 should derive from fostering institutional integration at the regional level. In this sense, the chapter assesses the regionally embedded processes of scientific knowledge creation and the formulation of a regional innovation policy that converses with regional economic needs and imperatives. From a theoretical perspective, the chapter adds to the academic literature by exploring a regional case where the formulation of innovation policy rationale has been explicitly assisted by the innovation system theoretical framework. Furthermore, the regional innovation policy impact illustrates the validity and the importance of the theoretical framework itself.
Theoretical context: the evolutionary heritage
In the neo-Schumpeterian and evolutionary literature, there is substantial evidence that the technological transformation, the introduction of radical or incremental innovations, and institutional change are fundamental prerequisites for long-term growth (Nelson and Winter, 1982; Nelson and Nelson, 2002; Mowery and Rosenberg, 1998; Wixted, 2009; Cimoli et al., 2010; Boschma and Frenken, 2011). Schumpeter's theory of economic development emphasized innovationled economic change. In recent years, the theory inspired the enfoldment of a robust school of thought with emphasis on issues of technological change and innovation in technological, organizational, or institutional terms. The evolutionary school has provided a valid theoretical approach that offers an integrated view for the processes of economic development, stressing the importance of institutions, the role of interaction among innovation actors, and the significance of system-oriented innovation policies.
The evolutionary thinking is traced back to evolutionary economics and the major assumptions that include the notions of novelty, mutation, selection, technological trajectories, and technological paradigms. In tandem, it adapts the general view of the interaction among technology, economy, and institutional contexts as a pre-condition for technological and social change. According to Verspagen, “the institutional environment is important because it is both a facilitator of and an impediment to technological change” (Verspagen, 2005: 499). Under this prism, the institutional context constitutes an endogenous factor that changes under the influence of technological and economic development.
In recent years, the evolutionary concepts have been applied in the field of regional analysis, and technology and innovation studies. In that respect, the evolutionary principles are incorporated in the systemic version of innovation policies. The latter focuses on the role of “the reviewing and redesigning the links of the system”, instead of the emphasis on framework conditions and “non-interventionism” (Lundwall and Borras, 2005: 611). As Lundwall and Borras (2005: 611) claim,
the systemic, “innovation systems” perspective “takes into account that competence is unequally distributed among firms” (or agents when we speak broader for science and technology policy too) … failures may extend beyond neoclassical “market failure” to subsume failures of institutions to coordinate, link or address various systemic needs.
Evolutionary thinking improves our understanding of innovation policies by paying attention on the dimension of non-equilibrium economic systems, and the crucial role of institutions in economic functions. In that respect, the state intervention is not limited in stabilizing “market failures” but retains a proactive and systemic character. As Nelson says, “the new evolutionary growth theory that is emerging sees economic growth as the result of the co-evolution of technologies, firm and industry structures, and supporting and governing institutions” (Nelson, 2006: 13). Evolutionary program highlights the importance of innovation, not only in technological terms but also in institutional and organizational terms, involving aspects of interactive learning. Moreover, evolutionary economists are approaching “institutions” as molding the technologies used by a society and technological change itself (Nelson and Nelson, 2002: 167).
Evolutionary frame emerges as a significant instrument of analysis, especially in the field of innovation studies. This is because of the particular nature of innovation policies, which involves issues of uncertainty, but also because of the association to industrial, economic, and regional development policies. Furthermore, evolutionary thinking is an important analytical framework on issues related to economic development.
Regional development constitutes a fundamental subject within social sciences while several theoretical schools deal constantly with it, such as spatial economics, economic geography, evolutionary economics, and innovation policy analysis (Storper, 2011a). For evolutionary theorists, a region's technological competence level is approached as the major factor determining productivity levels, while technological advance retains a fundamental connection to regional competitiveness. A competitive region is the one that can create, attract, and maintain innovative production activities. However, from an innovation systems perspective, regional competitiveness is inextricably interlinked to a system's capability to produce, transfer and exploit knowledge resources and, furthermore, to generate value-added products or services. As a result, regional competitiveness is usually measured through innovation and productivity indicators. However, an innovation systems approach provides us with the opportunity to explore competitiveness, driving forces, and success factors from an institutional, policy, and organizational perspective.
Innovation policy and regional innovation systems
The production, diffusion, and use of scientific and technical knowledge – analytical, synthetic, or symbolic (Asheim, 2012) – constitutes a major issue in the field of technological change and innovative capability. In that respect, policies for the advance of science, technology, and innovation are receiving a special emphasis as policy objectives in the frame of innovation systems. Science policy regards the allocation of resources to science, and the regulation of the internal and broader activity of research organizations. Technology policies regard the rules, regulations, and measures focusing on specific technological sectors or industries, or science-based technologies, strategic technologies, and initiatives such as technology parks.
In principle, innovation policies observe a set of measures that aim to improve the ability of firms to compete by promoting technological improvements through the generation, diffusion, and adoption of process, product, and organizational technological changes (Bartzokas, 2000: 27). Although science and technology policies constitute distinctive public policy areas, their association, interplay, complementarity, and interaction requires a common ground of research. In recent decades, the links between policy measures are increasing on account of major economic and technological changes. In the post-war period, science (and innovation) policy has received special policy attention in the sense that it has been linked to economic growth issues (Lundwall and Borras, 2005; Cantwell, 2005; Nauwelaers and Wintjes, 2008). More recently, innovation policies have been increasingly interwoven with measures oriented to regional development, industrial transformation, and technological systems (Bergek et al., 2008).
Part of this chapter's major proposition regards the significance of knowledge organizations in processes of development and catching-up, within the frame of “regional innovation systems.” As Nelson illustrates, indigenous universities and public laboratories play an increasingly important role as vehicles through which technologies and organizational forms of the advanced countries come to be mastered in the developing ones (Mazzoleni and Nelson, 2006: 11). Public research organizations have been an important element of catch-up in certain important fields for which knowledge originating from abroad was ill-suited to national needs (i.e. catch-up experiences of Japan, in the late nineteenth and early twentieth centuries, and Korea and Taiwan later in the twentieth century) (ibid.). Thus, to a considerable extent the role of knowledge institutions emerged as prominent not only in the functioning of innovation systems but also in the integration of processes for technological and institutional transformation. Furthermore, empirical and theoretical evidence has interpreted and elaborated the positive effects by the interaction amongst industry, universities, and public sector. Triple-helix relations have emerged the last years, not only as a theoretical prism but also as a dominant innovation policy practice for many countries (Etzkowitz and Leydesdorff, 1997, 2000).
Science, technology, and innovation policies are inextricably interlinked with the concept of regional innovation systems, as the latter appeared in the early 1990s (Cooke, 2001) in congruence to the use of the innovation system term through Freeman (1987), Lundwall (1992), Nelson (1993), and Edquist (1997). The innovation systems approach basic features involve the principle of innovations carried out through a network of various economic and social actors, which are supported and interact (Edquist, 1997) in certain institutional and organizational dimensions. In principle, innovation systems strategies observe a set of initiatives aiming to enhance companies' capacities towards the introduction of knowledge assets and the production of new products or services, usually by encouraging collaboration between knowledge users and producers (Nauwelaers and Wintjes, 2008). Recent theoretical and empirical advances have further progressed issues related to the linkages amongst national and regional innovation systems and the routes through which innovation might contribute to competitiveness (Wixted, 2009).
This chapter will provide a regional analysis for Skåne through the lense of the regional innovation systems (RIS) approach. As a regional innovation system could be defined as a “constellation of industrial clusters surrounded by innovation supporting organizations” (Asheim and Coenen, 2005; Chaminade and Vang, 2008). Based on the current literature, the concept of RIS includes a set of actors engaged in knowledge exploration, knowledge diffusion, and knowledge exploitation (Braczyk et al., 2004; Asheim and Isaksen, 2002; Asheim et al., 2009; Breschi and Malerba, 1997; Mowery and Rosenberg, 1998). Codifying innovation systems' literature as major elements in the regional system concept can be identified: a) the knowledge generation sub-system, which includes universities and public and private research organizations; b) the knowledge transfer and research funding institutions; and c) the knowledge exploitation sub-system, which includes business firms and industrial clusters partly dependent on the knowledge generation system (Autio, 1998; Tödtling and Trippl, 2005; Asheim and Gertler, 2005; Ter Wal and Boschma, 2011; Boschma and Frenken, 2011). Moreover, innovation policies influence the dimensions of an innovation system at the level of knowledge exploration, diffusion, and exploitation.
In that spectrum, emphasis is given to the interaction between universities, research institutes, industry associations, technology transfer organizations, and brokers on the one side and industrial structure and mechanisms (the knowledge exploitation sphere) on the other side. Additionally, important parameters in these processes are the tacit knowledge dynamics and institutions which are defined usually as “untraded interdependencies” (Storper, 1997, 2010; Storper and Scott, 2009) and constitute region-specific assets of innovation systems. In that respect, there is a diversity of regional systems typologies, depending on special regional and policy characteristics, classified usually as “territorially embedded, regionally networked or ‘dirigiste’ ” (Asheim and Gertler, 2005: 300).
Therefore, innovation policies and innovation-supporting organizations and institutions are both major parts of a regional innovation system. Innovation policies aim to connect the creation, acquisition, accumulation, and utilization of knowledge rooted in inter-firm networking, learning processes, and “sticky” knowledge grounded in social interaction (Asheim and Isaksen, 2002). Regarding innovation-supporting organizations, there is a set of diversified measures. First, innovation-supporting organizations include mechanisms producing knowledge and technology resources, in basic or applied knowledge. Second, there are regulations and organizations (i.e. knowledge transfer organizations, science parks) enhancing the transfer of produced knowledge. The nature and the character of institutions (i.e. sector based, system-oriented, firm-oriented), determine the policy goals, the implementation processes, the policy rationale, and last, but not least, the policy outcome.
Skåne region: the co-evolution of technological and
institutional innovation
As mentioned, the major hypothesis addressed in this chapter is that the role of universities to regional development could include not only traditional methods knowledge transfer (e.g. licensing) but also triple-helix relations, system-oriented applied research projects, and strategic collaborations. The research gap which is addressed in this chapter regards the multiple roles though which public research institutes could support regional innovation system-building, under a strategically robust innovation policy. Thus, it is argued that the deployment of an integrated institutional environment that accommodates actors’ propensity towards cooperative arrangements constitutes a fundamental prerequisite for enhancing regional innovation capacity. In that respect, the case of Skåne provides input on how a theoretical framework might assist the formulation of applied innovation policy, and also how the applied innovation policy impact could illuminate the validity of the same theoretical framework itself. The analysis of Skåne region will be analyzed through the lense of evolutionary theory and innovation systems approach in particular. The latter has placed innovation as a central part of the explanation of regional growth processes, along with the role of innovation-supporting institutions and organizations, and strategically robust innovation planning. In that respect, the present analysis has been developed within the theoretical space of innovation systems and evolutionary thinking since it gives a prominent emphasis to innovation, innovation policies, innovation-supporting institutions and organizations, and co-evolution amongst knowledge, technology, innovation activity, and institutional framework.
Skåne, constitutes the southeastern Swedish county and retains a population of approximately 1.2 m. Malmö is the main city in the region, which is connected to the Danish capital, Copenhagen, by the Öresund bridge of 22 km (Benneworth et al., 2009).
Skåne is the largest agricultural region of Sweden4 and is home to major international food production companies and processors, including Campbell's Soup and Unilever (OECD, 2003: 125). Skåne has a diversified industrial structure which includes a high share of industrial and rural production while low- and medium-tech industries dominate the production structure. The region passed through a transition phase after the crisis and decline in European shipbuilding and other heavy industries during the 1970s (Coenen, 2007). In the transition phase, over the 1980s, Malmo lost, for instance, its large shipyard and had to close many textile and clothing plants. However, manufacturing, low- and high-tech, is also an important part of Skåne's economy (25 percent of the total labor force). The tertiary sector employs 70 percent of the work force, half in public services and half in private services (Henning et al., 2010). The food sector remained an important production activity during the last couple of decades, although it passed through several changes. As will be illustrated, the opening up of international competition forced the food sector to enhance its competitiveness. In that direction, several initiatives have been taken at regional and national level to support value-added activities. Skåne's economy has changed over the last couple of years as a whole. Those employed in agriculture have almost halved since 1990 while the number of those employed in manufacturing industries has decreased by around a fifth (Region Skåne, 2009). However, there is an increase in business sectors based on R&D.
The economic structure of Skåne has been further transformed lately with the emergence of science-based industries, especially in the fields of life sciences, biotechnology, and information technologies. The high-tech industry is agglomerated in the area of Lund and secondary in Malmö, where several high-tech firms are located. In terms of innovation systems, Skåne is home to a highly advanced knowledge exploration sphere which has been developed mainly around the Lund University area. Additionally, a rich set of technology transfer and incubation institutions are operating at the level of knowledge diffusion. The knowledge exploitation sphere includes traditional sectors (e.g. the food sector), however, several clusters have been developed in the last years, especially in the fields of information technologies and life sciences.
Skåne region has a favorable position within Sweden in respect of heavy investments in R&D, knowledge infrastructures, knowledge diffusion mechanisms, and science-based production activities. In tandem, it retains international access and increasing integration with the area around Copenhagen.
The innovation system of Skåne has been formulated in the last two decades with the support of regional and national innovation policy. National science policy has supported the emergence of a rich knowledge base in the region for years. The Swedish Foundation for Strategic Research and the Swedish Research Council have provided vast funding for scientific, technological, and medical research in the region the last 20 years. In the last decade, many national policy agencies such as VINNOVA (the Swedish Governmental Agency for Innovation Systems) have funded policy measures, enhancing the support of a knowledge base and knowledge diffusion (Thorslund et al., 2005).
The major part of that strategy was the creation of VINNOVA (Persson, 2008: 24), together with the Swedish Agency for Economic and Regional Growth (Tillväxtverket), and the launching of a new innovation strategy. The new system-orientated direction of innovation policy in Sweden has a major impact on regional science and technology structures and processes in Skåne, while it has been co-evolved to regionalized institutional innovations and knowledge-conducive technological, institutional, and organizational arrangements. VINNOVA promoted an explicit implementation of the innovation systems approach through innovation programs in strategic innovation areas (Bitard et al., 2008). As Persson claims, the new Swedish innovation policy has in many ways been inspired by the new innovation paradigm, primarily during the last decade. During this period, the Swedish government took a number of initiatives to formulate a new innovation policy, with a somewhat different focus than earlier technology policies.
Furthermore, many regional policy initiatives enriched the regional innovation system though the creation of new organizations, such as Ideon Science Park and Medeon Science Park. Additionally, formulation of funding mechanisms, with the support of national or regional organizations (e.g. LU Bio5), have supported many spin-off initiatives, especially in the fields of life sciences and information technologies. Overall, the innovation policy support in the Skåne region could be categorized in three analytical periods: a) the period of basic knowledge creation and traditional industrial and technology policy, which lasts until the mid-80s; b) the next period lasting to the end of 90s and including applied research programs, new knowledge generation organizations, new technology transfer organizations, and the support of science-based sectors; and c) the period from 2000, which includes more system-oriented innovation policy programs, gradual technological and organizational transformations in traditional industries, such as the food sector, and further enhancement of novel funding and knowledge transfer mechanisms at a regional level. Through these periods, the increasing importance of knowledge-related growth factors can be identified. However, a continuity in the science and innovation policy and the supporting organizations, which enhanced industrial transformations and the emergence of whole new technology-intensive sectors, can also be seen in the long term. In that respect, one of the reasons the Skåne case remains important is because of its path of development, as a non-metropolitan region sustained on knowledge-based growth factors for its economic development. From a theoretical point of view, though, Skåne constitutes a distinctive case, since the formulation of innovation policy rationale has been explicitly assisted by the innovation system theoretical framework. In addition, as will be illustrated, the regional innovation policy impact shows the validity and the importance of the theoretical framework itself.
The governance structure in the region has been enhanced the last years because of an administrative regionalization trend in Sweden. Sweden maintains regional authorities (Länsstyrelsen), which operate as a central state at the local level. In 1996, the region engaged in a 10-year initiative to form an elected regional government which allowed stronger regional decision-making and control (together with Vasta Gotaland) (Coenen, 2007). Furthermore, in 1998 the regional growth agreements (Regionala TillväxtAvtalen), formatted a new institutional regional function at the level of public-private regional development partnerships (e.g. industry, universities, labour unions, and regional public authorities). The regional growth agreement for Skåne explicitly drew on the innovation system approach. The major priority of the plan regarded the food and the life sciences sectors.
Recently, several social and technological processes have enhanced the region's innovative capability, and enabled a relatively steady transition to more knowledge-intensive production activities, both in the traditional (i.e. food) and science-based (i.e. biotechnology, ICT) sectors (Benneworth et al., 2009). Skåne maintains a relatively high position in all of the regional innovation indicators in Sweden (see Table 11.1), especially with regard to public and business R&D expenditures, lifelong learning, and employment in medium-high and high-tech manufacturing.6 The regional economy is still diversified, although there have been important policy initiatives which significantly improved its position to the broader innovation geography. These policy initiatives transformed much of the industrial structure and organization elements, improved the existing institutional set-ups, and also enhanced the regional resources, interactions, and innovative competencies.
The food industry constitutes a region's major productive sector. As Coenen (2007) illustrates, while life science accounts for approximately 7,600 employees, and IT accounts for 13,000 employees, the food sector outnumbers these sectors with 25,000 employees (Henning et al., 2010). Skåne is home to almost 45 percent of Sweden's food industry activity, partly because of the favorable environmental conditions and the historical growth pathway. Since EU accession (1995), Skåne has been exposed to international competition which forced the industry to go through industrial transformation. The Swedish food industry adapted well to changes and increased its productivity. However, employment in the industry has decreased substantially in recent years and especially in Skåne (around 9–10 percent) (Coenen, 2007). The major reason has been the traditional character of activities and labor-intensive bulk production aimed at price competition and economies of scale (Henning et al., 2010).
In response to those pressures, certain policy initiatives have developed the last 10 years. Under the framework of VINNVAXT, a policy measure designed and funded by VINNOVA, “Food Innovation at Interfaces” (FII),7 was implemented
Table 11.1 Regional innovation indicators in Skåne
Source: Hollanders et al. (2009: 59), author's own processing.
in 2001 and the successful application has since been coordinated by the Scania Food Innovation Network. The latter was a collaborative scheme between the business and scientific communities to further enhance the competitiveness of the food industry (Benneworth et al., 2009). FII's main target was the enhancement of an added value food industry (products and services) via further investment in research and development activities.8 Lund University (LU), also launched the Lund Food Science Centre, which promotes multi-disciplinary cooperation and capabilities across the various departments at the university (Benneworth et al., 2009; Coenen, 2007). In terms of impact, it is noted that more than 140 companies have been involved in the first years of the scheme, together with more than 70 researchers in almost 80 projects (Lagnevik, 2008).
The role of LU was important in that respect, since it provided knowledge perspectives related to the food industry, including food chemistry, knowledge-driven food logistics, and quality control (Lagnevic et al., 2004: 84). Overall, the case of VINNVAXT raises some points of discussion. First, the triple-helix relations enhanced though the program seem to encourage knowledge flows amongst partners involved in joint projects. These relations have been further encouraged by the system-oriented policy measures initiated by the new Swedish innovation agency, VINNOVA. Second, the variety of projects implemented within the program highlight the feasibility of application of science-based knowledge in more traditional sectors, such as the food sector. Last, but not least, the VINNVAXT experience provides information on the importance of long-term and permanent mechanisms in supporting industrial transformation. It seems that applied research necessitates not only the implementation of fixed term programs but also a follow-up process which will incorporate statutory organizations and mechanisms (e.g. the Lund Food Science Centre). As a result, it seems that the impact from science and innovation policies could be a multilevel one. LU and its research mechanisms constitute the result of a long-term, dedicated science policy, which is now partly merging into innovation policy and producing applicable results in terms of innovative products and services. The Skåne region is, today, home to a heavy R&D infrastructure,9 especially in the fields of ICT and life sciences. This specialization has been enabled, to a great extent, by the role and activity of the LU, a pivotal actor in the developing regional innovation system. LU includes a wide number of disciplines including the Faculty of Science, the Faculty of Engineering, and the Faculty of Medicine.10
The establishment and growth of Skåne's high-tech industries has been enhanced by the creation of the Ideon Science Park in 1983.11 The park was established via collaborative initiatives between LU, regional industry, and policy makers responding to pressure of the recession and the decline of regional indus-try.12 As Bengtsson and Lind note, the aim at first was to exploit the research and higher education at LU and to support the establishment of new firms (Bengtsson and Lind, 2004).
Currently, Ideon hosts more than 250 companies, mainly in IT and biotechnology. Ideon is regarded as one of Scandinavia's most successful science parks (Bengtsson and Lind, 2004). Furthermore, Ideon is home to several organizations that specialize in technology transfer or business incubation, such as Ideon Agro Food, Venture Lab, LU Bio, and Ideon Innovation. Thus, it incorporates a multitude of actors and mechanisms supporting innovation activity in congruence to the proximity of LU and Ideon companies. Consequently, the impact from Ideon's activity includes not only the support of start-up initiatives but also the formulation of a new open “innovation space” comprising a set of organizations supporting innovation at different stages of the value chain (e.g. start-up, knowledge transfer, development). However, several remaining challenges still include the knowledge-intensive firms’ locational volatility (i.e. AstraZeneca's delocaliza-tion to the Göteborg Region). This entails repercussions for RIS and poses the need for novel and place-specific institutional arrangements (e.g. funding mechanisms, access to knowledge).
The region sustains a life science cluster comprising firms and organizations in the fields of pharmaceuticals, medical-technical equipment, and biotechnology (Moodysson et al., 2008: 8). As Moodysson et al. note, the universities and university hospitals in Malmö and Lund are essential parts of the Scanian life science cluster. The reason is that they promote research activities, and also innovation initiatives representing the demand side of the cluster (Moodysson et al., 2008: 15).
The biotechnology cluster, Medicon Valley (MVA), is located in the Swedish-Danish cross-border Öresund region. Its origin can be traced back to big corporations with important parts of their corporate networks located in Southern Sweden (i.e. AstraZeneca), accompanied by a strong R&D infrastructure employing approximately 6,000 life scientists (Coenen, 2007; Coenen et al., 2005).
The scientific and technological role of LU was pivotal in the development of MVA.13 The first biotechnology activities emerged in Skåne through spin-off companies from LU during the 1980s (i.e. BioInvent) (Coenen, 2007).14 Since then, there has been an impressive growth in the number of dedicated biotech firms (DBFs). It is estimated that 55 new firms have been established since 1998. In 2009, there were approximately 140 DBFs in Medicon Valley with 35 of them located in Skåne (Asheim et al., 2009). Overall, more than 300 life sciences companies are located in Öresund region when medical technology and pharmaceutical segments are included.
As several authors demonstrate, LU is a catalytic policy actor in MVA. It holds the chair of the board of directors, with all relevant research departments represented as active members (Benneworth et al., 2009), while membership includes more than 250 public actors. These actors include university faculties, hospitals, large private companies (e.g. Novo Nordisk A/S, BioInvent International AB), investors, clinical research organizations, science parks, service providers, and other organizations in the region (Benneworth et al., 2009 : 1656).
LU has enhanced life sciences through the Postgenomic Research and Technology Programme in South Western Sweden (Swegene), started in 1999. Swegene is a joint program involving LU, the University of Gothenburg, and Chalmers University of Technology in Gothenburg with a goal to create competitive technology platforms in genomic research (Benneworth et al., 2009). In 2004, the establishment of the strategic research centre Swegene Centre for Integrative Biology at Lund University (SCIBLU) enhanced the creation of a stronger research environment in life sciences.
LU sustained another significant initiative in 2001, the Biomedical Centre (BMC). The BMC's aim is to create cross-connections between different fields in life sciences. BMC is located close to LU Hospital and today constitutes the biggest research and teaching unit in LU (Benneworth et al., 200). This initiative is technologically and institutionally another step towards to the regional processes for the construction of an integrated innovation system. Over the last couple of years, its operation has enhanced the creation of synergies between knowledge generation and knowledge application.
The IT industry is also considered as one of the strengths of the region, mostly on account of the presence of Sony Ericsson (Ericsson Mobile Platforms and Ericsson Technology Licensing). Another parameter was the presence of high-technology SMEs active in software and hardware development, and a high-quality research and education infrastructure in ICT (Coenen, 2007). Despite the presence of private companies, the role of LU has been important facilitating factor. Moreover, Ideon proved to be an important point of stability through which new activities could emerge (Benneworth et al., 2009). Generally, there are more than 90 ICT firms in the Ideon, either with close ties to Ericsson or to LU. Although the inter-business and inter-institutional relations are not always symmetric or homogenous (i.e. small firms, large actors), certainty potentially provides further technology activities and commercialization in the field. This is an innovation system for novel ideas and services. The latter has been further enhanced by the evolving institutional integration between the university (as knowledge conduit, investor, and international actor), the large companies and spin-offs, the innovation agencies, and Region Scania which, after mid-90s, supported the initiatives in Ideon Park (Benneworth et al., 2009). As Benneworth et al. illustrate, Ideon played a catalytic role as a concrete, successful activity in which various regional partners were cooperating, bringing them closer together institutionally (ibid.), facilitating a “regional developmental coalition” (Asheim, 2002). The specific integration procedures proved a significant regional endowment in formulating new solutions and creating new innovation resources and pathways which outreached and restructured the region's dominant paradigm based on hardware provision.
In extra-regional systemic terms, Skåne region today constitutes one of the parts of the Öresund region, together with the Copenhagen region. The Öresund Region15 comprises the Skåne county (33 municipalities) in the south of Sweden. On the Danish side, it comprises Sjælland and surrounding islands, which includes Greater Copenhagen (comprising the Municipalities of Copenhagen and Frederiksberg and the counties of Copenhagen, Roskilde, and Frederiksborg) and the rural counties of Vestsjælland, Storstrøms, and Bornholm (OECD, 2006: 12). The Öresund Region's strategic importance is crucially linked to its location. More than half of the exports from Sweden (US$ 95 billion) are exported to the rest of the EU and almost two-thirds of Sweden's imports (US$ 80 billion) originate from within the EU16 (OECD, 2003: 35). This institutional infrastructure constitutes a major strategic advantage for both regions and enhances further regional formations in terms of public or private R&D activity, knowledge interaction, technology transfer, and collective learning.
In particular, a major systemic intervention in the region concerns the “Öresund Science Region” projects, which include the formation and enhancement of several regional17 technology platforms.18 These platforms operate as hubs of knowledge between regional partners engaged in innovation activity. The Öresund Science Region is linked to 14 different Higher Education Institutions (HEIs). The organization mobilized the business community which, through engagement, became part of the regionally available scientific knowledge base. In each platform there is a database of the relevant regional businesses and organizations and their respective competences, a fact that partly facilitates a consistent knowledge transfer and dissemination. The platform system has constituted a social and institutional innovation with a potential impact for directing scientific knowledge in specific application prisms. Moreover, key potential areas of regional competence, with a reference both to productive activities and also to scientific competencies, have been identified. This process has enhanced the creation of a system for developing collective learning and cross-fertilization between different platforms. Such an example is the Öresund Food Network which is linked to the Medicon Valley platform (OECD, 2006: 31).
The Öresund experiment has been an innovative intervention in the institutional regional structure. First, it is an institutional collaboration between two different regional and national innovation systems, Swedish and Danish. As a result, this initiative has constituted a lesson on institutional learning and inter-regional cooperation. The collaboration amongst these regions shed some light on the potentially positive impact on interactive innovation issues, but also raised issues relevant to institutional differences and barriers, such as the divergence in intellectual property rights policies and educational policies. Furthermore, Öresund region has involved a vast set of institutions, organizations, businesses, intermediaries, and government agencies in an evolutionary institutional helix. The latter created the pre-conditions for systemic, institutional, and techno-economical “agglomeration economies,” with respect to technological activities with innovative perspective. Additionally, a crucial feature for the Öresund case was the role of public research organizations. Universities have been involved in several projects (e.g. Öresund Food, Öresund IT, and European Spallation Source19) relating to the processes of knowledge production, but, moreover, have further encouraged actors’ integration through their participation in several strategic initiatives (e.g. Öresund University).
However, on account of a recent decision by its Board of Vice-Chancellors, Öresund University has decided to close down the joint operation of Öresund platforms. This decision was taken in 2011, and the projects run by the platforms will be hosted by the respective universities. The operation of the collaborative platforms as autonomous organizations (Öresund University, Öresund Greenhouse, Öresund Environment, Öresund Food, Öresund IT, Öresund Logistics), now has the support of LU and Roskilde University. This process has revealed the technical and financial difficulties regional institutional engineering entails. Moreover, it highlights the significance of regional actors’ collaboration propensities for regional innovation policy. In this case, it seems that diverging strategies amongst regional actors, and especially between universities and the regional government, are identified as initial drivers of policy retrogression. Nevertheless, policy and financial discontinuities remain serious challenges for the assured institutional experiment. The implications from this institutional inertia could be summarized by further limitations on potential inter-regional collective learning activities and further research and business alignments. Overall, the two regions retain the innovation potential to enhance institutional integration, which constitutes a major factor to further enhance knowledge flows, interactive innovation, and regional innovation capability. In that respect, a novel inter-regional institutional framework for innovation would further enhance joint ventures, knowledge flows, providing awareness for innovation activities and enhancing technology-market alignments, and deeper cooperative ventures amongst the two regions.
Conclusions
Storper claims that regional development is mostly approached as a process of spatial distribution of economic capacities and a consequent process of spatial distribution of development and incomes (Storper, 2011). The certain spatial distribution, this chapter argues, is not associated to agglomeration propensities and scale economies, or optimal-led preferences and choices of economic agents, as new economic geography and urban economics would be identified, respectively A determinant factor for the form and evolution of any given spatial distribution is innovation-supporting organizations and institutions. Institutions have a major impact on technical change (Johnson, 2010) and on underlying development features. The impact of institutions is inextricably associated to policy choices and policy forms aimed at the advance of science, technology, and innovation. The exploration of regional innovation policies reveals a strong involvement of several universities in the processes of regional development, especially when it comes to knowledge-conducive and knowledge-intensive growth processes. In recent years, the crucial spatial role of universities has driven a focus in the literature on certain places oriented to knowledge diffusion (Benneworth et al., 2010). As has been illustrated, the role of public research institutions exceeds the perspective of technological change and enters into issues of institutional innovation and innovation policy measures.
These findings allow the drawing of conclusions which enrich the previous literature. The present regional system analysis provides evidence in accordance with the potential multilevel developmental and systemic role of universities (Mazzoleni and Nelson, 2006; Benneworth et al., 2009). It seems that the potential contribution of public research organizations exceeds the linear pattern of technology transfer. It incorporates functions of systemic organization, networks formulation, cooperative research development, and new science-based sectors generation.
The case of Skåne stresses the significance of public research institutions in the processes of innovation, but also on regional systems transformation and system-atism. What also arises through the Skåne case is the identification of some basic characteristics for the formulation of a regional and functional innovation system. The latter includes a place-based, endogenous, and system-orientated regional science policy. Moreover, the sustenance of a functional innovation system involves the creation of new production capacities and also the attainment of regional advantages in respect to “innovative efficiency” (Cimoli et al., 2010).
The regional form of that innovative efficiency has been strongly affected by the regional level of institutional integration and the concurrent role of new institutional devices aimed at knowledge generation and knowledge diffusion. The localized institutional integration has been developed between LU, regional governance, knowledge organizations at the extra-regional level, and anchor tenants or large technology firms. Additionally, the national innovation policy framework has played a significant role through the shift to more interactive and systemic innovation policies. LU has become an agent of technological and institutional learning which re-engineered the regional economy to a knowledge-based environment. Part of these processes has been conducted via the governance networks and institutional learning processes with which LU has been involved. In that respect, the improvement of regional associational capability resulted in the formation of a regional strategic orientation in specific sectors within intra-regional strategic institutional and technological synergies (Benneworth et al., 2009). The role of LU remains significant both in innovation processes – either in industry transformation or in science-based activities – and also in the sustenance of new institutional experiments.
Within this field, the role of proactive and system-oriented innovation policies should be emphasized, together with the significance of institutional integration for supporting processes of economic development. Under this prism, also crucial has been the importance of a proactive and interactive policy framework provided by the new Swedish innovation policy paradigm, which promotes interaction, system-oriented measures, and triple-helix processes. On the one side, the case examined illustrates the interpretational and methodological potential of the theoretical framework. The implementation of system-oriented measures, instead of supply-side or demand-side, constitutes a major tool to support regional innovative capability. Specifically, the creation of knowledge infrastructures, knowledge diffusion mechanisms, innovation-supporting institutions, and triple-helix programs enhanced innovation activity in terms of business creation, industrial transformation, and production of new products and services. Moreover, the role of LU illuminates the significant role a public research institution might have on regional development processes, not only in terms of knowledge production and business creation, but also for the system-oriented re-engineering of the system. On the other side, the case of Skåne illustrates how a conceptual framework might assist regional development processes. Swedish innovation policy has been explicitly influenced by the innovation system approaches over the last years (e.g. VINNOVA). In tandem, LU is home to research teams working on the innovation systems theory (e.g. Centre for Innovation, Research and Competence in the Learning Economy – CIRCLE). As a result, Skåne regional innovation policy has obtained influence from very different directions towards a system-oriented rationale. Innovation policy measures implemented in the region over recent years have explicitly incorporated aspects of innovation systems theory. Overall, Skåne constitutes a case where the theoretical framework assisted the formulation of innovation policy rationale. Moreover, the innovation policy impact illustrated the validity and the importance of the same theoretical framework.
Overall, the findings confirm the importance of the system-oriented innovation policy measures at several levels. First, we have identified the importance of a specialized publicly supported knowledge base for each of the developed clusters in the region. Second, we have highlighted the significance of specialized innovation-supporting institutions that enhance the identification of novel ideas amongst research mechanisms, support the creation of innovating ventures, and provide funding opportunities or incubation facilities. Third, it seems that a rich knowledge base, such as LU, could operate as a base for an exceptional spin-off activity in science-based sectors such as biotechnology. The co-location of LU and the Ideon Science Park provide the crucial elements for the emergence of many spin-offs derived from research activity. Thus, it seems that applied research collaborations have emerged as important, especially at the level of science-based sectors. These features form a framework friendly to innovation, which tackles issues of knowledge transfer and knowledge exploitation.
From a critical point of view, though, Skåne region still faces several challenges related to sustainability, size, and interaction. Regarding growth sustainability, it seems that Skåne is home to many different sectors with growth potential. However, their long-term growth path depends on their special characteristics relating to technology improvement, technology specialization, market orientation, and business strategy. In other words, although several clusters have been identified in the region, it is still challenging to deal with regional and international competition, especially in respect of knowledge-intensive sectors. This issue is also relevant to the size of activities. The limited size of activities in many sectors, such as biotechnology, where the most companies are micro spin-offs, could be an obstacle for further technology improvement and productive expansion. Under this prism, innovation policies should enhance appropriate mechanisms relevant to interaction, economies of scale, interactive learning, joint initiatives, and new innovative combinations (Henning et al., 2010). Last, but not least, regarding interaction, the relationship between parts of the system is still questioned. It seems that deeper relations and more joint ventures in several sectors are needed, both at the intra-regional level – amongst the system's parts – and at the extra-regional level, especially with the proximate Copenhagen region.
This chapter attempted to interpret growth aspects in a Swedish region based on evolutionary school insights and system thinking. The latter has provided in the last decades a valid theoretical perspective stressing the importance of institutions and social technologies. In that respect, the regional development and innovation processes in Skåne have been explored through the role of innovation-supporting institutions and innovation systems in general. As has been illustrated, Skåne is home to a rich knowledge base and a highly developed knowledge transfer set of organizations, which enhance an endogenous oriented growth path based on knowledge-related factors. The policy and institutional engineering deployed with the contribution of regional research organizations gives rise to a knowledgeintensive system and a knowledge-based growth path. This fact enriches the range of factors determining regional growth innovation systematism. A major element for these institutional and organizational arrangements has been the implementation of a strategically robust innovation policy over recent years, fostering regional institutional endowments. The latter has enhanced the degree to which regional actors’ collaboration propensities are high within institutional integration arrangements. Furthermore, this integration has provided a fundamental regularity on productive and technological capacities spatial distribution, which refers to the underlying role of knowledge and institutional endowments for regional transformation. The case of Skåne also points out that systems thinking could provide a richer understanding of innovation activity and it is able to enhance the design and implementation of system-oriented and strategically robust innovation policies with regional economic impact.
Notes
1 The term “innovation systematism” means the process through which the elements of a regional innovation system are developing on an interactive pattern, based on the production, circulation, and utilization of knowledge resources, and with respect to collective forms of interactive learning.
2 The term “strategically robust innovation planning and policies” means the design and the implementation of policies oriented to: a) the enhancement of all the parts of a regional innovation system, b) the strengthening of the links within the innovation system, c) the integration of actors’ propensities for cooperation to long-term strategically-oriented growth and innovation plans, d) the support of the innovation and knowledge-related resources of a region, with respect to the production of value-added products or services.
3 The term “regional innovation capacity” means the capability of the region to enhance the production of knowledge resources and to foster their use and exploitation on value-added production activities.
4 The historically shifting governing rule over Skåne between Denmark and Sweden is detailed in the Treaty of Roskilde, 1658 (Benneworth et al., 2009: 1652).
5 LU Bio is an early-stage investor who provides capital and industrial development expertise to enable efficient development of bioscience inventions. It is located in Ideon Science Park. LU Bio was founded in May 2007 by Lund University AB. LU Bio retains cooperation with other Nordic early-stage investors.
6 Skåne constitutes the major part of the Southern Sweden region. Sydsverige (NUTS II) includes two counties, Skåne and Blekinge, with Skåne being the largest one.
7 The project is delivered on the principles of “functional regions” which is approached as a “triple helix” partnership of industry, academia, and government and is a collective, long-term vision for the region (Coenen, 2007). The total budget comprises 600 million Swedish crowns (approx. e70 million). The program provided each selected region with up to 10 million Swedish crowns per year (total budget 20 million) over a maximum period of 10 years. As Coenen notes, VINNVäXT can also be seen “as an example of Sweden's recently changing policy in favour of regionalization, since prior to this programme, innovation policy in Sweden was heavily national and sector oriented’ (ibid.).
8 FII has been granted funding as a VINNVäXT program in 2003 (Asheim, 2005: 26). The program is divided into four project areas: Food and Health, Functional Foods; International Consumer Marketing; Good and Convenient Food on a Large Scale; and Innovations in Theory and Practice which cover a spectrum for analytic and synthetic knowledge-based innovation (Asheim, 2005: 26).
9 The region's R&D infrastructure has been enhanced by several institutions dedicated to research capability, but also to knowledge diffusion and exploitation, such as: Lund University, LU Innovation, Malmö University, Kristianstad University, The Swedish University of Agricultural Sciences (Alnarp), technology transfer offices, Teknopol, Lund University Technology Group, Innovation Skåne, Technology Bridge Foundation in Lund, Ideon Science Park, Krinova Science Park, Medeon Science Park, CAT-symbion Innovation, and Ideon Innovation.
10 LU is considered to be one of Scandinavia's most dynamic institutions on research and education (founded in 1666, it retains more than 40,000 students).
11 The government, especially through its county administration office in Malmö, took a very active part in the creation of the Ideon Science Park (Bengtsson and Lind, 2004: 88).
12 In 1982, SUN (the foundation for cooperation between university and industry) encouraged contact between industry and the university to facilitate the exchange of information between them and to support relevant development programs and research. SUN, which comprised Lund University, the county of Skåne, the regional development fund, and the commercial chamber of Skåne, became the organization which mostly designed the park in Lund (Bengtsson and Lind, 2004: 83).
13 It should be noted that Lund University Innovation Systems exists to commercialize novel ideas. Specifically, it has already been involved in the creation of more than 50 spin-off companies based on academic research from Lund University, many of them in the field of biotechnology (Lund University Innovation Systems, 2011).
14 Active Biotech AB is one of the largest and the second oldest health care related DBF in the region, after BioInvent International AB which has more than 100 employees (Benneworth et al., 2009).
15 The Öresund Science Region has a population of more than 3.5 million, approximately 25 percent of the total combined population of Denmark and Sweden (OECD, 2006: 12).
16 Germany was for years Sweden's single largest trade partner and Swedish trade with Denmark is equivalent to approximately 7 percent of both export and import (OECD, 2003: 35).
17 Denmark and Sweden are among the most administratively decentralized of OECD members, delegating many responsibilities to the local and regional levels, thus national governments are mostly indirectly involved in Öresund Science Region projects. However, national government policy has a direct impact on the Öresund integration process in the fields of fiscal policy, employment legislation, and intellectual property right rules (OECD, 2006: 53).
18 The OSR programs included Medicon Valley Academy (MVA) which was a member-financed network organization within the biotech and life science area in the Öresund Region (275 member organizations); the Öresund IT Academy; the Öresund Environment Academy; Öresund Design; Öresund Logistics; the Öresund Food Network; the Oresund Greenhouse, which supported project collaboration; the Oresund Entrepreneurship, which supported entrepreneurship and enterprising behavior at the universities in the Öresund Region; the Diginet Öresund, a network for digital entertainment; the Nano Öresund; and the Humanities Platform.
19 The European Spallation Source will be located in Lund, and is co-hosted by both Sweden and Denmark. It is funded by a partnership of 17 European countries and its major aim is to enhance the generation of neutrons, with application to materials, energy, life sciences, and nano science.
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