Sectoral Innovation System Research Articles

Sectoral systems of innovation in the era of the fourth industrial revolution: an introduction to the special section

AbstractThe sectoral system framework has been adopted to study innovation and industrial dynamics in a wide range of sectors. However, recent development of the so-called “fourth industrial revolution” technologies, such as artificial intelligence, cloud computing, additive manufacturing, advanced robotics, Internet of Things, smartphones, and autonomous vehicles, has been blurring the boundaries of existing sectors, bringing both opportunities and challenges for sectoral systems research. In this introductory essay, we first provide a quick review on the sectoral systems of innovation literature, clarifying some conceptual and methodological issues. Then, we discuss how the fourth industrial revolution might reshape sectoral systems along three different dimensions (i.e. technological, market, and policy dimensions). Finally, we introduce articles in this special section and call for future research on this intriguing topic.

Catch-up and the entry strategies of latecomers: Chinese firms in the mobile phone sector

Abstract As interfaces between human beings and the digital world, mobile phones have evolved from relatively simple devices (e.g., feature phones) to complex products (e.g., smartphones). Many firms in emerging countries such as China have successfully entered the mobile phone sector. A research question that emerges from the evidence on China is whether the entry strategies of these catching up firms have been affected by the introduction of smartphones. In order to investigate this question, the article follows the methodology of evolutionary theory and history-friendly models. It first examines historically the various strategies of the Chinese entrants in the mobile phone sector. On the basis of this empirical analysis, it then develops appreciative theorizing on the factors that have affected the catch-up entry strategies. Our results show that the successful catch-up entry strategies differ depending on the sectoral environment. A technology-driven strategy is more appropriate when there is a market sheltered from competition, so that technological capabilities can be accumulated; on the contrary a marketing-driven strategy is more appropriate when standardized technological solutions become widely available. The article contributes to the catch-up literature by identifying a new entry strategy and by pointing at the role of the sectoral environment, and to the sectoral innovation system literature by addressing the catch-up strategies of latecomer firms under different technological, industrial structure, and market conditions.

A dynamic multi-sector analysis of technological catch-up: The impact of technology cycle times, knowledge base complexity and variety

This article contributes to the ongoing debate about whether, how, and under what conditions latecomer countries can become producers of new technology and innovation, thereby catching up with technological leaders. Recent work on sectoral systems of innovation and in the evolutionary economics literature suggests that successful latecomers can move into new technological or industrial domains. They specialise in domains that present more frequent windows of opportunity, shorter technological cycles, flatter learning curves and easier access to relevant knowledge than others. This study investigates the role and significance of two hitherto neglected dimensions of technological regimes that might influence technological catch-up, namely, the degree of complexity and variety of an industry's knowledge base.The impact of technological variety and complexity on catch-up dynamics is tested in three industries – upstream oil/gas, wind power and solar energy – over the period from 1980 to 2016. First, we find that increased knowledge base complexity and related (as opposed to unrelated) variety play a substantial role by hindering the latecomers’ attempts to catch up with technological leaders within each industry. Second, we confirm that other dimensions of technological regime are relevant. Specifically, we find that the length of the technological cycle is important, although a nuanced picture emerges regarding the direction of its impact on catch-up when results are compared across the three industries. These results offer new insights into the technologies and industries in which latecomer countries can specialise in order to develop their innovation capacity.

The Chilean Sectoral Innovation Systems: An Approach from The National Innovation Survey

This paper proposes a configuration and characterisation of the economic sectors in Chile applying Malerba’s sectoral innovation systems approach. Its objective is to examine the existence of sectoral systems of innovation in Chile and their characteristics. Using data from the Chilean Tenth Innovation Survey of Firms, a three-step statistical analysis was performed. In the first step, 15 variables were chosen and converted by factor analysis into four components reflecting the configuration of the sectoral system. In the second step, a cluster analysis was carried out to determine the characterisation of the sectors. In the final step, a simple econometric model was developed to estimate a proxy for the propensity to patent of the economic sectors. It is possible to discover the existence of three groups of sectoral innovation systems. One is characterised by a low propensity to patent. Another one uses market information and some effort in R&D to innovate. A third one is characterised by a strong use of market sources, high effort in R&D, strong networking and collaboration, and a close interaction with the industrial property system. This paper shows the usefulness of composite variables in identifying those sectors with higher propensity to patent. In particular, the factor networks and collaboration is the most important. This last is important to highlight in terms of policies in science and technology that aim to establish formal mechanisms to share common knowledge strengthening the relationships among the different players of the innovation process

Exploring new opportunities through collaboration within and beyond sectoral systems of innovation in thefourthindustrial revolution

AbstractThis article investigates how a leading Chinese multinational enterprise in a core sector of the fourth industrial revolution manages research collaborations within and beyond its sectoral systems of innovation to create novel innovations and push the technological frontier of the industry. We find the firm expanded its technology boundaries through collaborations, particularly multidisciplinary collaborations in both core and noncore technological areas of the industry to establish and maintain its leadership in this dynamic sector. High disciplinary diversity in the company’s collaborative research portfolio is positively associated with the novelty of its innovation outputs. Promising noncore technologies have been integrated into its production through collaborative research, thus promoting technological convergence at both the firm and the sectoral levels. As a result, the boundary of the industry is expanded.

The UK and German Low-Carbon Industry Transitions from a Sectoral Innovation and System Failures Perspective

Industrial processes are associated with high amounts of energy consumed and greenhouse gases emitted, stressing the urgent need for low-carbon sectoral transitions. This research reviews the energy-intensive iron and steel, cement and chemicals industries of Germany and the United Kingdom, two major emitting countries with significant activity, yet with different recent orientation. Our socio-technical analysis, based on the Sectoral Innovation Systems and the Systems Failure framework, aims to capture existing and potential drivers of or barriers to diffusion of sustainable industrial technologies and extract implications for policy. Results indicate that actor structures and inconsistent policies have limited low-carbon innovation. A critical factor for the successful decarbonisation of German industry lies in overcoming lobbying and resistance to technological innovation caused by strong networks. By contrast, a key to UK industrial decarbonisation is to drive innovation and investment in the context of an industry in decline and in light of Brexit-related uncertainty.

Industrial Energy Transitions and the Dynamics of Innovation Systems: The Swedish Pulp and Paper Industry, 1970–2010

This article provides a sectoral innovation system perspective of the development of energy efficient and clean process technologies in the Swedish pulp and paper industry. Specifically, the analysis elaborates the importance of knowledge development, actor networks, and institutions (including policy) for progressing and diffusing novel technologies related to energy use. The empirical analysis also sheds light on how significant changes in the sectoral innovation system have influenced the relevant research, development and demonstration activities in the Swedish pulp and paper industry over the period 1970–2010. The results are based on various sources—e.g., industry magazines, reports from industrial consultants and associations, minutes from meetings—and illustrate the importance of well-functioning innovation systems for successful technological development and diffusion processes. They display, in particular, the importance of joint, industry-wide R&D activities, trust-based state—industry relationships, government R&D expenditures, and intense information sharing. One important implication is that the role of policy stretches beyond the funding of basic R&D. Policy also involves measures that strengthen existing actor networks, build competence, and secure the existence of research institutes that provide a bridge between basic knowledge generation (at the universities) on the one hand, and industrial application on the other.

The price tag of technologies and the ‘unobserved’ R&D capabilities of firms

ABSTRACT In this work, we develop and apply a methodology to estimate technology-specific R&D investments at the firm level. To do so, we combine R&D investment with patent data for the world top R&D investors worldwide and show that investment per patent varies greatly across technologies and across firms developing a given technology. We then use these results to assess the relationship between technology-specific R&D investments and a series of factors characterizing technological development. The estimation strategy makes use of a multilevel framework that allows modelling heterogeneity at the firm and sector level. In line with the literature on the sectoral systems of innovation, we find that sector specificities matter in determining the price of technologies, economies of scale in knowledge production, and the cost associated to specialization. Moreover, our results suggest that the persistent differences in R&D intensity across firms are related to the technological choices they make. Firms’ idiosyncrasies co-exist with significant differences across sectors in shaping knowledge production functions. Implications for policy and research are discussed accordingly.

Many Miles to Paris: A Sectoral Innovation System Analysis of the Transport Sector in Norway and Canada in Light of the Paris Agreement

Transport is associated with high amounts of energy consumed and greenhouse gases emitted. Most transport means operate using fossil fuels, creating the urgent need for a rapid transformation of the sector. In this research, we examine the transport systems of Norway and Canada, two countries with similar shares of greenhouse gas emissions from transport and powerful oil industries operating within their boundaries. Our socio-technical analysis, based on the Sectoral Innovation Systems approach, attempts to identify the elements enabling Norway to become one of the leaders in the diffusion of electric vehicles, as well as the differences pacing down progress in Canada. By utilising the System Failure framework to compare the two systems, bottlenecks hindering the decarbonisation of the two transport systems are identified. Results indicate that the effectiveness of Norway’s policy is exaggerated and has led to recent spillover effects towards green shipping. The activity of oil companies, regional and federal legislative disputes in Canada and the lack of sincere efforts from system actors to address challenges lead to non-drastic greenhouse gas emission reductions, despite significant policy efforts from both countries. Insights into the effectiveness of previously implemented policies and the evolution of the two sectoral systems can help draw lessons towards sustainable transport.

Policy Role in Innovation Network: Case of Indonesian food processing firms

<p>The objective of the study is to reveal factors that are internal and external to firms that affect the use of network relations for innovation, with a focus on mapping the policy role in innovation networks. The study was undertaken through case analysis in four different firms. The study found that the number of actors in network relations affects upgrading of value of a good or service. The upgrading is activated by learning events, which are related to organizational changes, namely, refocusing on the core business, restructuring the internal organization, undertaking management change, and applying responsive management practices. The specific policy role in stimulating the network effect for innovation are: (i) government facilities for the ease of doing business by continuing to reduce bureaucratic processes to regulate standard requirements, (ii) strengthening government agencies–industry relations by establishing promotion of representatives of Indonesian food products overseas, (iii) government brokerage and matching services for global trading by arranging trade fairs, business seminars, or supporting modern information technologies, and (iv) government relaxation on import restriction to maintain a stable supply of raw materials for food processing. The substantive contribution of this scientific study is the provision of the concept of policy role in innovation networks viewed from the sectoral system of innovation.<strong></strong></p><p><strong> </strong></p><p><strong>Keywords: </strong><em>innovation network, policy role, organizational change, upgrading, sectoral system of innovation</em></p>

Issues and Potentials of Research Topics in Medicines:A Research Priority Setting (RPS) in The Indonesian Institute of Sciences (LIPI)

<p>This article ilustrates the findings of research priority setting (RPS) in the field of medicine and health at the Indonesian Institute of Sciences (LIPI) in 2017. This RPS has been conducted to address issues and explore potential research topics in LIPI in the area of drug and health industry. The RPS stage has been conducted with the Delphi Method and produced five major issues, namely 1). Structure of the pharmaceutical industry in Indonesia, 2). The Role government R&D institutions and universities in the structure of the pharmaceutical industry, 3). Standardization and product supervision, and 5). Policies in the sectoral innovation system. Based on these major issues, LIPI has potential research topics that need to be developed, as follows: 1) Research on "<em>marker</em>" compounds and development of "<em>markers</em> <em>bank </em>", 2) Research on combinations of chemical compounds in medicinal and health products, 3) Social research related to public acceptance of medicinal products, 4) Research on the potential of herbal medicines originating from "<em>indigenous knowledge</em> ", 5) The need to develop a catalog of potential herbal medicinal ingredients, 6) Development of formulations of finished drug products based on the expired patent utilization, 7) Development of research for phytofarmaceutical products, 8) Development of research on reagents to support research activities in the fields of health and medicine, 9) Development of technological capabilities that is needed to support research activities in the fields of health and medical treatment, 10) Development of research topics by referring to the ministry's pharmaceutical industry development road map and 11) Research potential in R&D institutions and universities with reference to R&D and manufacturing scenario of APIs. The outputs of RPS will be the basis for LIPI to focus on research in the field of medicine and health for the years 2017­­­--2026.</p><p> </p>Keywords: research priority setting, pharmaceutical industry, medicine research, pharmaceutical industry

Styria Bölgesi (Avusturya) Yenilik Sistemi'nin Genel Bir Değerlendirmesi

Yenilik, kısaca bilginin ürünler ve süreçler şeklinde ticarileştirilmesidir. Yenilikler, klasik iktisatçılardan beri ekonomide önemli bir yere sahiptir. Günümüzün küreselleşen dünyasında bu önemi daha da artmıştır. Küresel rekabet gücünde, yenilikler önemli bir unsur haline gelmiştir. Bu nedenle yeniliklerde sistem yaklaşımı temelinde 1980'lerde Ulusal Yenilik Sistemi (UYS), 1990'larda Bölgesel Yenilik Sistemi (BYS) ve 2000'lerde Sektörel Yenilik Sistemi (SYS) gibi yaklaşımlar geliştirilmiştir. Bu çalışmada, Avusturya'nın Styria Bölgesi Yenilik Sistemi temel bileşenleri (stratejiler, aktörler ve araçlar) ile analiz edilmiştir. Bir sanayi bölgesi olan Styria, II. Dünya Savaşı sonrasında Avrupa'nın yeniden yapılanmasında önemli bir rol oynamıştır. Bu dönemde, demir-çelik sektörüne dayalı bölge ekonomisi oldukça gelişmiştir. 1980'lerde dış ticarete açılan bölge, düşük maliyetli gelişmiş ülkelerin rekabet baskısı altında kalmıştır. Bölgenin küresel rekabet gücünü yenilikler temelinde artırmak için yerel aktörlerin işbirliğinde Bölgesel Yenilik Sistemi geliştirilmiştir. Nitel araştırma yöntemlerinden doküman analizi tekniğiyle yapılan analizle Styria Bölgesi Yenilik Sistemi'nin temel bileşenleri (stratejiler, aktörler ve araçlar) ortaya konmuştur. Bunlar, stratejiler (kalkınma, teknoloji, ekonomi ve araştırma stratejileri), aktörler (Bilim, Araştırma ve Ekonomi Bakanlığı, Ulaştırma, Yenilik ve Teknoloji Bakanlığı ile bölge yönetimi, üniversiteler ve araştırma kurumları gibi yerel aktörler) ve araçlar (mali destekler, kümeler, yetkinlik merkezleri gibi). Analizle Styria bölgesinin yenilik sistemi temelinde sanayi toplumundan bilgi toplumuna dönüşüm sürecinde olduğu gözlenmiştir.

Identifying System-Related Barriers for the Development and Implementation of Eco-Innovation in the German Horticultural Sector

The implementation of eco-innovations can be a strategy to combine economic benefit and reduce negative environmental impact. German greenhouse production is highly energy intensive, as heating and energy account for the second largest cost factor. Thus, the sector wants to develop and implement eco-innovations to speed up the process towards increased sustainability. In this paper, a sectoral systems of innovation (SSI) analysis is presented to identify and describe interrelated systemic barriers for developing and implementing such innovations into the sector. The SSI was used as an analytical framework, which enabled covering different system levels and components in the research in order to draw a comprehensive picture of this specific innovation environment. A mixed-methods, explorative approach was used: a literature analysis, followed by an expert workshop and semi-structured expert interviews, was conducted to understand the barriers for development and implementation of such innovations. A SWOT workshop assisted in generalizing results from selected innovation examples. A complementary two-wave Delphi study was used to identify innovation activity, important actors, policies and drivers within horticulture. Based on these data, we were able to identify different barrier-types, showing how they are interconnected and affect innovation processes increasing ecological modernization of the sector.

Critical issue mapping of Indonesian natural rubber industry based on innovation system perspectives

The added value of Indonesian natural rubber industry is the lowest among other main natural producing countries, Malaysia and Thailand. It is necessary to overcome this problem especially based on innovation system perspectives. The objectives of this study are to map the problems of the natural rubber industry and developing alternative solutions to these problems. This study use systems approach, namely Soft System Methodology (SSM) and Strategic Assumption Surfacing and Testing (SAST), which aim is to get a complete picture (rich picture) of the problems in Indonesian rubber industry and to identify the strategic issues that become the industry priorities through sectoral innovation system approach. Based on the mapping of strategic issues, it shows that almost all indicators were in a certain planning region. Such as policy issues (general/parent policies, financing policies, price policies, tax policies for R&D and Innovation, education and training policies), Institutional Issues (formation of financial institutions and institutional arrangements), Human Resources, Industrial issues (Development of downstream industries), technology (technology development as needed), as well as financial and market problems. This implied that there were many strategic and urgent problems that must be addressed in the development of the downstream industry and the innovation system of Indonesia’s natural rubber industry. It is important to highlight the interaction between innovators, intermediaries and innovation users. In addition to the interaction within the system, interactions outside the systems are also needed, such as foreign research institutions, etc. Government and financial institution support, strengthening the innovation institution and the existence of a legal direction and protection (such as the system innovation law/act) are the key factors in enhancing the innovation-based industry and increasing the industry competitiveness.

Sistemas Regionais de Inovação no Setor Farmacêutico Brasileiro: Estudo Comparativo

O presente estudo visa caracterizar a configuração regional do setor farmacêutico brasileiro, tendo por base as abordagens de sistemas regionais e setoriais de inovação. Para tanto, foram analisados dados secundários do setor produtivo e de ciência e tecnologia de cinco estados da federação – Rio de Janeiro, São Paulo, Goiás, Minas Gerais e Pernambuco. Os resultados indicam queda de participação do setor farmacêutico na atividade econômica de Rio de Janeiro e São Paulo, enquanto Goiás destacou-se pelo crescimento. Contudo, São Paulo e Rio permanecem em posição de destaque quanto à capacitação científica, abrigando maior número de instituições de pesquisa e cursos superiores e de pós-graduação voltados ao setor. As políticas estaduais refletem estratégias heterogêneas, mas que apresentam como ponto comum a concessão de diferentes modalidades de incentivos fiscais. O estudo apresentado identifica aspectos político-econômicos relevantes à elaboração de políticas públicas para o fortalecimento do setor farmacêutico, especialmente, no Rio de Janeiro.

Evolution and maturity of Brazilian automotive and aeronautic industry innovation systems: a comparative study

ABSTRACT The Brazilian Automotive and Aeronautic Industries are both important sectors for the National Innovation System. Through this research, we aim to understand the Innovation System of both sectors in order to collect lessons learned for the Automotive Industry Innovation Policy called Inovar-Auto (Innovate-Auto), which was effective from the beginning of 2013 until the end of 2017. This study was conducted based on the quantitative analysis of sectoral investment in R&D and the number of patents as well as on the qualitative analysis of some critical projects performed by companies in both industry sectors, the Automotive and the Aeronautic. All data were collected via interviews with the agents of the sectoral innovation system. This article aims to contribute to the analysis of a sectoral innovation system based on an analytical tool to measure the maturity level on specific key variables.

Az innovációs rendszerek irodalmának áttekintése

THE AIMS OF THE PAPER The systemic concept of innovation is now widespread, which implicates that innovation is considered as the outcome of the interplay between different actors situated in a specific environment. The study aims to introduce this concept and to analyze the literature of the innovation systems. The paper includes the definition of national, regional, technological, and sectoral innovation systems, and the specification of their position in the literature. Besides, the paper examines the new challenges that innovation systems must face. METHODOLOGY This study is a literature review, which consists of three parts. First, we describe the four types of innovation systems according to the most influential publications. Then, we analyze the evolution of the literature with bibliometric tools and describe the relationship between the different types of innovation systems. Finally, we introduce the new theoretical challenges of innovation systems. MOST IMPORTANT RESULTS The results show, although during the last three decades there has been a dynamic rise in the innovation system literature, in the last few years it stopped. It shows that the innovation system approach is beyond its most dynamic expansion. Also, it faces several challenges in order to remain a relevant analytical framework for newer aspects of innovation research. Therefore several approaches have been integrated that take into account the social and environmental impacts of innovation. RECOMMENDATIONS The innovation system as an analytical framework needs to be renewed, but it is still a widespread, relevant concept. In addition to the efforts made so far, further research is needed to enable a broader interpretation of innovation within this framework. Acknowledgements: This publication/research has been supported by the European Union and Hungary and co-financed by the European Social Fund through the project EFOP-3.6.2-16-2017-00017, titled Sustainable, intelligent and inclusive regional and city models.

Building an innovation system of medical devices in China: Drivers, barriers, and strategies for sustainability.

Objectives:This article aimed to discuss the emergence of medical device sector in China from a sectoral innovation system perspective, to explore the drivers and barriers to the successful building of an innovation system of medical devices, and to highlight the policy implications and suggestions for sustainable innovation of medical devices.Methods:A theoretical framework of sectoral systems of innovation was applied in the analysis of data, and materials were collected from multiple sources with particular attention paid to the evolutionary phases, structure, and function of the innovation system.Results:The evolution of medical device sector in China could be divided into four phases: initialization (1960s–1970s); exploration (1980s); steady growth (1990s); and rapid growth (since 2000). Through analyzing the innovation system’s structural components of technology, actors, and networking, as well as institutions, this study indicated that the government policy decision was the most important driver that affected the virtuous cycle of the Chinese medical device innovation system, followed by market demand and entrepreneurial activities. However, barriers against the innovation cycle such as knowledge base development and diffusion, legitimacy, and resource mobilization still remained.Conclusion:In its endeavor to build an innovation system, the Chinese medical device sector had made some progress in meeting the local medical demands and improving its industrial competence. Although a Chinese innovation system for medical devices was initiated under the guidance of the government, knowledge advancement and diffusion had become the main challenges for the sustainability of innovation in this sector. The future development depends on China’s effort and ability to establish education and health research systems specific to medical devices.

Evaluation of technological competence and operations efficiency in the defense industry: The strategic planning of South Korea

This research aims to contribute to efficiency improvement by providing the implications for decision-making on continuous defense R&D investment strategies and acquisition methods via analyzing the current position and measuring the efficiency of overall weapon systems on technological competence and operations. This research is distinctive in comparison to previous studies because it is structured in a two-stage DEA analysis for efficiency by distinguishing between the technology and operations of the current eight fields of weapon systems and by adding the external index for government competence and market competence. In 2016, in comparison to the year 2013, the eight major weapon systems’ efficiency fields of the overall system of Korea, efficiency of technological competence, and efficiency of operations all increased. This research introduced the input and output variable that fits in with the defense industry by connecting the weapon systems efficiency with the national innovation system and the sectoral innovation system that are both projected in this industry. It also formed the concepts of technological competence efficiency and operations efficiency using the two-stage Network DEA method.

Evaluation of M-Payment Technology and Sectoral System Innovation—A Comparative Study of UK and Indian Models

The paper constructs a sectoral system of innovation model specifically for the mobile payments (m-payments) sector. Both the UK and Indian sectoral system of innovation were studied in regards of the actors involved in providing the m-payment service with an emphasis on emergent business models. We integrated open innovation and Ogle’s ideas into our model and demonstrated the importance of active agency in shaping innovation systems, for example in leveraging existing social networks. The research draws upon original interviews with companies and regulators in both India and the UK. Our overall conclusion is that the m-payments sectoral system of innovation in India is more customer-oriented and far-reaching as compared to the practices in UK. It concludes that no matter the context, the importance of integrating firms’ activity into integrated service systems in demand-driven innovation is key for success.