Restructuring of R

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Restructuring of RD sectors in CEE countries as
process of building of national innovation
infrastructure Case study of Serbia capacities,
readiness, threats and obstacles
Djuro KUTLACA, PhD Science and Technology Policy
Research Centre of the Mihajlo Pupin
Institute 11000 Belgrade, Volgina 15, Serbia and
Montenegro Tel/Fax[phone] E-mail
dkutlaca_at_labtel.imp.bg.ac.yu , and FaM Faculty
of Management 21000 Novi Sad, Vase Stajica 6,
Serbia and Montenegro Tel [phone]
381(0)21 451671/104 Fax 381(0)21
526254 e-mail kutlaca_at_famns.edu.yu
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Production capabilities are wider than technical
capabilities What occurs within firms is a
transformation of the knowledge about technology
into the knowledge about products. Nick Von
Tunzelmann, Technology and Industrial Progress
the foundations of economic growth, Edward
Elgar, UK, 1995
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NIS gt the network of institutions in the
public and private sectors whose activities and
interactions initiate, import, modify and diffuse
new technologies Freeman, 1987
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NIS the set of organizations, institutions,
and linkages for the generation, diffusion, and
application of scientific and technological
knowledge operating in a specific
country Riccardo Galli Morris Teubal, 1997
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NIS Concept of Technopolis 2000 modified and
extended by S.Kuhlmann EC, 2003a
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• Content
• U-I relations in OECD countries
• U-I relations in CEE or transition countries
• Case of transition RD system in Serbia

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• Content
• U-I relations in OECD countries
• U-I relations in CEE or transition countries
• Case of transition RD system in Serbia

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Universities Bologna 1088 Industrial
labs Bayer, Hoechst and BASF - 1870s
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Entrepreneurial universities" Joensuu
(Finland), Twente (The Netherlands), Chalmers
(Sweden), Warwick and Strathclyde (UK) Clark,
1998
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Entrepreneurial universities" (a)    a
strenghtened steering core, (b)   an expanded
developmental periphery, (c)    a
diversified funding base, (d)   a stimulated
academic heartland, (e)    an integrated
entrepreneuiral culture.
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OECD Invisible hand of market vs. Government
initiatives and programmes to promote technology
diffusion (a)    1980s - national networks
of manufacturing extension
centers (b)   1990s - business advisory /
consultancy services and
networking activities (c)    recent trends -
upgrade the infrastructure
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Government programmes for diffusion of technology
could be        Supply-driven, to transfer
technology from government laboratories to the
industrial firms,        Demand-driven, to
transfer technology to meet the specific needs of
firms,        Network-based, to develop bridging
institutions and partnerships to promote
technology flows,        Infrastructure-building,
to upgrade regional and national technology
diffusion infrastructure.
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Industrial support policies (1) sectoral
policies, (2) crisis aid, (3) RD and
technological innovation, (4) regional
development, (5) general investment
incentives, (6) support to SMEs, (7) labor and
training, (8) exports and foreign trade, (9)
energy efficiency, (10) environmental protection
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(3) RD and technological innovation - funding
of - technology incubators, centers, parks,
? Innovation Infrastructure - RD venture
capital, - international RD cooperation -
support for hiring RD personnel, - almost 40
directly promote selected technologies,
focusing on microelectronics / information
technologies, energy saving, new materials,
space and aeronautics and biotechnology
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Innovation infrastructure support for
industrial development and industry-science
linkages 1. Information point liaison
officer 2. Information center 3. Innovation
center 4. Business / Technology incubator
5. Technological park 6. Science
park 7. ST park 8. Industrial / Business
park 9.
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(3) RD and technological innovation In
1993 269 programmes (out of 1437 -
18.7) 8,677 million (out of 46,028 million
- 18.9)
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• OECD STI Outlook, 2000
• Industry-science linkages have become a central
  concern of government policy in recent years.
• Technical progress has accelerated in areas where
  innovation is directly rooted in science
  (biotechnology, information technology, new
  materials)
• Firms demand for links to the science base has
  increased.
• Innovation now requires more external and more
  multidisciplinary knowledge.
• Firms have been forced to save on RD costs and
  to search for alternative sources of knowledge
  outsourcing!
• Financial, regulatory and organizational changes
  have boosted the development of a market for
  knowledge.

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• OECD STI Outlook, 2000 (cont.)
• Restrictions on public financing have encouraged
  universities and other publicly funded research
  organizations to enter this market, especially
  when they can build on established linkages with
  industry.
• Such links are beneficial to both universities
  and firms.
• Universities seek industry contacts to ensure
  good job prospects for students, to keep
  curricula up to date and to obtain research
  support.
• Leading research universities seek strategic
  alliances with firms in order to consolidate
  their position in innovation networks and to
  establish their place in the market for knowledge.

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• OECD STI Outlook, 2000 (cont.)
• The main benefit for firms is often improved
  access to well-trained human resources.
• Other benefits include access to new scientific
  knowledge, established networks and
  problem-solving capabilities.
• Interaction between science and industry takes
  various forms in different countries, owing to
  differences in institutions, regulatory
  frameworks, research financing, intellectual
  property rights and the status and mobility of
  researchers.
• While modest in number, university spin-off firms
  are a vital component of networks and play an
  increasingly valuable role in most countries.
• Preliminary OECD data suggest that spin-off
  formation is about three to four times higher in
  North America than in other OECD areas.

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• OECD STI Outlook, 2000 (cont.)
• Most spin-offs are concentrated in information
  and communication technologies (ICT) and
  biotechnology.
• Governments can help lower certain obstacles to
  spin-off formation by providing seed capital to
  help finance early-stage investment or by
  improving incentive structures for researchers
  and would-be entrepreneurs
• Other barriers also affect the link between
  science and industry - the granting of
  intellectual property rights varies significantly
  - Some countries grant ownership of publicly
  funded research to the performing institution,
  others to the inventor (latest Germay UNI).
• Granting licenses to institutions tends to make
  the research less exclusive.
• In addition, public researchers are traditionally
  evaluated on their research, not on their
  contribution to industry

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Table Main ST indicators key figures, year
2003 OECD-MSTI, 2004
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• Content
• U-I relations in OECD countries
• U-I relations in CEE or transition countries
• Case of transition RD system in Serbia

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• Transition and restructuring of RD system in
  CEEC
• re-allocation and wasting of human resources,
• strong organizational and functional changes
  (closing-up, take-over, disappearing, surviving,
  etc.),
• searching for new role in new NIS, which creation
  hardly could be connected with contribution form
  RD system
• Radosevic, 1999

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RD systems
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• Main characteristics of western
• RD system are
• Relatively autonomous institutes / groups
• Highly interactive institutions/individuals, both
  nationally and internationally
• Broad clusters around basic and applied research,
  but boundaries blurred
• Self-renewing, spin-offs, etc. organizational
  changes.
• Sharp, 1999

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• Basic Research Cluster
• Competitive and subject to peer review to
  promote excellence
• Project / programme funding for 3-5 years to
  ensure renewal
• Link research to graduate teaching to ensure
  new blood
• Linked into EU system to ensure interchange.
• Applied Research Cluster
• Tax breaks to encourage investment in RD
• Subsidies geared to employment scientist and
  engineers
• Shared-cost projects for collaborative RD EU
  schemes and EU structural funds
• Government contracts on customer/contractor
  basis.
• Sharp, 1999

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• Main characteristics of former Soviet RD system
  are
• Highly hierarchical (both organizational and
  personal)
• Collegial within institutions but not outside
  few links international
• Failure of linkages between enterprises and
  branch industrial institutes,
• No linkages between enterprises and universities.
• Sharp, 1999

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• Characteristics of transition from former Soviet
  RD system to western RD model are
• Fall out and free floating disappearing of the
  institutions and individuals (brain-drain, both
  national, from RD to other sectors, and
  emigration from country), waiting and see
  strategy, followed by insecurity, small and rear
  salaries, etc.
• Survival of the fittest massacre of the unfit /
  unlucky see Table 3
• Linkages beginning to form desperate search for
  mergers and links with domestic and foreign
  companies, needed for some sort of RD support
• New corporate sector emerging .
• Sharp, 1999

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• Proposition how to move from transition to
  western system
• Essential to give institutes / research groups
  autonomy and allow re-grouping if this is
  necessary
• A high degree of inter-change and inter-action
  essential
• Mechanisms for dynamic re-grouping and
  self-renewal must be part of system .
• Sharp, 1999

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Meske, 1998
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Table Researchers in selected CEE countries in
1990 and 2003 OECD-MSTI, 2004
2003/1990
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• Main problems in process of creation of NIS in
  CEE
• Practically, in the ex-socialist economy
  individual enterprises existed only as production
  units.
• RD organizations were not organized in industry,
  but for industry, RD was not conducted in
  industry, but for industry!
• The neglect of the role of enterprise as a source
  of technology and emphasis on extramural RD were
  at the root of the problems of RD in the
  socialist system
• the successful exploitation of imported
  technology is strongly related to the capacity to
  adapt and improve this technology through
  indigenous RD Freeman, 1991.
• Radosevic, 1996

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• Main problems in process of creation of NIS in
  CEE (cont.)
• Because of closeness of the socialist economies,
  their RD systems were forced to imitate and
  re-invent technologies already in use in western
  economies, and strongly oriented towards military
  objectives, reducing their contribution to the
  economy.
• Product development dominated over RD and over
  technological effort which focused on process
  techno-logies, cost reduction and organizational
  efficiency
• Civilian RD sector had very low productivity,
  unable to cope with rapid changes in
  technologies, which became obvious with the
  progress of microelectronics.
• Implementation of innovations was slow and
  inefficient and user specifications and
  requirements did not play an important role.
• Radosevic, 1996

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• University-industry links as magic formula for
  commercialization of RD results - ?
• Difference in level of technological development
  of particular industries and fields of ST are to
  big, and bridging mechanisms are missing or
  undeveloped
• Absence of market (projects, consultancy) and
  non-market (informal knowledge transfer,
  education) links between RD sector and
  industrial organizations in socialist period, can
  not be easily overcome
• Type of RD results packages ready for
  implementation, as main RD results in former
  Soviet RD model, are inadequate form of supply
  for technologies for new, market economy
  conditions.

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Total Patent Applications
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Resident Patent Applications
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Non-Resident Patent Applications
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• Innovation capacity
• National innovative capacity is the ability of a
  country as both a political and economic entity
  to produce and commercialize a flow of
  new-to-the-world technologies over the long term
  Furman, Porter, Stern, 2002.
• Building blocks for the concept of innovative
  capacity
• Presence of a strong innovation infrastructure
• Specific innovation environments present in a
  countrys industrial clusters
• Links between the common innovation
  infrastructure and specific clusters.

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Innovation capacity Public policy plays an
important role in shaping a countrys national
innovative capacity beyond simply increasing
the level of RD resources available to the
economy, other policy choices shape human capital
investment, innovation incentives, cluster
circumstances, and the quality of linkages
Furman, Porter, Stern, 2002. CEEC
Innovative capacity of the economy under the
framework of NIS is potential for interaction
between the actors of the NIS, rather than
ability to innovate.
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Innovation capacity second concept
A Two-Tier or Multi-Tier Europe? Assessing the
Innovation Capacities of Central and East
European Countries in the Enlarged EU SLAVO
RADOSEVIC School of Slavonic and East European
Studies JCMS 2004 Volume 42. Number 3. pp. 64166
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• Content
• U-I relations in OECD countries
• U-I relations in CEE or transition countries
• Case of transition RD system in Serbia

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Absorptive Capacities
Source Dj.Kutlaca, after S.Radosevic
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RD Capacities
Source Dj.Kutlaca, after S.Radosevic
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• Industrial RD and Innovation activities in
  Serbia
• First Innovation Survey 1987-1991
• Second Innovation Survey 1992-1995
• Metal processing, Chemical and Textile industries
  in Serbia and Montenegro
• Sample 25 of employees
• 70 same firms in both surveys
• Methodology OECD - Frascati Oslo Manual, EU
  harmonized questionnaire
• Third Innovation Survey 2005 EAR!

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Industrial RD and Innovation activities in
Serbia Federal government in former
Yugoslavia in late 1980s launched ST programme
with main direction to build networks between
universities and industrial laboratories. After
two years, this programme gained first results,
but later political developments stopped this
process and broke most of newly established links
(through projects, consultancy works, etc.)
Radosevic and Kutlaca, 2001 Joint
characteristic for both IA surveys is fact that
main partner in contract RD activities were
universities, followed by independent RD
institutes. This fact confirm positive findings
about established good practice during
abovementioned federal government ST programme,
directed to networking process between industrial
RD laboratories and universities.
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Development of Science Technology Parks in
Serbia2005 - ?
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Development of Science Technology Parks in
Serbia2005 - ?

• Technology Incubators in AP of Vojvodina
  Development plan of the Govt. of the APV
• Zrenjanin
• Subotica
• Novi Sad ? ST park !

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Development of Science Technology Parks in
Serbia2005 - ?

• Govt. of Serbia
• ST park in Agroindustry Radmilovac

• Local Municipalities in Serbia
• Business Incubator Knjazevac

• Companies
• Hemofarm Vrac, AP of Vojvodina

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• Strategic Group for Innovation Govt. of Serbia
  est. 11.11.2005 as triple helix
• Govt
• RD org.
• Industry

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Strategy for development of ST parks and
innovation centers in Serbia Ministry of
Science and Environmental Protection, February
2005.
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Case 1 Science Technology Park Novi Sad
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Technology incubator project

• Project partnership between the VIP Fund and the
  University of Novi Sad (UNS) has been created
  (the contract signed)
• The applicant will be the University of Novi Sad
  and the partner would be the VIP Fund
• The location of the Incubator would be in the
  Novi Sad Free Zone

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Science Technology Park

• 25 high-tech companies already in the virtual
  Park
• The incubator will be the first component of the
  physical Park
• The Science Technology Park ownership defined
  and approved by the three parties (UNS, FZNS, VIP
  Fund)
• The project partners would ask for EUR 300,000
  from INTERREG Program, VIP Fund will provide 10
  co-financing

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Incubator details

• The incubator will provide 500 square meters of
  office space for approx. 10 tenant companies
• 4 tenant companies identified and more to come as
  a result of the Best Technology Innovation
  Competition
• The project is the result of two years long pilot
  project NOSIC Incubation Centre Novi Sad, which
  you may learn more about at www.nosic.ns.ac.yu

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Incubator details

• One-story building with prefabricated (modular)
  construction,
• Management and staff (not more than 4 people)
  that will provide consultancy services to tenant
  companies
• VIP Fund as a regional investment promotion
  agency will have up to 25 of the incubator to
  foreign companies for investment settlement and
  other business endeavors in Vojvodina

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Case 2 Science Technology Park Mihajlo
Pupin Belgrade
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• The Mihajlo Pupin Institute in Belgrade (MPI)
• "parent" ICT research and development
  organization,
• a number of small and medium enterprises
  ("daughter" companies) that commercialize "the
  parent" organization's research results,
• an enterprise rendering administrative and other
  supporting services,
• appropriate infrastructure,
• surplus business premises for new SME that would
  be founded through "spin off" and incubation
  processes,
• as well as the already existing enterprises that
  would form part of a newly established STP.
• At present, the MPI "hosts" on its premises 16
  SMEs, on cca 1.460 sqm, which utilize its
  infrastrucure.

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STPMP - Vision
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Questions Answers