The IPL newsletter: Volume 14, Issue 287

News from the IPL


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.


Expert Panel Examining Business Support Programs in Ontario

Government of Ontario
Ontario has appointed a panel of experts to review the province’s business support programs so Ontario companies have the best help possible to succeed and grow. Panelists Dr. Margaret Dalziel (Chair), Dr. David A. Wolfe and Dr. Douglas Cumming will conduct the review. They will review and evaluate programs according to established criteria, including those put forward by the Jobs and Prosperity Council that focus on improving productivity, strengthening exports and increasing innovation performance. Business support programs help companies by offering assistance in key areas like increasing competitiveness and attracting and sustaining a modern workforce. The panel is considering all forms of business support, including tax credits, grants and other direct support programs.  It will report back to the province by the end of February 2014, in time to inform the 2014 Ontario Budget. Providing Ontario businesses with the best support possible helps create a dynamic and innovative business climate in the province, one of the three pillars of the government’s economic plan to create jobs and growth.

Ontario Centres of Excellence and OMERS Ventures Launch oneeleven, Canada’s First Community for Data-Driven Entrepreneurs

Ontario Centres of Excellence
Visionaries in Toronto’s tech community imagine a not-so-distant future where the downtown core is host to a big data ecosystem where entrepreneurs, investors and academics will come together to spark organic collaboration and innovation through everyday interactions such as getting a cup of coffee. With the launch of oneeleven, a major milestone toward achieving that vision has been reached and Canada’s first community for data-driven entrepreneurs has been born. Co-founded by strategic investments from Ontario Centres of Excellence (OCE) and OMERS Ventures, with the recent addition of Ryerson University as the founding academic partner, oneeleven is a community of entrepreneurs that are ready to take their promising new tech ventures to the next level by harnessing the power of high performance computing (HPC).

European Commission and OECD Launch Website for Universities to Measure Entrepreneurial Impact

European Commission
Recently, the European Commission, together with the Organisation for Economic Co-operation and Development (OECD), launched a new online self-assessment tool for universities to measure how entrepreneurial they are. HEInnovate enables institutions to assess their performance in seven areas: leadership and governance, organizational capacity, teaching and learning, pathways for entrepreneurs, university-business exchange, the internationalized institution, and impact measurement.

Editor's Pick

Collaborate to Innovate: How Business Can Work With Universities to Generate Knowledge and Drive Innovation

Birgitte Andersen, Muthu De Silva, and Charles Levy, The Big Innovation Centre
Universities play a major role in supporting innovation and competitiveness in the UK. In addition to delivering outstanding research and teaching, universities widely interact with all stakeholders in the economy. There is a growing pool of evidence which demonstrates the positive contribution they make to the UK’s economic and social development. However, it seems that policy makers still do not fully understand how to make the most out of successful university–business interactions. In response to this gap in the economy, this report discusses how to unlock and stimulate different forms of collaborations between universities and businesses, by drawing on a survey of 200 businesses, and in-depth interviews with 14 companies.

Innovation Policy

Reinforcing EU Cohesion Policy for Maximum Impact on Growth and Jobs: The Reform in 10 Points

European Commission
Under the EU’s 2014-2020 budget, Cohesion Policy will invest €325 billion in Europe’s Member States, their regions and cities to deliver the EU-wide goals of growth and jobs, as well as tackling climate change, energy dependence and social exclusion. Taking into account the national contribution of member states, and the leverage effect of financial instruments, the overall impact is likely to be more than €500 billion. The reform of Cohesion Policy will ensure maximum impact for these investments, adapted to the individual needs of regions and cities. This memo explores the ten key elements of this reform.

From Bricks to Brains: Increasing the Contribution of Knowledge-Based Capital to Growth in Ireland

David Haugh, OECD
With sound framework conditions, fine universities, good infrastructure and policies friendly towards foreign direct investment, Ireland scores high in international innovation scoreboards. Overall, policies to boost innovation and entrepreneurship are on the right track, but investment in knowledge-based capital could be made a more dynamic source of growth and jobs. While Ireland has made good progress towards building up its scientific capabilities, innovation capacity remains weaker than in other small advanced OECD countries, such as Austria, Denmark, Sweden and Switzerland. To become more effective, the innovation strategy should be simplified, with a drastic reduction in the number of government agencies involved in funding innovation, so as to better focus on strengthening the linkages between the business and academic communities. While attracting high-tech multinationals should remain central, there is potential to better develop spillovers between these firms and domestic SMEs, notably by establishing applied research centres. Entrepreneurship should be fostered by improving the business environment, including access to non-bank finance, streamlining the insolvency regime and transfer of intellectual property rights, and upgrading the broadband network.

Cities, Clusters & Regions

How Cities can Nurture Cultural Entrepreneurs

Ann Markusen, Ewing Marion Kauffman Foundation
Since the Great Recession, North American mayors and city councils have boosted investments in arts and culture as creative placemaking to improve the quality of life, to attract residents, managers and workers, and to welcome visitors. Many city leaders are newly aware that artists bring income into the city, improve the performance of area businesses and creative industries, and directly create new businesses and jobs. Because of extraordinary levels of self-employment, artists often choose cities of residence based on factors other than job and employer locations. Their innovative challenges differ greatly from those faced by scientists and engineers. Artists and related cultural workers tend to fall through the cracks in traditional workforce and small business development programs. As a result, American cities have explored new ways of supporting artists that include space provision, artist-targeted websites and marketing projects, incorporating artistic work into city enterprises, and entrepreneurial training programs tailored to the realities of arts and design as occupations. This policy brief summarizes reasons for and variations in new initiatives to spark cultural entrepreneurship, sampling bottom-up experiments and providing a menu of options for cities of all sizes and character. The brief also counsels city leaders to focus on what is distinctive about their cities, rather than replicating generic strategies elsewhere (e.g. large, expensive arts venues). Via references for further reading, it directs city leaders to various resources for exploring place-appropriate creative entrepreneurship policies.

Course Correction: Charting a New Roap Map for Ontario

The Institute for Competitiveness and Prosperity
Ontario is a long way off from closing the prosperity gap with its North American peers. In 2012, Ontario’s GDP per capita ranked a disappointing 14th out of 16 North American peers. This ranking is unchanged from when the Task Force first began measuring Ontario’s economic progress more than a decade ago. To achieve the Task Force’s goal of ranking at the median of North American peers, Ontario would have to increase its GDP per capita by nearly $8,000 from its current level. This is a tall order given the province’s poor growth performance since 2001.  This report identifies a number of key measures needed in both the private sector and government to get Ontario’s economy on the right track. Some issues are not new; lack of business investment in innovation and productivity enhancing equipment, for example, continues to be a stubborn problem among Canadian businesses. Lagging labour productivity, particularly in Ontario’s important manufacturing sector, remains to be a leading drag on the province’s competitiveness. Without substantial change in these areas, Ontario will continue to miss its target of eliminating the prosperity gap.

Statistics & Indicators

State Incentives for Innovation, Star Scientists and Jobs: Evidence from Biotech

Enrico Moretti and Daniel J. Wilson, NBER
This paper evaluate the effects of state-provided financial incentives for biotech companies, which are part of a growing trend of placed-based policies designed to spur innovation clusters. The authors estimate that the adoption of subsidies for biotech employers by a state raises the number of star biotech scientists in that state by about 15 percent over a three year period. A 10% decline in the user cost of capital induced by an increase in R&D tax incentives raises the number of stars by 22%. Most of the gains are due to the relocation of star scientist to adopting states, with limited effect on the productivity of incumbent scientists already in the state. The gains are concentrated among private sector inventors. The report uncovers little effect of subsidies on academic researchers, consistent with the fact that their incentives are unaffected. These estimates indicate that the effect on overall employment in the biotech sector is of comparable magnitude to that on star scientists. Consistent with a model where workers are fairly mobile across states, the report finds limited effects on salaries in the industry. The authors uncover large effects on employment in the non-traded sector due to a sizable multiplier effect, with the largest impact on employment in construction and retail. Finally, the research finds mixed evidence of a displacement effect on states that are geographically close, or states that economically close as measured by migration flows.

Policy Digest

The Role of Clusters in Smart Specialization Strategies

European Commission
This report investigates the potential contribution of clusters and cluster policies in the design and implementation of Smart Specialization Strategies. Both cluster policies and Smart Specialization Strategies are policy approaches with a place-based dimension, aiming at exploiting advantages of proximity to promote economic growth and competitiveness. With regions across Europe currently working on their Smart Specialization Strategies, the question whether and how clusters and cluster policies can be used in this endeavour is highly relevant. Smart Specialization Strategies are difficult to design and implement because they are based on a new and complex academic framework that now has to be translated into policy practice. The contention of this report is that lessons learnt from the rich history of cluster policies can provide concrete inputs into the development of Smart Specialization Strategies (S3).

The report investigates this contention both from conceptual and practical perspectives:

  • Chapter 1 identifies the commonalities and differences between the two concepts as they are defined and discussed in the various strands of literature. This helps disentangle the key elements for which cluster policy experience can be used to inform and support Smart Specialization Strategies, but also highlights the limits of this potential contribution;
  • Chapter 2 looks at policy practice. It discusses the way Smart Specialization Strategies are applied so far and the challenges that lie ahead, enlightens the main features of cluster policies and draws the lessons learned from their application. On this basis, it identifies six areas where cluster policies have the potential to contribute to Smart Specialization Strategies.

The key message is that clusters and cluster policies are for many regions likely to be among the key building blocks in developing and implementing S3. Main contributions are expected for the tasks of defining priority domains and engaging stakeholders, but other contributions are possible too. The full potential of clusters and cluster policies will be reached if:

  • The Smart Specialization Strategies integrate cluster policies into a broader transformation agenda for the entire regional economy, and complement cluster policies with other cross-cutting and technology/knowledge-domain-specific activities;
  • The cluster-based analysis and the type of cluster policies implemented in S3s move beyond the current cluster policy practice, i.e. they are adapted to the regional environment, to the level of maturity of the cluster, and they comply with a list of good practices rules, including the capacity to address emerging new domains cutting across sectors.

The Contribution of Clusters and Cluster Policies to Smart Specialization Strategies

  • Cluster policies can provide a core toolkit to engage with and develop sectors of the economy in which a region has a significant position. They have the ability to guide the concentration and integration of economic policies around specific areas of the economy. And they can help avoid the pitfalls of traditional industrial policies, which often use tools that limit competition and thus ultimately competitiveness, and target narrow industries rather than broader groups of suppliers, service provides, and end producers engaged in the co-creation of economic value;

The report identifies six leverage points for clusters and cluster policies to be used in Smart Specialization Strategies. For the first and the last (prioritization and stakeholders engagement), the current practice of cluster policiesalready provides significant value to S3. For the remaining four, the cluster approach can in principle provide significant value but the actual practice of cluster policies often still falls short of this potential:

  • Prioritization: How should policy makers select (and justify) priority intervention domains (at sufficient level of granularity) for S3? Methods to identify these domains can benefit from quantitative and qualitative approaches used in cluster selection (taking into account their limits, notably to identify new domains shaped by knowledge crossing traditional industry boundaries) and roadmaps defined by clusters can be used as inputs into the prioritization process;
  • Integrated policy mixes: What is the appropriate mix of policies? What are adequate policies for S3? S3 involves the design of smart policy mixes, i.e. the effective combination of policy instruments, from different policy areas, that target the market or system failures in the specific activity domains. The diversity in cluster policies implies diversity in their potential contributions to S3 policy mixes. At one extreme, there are cluster policies which are limited to funding light catalytic actions (e.g. cluster animation cells) which may be of support to the S3 process in terms of prioritization and endorsement, but not so much for the design of integrated policy mixes; at the other extreme, cluster policies that consist of orienting a wide range of policy instruments from different policy domains towards clusters’ needs, may come closer to full S3 policy mixes;
  • Smart, evidence-based policy-making: What tools should be developed for evidence-based policy (measuring, assessing and learning in S3)? Lessons from cluster evaluations can be used to fine-tune policy portfolios. Even if the availability of robust and impact-oriented evaluations are still limited, the newer methods at play, focusing on cluster dynamics and trends, are potential inputs for iterative Smart Specialization Strategies, which need periodically to revise strategic choices and policy mixes to support domains selected for smart specialization;
  • Multi-level governance: How can policies be aligned across national, regional, EU levels? Cluster policy instruments rely most often on sources of funding from different origins. With respect to public funding it is crucial to achieve synergies, rather than duplications between these various sources, and to align goals pursued by the various authorities. Some clusters have long-term experience in achieving a good articulation of diverse sources of public funding, and these lessons can inform S3;
  • Cross-border dimensions: What is the appropriate territory to design S3 and how can compatible policies be formulated? Reinforcing the international dimension of the clusters and the domains of smart specialization is a pressing challenge: Europe needs globally competitive clusters. However, internationally competitive S3 domains are unlikely to correspond to regional boundaries: S3 requires trans-border strategies.
  • Sustained stakeholders engagement: How can policy makers promote participation, engagement and commitment of the variety of stakeholders? Strategies to involve stakeholders in all phases of the S3 policy cycle, in order to ensure a bottom-up design and implementation of S3, wide and deep endorsement of the strategy, and its visibility to the outside world, can rely on existing platforms established in the context of clusters and cluster policies, and on “regional champions” associated to the clusters. Strategies to avoid capture by vested interests are critical for the success of S3.
  • Cluster policies provide important leverage points for S3 but they are cannot be equated to S3: The former policies are among the possible policy tools in a S3 policy mix, but Smart Specialization Strategies have a broader remit. Cluster efforts need to be embedded into a broader economic strategy that develops the cluster portfolio over time, enhances the general business environment to benefit all firms, and integrates cluster-specific and cross-cutting activities into a coherent overall value proposition for the location.


Aerospace Innovation Forum

Montreal, 2-4 December, 2013
In a highly competitive global market where environmental regulations are tightening, innovation remains a major competitive advantage for companies. However, to position themselves on future aircraft programs and in the supply chains of major OEMs, companies need new approaches. Instead of working in a silo with the sole aim of creating new products, innovation must now be pursued in a global and systematic way. It must be at the very heart of companies’ critical activities, encompassing design, manufacturing and operations, as well as end-of-life product management. Companies must also innovate in the way they finance new projects and manage, organize and train human resources. These complementary challenges will be discussed in more detail during the Aero Financing and Aero Training seminars that will be held on the third day of the Aerospace Innovation Forum 2013.

DRUID Academy Conference 2014

Aalborg, Denmark, 15-17 January, 2014
The conference is open for all PhD students working within the broad field of economics and management of innovation, entrepreneurship and organizations. 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 encourage all PhD students to submit their research to the conference. Do not hesitate to apply even if you have not been in contact with DRUID previously. The main emphasis is on PhD presentations. Each PhD student paper will be assigned to a “junior” (a fellow PhD student) and to a senior discussant (from DRUID faculty or invited guests). There will also be a series of keynote speakers in the program. The details of the program, titles of keynote presentations etc. will be continuously updated at the DRUID homepage.

The Geography of Innovation

Utrecht, The Netherlands, 23-25 January, 2014
This conference provides a forum for discussion to scholars and practitioners interested in scientific, policy and strategic issues concerning the spatial dimension of innovation activities. The main objective of this event is to bring together reserachers from a variety of disciplines ranging from economic geography, economics, management science, sociology, network theory, regional science and urban studies. The conference invites contributions in a wide range of topics underlying the geography of innovation, such as: global and local dynamics of innovation; science and technology policy; cluster competitiveness; firms R&D strategies; entrepreneurships; innovation systems; sustainable and social innovation; industrial dynamics and innovation networks.

Budget 2014: Re-balancing Innovation Support Programs 

Ottawa, 22-23 April, 2014
he 13th annual RE$EARCH MONEY conference continues our examination of the implications of recent federal budgets for business innovation support. This year, we will look at how Budget 2014 builds on the last two budgets, in particular the extent to which the government is changing the balance between indirect and direct support of firms and the balance between supporting basic and applied research in academia and academic-industrial research collaboration. We’ll also look at implications of the anticipated update to the federal government’s science and technology strategy, should it be released with the 2014 budget or before, and examine progress being made with the federal government’s new VC fund and its support for accelerators and other innovation intermediaries. In smaller breakout sessions we’ll dig deeper into specific opportunities being pursued in Canada in the digital economy, new industries based on genomics and quantum computing and new sources of funding such as crowdfunding, impact investing.

Business Innovation Summit 2014: Accelerating Corporate Innovation and Commercialization 

Toronto, 28-29 May, 2014
The objective of this conference is to help companies of all sizes across Canada harness the power of innovation, and accelerate their innovation and commercialization results. The Summit is exploring the real-life challenges and opportunities of innovation within firms, and is featuring tangible solutions that work. We are assembling an outstanding lineup of Canadian and international speakers to share best practices and unique insights on how to implement effective processes and build innovative organizations for the 21st century.

Creative City Summit 2014: Love Your City – Transforming Communities Through Culture

Hamilton, Ontario, 11-13 June, 2014
Through interactive sessions, case studies and keynote addresses, experts will share real world projects that are transforming cities across the country. The 2014 Summit theme focuses on communities that are creating conditions in which culture can thrive.  Presenters will explore how leadership, innovative thinking, partnership building, and simply doing things differently can lead to a creative community. Delegates will gain insight into integrating culture within other local planning initiatives; encouraging and stimulating “eventful” cities; planning community wide participatory events; initiating creative placemaking projects; and creating cultural hubs in their community.

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This newsletter is prepared by Jen Nelles.
Project manager is David A. Wolfe.