News from the IPL
INTRODUCTION
This newsletter is published by The Innovation Policy Lab at the Munk School of Global Affairs, University of Toronto, and sponsored by the Ministry of Research and Innovation. The views and ideas expressed in this newsletter do not necessarily reflect the views and policies of the Ontario Government.
ANNOUNCEMENTS
Canadian Government Announces Support for the Genomics Research Development Initiative
The Canadian government recently announced the three-year, $59.7-million investment in GRDI. Established in 1999, GRDI coordinates the efforts of federal science departments and agencies involved in the field of genomics research. Its strategic goal is to contribute solutions to issues that are important to Canadians, focusing on the role of federal government research.
Canadian Government Launches a New Agricultural Research Commercialization Fund
The federal government has budgeted $50 million for a new funding program meant to support development and commercialization of new products and processes in the agriculture sector. The Agricultural Innovation Program (AIP), divided into separate knowledge creation and transfer and commercialization funding streams, is expected to provide grants and loans for industry-led science and technology projects that bridge the gap between ideas and discoveries, and products in the marketplace.
Editor's Pick
Innovation and Knowledge Flows in the Financial Services and ICT Sectors of the Toronto Region
David A. Wolfe, Charles H. David, Nicola Hepburn, Nicolas Mills and Gale Moore, PROGRIS
This report presents the key findings of a recently completed study of innovation processes within the financial services sector of the Toronto region. It examines the flows of knowledge and technology between the information and communications technology sector (ICT) and financial services sector within the Toronto region, and how these flows contribute to the innovation process.
Innovation Policy
Cracking Canada’s Productivity Connundrum
Someshwar Rao, IRPP
Beneath the veneer of Canada’s stellar economic performance in the 2000s lies the conundrum of slow productivity growth. Most of Canada’s economic strength over the past 10 years has been due to strong labour force growth and sharp increases in prices for Canada’s natural resources. But as this study shows neither of these can sustain the growth capacity of the Canadian economy in the future. Economic growth will increasingly depend on productivity — the ability to create more economic value by working smarter. This broad review of the determinants of productivity growth \ finds that there are three main challenges in Canada. First, while innovation and the adoption of technologies are by far the most important direct drivers of productivity, Canada remains a laggard compared with other industrialized nations in this area, due to insufficient investment in research and development (R&D) and the equipment that embodies new technologies. A second important factor is the relatively large number of small and medium-sized enterprises in Canada. Because of their small size, these firms are unable to benefit from production techniques that require a certain minimum scale to be profitable, hampering their ability to grow. Finally, competition and firm dynamics within industries are critically important for spurring innovation and productivity. But Rao maintains that there is not enough “creative destruction” — the process of inefficient firms shutting down and more productive ones taking their place, which accounts for a large share of productivity growth.
The Impact of Regulation on Innovation in the United States: A Cross-Industry Literature Review
Luke A. Stewart, ITIF
Free marketeers and many business groups cite regulatory burdens and uncertainty as the chief culprit of the country’s sluggish economic growth. To be sure, in a general sense, regulations do affect the decisions of would-be job creators. However, it is important to grasp how regulations specifically affect innovation. After all, innovation is a critical source of economic growth and long-term competitiveness. In this paper commissioned by the Institute of Medicine, ITIF Research Analyst Luke Stewart walks us through the landscape of regulatory policy and its impact on innovation.
Growth Analysis
How can wealthy nations stay rich in a rapidly changing global knowledge economy? This question is of central concern for many small open economies like Sweden’s.This report is commissioned by the Ministry of Enterprise, Energy and Communications and the purpose is to provide a first background analysis for an upcoming evaluation of Swedish innovation policy by the OECD.
Yuan-Chieh Chang, Phil Yihsing Yang, Tung-Fei Tsai-Lin and Hui-Ru Chi, DRUID
This paper examines how universities can develop a new organizational structure to cope with the rise of academic entrepreneurship. By deploying the Pasteurian quadrant framework, knowledge creation and knowledge utilization in universities can be measured. The relationships between university antecedents, Pasteurian orientation, and research performance are analyzed. The findings indicate that university antecedents of strategic flexibility and balancing commitment contribute to a greater Pasteurian orientation in university departments. The higher degree of Pasteurian orientation has significantly positive impacts on the performance both of knowledge creation and knowledge utilization. Moreover, the Pasteurian orientation acts as a mediator between university antecedents and research performance.
Entrepreneurship and Innovation: Public Policy Frameworks
David B. Audretsch and Albert N. Link
The purpose of this paper is to identify and unravel the disparate views toward innovation prevalent within the economic community and to link them to the various public policy approaches. These various schools of thought, or ways of thinking about the economy in general and the role of entrepreneurship and innovation in particular, not only shape how innovation and entrepreneurial activity are valued, but also the overall policy debate concerning innovation and entrepreneurship. Unraveling of these views sets highlights the disparate way in which entrepreneurial activity leading to innovation is valued.
Cities, Clusters & Regions
Organizing Clusters for Innovation: Lessons from City Regions in Europe – CLUSNET Final Report
Goran Lindqvist amd Orjam Solvell, Europe INNOVA
Since early 2009, the CLUSNET project has organized policy workshops in partner cities with the participation of numerous policy makers and clusters managers from all over Europe. During each workshop, in-depth policy analysis of existing cluster policies has been conducted with the objective to produce concrete suggestions for policy improvements. During CLUSNET workshops, networking activities and B2B meetings have been organized for cluster managers from partner cities in order to stimulated cross-border collaborations. In parallel, CLUSNET has enabled policy makers to participate in thematic in-site visits allowing them to engage in more direct, bilateral policy exchanges. As a result of these activities, policy makers have gained an even better understanding of the complexity of successful cluster policy support, while at the same time gaining insight into the challenges facing European clusters today. As a platform for policy exchanges, CLUSNET has contributed to the design of even more effective clusters support policies in European cities. The lessons learned and policy recommendations born out of this work, are to be found in this report. Together with the successful inter-cluster contacts generated by the CLUSNET project, these policy recommendations constitute the core result of three years of activities
Ontario Cross-Border Technology Innovation Ecosystem Study: Leaders to Start-up Funding Success
Wendy Cukier, Charles Davis and Saif Al-Naib, OCTIE
There is a positive link between social networking outside of Canada and innovation. This report finds Ontario technology start-up organizations with larger social networks are associated with more start-up funding, at an average rate of $1.7 million more per relationship. Findings of the report also revealed that nearly half of network connections in the best funded companies come from San Francisco, Boston or New York. In addition to the correlation between extensive social networks and larger funding, a surprising trend emerged from the research — the majority of people involved in Ontario technology start-ups are clustered, but this leads to redundant social networks and less funding.
Unify, Regionalize, Diversify: An Economic Development Agenda for Nevada
Mark Muro, The Brookings Institution
Nevada stands at a crossroads, yet it appears ready to remap its future. Silver Staters sense that the current economic slump has not been just a temporary reversal but a challenge to the state’s traditional growth model—one that has revealed an economy over-dependent on consumption sectors, prone to booms and busts, and too little invested in innovation and economic diversification. And yet, for all that Nevadans have been early to recognize that the current slump will beget, in some places, innovation and renewal, and in other places erosion—and so requires action. To that end, this paper draws on an intense five-month inquiry that sought to define the nature of the economic challenges the state and its major regions face; identify industries and industry clusters that have the highest potential for expansion as part of an economic diversification effort; and suggest policy options that will enable the state, its regions, and the private sector to work more effectively to build a more unified, regionally vibrant, and diversified Nevada.
Statistics & Indicators
Best Countries for Business: As US Struggles Canada Soars to the Top
Kurt Badenhausen, Forbes
Rising debt and regulatory constraints continue to damage the reputations of the U.S. and Europe as business-friendly locales, but America’s northern neighbor is doing the right things to encourage entrepreneurship with robust tax reform, strong investor protections and a lack of red tape. Canada ranks No. 1 in this annual look at the Best Countries for Business. While the U.S. is paralyzed by fears of a double-dip recession and Europe struggles with sovereign debt issues, Canada’s economy has held up better than most. The $1.6 trillion economy is the ninth biggest in the world and grew 3.1% last year. It is expected to expand 2.4% in 2011, according to the Royal Bank of Canada.
Policy Digest
Business Innovation Policies: Selected Country Comparisons
OECD
This study is concerned with trends in and key features of policies and programs used by governments to support innovation in the business sector. In addition to identifying good practices across a range of programme types, it compares business innovation policies across several countries, with a particular focus on Canada.
Key trends in business innovation policies
All OECD countries have policies in place to strengthen their innovation performance. These policies are wide-ranging and include framework policies, specific policies to foster private investment in innovation, and policies that aim to shape demand for innovative goods and services. Typically, the mix of policies differs considerably between countries, due to structural and institutional differences, among other reasons. Among OECD countries as a whole, as well as the seven countries examined here, recent years have seen some shifts in the mix of policies used to support business innovation. These shifts include:
- A growing attention to demand-side policies. Growing attention is being paid to a range of policies aimed at strengthening demand for innovation. This includes policies such as innovation-oriented public procurement, standards and regulation. The growing interest in demand-side policies has emerged in part because of greater awareness of the importance of feed-back linkages in the innovation process between supply and demand. Demand-oriented innovation policies are thus part of an evolution from a linear model of policy, usually focused on R&D, to a more broad-based approach that considers the full innovation cycle. Indeed, many countries have noted that a main challenge for innovation is often not the lack of knowledge or technology, but linking these innovations to a market. This is particularly the case in markets with major public goods
characteristics, e.g. markets for environmental goods and services, certain health services, and other public and semi-public services.Recognition of the essential interaction between demand and supply conditions is also reflected in the broader academic literature. The focus on demand-side policies also reflects a frequent perception that traditional supply-side policies – despite many refinements in their design over past decades – have not been sufficient to bring about the desired levels of improvement in innovation performance and productivity. Furthermore, current pressures on governments’
discretionary spending create incentives to explore how innovation might be fostered without new programme spending. Several of the instruments used are relatively new and little is known thus far about their cost-effectiveness and impact. Moreover, the scale of these demand-side policies is typically still quite small and not considered a high priority in most countries; - A growing use of indirect support for innovation, notably a growing use of R&D tax credits and an increase in their
generosity. At the time of writing, 22 OECD member countries provided some form of R&D tax credit to foster private investment in innovation, up from 12 countries in 1995 and 18 in 2004. Moreover several countries have enhanced the generosity of their system in recent years, as measured by changes in the so-called B-index. Many countries have also made changes to their R&D tax credit schemes with the goal of expanding the number of beneficiaries. Some have enlarged the criteria of eligibility, or the degree of coverage for firms eligible for tax relief. The growing importance of R&D tax credits partly reflects that this instrument is less likely to distort private decisions and market behaviour than more targeted, direct support. At the same time, there is some concern that the growing generosity of these measures may lead to tax competition among countries; - Shifting emphases in direct support for innovation. As indirect support has grown, so direct support for R&D has declined, at least that part of direct support linked to direct procurement by governments, e.g. for defence. At the same time direct support is increasingly provided for different purposes, e.g. to encourage collaboration and knowledge transfer between firms or between firms and scientific institutions, to foster the growth of hightechnology start-up firms, to encourage the development of venture capital activity, and to support innovation relevant to climate change and the environment. Direct support therefore remains an important policy instrument for OECD countries, as it allows governments to target specific barriers that affect innovation performance such as lack of different forms of co-operation, or specific areas considered to have high social returns;
- Growing attention given to policy evaluation. The evaluation of policies is clearly essential to enhance their impact and efficiency. In recent years, and particularly following the financial crisis and the squeeze on discretionary public spending, emphasis has grown on evaluating policies to measure their impact and efficiency. However, the evaluation record is still patchy. While considerable effort has been invested in the evaluation of some forms of direct and indirect support for R&D, particularly as regards the additionality entailed in any changes in private R&D spending, more remains to be done. There has also been relative underinvestment in the evaluation of other programs used to increase innovation. In all cases the methodological challenges of reliably attributing impact to government programmes are significant, and ongoing
efforts are needed to meet the evaluation challenge.
Canada’s policy mix for innovation
Canada’s current policy mix heavily emphasises certain instruments, notably indirect support for R&D, through the tax credit system, as well as direct support for some aspects of innovation, including venture capital investment and commercialisation. Canada currently places only a very limited emphasis on demand-side measures in its overall policy mix. These policy settings lead to a number of considerations.
First, by relying primarily on the R&D tax credit to foster business investment in innovation, all actors and activities engaged in R&D (and meeting the relevant criteria) can benefit from government support. That is, this key instrument does not single out specific areas considered to be particularly promising for the future, or to have high potential social returns. However, Canada does operate a number of supply-side programmes that are sector specific. Two examples are the Strategic Aerospace Defence Initiative and the Automotive Innovation Fund. Explicit priorities are also contained in the Federal Science and Technology Strategy. A question to consider is whether the right balance has been struck between the R&D tax credit and more focused efforts to support priority areas considered likely to have high social returns.
Secondly, by emphasising the R&D tax credit, government policy also focuses primarily on R&D as the driver of innovation performance. While R&D is certainly critical, it is not the only investment that firms make in innovation. In Canada, as in many other OECD countries, a key barrier to stronger innovation performance does not so much appear to be a lack of knowledge, but a lack of take-up in the market and commercialisation. Moreover, a focus on R&D typically implies a choice in favour of sectors and firms that are heavily engaged in R&D, such as high-technology manufacturing and certain service-sector activities. Balancing the support for R&D with support for other important features of innovation (e.g. through support for venture capital, business angels or high-growth
firms) as in fact Canada does to some extent; may enhance some of the other dimensions of innovation.
Third, as in other OECD countries, policy makers may wish to consider complimenting the existing supply-side policies to foster innovation with well-designed demand-side policies.
Events
Innovation in a Sustainable Supply Chain: A Global Challenge
Montreal, 5-6 December, 2011
Aéro Montréal, the Québec Aerospace Cluster, in collaboration with CRIAQ, is organizing the third forum entirely dedicated to aerospace innovation. More than 500 participants and renowned speakers from the aerospace industry from Québec, Canada and abroad. The program includes conferences, workshops, B2B technology meetings and innovation exhibits.
The Strategic Management of Places
San Diego, CA, 12-13 December, 2011
his Conference will bring together thought leaders on the policies that cities, regions, states and communities can pursue to improve their economic performance. In particular, the conference will focus on thestrategic management of a place. A place can be a city, region, state, or even a greater geographic and political unit. We are drawing on the experience and insights of highly accomplished leaders spanning a broad spectrum of disciplines in academia, a wide range of contexts in business, and diverse range of public policy leadership roles in a series of panels to identify what matters in shaping the economic performance of a place, why it matters, and how policy can influence those outcomes.
CALL FOR PAPERS – DRUID Academy Conference 2012
Cambridge, UK, 19-21 January, 2012
The conference is open for all PhD students working within the broad field of economics, entrepreneurship and management of innovation and organizational change. We invite papers aiming at enhancing our understanding of the dynamics of technological, structural and institutional change at the level of firms, industries, regions and nations. DRUID is the node for an open international network – new partners are most welcome (we of course encourage DRUID Academy PhD students and students previously connected DRUID conferences to submit an abstract as well). Do not hesitate to apply even if you have not been in contact with DRUID previously.
Saint-Etienne, France, 26-28 January, 2012
Public and corporate actors are faced with pressing questions concerning innovation policy and the return of R&D investment. To answer these questions, new perspectives are necessary to overthrow received wisdom. This first European seminar on “Geography of Innovation” invites scholars from all disciplines to present their work on local and global processes of innovation, on the interaction between science, technology and policy, on clusters, entrepreneurship and competitiveness, and on green growth and sustainability. To further our understanding of innovation processes, the seminar intends to bring together a variety of disciplines including economic geography, regional science, economics of innovation, network theory and management science. We further welcome new contributions to the establishment of (European) databases as well as new analytical tools, including spatial econometrics, network analysis, (interactive) visualization, bibliometrics and policy evaluation tools.
The Governance of Innovation and Socio-Technical Systems: Theorizing and Explaining Change
Copenhagen, Denmark, 1-2 March, 2012
‘Governance’ is a notion that has gained increasing currency the past years in the field of (sectoral) innovation systems and socio-technical systems’ studies. Generally speaking, it refers to the ability of a society to solve collective action problems in issues that involve science, technology and innovation. However, there continues to be a considerable level of indeterminacy in the literature. Firstly, because the empirical literature on systems exhibits multiple understanding of change, and hence about how governance processes take place. This diversity has not been properly spelled out, obscuring the way in which change is linked to specific forms of (effective) governance. And secondly, because these empirical studies tend to use the notion ‘governance’ in rather loose conceptual terms and sometimes even only implicitly. This tends to underestimate or ignore the coordination aspect embedded in any form of systemic change. For these two reasons, the actual explanatory capacity of the notion ‘governance’ when studying systems’ change remains limited. This workshop aims at addressing this gap in the literature, asking how do agents and institutions coordinate in the process of generating change in complex socio-technical and (sectoral) innovation systems.
CALL FOR PAPERS – 2012 Conference on Entrepreneurial Universities
Muenster, German, 25-27 April, 2012
The conference will be a European discussion forum for researchers and practitioners on Entrepreneurial Universities, where theory and practice are equally emphasised in the programme. We are now calling for presentation papers, workshops and posters on the themes of the conference. We would like to encourage you to submit abstracts of conceptually or empirically focused proposals. All papers will be double-blind reviewed and published in the conference proceedings.
Delft, Netherlands, 13-16 May, 2012
Regions and cities are increasingly interdependent; economically, socially and environmentally. They are, for example, becoming more reliant on interregional flows of trade, labour and resources. Patterns of interactions between regions are experiencing rapid changes as a result of dramatic shifts in production and consumption patterns, advances in communication technologies and the development of transport infrastructure. These changes pose many challenges for the analysis and management of regions. They are also leading to new patterns of activities and relationships and new forms of clustering and networking between regions. At the same time, regions are becoming increasingly fragmented in many ways; economically, socially, environmentally and also politically. Classic forms of government based on clear cut arrangements between administrative levels, policy sectors and the public and private domain are no longer sufficient. The governance of regions faces multi-level, multi-actor and multi-sectoral challenges. New spatial interactions at new scales demand new approaches for consultation and coordination. More flexible (‘softer’) forms of governance are beginning to emerge which seek to work around traditional governmental arrangements.The result is a complex pattern of overlapping governance and fuzzy boundaries, not just in a territorial sense but also in terms of the role of both public and private actors. These new arrangements pose many as yet unresolved dilemmas concerning the transparency, accountability and legitimacy of decision-making. The 2012 RSA conference in Delft provides a timely opportunity for participants to come together and reflect on the various strengths, weaknesses, challenges and opportunities of networked cities and regions within these different contexts of fragmentation.
Karlsruhe, Germany, 12-13 June, 2012
The Lund Declaration, which was handed to the Swedish Presidency of the Council of the European Union by 400 prominent researchers and politicians in 2009, states that “European research must focus on the Grand Challenges of our time moving beyond current rigid thematic approaches. This calls for a new deal among European institutions and Member States, in which European and national instruments are well aligned and cooperation builds on transparency and trust.” The declaration thus asks EU institutions to play a crucial role in bringing the relevant public and private actors together, and helping to build more cooperation and trust in order to address the overarching policy objectives.This declaration has taken up and reinforced a development in the past few years in which governments and the European Union have adopted a new strategic rhetoric for their research and innovation policy priorities which addresses the major societal challenges of our time. This is evolving into the third major policy rationale besides economic growth and competitiveness. It is not yet clear whether and how any transformative effects from this new mission-oriented approach can already be identified. The conference aims to attract papers that discuss possible transformative effects at different levels, i.e. on the actors performing research, innovation processes, scientific fields and technological sectors, the institutional funding and research landscape, society, the demand and user/beneficiary side, research and innovation policy and financing, and national and European political framework conditions. It also invites contributions that critically discuss methodological issues, conceptual developments and novel normative challenges around innovation and R&D policy triggered by the – alleged – mission oriented turn.
CALL FOR PAPERS – Entrepreneurship and Innovation Networks
Faro, Portugal, 14-16 June, 2012
Following the tradition established by the previous symposia, starting in 1998, the symposium is designed to bring together leading-edge views of senior academic scholars and mix them with the critical and creative views of postdocs and PhD students engaged in their thesis work. We welcome researchers from various fields, such as economic geography, economic history, entrepreneurship,
international business, management, political science, regional economics, small business economics, sociology and urban and regional planning. The objectives of the fifteenth Uddevalla Symposium 2012 are: i) to provide a unique opportunity for scholars including senior and junior researchers to discuss path-breaking concepts, ideas, frameworks and theories in plenary key-note sessions and parallel competitive paper sessions, and ii) to facilitate the development and synthesis of important contributions into cohesive and integrated collections for potential publication. Therefore, unpublished complete papers are invited for presentation and feedback from other scholars. A selected list of these papers will be subjected to review and development for publication in scholarly venue.
CALL FOR PAPERS – XXIII ISPIM Conference: Action for Innovation: Innovating from Experience
Barcelona, Spain, 17- 20 June, 2012
The plea for innovation is universal. Managers and politicians have understood that innovation is needed on an everyday-basis to strengthen the competitiveness of organisations, regions and countries. Innovation, however, requires more than good ideas and intentions. Leadership, foresight, courage, investment, inspiration and perspiration are needed to turn intentions and ideas into effective action. Even with these elements in place, not every initiative is successful. However, every action and each experience provide new insights into the causes of failed and successful innovation. Successful innovators, be they individuals, organisations, intermediaries or policy makers, must therefore overcome the paradox of building on experience, and yet breaking away from the status quo, with a permanent innovation mindset. These challenges of “Action for Innovation” are the core focus of this conference.
Subscriptions & Comments
Please forward this newsletter to anyone you think will find it of value. We look forward to collaborating with you on this initiative. If you would like to comment on, or contribute to, the content, subscribe or unsubscribe, please contact us at ipl.munkschool@utoronto.ca.
This newsletter is prepared by Jen Nelles.
Project manager is David A. Wolfe.