1. Innovation systems in economic
development: developing
dynamic social networks
Dr. Paul Benneworth
Center for Higher Education Policy Studies
(CHEPS), University of Twente, the Netherlands.
Paper presented to Cities as seedbeds for
innovation, International Conference of
Indonesian Development, Erasmus ISS, the
Hague, 12th-14th September 2013.

2. Acknowledgements
 OECD Regional Innovation Strategy
Project
◦ All comments on a personal basis
 Conference Organisers
 Conference Sponsors & Hosts

3. Introduction & Overview
 Economic development and
innovation communities
 Importance of global-local connectivity
to driving economic upgrading
 Identifying & promoting sites of
innovative networking
 Towards a new policy framework for
stimulating dynamic innovation
networks

4. INNOVATION COMMUNITIES
AND ECONOMIC
DEVELOPMENT
Part I

5. The innovation imperative
It is Indonesia‟s capacity to innovate
that will drive productivity growth, and
lead to a tripling of GDP by 2025, and
not natural resources.
Dr. Lukita D Tuwo, Vice Minister of
National Planning and
Development, ICID Conference, 13th
September 2013.

6. Innovation, economic growth &
proximity: an orthodox view
 Increasing importance of innovation to
economic development
 Innovation based on creating/
exploiting new knowledge
combinations
 Creating new combinations involves
knowledge exchange between people
 Effectiveness of knowledge exchange
requires proximity of exchanging
actors

7. Innovation communities
Source: Gertner et al. (2010)

8. Community of
Practice
Knowledge
Producer
(university/
academics)
Knowledge
Exploiter
(firm/
researcher)
(Inter)national
technology transfer
associations –
AUTM, AURIL, AIRTO
(Inter)national policy
communities:
EU, OECD, UNU
Research
Funders
Publishing
Outlets
Ranking
organisation
s
Learned
societies
Research
Partners
R&D
Services e.g.
Metrology
Research
Partners
Research
Subsidiser
s
Corporate
Partners
Suppliers
&
customers
R&D
Services e.g.
Metrology
Standards‟
bodies
Knowledge linkages in CoPs

9. Local sites, global
knowledges
 Local spaces of knowledge
combination
◦ People critical – roles shift, networks grow
 Often emphasis on local sites
◦ Global networks equally important
 From „everything everywhere‟ to locally
situated knowledge
◦ Certain activities host global-local
communities
 Global-local anchors connect & embed

10. GLOBAL-LOCAL
CONNECTIVITY &
ECONOMIC UPGRADING
Part II

11. Economic development as a
connectivity challenge
 Innovation success network-
dependent
◦ Anchoring innovation communities locally
 Economic upgrading raising
performance
◦ Better using assets  new opportunities
 Evolution – creating/ exploiting new
paths
◦ New combinations and potentials?
 Where are the network „structural

12. Two variables describing
connectivity
A1
A2 A4
A3
a. Isolated
G1 G2
G3
A1
A2 A4
H1
b. Single
Hinge
G1 G2
G3
Region Region
c. Multiple Hinge
G1 G2
G3
Region
H3
H4
H1
H1
A1
A2 A4A3
a.
Centralised
A1
A2 A4
A3
b. Dense
decentralised
A1
A2 A4A3
c. Sparse
decentralised
a. Centrality (internal connectivity)
b. Hinge Linkages (external
connectivity)

13. No Hinges
Single Hinge
(opp)
Single Hinge
(alt)
Diverse
Hinges
Centralised Decentralised Dense Decentralised Sparse
Typology of network
connectivities

14. SITES OF INNOVATIVE
GLOBAL-LOCAL
NETWORKING
Part III

15. Key Hinges building
connectivityType of hinge
activity
Hinge activity stimulating local
connectivity
Hinge activity stimulating global
connectivity
Large-hub firm Encouraging cluster-building and
knowledge circles between MNC and
SMEs
Subsidies for R&D with world-leading
research activities elsewhere
Related diversity
firm activities
Supporting cross-sectoral shared
innovation projects and networking
activities
Encouraging local firms in sourcing
knowledge from world-leading institutes
Cluster-firm
network-industrial
district
Upgrading the innovation capacities of
local businesses in the industrial district
Marketing the collective capacity of the
local entity globally, building up a global
industrial district brand
Relay centres Innovation vouchers to help SMEs
access knowledge located elsewhere
Mentoring schemes to help local firms to
absorb knowledge created elsewhere
Universities &
public RTD
infrastructure
Technology transfer office helping local
SMEs to identify knowledge needs and
absorb university knowledge
Supporting participation in collaborative,
multinational innovation and research
projects pursuing global excellence
Physical
infrastructure
Upgrading local/ regional accessibility
and feeder infrastructure to support its
wider role
Affirming the importance of the place as a
centre of particular transport/ distribution
networks with other public policies
Epistemic
communities
Supporting post-qualification education
for local agents on basis of external
standards (e.g. MBA)
Overseas visits and delegations to build
connections with people in similar
situations elsewhere
Source: Benneworth & Dassen, 2011.

16. .
Typology of innovation
dynamics
Building local
clusters
(Diversifying local
supply chains)
Addressing
peripherality:
building global
connections
Sustaining critical
mass and world-
leading position
Improving
global profiling
& markets
Global Connectivity
High
HighLow
Low
Local
density

17. Four kinds of connectivity
repertoire
 Connecting globally (red): Building a global
pipeline: finding a point of connection from the
region to key global actors
 Cluster-building (blue): Improving local
networking to connect more local actors into the
growing regional network
 Sustaining momentum (yellow): Building up new
regional hinges with connections to regional firms –
building critical mass.
 Deepening pipelines (green): extending hinge
connectivity & networks around hub

18. 4 different „flavours of science
park‟
 Regions lacking global hinges, science parks as
technology poles, global actor „soft landing‟
programmes for foreign R&D investors, with
connections to regional actors (cf. Crete Innovation
Pole, IRE, 2008).
 IF good local networks, some global connections,
then science park a physical space for networking,
building critical mass between actors.
 Science parks can stimulate cluster-building,
acting as innovation promotion centres, (IDEON in
Lund) and providing physical links to universities.
 Where there are strong regional connections,
science parks can consolidate relationships
between local firms, build wider innovation profile

19. TOWARDS A NEW
INNOVATION POLICY
FRAMEWORK
Part IV

20. An Indonesian Inspiration?
A company based in Jakarta, with
Global and US patents, based on
research in the US and Spain, spun-out
from an Indonesian university
Dr. Warsito P. Taruno, Founder of
Edward Technology Company

21. The new innovation policy
paradigm
 Global local innovation
◦ EU/ OECD Smart Specialisation
◦ Constructed regional advantage
 Identifying local opportunities
◦ Connections to global value chains
◦ Existing innovation assets
◦ Opportunities for unique regional activities
 So why is every region building a life
sciences cluster?

22. A guiding rule for policy-
makers
 “Regional authorities and government
agencies should not be paying
excessive attention to building
regional capability without carefully
assessing and understanding the
kinds of GPNs with which the region
can have a good chance of strategic
capacity” (Yeung, 2006, p. 31).

23. Problems in developing policy
 Connecting globally: in these regions, the difficulty lies in
understanding which latent and potentially externally-
networked actors have the potential to be worth supporting as
the basis for a better connected knowledge economy.
 Cluster-building: the greatest issue here is in distinguishing
between the different global connectivities of the latent and
actual micro-clusters that exist in the region, and in particular
in identifying which clusters are to be prioritised.
 Sustaining momentum: the greatest issue in these regions
is in addressing complacency and creating a sense of
urgency; it is easy to have a politically desirable strategy and
to describe it as a global-local perspective than to challenge
the existing order.
 Deepening pipelines: the clear difficulty here is in getting
round the existing lead partners who dominate regional
discussions and are able to configure strategy and policy
outcomes to their own benefit.

24. Challenges for emerging
economies CLUSTER-BUILDING
1. Improve innovation
governance
Identifying regional pockets of excellence & opportunities for related-
variety spill-over effects.
2. Foster an innovation
friendly environment
Encouraging local co-operation to build mutual trust
3. Human Capital
Development
Universities leading micro-clusters as honest brokers; Supporting market
research, technology analysis of cluster shared needs; Creating
entrepreneurial labour market with business experience; Technology
clubs etc.
4. Development of
Research Infrastructure
Shared R&D facilities; Use of university/ PRO/ Technology Centre as
broker
5. a) Strengthen
innovation in the SME
sector
Signposting services to reduce effort necessary for SMEs to access
innovation resources.
5. b) Industrial policy
and strategic
technology policy
Helping local businesses to fit into supply chains: ISO9001, industry
standards; new products into existing markets; supporting proof-of-
concept innovation projects
6. Develop innovation
poles and clusters
Brokerage: matchmaking, introductions, sign-posting, creating regional
knowledge database; Industrial knowledge circles – technology clubs with
lead actors involved.
7. Promote and sustain
creation and growth of
innovative enterprises
Creating supportive spaces for new high-technology businesses; Support
in accessing external knowledge sources; Ready provision of high-
technology entrepreneurship resources (finance, IP, skills)