Talents and Innovative Regions: A Systemic Perspective

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Talents and Innovative Regions A Systemic
Perspective

• Professor Bjørn T. Asheim,
• University of Lund and University of Oslo
• Paper presented at conference on Regions in
  Action The Nexus of Innovation, Entrepreneurship
  and Public Policy, Amsterdam, May 24 and 25, 2004

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Why talents, why innovative regions and why
systemic?

• On talents In a knowledge-based economy, the
  ability to attract and retain highly skilled
  labour is crucial to the current and future
  prosperity of city-regions as well as nations
• On innovative regions In a learning/ knowledge-
  based economy innovation is the most important
  means of competition
• On systemic In a learning/knowledge-based
  economy innovation is understood as interactive
  learning, which implies a focus on system of
  firms and organisations and not on individual
  firms

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Perspectives on innovative regions

• Firm perspective Theories used to inform
  strategies based on various incentives to try to
  alter the location decision of firms
• Clusters of related and supporting industries
  operating as geographically concentrated
  collections of interrelated firms in which local
  sophisticated and demanding customers and strong
  competition with other firms in the same industry
  drive the innovation process (Porter)

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Innovative regions (cont.)

• A second view focuses on the role of human
  capital that is, highly educated people. It
  argues that places with higher levels of human
  capital are more innovative and grow more rapidly
  and robustly over time (Lucas, Glaeser)

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Innovative regions (cont.)

• A third view emphasizes the role of creative
  capital, arguing that certain underlying
  conditions of places, such as their ability to
  attract creative people and be open to diversity,
  inform innovation and growth )creative cities
  (Florida, Cushing)

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Creative cities

• Constellations of talents and creative people are
  most commonly found in large city regions where
  the diversity of urbanization economies is more
  abundant. This, together with other factors such
  as labour markets characterised by high demand
  for qualified personnel, cultural diversity and
  tolerence, low entry barriers and high levels of
  urban service, largely determine the economic
  geography of talent and of creativity, both of
  which display concentration to large cities.

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Creative cities buzz and face-to-face contact
(F2F)

• Storper argues that face-to-face contact
  represents the most fundamental aspect of
  proximity, which favours urban concentrations and
  agglomerations. He argues that F2F is
  particularly important in environments where
  information is imperfect, rapidly changing, and
  not easily codified key features of many
  creative activities

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Creative cities buzz and F2F

• However, buzz and F2F cannot be generalised to
  such an extent as Storper attempts
• First, buzz and F2F is not necessarily the same
  types of phenomenon
• The classical F2F situation is the
  user-producer relationships found in clusters
  with manufacturing industries based on a
  synthetic knowledge base, and exploiting
  localisation econimies, and where tacit knowledge
  is of great importance

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Creative cities buzz and F2F

• The typical buzz situation is an informal
  meeting place (bar, pub, hotel lobby in
  connection with a conferences and fairs etc.),
  where networking is finding place, and
  information not knowledge is taking place
• The only group which may exchange knowledge in
  buzz situations is people employed in creative
  occupations (incl. advertisement etc.), which is
  based on a symbolic knowledge base, and where
  knowledge is highly individualised

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Creative cities buzz and F2F

• Talent working in high-tech industries based on
  an analytical knowledge base, however, does not
  exchange knowledge in informal buzz situations.
  They enjoy F2F when taking advantage of the
  proximity to the diversity of formal, codified
  knowledge and expertise found in large cities,
  and, thus, exploit urbanisation economies

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Analytical versus synthetic knowledge base
Whats the difference?
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Creative cities policy implications

• Thus, it is not enough to attract firms the
  right people also need to be attracted. Florida
  calls for complementing policies for attracting
  firms (business climate) with policies for
  attracting people (peoples climate). This
  suggests that the attention of politicians and
  planners should be directed towards people, not
  companies, i.e. away from business attraction to
  talent attraction and quality of place.

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Creative cities policy implications (cont.)

• This demonstrate that quality of place must be
  understood in broader terms than traditionally
  accustomed to while the attractiveness and
  condition of the natural environment and built
  form are certainly important, so too is the
  presence of a rich cultural scene and a high
  concentration of people working in cultural
  occupations as well as diversity and openess to
  newcomers (tolerence). The presence of such an
  environment or milieu attracts other types of
  talented or high human capitals individuals,
  which in turn attracts and generates innovative,
  technology-based industries.

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Creative cities on efficiency and equity

• Increased social and economic polarization in
  American creative cities the living conditions
  of the thinking class vs the serving class -
  represents the greatest challenge to retaining US
  position as the world leader in technology and in
  its ability to attract top talent. While
  attracting talent and improving quality of place
  are easy enough to find support for, more often
  than not the real consequences and costs for the
  low-skilled serving class (displacement and
  gentrification) are neglected and overlooked.

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Creative cities on efficiency and equity (cont.)

• In a new study Europe in the creative age
  (Florida and Tinagli) it is shown that Sweden is
  the top performer on the Euro-Creativity index,
  outperforming not only all of the other European
  countries, but the US as well
• Also the other Nordic countries as well as
  northern European countries (Ireland, the
  Netherlands and Belgium) is performing well

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Creative cities on efficiency and equity (cont.)

• This indicates that it is not only a question of
  finding the optimal trade-off between efficiency
  and equity (getting th trade off right), but
• That it might be a question of producing synergy
  between efficiency and equity (more equity also
  results in more efficiency), found in the Nordic
  countries, as the best policy to promote and
  reproduce creative cities

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Creative cities varieties of capitalism

• This problematic points to the varieties of
  capitalism approach
• Soskice and others convincingly argue that
  different national institutional frameworks
  support different forms of economic activity,
  i.e. that coordinated market economies have their
  competitive advantage in diversified quality
  production, while liberal market economies are
  most competitive in industries characterised by
  radical innovative activities

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Varieties of capitalism ((Soskice) Peck,
2003)
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Varieties of capitalism/varieties of regional
innovation systems

• Useful in comparative analysis of countries, no
  focus on regions
• Strong dichotomization
• Inert and inherited institutional landscape
  (policy learning)
• Application in regional context thus far
• Entrepreneurial Regional Innovation Systems
  (ERIS) versus Institutional Regional Innovation
  Systems (IRIS) (Asheim Gertler, 2004 Cooke,
  2004)

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IRIS (Cooke 2001/2004) (associated with
coordinated market economies)

• RD driven
• User-producer relations
• Technology focused
• Incremental innovation
• Bank borrowing
• External supply-chain networks
• Science park

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ERIS/New economy innovation system(associated
with liberal market economies)

• Venture capital driven
• Serial start-ups
• Market-focused
• Incremental and disruptive
• Initial public offerings
• Incubators (university industry relations)

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Knowledge bases institutional frameworks

• Synthetic knowledge base - IRIS
• Analytical knowledge base - ERIS
• ) Regional differentiation of innovation
  policies (US/European blend) at intra- and
  interregional levels within countries,
  representing different degrees of efficiency with
  respect to knowledge exploration, examination and
  exploitation
• ) Regionalisation of regional policies
  (innovation, entrepreneurship and talent are
  increasingly important) in many countries

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Talents and innovative regions/creative cities
what about the ordinary regions?

• This problematic has also an inter-regional
  (centre-periphery) dimension (i.e. within the
  EU). If cities are the centres of the
  knowledge-based economy attracting and retaining
  most of a nations talent, then the development
  of the knowledge-based economy will be
  geographically uneven and knowledge poverty will
  become a new kind of locational disadvantage.

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Talents and ordinary regions

• In policy terms the focus must be on how, without
  destroying what makes cities attractive places to
  be in, the less knowledge-based and peripheral
  regions can make themselves better capable of
  retaining and attracting industry that is likely
  to offer qualified, higher value-adding, more
  knowledge-intensive jobs for their own educated
  youth and attract other talents as well

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Knowledge based versus learning economies Whats
the difference?

• Most strategic resource ? knowledge
• Most fundamental activity ? learning
• But
• Learning economy innovation across-the-board of
  all types of industries or sectors
• Knowledge-based economy focus on science-based
  high-tech economies

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Science base vs knowledge base

• Important to distinguish between
• Science base
• Knowledge base
• And between
• RD intensive industries (OECD view)
• Knowledge intensive activities

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Distributed knowledge base

• Transition from an internal knowledge base of a
  firms to a distributed knowledge base of firms
  where the whole value system of a firm or value
  chain of a product must be taken into
  consideration when the knowledge intensity of a
  product is determined
• More and more highly complicated combinations of
  different knowledge types codified (embodied and
  disembodied), artisan and experience based, tacit
  knowledge

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Distributed knowledge base (cont.)

• The knowledge intensity enters as embodied
  knowledge incorporated into machinery and
  equipment or as intermediate inputs (components
  and materials) into production processes of other
  firms in the value chain/cluster
• This demonstrates that the relevant knowledge
  base for many industries is not internal to the
  industry, but is distributed across a range of
  technologies, actors and industries, making the
  OECD ranking of RD intensive industries less
  relevant (systemic perspective)

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Talents and ordinary regions

• In upgrading peripheral regional economies to
  knowledge-based (learning) economies the
  formation of regional innovation systems could
  play a strategic role either defined narrowly by
  using local universities as motors and agencies
  for change, or through a learning region approach
  based on broad social participation in a
  bottom-up perspective (implying a broad
  definition of an innovation system)

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Talents and ordinary regions (cont.)

• In this context it is important to be reminded of
  Porters view on the competitive advantage of
  firms and regions being based on the exploitation
  of unique resources and competencies, which must
  be reproduced through continous innovation. This
  linking of competitiveness and innovation is of
  strategic importance as it underlines the dynamic
  character of competitive advantage as a result of
  innovation