Evolving patterns of innovation activity and linkages in Norwegian VRI regions

Evolving patterns of innovation activity and linkages in Norwegian VRI regions Sverre J. Herstad Innovation Research in Norway Recent Findings and Future Perspectives The Research Council of Norway 03.03.2017

Background Exploring the role of VRI in regional innovation system formation and new path development funded by the VRI program and coordinated by Bjørn Terje Asheim, University of Stavanger WP 3: Identifying and exploring RIS in the Norwegian context (NIFU - Sverre Herstad (leader)) CIS and LEED data used to identify whether and how RIS configurations have evolved in parallel with the VRI programs mobilization efforts and other policy and business cycle influences

Herstad, S., & Sandven, T. (2017). Towards regional innovation systems in Norway? An explorative empirical analysis NIFU REPORT (Draft #2, February 2017) Theoretical framework & empirical operationalisations of key RIS dimensions General trends in the Norwegian regional landscape 2006-2012 Detailed analysis of each VRI region (with some low N limitations) allow differentiated trends to be identified

The RIS approach Rationale: Innovation is localized because knowledge diffusion through labour market mobility, information buzz and collaboration is fostered by geographical proximity. Motivation for tailored policy intervention: These processes are differentiated between regions, and assymmetric & path-dependent within them. Objective: Strengthen innovation-based regional development by broadening and speeding up knowledge diffusion between firms and industrial sectors, and between the research system and the industrial base. Micro-foundations: Regional firms that are engaged in innovation activity and organize for broad-based learning ( learning work organizations ).

Narrow RIS : Emphasises interactions between a knowledge exploration/diffusion sub-system (universities, regional colleges, R&D institutions, technology transfer organizations) and a knowledge exploitation sub-system (firms) Broad RIS : Takes into account the wider system of organizations and institutions supporting learning and innovation in a region. Acknowledges the importance of knowledge development and diffusion within the domain of industry itself

(Ideal) types of RIS Territorially embedded regional innovation networks consists of firms that base their innovation activity mainly on localised learning processes stimulated by geographical, social and cultural proximity without much interactions with science institutions. Exploitation, pathdependence Networked regional innovation systems emphasises complementary efforts aimed at upgrading regional research infrastructures and strengthen their interactions with local firms. Regarded as the ideal-typical RIS in that potential for combining science-based (analytical, STI-based) and experience-based (synthetic, symbolic, DUI-based) knowledge. Stronger exploration capacity; planned character. Regionalized national innovation system involve interaction with firms or institutions located elsewhere. Linkages form on a project-to-project basis reflecting linear rather than interactive models of innovation.

The Norwegian policy context Regionalisation & diversity: Strong tradition for innovation-based regional development policy. The VRI program seeks to combine the two perspectives on RIS and is parallelled by cluster programs and regional research funds. Networked regional innovation systems Centralisation & specialisation: Dominant R&D funding instruments (e.g. BiA, thematic research programs, skattefunn) & industrial policy more generally work towards strengthening the systemic lock-in (Narula, 2002; Strand & Leydesdorf, 2013) between incumbent industries & national stronghold research institutions Regionalization of the national innovation system

Measurement Community innovation survey data covering the years 2006-2012 (CIS2006, CIS2008, CIS2010, CIS2012) harmonized to allow comparision between different waves: Only sectors and size clases that in each wave were sampled according to the same procedure are included

Industry structure & the hamonizied CIS sample Sector proportion of employment Employment growth 2006 2008 2010 2012 2006-2012 Primary 3,36 % 3,08 % 2,79 % 2,57 % -17,25 % Mining & Quarrying 0,17 % 0,17 % 0,18 % 0,19 % 21,49 % Oil & Gas 0,86 % 1,05 % 1,37 % 1,60 % 100,75 % HT manufacturing 0,53 % 0,51 % 0,47 % 0,45 % -8,80 % MHT manufacturing 1,75 % 1,69 % 1,60 % 1,65 % 2,04 % MLT manufacturing 4,53 % 4,60 % 3,93 % 3,87 % -7,34 % LT manufacturing 3,72 % 3,40 % 3,22 % 3,03 % -11,76 % Infrastructure 1,06 % 1,04 % 1,10 % 1,13 % 15,57 % Construction 7,31 % 7,66 % 7,96 % 7,97 % 18,09 % Trade 15,07 % 15,01 % 14,41 % 14,21 % 2,23 % Transportation 6,03 % 5,83 % 5,76 % 5,55 % -0,19 % Horeca 3,24 % 3,18 % 3,22 % 3,19 % 6,72 % Communication 3,36 % 3,49 % 3,46 % 3,56 % 14,94 % Financial Services 2,99 % 3,04 % 2,94 % 2,91 % 5,29 % Administrative, technical & Scientific services 4,46 % 4,86 % 4,95 % 5,17 % 25,68 % Other services 4,93 % 5,23 % 5,35 % 5,15 % 13,01 % Public administration 5,70 % 5,65 % 5,92 % 6,14 % 16,69 % Education 7,90 % 7,80 % 7,91 % 7,96 % 9,18 % Healthcare 19,51 % 19,16 % 19,78 % 20,00 % 11,10 % Personal & Creative services 3,52 % 3,55 % 3,69 % 3,72 % 14,33 % Total employment 2 356 995 2 495 264 2 548 866 2 554 151 8,36 %

Supplementary information at the establishment level used to regionalize information provided by the enterprises sampled in the CIS and measure proportions of employment instead of proportions of firms with characteristics of interest People hold the knowledge that RIS are to mobilize, and learn as a result of their employers responses to RIS and other mobilization efforts. The larger the firm, the more it weights in regional knowledge bases & networks.

VRI region Oslo & Akershus Sampled enterprise X Size: 200 employees distributed on 4 establishments Enterprise sector: Oil & Gas extraction Innovation activity: Yes Research collaboration in own region : Yes Industrial collaboration in own region : No Establishment 1 Employees: 5 Sector: Headquarter functions (NACE 70.100) Participating in innovation activities: No VRI region Trøndelag Establishment 4 Employees: 25 Sector: Technical & Scientific services Participating in X s innovation activities: Yes VRI region Rogaland Establishment 2 Employees: 100 Sector: Oil & Gas extraction Participating in innovation activities: Yes Establishment 3 Employees: 70 Sector: MLT manufacturing Participating in X s innovation activities: No

RIS operationalized The micro-foundations for RIS (The size & sector composition of) employment in innovation-active firms (firms with positive innovation expenditures or outcomes, ongoing or abandoned innovation projects) The broad definition of RIS (The size & sector composition of) employment in firms with industrial collaboration within own region The narrow definition of RIS (The size & sector composition of) employment in firms with local research system collaboration within own region

The micro-foundations for RIS 0,5 0,45 0,4 0,39 0,38 0,35 0,3 0,39 0,38 Expected proportion employment in active firms if sector propensities remained as in 2004-2006 0,25 0,2 2006 2008 2010 2012

weakened during the period 0,5 0,45 0,4 0,35 0,3 0,39 0,41 0,35 0,33 Expected proportion employment in active firms if sector propensities remained as in 2004-2006 Observed proportion employment in active firms 0,25 0,2 2006 2008 2010 2012

In the beginning (2006 2008) Active empl linked to international industrial system Active empl linked to international research system Active empl linked to non-local domestic industrial system Active empl linked to non-local domestic research system Active empl linked to local industrial system Active empl linked to local research system Innovation active employment Decline relative to 2004-2006 (= 1) Increase relative to 2004-2006 (=1) 0,70 0,80 0,90 1,00 1,10 1,20 1,30 2010-2012 2008-2010 2006-2008

towards the end Active empl linked to international industrial system Active empl linked to international research system Active empl linked to non-local domestic industrial system Active empl linked to non-local domestic research system Active empl linked to local industrial system Active empl linked to local research system Innovation active employment 0,70 0,80 0,90 1,00 1,10 1,20 1,30 2010-2012 2008-2010 2006-2008

The broad definition : Industrial collaboration (clients, suppliers, competitors) Active empl linked to international industrial system Active empl linked to international research system Active empl linked to non-local domestic industrial system Active empl linked to non-local domestic research system Active empl linked to local industrial system Active empl linked to local research system Innovation active employment 0,70 0,80 0,90 1,00 1,10 1,20 1,30 2010-2012 2008-2010 2006-2008

The narrow definition : Research system collaboration (universities, university colleges, research institutes) Active empl linked to international industrial system Active empl linked to international research system Active empl linked to non-local domestic industrial system Active empl linked to non-local domestic research system Active empl linked to local industrial system Active empl linked to local research system Innovation active employment 0,70 0,80 0,90 1,00 1,10 1,20 1,30 2010-2012 2008-2010 2006-2008

0,00 0,50 1,00 1,50 2,00 2,50 Troms Nordland Telemark Hedmark/Oppland Møre og Romsdal Vestfold Østfold Oslo/Akershus Sogn og Fjordane Rogaland Hordaland Trøndelag Buskerud Agder 0,17 0,22 0,27 0,27 0,29 0,34 0,38 0,38 0,29 0,35 0,28 0,33 0,41 0,37 0,00 0,20 0,40 0,60 0,80 1,00 1,20 Innovation activity CIS2012/CIS2006 Innovation activity CIS2012

0,00 0,50 1,00 1,50 2,00 2,50 Troms Nordland Telemark Hedmark/Oppland Møre og Romsdal Vestfold Østfold Oslo/Akershus Sogn og Fjordane Rogaland Hordaland Trøndelag Buskerud Agder 0,17 0,22 0,27 0,27 0,29 0,34 0,38 0,38 0,29 0,35 0,28 0,33 0,41 0,37 0,00 0,50 1,00 1,50 2,00 2,50 Innovation activity CIS2012/CIS2006 Local research system collaboration CIS2012/CIS2006 Non-local domestic research system collaboration CIS2012/CIS2006 Innovation activity CIS2012

Sectors Micro-foundations: The largest innovation sectors are MLT manufacturing, LT manufacturing and ICTs. The most committed to innovation are HT manufacturing, MHT manufacturing and ICTs. Local research system collaboration: Dominated by manufacturing & aquaculture; strong commitment from the high-tech segment. The contribution & commmitment of ICTs declined during the period. Local industrial collaboration is also dominated by manufacturing & aquaculture; strong commitment from the high-tech segment. The contribution & commmitment of ICTs declined during the period. Oil & Gas narrowly defined (excluding the supplier industry) dominate the highly specialised networks of Rogaland. Strong growth in sector contribution & commitment to research system collaboration also in Agder &Telemark.

The period 2006-2012 The VRI program sought to mobilize firms into development work and collaboration with local research institutions. but the industrial base reduced its overall commitment to innovation... strengthened linkages to national stronghold research institutions instead of local research institutions or research institutions abroad and strengthened linkages to international industrial networks instead of local ones Decoupling of ICTs from regional & domestic collaboration networks in spite of strong sector commitment to innovation

What are the policy objectives? Project execution - Path extension: Contractual R&D sourcing from leading technical universities/institutes specialised in serving the needs of incumbent industries with strong pre-existing internal capabilities Exploration - Learning - New path creation: Demands incentives for industrial actors to develop and accumulate new capabilities in spite of weak initial system support. Intramural RD&I efforts and collaboration with partners abroad. Strengthen local research institutions and build RIS: Demand framework conditions & funding schemes dedicated to the task.

The way forward Theoretical & empirical research on interactions and interdependencies between different processes (local-global; STI- DUI, intramural-contract R&D) and policies (supply-demand side; firmnetwork; centralisation-regionalization). Strengthened framework conditions for research on industrial dynamics that reflect the vibrancy of the research field internationally and the need for structural change in the Norwegian economy by allowing theory, data infrastructures and methods to be developed and exploited through cumulative research with a horisontal relationship to policy formulation & implementation

Thank you. Sverre.herstad@hinn.no