Historical Roots ofNSl:List's“importance ofintangiblecapital。F.List(TheNational Systemof PoliticalEconomy,1841)RQ:HowcouldGermanyovertakeBritainduringindustrialrevolutionEmphasis on statein coordinatingand carrying throughlong-termpoliciesforindustryandeconomy>coveringawide set of national institutionsincluding thoseengaged ineducationandtrainingas wellasinfrastructuressuchasnetworks forthetransport ofpeople and commoditiesDevelopmentof"productiveforces",notallocationofscarceresourcesBest technical education and training systems (e.gGewerbeInstitute)K.D.Friedrich(1835)NeubrandenburginFlamesTechnische UniversiteitTUEindhovenUniversity of TechnologyEconomicsof Innovation2013
Economics of Innovation 2013 Historical Roots of NSI: List’s “importance of intangible capital • F. List (The National System of Political Economy, 1841) − RQ: How could Germany overtake Britain during industrial revolution − Emphasis on state in coordinating and carrying through long-term policies for industry and economy > covering a wide set of national institutions including those engaged in education and training as well as infrastructures such as networks for the transport of people and commodities − Development of "productive forces", not allocation of scarce resources − Best technical education and training systems (e.g. Gewerbe Institute) K.D. Friedrich (1835) Neubrandenburg in Flames
NSl:Role of (national)institutions,organizations,etc.oninnovation&diffusionHow different national cultures,institutions,organisations,inter-firm relationships...affectinnovationanddiffusionOrganisationsorformalInstitutions are sets ofhabits,routines,rulesinstitution are formalnorms andlaws,whichstructureswithexplicitregulate the relationsgoals and purposes (e.gbetweenpeopleandbanks,universitiesshapehumaninteractiongovernments)(e.g.privateproperty)Technische UniversiteitTUEindhovenUniversity of TechnologyEconomicsofInnovation2013
NSI: Role of (national) institutions, organizations, etc. on innovation & diffusion How different national cultures, institutions, organisations, inter-firm relationships . affect innovation and diffusion. • Institutions are sets of habits, routines, rules, norms and laws, which regulate the relations between people and shape human interaction (e.g. private property) • Organisations or formal institution are formal structures with explicit goals and purposes (e.g. banks, universities, governments). Economics of Innovation 2013
Historicalperspective onNSl:Understanding riseandfallofempires(growthrates)Whatwerethekeycharacteristicsof.BritishNSlin 18th Century(includingscienceasnationalinstitution encouragedbystate,linksbetweenscientistsandentrepreneurs...)GermanNSIin 1gth Century(includingtechnologicaleducation and training systems, role of state)UsNS/in2othCentury(includingmassproduction,in-houseR&D,foreigninvestment)Technische UniversiteitTUEindhovenUniversity of TechnologyEconomicsofInnovation2013
Historical perspective on NSI: Understanding rise and fall of empires (growth rates) What were the key characteristics of: British NSI in 18th Century (including science as national institution encouraged by state, links between scientists and entrepreneurs.) German NSI in 19th Century (including technological education and training systems, role of state) US NSI in 20th Century (including mass production, in-house R&D, foreign investment) Economics of Innovation 2013
KeyaspectsofSystemsInnovation(Sl)perspective1.Institutional change not seen from static allocative efficiencycriteria but how promotes technological and structural change2.Mezzoperspectivebeyondmicro/macro.Individualfirmsareseen as part of broader network of firms with whom theycooperateandcompete.Sl can be inter-firm,regional, national or global.The network isthe unit of analysis (notthe firm)inthemezzo perspectiveNetwork consists of:a. customers, subcontractors,infrastructure, suppliersb.competencies/functionsc. links/relationshipsCompetenciesforinnovationare distributedthroughout networkTechnische UniversiteitTUofactorsandtheirlinks/relationshipsEindhovenUniversity of TechnologyEconomicsofInnovation2013
Key aspects of Systems Innovation (SI) perspective 1. Institutional change not seen from static allocative efficiency criteria but how promotes technological and structural change. 2. Mezzo perspective beyond micro/macro. Individual firms are seen as part of broader network of firms with whom they cooperate and compete. SI can be inter-firm, regional, national or global. The network is the unit of analysis (not the firm) in the mezzo perspective. Network consists of: a. customers, subcontractors, infrastructure, suppliers b. competencies/functions c. links/relationships Competencies for innovation are distributed throughout network of actors and their links/relationships. Economics of Innovation 2013
Moreonsystemsofinnovationperspective3.Economicand technical change is a social process whereby newinstitutionsinordertobe viablehaveto be embodiedinsocialpractice(Granovetter1995).Informal networksthatsupportorhinderchangeLearning =process of (a)acquisition oftechnical andorganizationalcompetenciesand(b)creationofsocialnetworks(social capital view)Social networks are indispensable for putting (new) knowledgeintoproductiveuse(e.g.entrepreneurialexperiences insmallwineproducernetworks)Technische UniversiteitTUEindhovenUniversity of TechnologyEconomicsofInnovation2013
More on systems of innovation perspective 3. Economic and technical change is a social process whereby new institutions in order to be viable have to be embodied in social practice (Granovetter 1995). Informal networks that support or hinder change. Learning = process of (a) acquisition of technical and organizational competencies and (b) creation of social networks (social capital view) Social networks are indispensable for putting (new) knowledge into productive use (e.g. entrepreneurial experiences in small wine producer networks). Economics of Innovation 2013