The role of academia as an external resource of innovation for the automotive industry in Indonesia

Abstract

This article will reveal the role of academia, especially university and public research institutions, as the external resource of innovation for the automotive industry in Indonesia. Data and information on the variation of innovation sources in the firm's innovation process are analysed by using the sectoral innovation system (SIS) framework. The resource of innovation for the automotive industry in Indonesia diverged from individual to organizational actors both from internal and external resources. First, the innovation resource mostly came from the internal organization of the firm. Second, the external resource of innovation in the Indonesian automotive industry mainly came from competitors that stimulated the creation of new products in sharp market competition. Third, the role of university and public research institutions as external resources of innovation in the Indonesian automotive industry was small. Fourth, the innovative public research institutions have shown the potential to become external resources of innovation for local automotive firms. Fifth, innovation cooperation between industry and public research institutions was linked by research and development (R&D) matching grants provided by the government. Sixth, support by the public research institution to the innovative industry occurred in the form of technical assistance. For the future development of the automotive industry in Indonesia, the study has drawn two policy implications: first, concrete steps are needed to encourage universities and public research institutions to help the development of the local automotive industry in Indonesia; and, second, attractive stimulations are needed to spur innovation through R&D activity inside the local automotive industry.