Speaker: Prof. Luigi Orsenigo

1
Speaker Prof. Luigi Orsenigo

• Università Commerciale Bocconi Milan
• CESPRI
• Centre of Research on Innovation and
  Internationalization

2
Some stylised facts from industrial dynamics

• 1. Small, new companies have high probabilities
  to exit markets within two years after entry
  (more than 50)
• 2. Survivors then grow at high but highly
  variable rates, but it still takes a long time
  (appr. 10 years) to achieve average performance
  of the industry
• 3. Survival is positively correlated to (initial)
  size and age, but negatively to growth
• 4. Innovativeness, internationalization, previous
  experience of founders are positively correlated
  to survival
• 5. Spinoffs from (large) efficient firms have
  higher probabilities to survive and growth

3
Heterogeneity and its persistence

• Firms differ even within very narrowly defined
  business lines under most measures of structure
  and performance
• Size
• Growth
• Productivity
• innovativeness
• These differences tend to persist over long
  periods of time no convergence to an average
• The dynamics of an industry is significantly
  driven by outliers

4
Taxonomies

• Different taxonomies have been proposed
• Type of firms
• Technological regimes
• Geographical areas
• Their intersection can be helpful in identifying
  needs of firms and policies

5
Taxonomies of firms

• Schumpeterian firms
• Based on innovations
• Smithian firms
• Exploiting division of labour and specializing in
  specific stages of the productive/innovative
  process
• Marshallian firms
• Exploiting networks and local externalities
• Marginal firms

6
Taxonomy of regions

• 1. High-tech clusters
• 2. Metropolitan regions in developed countries
• 3. Diversified and dynamic industrial regions
• 4. Specialized industrial clusters
• 5. Intermediate regions
• 6. Old industrial and re-conversion regions
• 7. Transition economies
• 8. Economic lagging regions
• 9. Metropolitan areas in economic lagging
  regions/countries
• 10. Border regions
• 11. Internal small rural areas
• 12. Large peripheral areas

7
Technological Regimes

• Schumpeter Mark I and Schumpeter Mark 2
• Pavitt's taxonomy
• New taxonomies
• 1. Science Based
• 2. Fundamental Processes
• 3. Complex knowledge system
• 4. Product-engineering
• 5. Traditional industries

8
Some properties of the processes of innovation
and internationalisaion

• interactive and continuous learning processes,
  involving mastery and integration of different
  knowledge bases and competencies multitechnology
  and multicapabilities small firms
• The Chain-linked Model
• Systems of production and innovation
• Regional
• Sectoral
• National

9
Strategic and organizational trade-offs and
firms' capabilities

• exploration and exploitation
• integration and coordination vs. specialization
  and decentralization
• capabilities of exploration
• Absorptive capacities
• Integrative capacities

10
The need for policies and intervention

• market failures
• externalities
• increasing returns
• complementarities
• network externalities
• positive feedbacks
• agents failures, i.e. the mistakes and
  rigidities of particular organisations, (e.g
  firms, government bodies, public agencies,
  etc..).
• -system failures, i.e. the lack or insufficient
  development of linkages, relationships,
  connections and complementarities among agents
  and fragments of knowledge may hamper
  technological advance

11
Range and aims of policies

• Incentives and capabilities
• creation of new technological opportunities
• support to the process of competence creation and
  development
• policies can be designed to stimulate faster
  adaptation and strategic/ organisational change
• variety of competencies, efforts and research
  directions has to be preserved and continuously
  recreated.
• Public support can be crucial in order to break
  lock-ins
• development and reconfiguration of the elements
  of the innovative process as a system and of
  their relationships In some cases, key elements
  are simply missing or are underdeveloped. In
  other cases, the relations among them are weak or
  conversely -redundant.
• Support might be necessary to promote and
  facilitate coordination among agents, like in
  standard setting.

12
Requirements and needs of new internationalising
firms

• Internal capabilities
• Strategy
• Finance
• Organisation

13
Internal capabilites

• Technology and products
• State-of-art, innovative technology and products
  (quality, services, price)
• Skills and training
• Protection of IPRs
• Knowledge of ones own market and of other
  potential markets
• Knowledge of foreign languages, cultures, laws,
  customs, etc..

14
Strategy

• Commitment to internationalisation
• owner or entrepreneurs with clear vision on
  internationalisation his company.
• appointment of an expert inside the company
  explicitly devoted to internationalisation
• Selectivity
• concentrate efforts on core capabilities and
  products that can gain leading positions in
  foreign markets
• Identifying the appropriate overseas
  distributor/agent/partner.
• customer orientation and awareness of the
  differences between countries
• concentrate efforts in specific countries rather
  than spreading too thinly

15
Strategy (ctd)

• balanced presence between foreign and domestic
  market
• - achieving a strong position in domestic markets
  as a basis for successful internationalisation
• - but do not consider foreign markets as less
  important than domestic ones

16
Organisation

• Culture of cooperation inside the company and
  with other SMEs to present common products or
  services
• Planning sufficient time and effort that are
  necessary to go for international market
• Networks
• knowledge of support organisations and access to
  experienced business experts within the region
  and abroad
• dense, but open networks
• active participation in networks
• effective organisation and control of overseas
  operations

17
Policy instruments

• A variety of support programs and organisations
• Wide differences across regions
• local, regional and national level
• Public and private
• Chambers of Commerce
• Technology transfer, incubators, ....
• Development agencies
• Trade associations
• Private services, finance,..

18
Areas of intervention

• Finance
• Marketing support
• Technological support
• Legal support
• Foreign policy
• Specific focus on internationalisation
• Division of labour vs. overlapping of functions,

19
Problems

• The organisational deficit
• Need to strengthen and formalise core
  capabilities and competitive advantages
• Building dense, open and non -redundant networks
• Integration of measures
• Identifying missing competencies and links
• External support is always complementary to and
  never a substitute for internal capabilities,
  strategies and organisation
• Policy making is learned, through experience and
  interaction