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THE ROLE OF UNIVERSITIES IN REGIONAL INNOVATION SYSTEMS - A NORDIC PERSPECTIVE Jan-Evert Nilsson (ed.) To be published by CBS Press, Copenhagen 2004-10-01 Table of contents Preface Sammandrag Regional systems of innovation 8 10 13 14 16 18 19 Higher Education in the Nordic Countries 22 22 25 28 30 35 41 Regions with an old large comprehensive university 43 43 44 47 51 57 59 Dynamics of capitalist economies The role of public policy National systems of innovation Regional system of innovation The new production of knowledge Triple Helix The regional impact of universities The role of universities in regional innovation systems Denmark - a controlled expansion Finland – increased focus on fields with growth prospects Iceland – one dominant university Norway – three waves of reforms Sweden – crisis generated growth National strategies and political circumstances The battle for a university The regional context University of Aarhus The University and the region Social networks and engaged networkers Conclusion Regions with small comprehensive universities The regional context Background and early history Growth paths Interaction with the surrounding society University, government and industry interactions Conclusion Regions with comprehensive technical universities The regional context Background and growth of the universities University, government and industry interaction Building Triple Helix partnership Regional impact of universities reconsidered 61 61 63 68 71 78 87 90 90 92 96 105 110 Regions with university college with technical education 112 112 114 115 125 133 137 Region with comprehensive mini university 139 139 140 141 146 146 148 The role of university in regional innovation systems The academic community Regional impact of the universities Elements in the regional systems of innovation The universities’ role in the innovation system The importance of the university in systems of innovation Policy implications 150 150 155 160 162 165 166 References 173 The genesis of the institutions The regional context The building of a university University, government, and industry interaction Regional impact Conclusion The regional context The background for founding UNAK Growth patterns University, industry and government interaction Regional impact Conclusion Preface This report is the outcome of the collective effort of nine scholars, who have been engaged in a on the “The Role of University in Regional Innovation System” The project has been possible thanks to the financial support from the Nordic Industrial Fund – Centre for Innovation and Commercial Development The Nordic Industrial Fund has shown great interest in the project and has made valuable comments We would like to thanks for the financial support enabling us to engage in this work The ideas of this report have evolved through a number of project meetings over a two-year period The project group has discussed the chapters of the report in this process, and all co-authors have contributed to the entire report There have been a division of labour within the group Thus, the first chapter was written by Jan-Evert Nilsson, and Åke Uhlin, collaboration with Peter Arbo, Heikki Eskelinen, Kent Nielsen and Jan-Evert Nilsson did the work on chapter Kent Nielsen has written chapter and Peter Arbo and Heikki Eskelinen chapter 4, Morten S Dahl, Bent Dahlum and Håkan Ylinenpää chapter 5, Jan-Evert Nilsson and Åke Uhlin chapter 6, and Ingi Runar Edvardsson chapter The final chapter was written by Jan-Evert Nilsson, who also has done the main editorial work and were responsible from co-ordinating the project Jan-Evert Nilsson Peter Arbo Morten S Dahl Bent Dahlum Ingi Runar Edvardsson Heikki Eskelinen Kent Nielsen Åke Uhlin Håkan Ylinenpää Karlskrona, Tromsø, Aalborg, Akureyri, Joensuu, Aarhus, Luelå October 2004 Sammanfattning Det är en allmän uppfattning att det mogna industriländerna är på väg att omvandlas till kunskapsekonomier i vilka universitet och högskolor förutsätts spela en viktig roll för den ekonomiska tillväxten Universitet och högskolor ses som en viktig resurs för att skapa ett konkurrenskraftigt näringsliv OECD har länge förordat aktiva insatser för att skapa nationella innovationssystem som ett viktigt element i innovationspolitiken Finland började tidigt med att utveckla en sådan jnnovationspolitik och Sverige följde efter i slutet av 1990talet i samband med att Verket för innovationssystem etablerades Teoribildningen om nationella innovationssystem utvecklades ursprungligen av nationalekonomer för vilka nationen av tradition upplevs som den relevanta geografiska enheten Studier av innovationssystem i olika länder antyder att det finns fler än ett innovationssystem i ett land Det finns såväl funktionella innovationssystem, som i vissa fall överskrider nationsgränser, som regionala innovationssystem som är koncentrerade till en del av landet Syfte och metod Syftet med denna studie är att studera vilken roll universitet och högskolor spelar i regionala innovationssystem Med innovationssystem menas det system av privata och offentliga aktörer som främjar utvecklingen av, utvecklar och bidrar till spridningen av ny teknik och nya företag Metoden som används är en praktikfallsmetod Nio universitetsregioner i de fem nordiska länderna har valts ut I dessa görs en studie av på vilka sätt universitetet/högskolan påverkar den ekonomiska utvecklingen i regionen I de flesta sker det genom att regionens utveckling sedan universitetet eller högskolan grundades följs Vi har valt att studera andra eller tredje vågens universitet, dvs i huvudsak sådana som etablerats i samband med den stor utbyggnaden av högre utbildning som skett under efterkrigstiden Skälen för etableringen av de nya universiteten har varierat över tiden Under1950- och1 1960-talet var etableringen en integrerad del av uppbyggnaden av den nordiska välfärdstaten Syftet var i första hand att säkra tillgången av kvalificerad arbetskraft till den växande offentliga sektorn Under 1970- och 1980-talen började universitet och högskolor i allt högre grad betraktas som motorer i den industriella utvecklingen Argumentet att det nya universitetet eller högskolan skulle bidra till att stärka konkurrenskraften i regionens näringsliv eller bidra till en modernisering av näringslivet blev allt viktigare Synen på universitetens roll fick avgörande betydelse för utformningen av de nya universiteten och högskolorna Vilken roll enskilda universitet och högskolor spelat i det regionala innovationssystemet återspeglar i hög grad vilken typ av universitet som utvecklats i regionen Universitetens regionala effekter Etableringen av ett universitet har förhållandevis stora direkta lokala ekonomiska effekter, då utbildningen förutsätter att studenterna kommer till universitetet Storleken på den direkta effekten varierar beroende på universitetens storlek mellan 3000 anställda och 22 000 studenter och 130 anställda och 900 studenter Hur betydelsefull denna lokala effekt är bestäms i sin tur av regionens storlek Medan regionen med det största universitetet har 645 000 invånare, har den med det minsta endast har 27 000 invånare Det största och det minsta universitetet i undersökningen förefaller sålunda vara av samma relativa betydelse Den andra slutsatsen som kan dras av undersökningen är att karaktären på den regionala effekten är beroende av typen av universitet som finns i regionen En avgörande skillnad är om universitetet har en teknisk fakultet eller inte De universitet och högskolor som saknar teknisk fakultet påverkar den regionala utvecklingen i första hand genom att de bidrar till en generell höjning av utbildningsnivån i regionen Huvuddelen av dem som utbildar sig vid dessa universitet har sin arbetsmarknad inom den offentliga sektorn De regionala effekterna på den industriella utvecklingen av denna typ av universitet är begränsad För universitet med en teknisk fakultet är situationen annorlunda Rund flera av dessa universitet har det vuxit fram ny produktion inom dynamiska teknikområden, Under 1990-talet skedde tillväxten i första hand inom IT-området Det är universitetens utbildning inom teknikområdet snarare än forskningen som fungerar som drivkraft i den industriella omvandlingen Universitet och högskolor med en teknisk inriktning levererar unga, ambitiösa och kvalificerade personer till företag som arbetar på expansiva marknader Nyckeln till stora regionala effekter är sålunda att universitetet och högskolan erbjuder utbildningar inom teknikområden som kännetecknas av hög tillväxt och en stor långsiktig tillväxtpotential Utbildningar inom datavetenskap, elektronik, telekommunikationssystem, programvaruteknik etc är exempel på områden som uppfyllde detta krav under 1990-talet På detta sätt avgör universitetets eller högskolans utbildningsportfölj hur stor regional tillväxtpotential som ett universitet kan erbjuda Ju fler utbildningsprogram inom teknikområden vars utveckling leder till en stark ökning i efterfrågan på arbetskraft desto bättre förutsättningar för stora regionala effekter Den långsiktiga utmaningen blir under dessa omständigheter att få till stånd en fortgående förnyelse eller utvidgning av portföljen med utbildningsprogram Sker inte detta finns et en uppenbar risk andelen utbildningsprogram inom teknikområden med snabb tillväxt inte minskar över tiden I diskussionen av universitetens effekter på den regionala industriella utvecklingen läggs förhållandevis stor vikt avknoppningarna från universitet och högskolor En föreställning är att forskningen vid universitetet eller högskolan skall generera resultat som kan ligga till grund för företagsetableringar Ofta relateras i detta sammanhang till erfarenheterna från Silicon Valley, där studenter och forskare vid Stanforduniversitetet har etablerat välkända företag som Hewlett-Packard, Adobe, Silicon Graphics, Sun Microsystem och Cisco Avknoppningar från de studerade nordiska universiteten är inte lika vanligt förekommande som i Silicon Valley Nästan inga av avknoppningsföretagen har vuxit och utvecklats till stora globala företag Det förefaller som om den institutionella strukturen i de nordiska länderna dämpar omfattningen på den entreprenöriella aktiviteten och hämmar tillväxten i de avknoppade företagen Detta bidrar till att reducera universitets och högskolors potential som en källa till nya företag Viktigare än som källa till avknoppningar är universitetens och högskolornas bidrag till att öka attraktiviteten hos regionen som plats för lokaliseringar Universitet och högskolor, särskilt de med teknisk fakultet, utgör en attraktion för expansiva företag som överväger ny- eller omlokaliseringar Alla de studerade nio universiteten har bidragit till att nya verksamheter lokaliserats till regioner Vilka typer av verksamheter som attraheras av ett visst universitet beror bland annat på universitetets egenskaper Styrkan i den attraktionskraft som ett universitet representerar bestäms också av hur många andra universitet med ett jämförbart utbildningsutbud som det finns Ju färre sådana universitet som finns desto större dragningskraft utövar universitetet Universitet som attraktionskraft innebär att universitetens lokalisering utövar ett starkt inflytande över var expansiva verksamheter inom dynamiska teknikområden lokaliserar sin produktion Därför bestäms den regionala effekt som denna kraft ger upphov till i u stor utsträckning av förekomsten i landet av sådana verksamheter I de studerade fallen illustreras detta av den stora betydelse Ericsson och NOKIA spelade för expansionen i ett antal universitetsregioner i Sverige och Finland Ericssons och NOKIAs expansion skapade stora regionala effekter i ett antal regioner Samtidigt bidrog dessa universitets och högskolors förmåga att förse företagen med kvalificerad arbetskraft till att en fortsatt expansion i företagen var möjlig I Danmark och Norge som saknade stora globala telekomföretag var universitetens attraktionskraft svagare Policyrekommendationer Analysen av universitets och högskolors roll i regionala innovationssystem visar att de under vissa omständigheter kan spela en central roll i en regions ekonomiska omvandling Universitetens huvudsakliga roll är att förde expansiva företag inom nya dynamiska teknikområden med kvalificerad arbetskraft Universiteten främjar på detta sätt framväxten av ett nytt näringsliv i regionen Ett universitet som kontinuerligt förmår utveckla utbildningsprogram inom nya dynamiska teknikområden kan sålunda permanenta sin roll som förnyare av regionens näringsliv Den regionala effekten av et sådant universitet bestäms emellertid också av hur väl företag i det egna landet förmår utnyttja den nya teknikens möjligheter Utan Ericsson och NOKIA skulle de regionala effekterna av Universitetet i Ulểborg och Blekinge Tekniska Hưgskola blivit betydligt mindre Ovanstående illustrerar storleken på de regionala effekterna av ett universitet eller högskola avgöras av en kombination av planerade insatser, kritiska besluta fattade utanför regionen och lyckliga omständigheter En framgångsrik politik bygger sålunda på att en rad olika beslutsfattare oberoende av varandra fattar de ”riktiga besluten” Komplexiteten i situationen gör att möjligheterna att planmässigt bygga ett framgångsrikt regionalt innovationssystem är begränsade Politiska insatser måste därför ges en mer generell inriktning Uppgiften blir att ge de institutioner om ingår i det regionala innovationssystemet rimliga förutsättningar för sin verksamhet samt att skapa ett system av incitament som belönar vissa typer av handlingar Regional Systems of Innovation The 1970s marked the end of a long period of high economic growth The growth rate was halved in the OECD countries and unemployment rised Initially the reading of the history of the 1970s was that “…the most important feature was an unusual bunching of unfortunate disturbances unlikely to be repeated on the same scale, the impact of which was compounded by some avoidable errors in economic policy” (McCracken et al 1977;14) The conclusion was that the immediate causes of the new economic problems could be understood in terms of conventional economic analysis The expert group could “… see nothing on the supply side to prevent potential output in the OECD area from growing almost as fast in the next five to ten years as it did in the 1960s… Whether it is achieved or not will depend heavily on our ability to obtain a desirable level and structure of final demand and the accompanying distribution of income without arousing disruptive conflicts, which exacerbate inflation (MacCracken et al 1977:16) The expert group expressed a strong belief of the strength in a well-balanced Keynesian economic policy The authorities were expected “… to steer demand along the relatively narrow path consistent with achieving a sustained recovery”(MacCracken et Al.1977:19) The lower limit was set by the need for a rate of expansion sufficient to encourage a recovery in investment and the upper limit by the point at which a rapid increase in aggregate demand would re-ignite inflationary expectations According to established theory the great policy challenge was to fine tune the economy so it could pass safely in the narrow strait between economic stagnation and high inflation Dynamics of capitalist economies Looking back we can see that the experts were wrong This unusual bunching of disturbances was indeed the start of something new quite different from the fast stable growth of 1950s and 1970s The old theory was an inappropriate tool for understanding the new economic situation The growth rate in the OECD-countries was reduced from 5,6 per cent per year in the 1960s to 3,7 per cent in the 1970s, while inflation rate increased from 3,7 per cent to 8,6 per cent The OECD countries became trapped in a situation of stagflation, which made Keynesian economic policy look obsolete Researcher started to look for alternative perspectives, both genuinely new as forgotten old ones One of the reinvented perspectives was the Kondratiev cycles Based on historical data the Russian economist Nikolaj Kondratiev claimed the existence of long waves of an average of about 50 years in the capitalistic economy(Nilsson 1987) The Kondratiev-perspective, which was considered interesting and relevant in the 1930s, became reinvented in the 1970s(Mandel 1972 and Shuman & Rosenau 1974) In the 1980s it became popular to interpret the economic stagnation as a down turn in he Kondratiev cycle The OECD economies were in a situation similar to the one in the 1920s and 1930(Freeman 1984) Christopher Freeman at Science Policy Research Unit at University (SPRU) of Sussex was one of the most active researchers applying a Kondratievperspective He had noted that “… the upswing of the long waves involves a simultaneous or near-simultaneous explosive burst of growth of one or several major new industries and technologies”(Freeman et al 1982:80) The upswing gets its power from some generic innovation, which can be used in a large number of new products and processes The technology diffusion process includes a significant element of innovations Under certain circumstances will such a generic innovation initiate a cumulative growth process maintained by the growth of new industries, which need further process innovations to make use of economy of scale when production volume expand The multiplier effects of the innovation-based growth further strengthen the growth process Freeman considered the beginning upswing made possible by changes in the technoeconomic paradigm, which included “… a combination of interrelated product and process, technical, organisational an managerial innovations, embodying a quantum hump in potential productivity for all or most of the economy and opening up an unusually wide range of investment and profit opportunities Such a paradigm change implies a unique new combination of decisive technical and economic advantages (Freeman & Perez 1988:47-48) Freeman argued that each technoeconomic paradigm was based on a key factor and he saw microelectronics as the key factor in the coming fifth Kondratiev upswing The diffusion of new technologies of wide applicability is capable of impairing a substantial upthrust to the growth of the economic system, creating many new opportunities for investment and employment and generating widespread secondary demands for goods and services The strength of the upswing depends on the growth potential of the new growth industries Over time, however, these new technological systems mature and their investment and employment consequences end to change The upswing continues until a disturbing lack of labour initiate a wage inflation spiral Fast increasing wages are met by increased prices and/or reduced return on investment Growing pessimism and reduced financial resources obstruct the innovation activities and reduced the diffusion of innovations The long economic wave is reaching its peak, as was the situation in the 1970s In this phase of the long wave Freeman considered the role of public policy as crucial The role of public policy The researchers at SPRU combined a conviction about the existence of long waves in the world economy with a strong belief in the prospect of national governments to manage economic development They considered public support to enhance the growth of new technological systems and support to new technologies as important means to recreate a period of fast growth in mature industrial countries They anchored their believe in earlier experiences of recovery from depression as well as from more recent Japanese experience They proposed three types of public initiatives Firstly, government should encourage corporations to develop and ake up radical innovations In certain phases of economic development such investments can play an decisive role The downswing of a Kondratiev cycle represented a gestation period when a patient public policy of support, encouragement, experiment and adaptation was considered to be extremely important(Freeman et al 1982:192) Public support should primarily be allocated to explorative R&D, which can be un- dertaken by groups of corporations because the direct commercial value of the findings normally is small Secondly, government should support the diffusion of radical innovations In the early stages of radical innovations not have big economic effects Initially the market for such innovations is small, which make these innovations less interesting for corporations Only large-scale diffusion can have such effects Public policies for developing new markets and stimulate the diffusion of such innovations is a way to stimulate growth The researchers underlined especially the need for such measures in sheltered or highly concentrated sectors of the economy like public service production and national monopolies These sectors are not subject to international competition, which may be unwilling or unableto promote the adoption of readical new technologies Thirdly, they identified a need for public support to stimulate import of foreign technology in areas where radical innovations had been developed in other countries Japan’s import of new technology in microelectronics from the U.S and their use of it in consumer electronics is a standard case when it come to the economic potential of an import strategy The relevance of such an import strategy is inversly proportional to the size of the nation The smaller the nation is, the bigger the chance that radical innovations are developed outside the nation What the SPRU-group achieved was to move focus from short-term demand oriented policies to long-term supply side policies aiming at structural change Their policy proposals still focused on isolated measures and they did not discuss the implementation ofn the policy The concept of national systems of innovation has not yet been formulated It was was introduced by Christopher Freeman some years later, who became inspired of what he had experienced at tour to Japan National systems of innovation Christopher Freeman used the concept national systems of innovation for the first time in 1987 in his analysis of economic development in Japan since the Second World War (Freeman 1987) In the term innovation system he included the network of institutions in the public and private sector whose interactions initiate, import, modify and diffuse new technologies By focusing on the innovation system he moved the perspective from single entrepreneurs and corporations to a network of institutions The innovation system was seen as the breeding ground for innovations Freeman considered the design of the innovation system as the single most important policy issue Thus he now moved the attention from means to the creation of a system of institutions Freeman was inspired by what he saw in Japan According to Freeman Japans national system of innovation differed in certain aspects from other industrial countries Freeman pointed at four important differences Firstly, Japan had a Ministry of Industry and Trade (MITI) which played a more proactive role than corresponding ministries in other countries Secondly, the system in Japan was characterized by a close cooperation between government and corporations Thirdly, the Japanese school system was characterized by the fact that a large share of the youth studies science and technology in upper secondary school Finally, Freeman pointed at a number of social conditions, 10 arts universities such as the University of Joensuu and the University of Tromsø offer primarily education programmes qualifying for jobs in public sector, while technical universities like Oulu, Luleå and Aalborg have education programmes qualifying for jobs in industry In order to increase the options for a regional impact the university should to offer educational programmes in fields experiencing a fast growing demand for labour In the last decades electronics, computer science, telecommunications, and software technology are examples of such programmes In the discussion much attention has been paid to the universities’ role as a source for new high-tech firms On order to stimulate spin-offs from the university research parks, incubators and venture capital organisations have been established Most of the nine universities report a number of spin-offs The numbers are however significantly smaller than in the U.S., partly due to the fact that the Nordic countries, like most European countries, are characterized by significant lower entrepreneurial activity than the U.S (Reynolds et al 2001) None of the spin-offs firm has became an international star like Adobe or Cisco The institutional structure in the Nordic countries seems to reduce the entrepreneurial activity and thus reduce the potential of universities as a source for new knowledge-based firms The Triple Helix perspective is stressing the interaction between university, industry and government The cases give a lot of examples of “triple helix – initiatives” In most cases these initiatives are about creating an organisation with the aim of strengthening the relation between the university and industry To some extent, individual members of the university staff have taken initiative to strengthen the regional systems of innovation Still, it is an open question if this just reflects the fact that all initiatives are taken in a social context or if organized cooperation between individuals from universities, industry and government is a prerequisite för research In the first case, the lesson is that initiatives taken by individuals need the support from other persons in order be successful In the second case, the great challenge became to organize cooperation between the three spheres in the best possibly way in order o stimulate neew initiatives Policy implications The presented cases can be read in two different ways On the one hand one can look for differences and similarities between the cases in order to draw some general conclusions, which hopefully are relevant also for other regions The discussion above is an example of this approach Based on such a perspective, some general policy conclusion related to measures and structure can be drawn The perspective supports a mental map saying that national policy is an important force in regional development Some persons may go one step further arguing that it is possible to plan the development of a region From this point of view, the task is to identify the measures that should be used in order to achieve expressed objectives Adopting this perspective some general conclusions can be drawn from the cases The founding of a university in a region has an impact on development In all the studied regions we can with great certainty say that the regions would be different without their universities First of all, a university represents an employer that offers jobs for a number of persons and attracts a number of stu- 166 dents Secondly, it also has an impact on the supply of qualified labour This is the standard argument used when someone propose the founding of yet another new university The founding of new universities has also been an important element in regional policy in all Nordic countries in the last decades However, this is not the same as saying that it is a successful policy We should remember that the primary role of the university is not to contribute to regional development, but to offer science-based education and to undertake research The fact that the universities also have got a third mission does not reduce the importance of the first two In fact, policy makers assume that there is no conflict of interest between the three missions The Dandy case in Aarhus illustrates that under certain circumstances such conflicts may exist Before a decision about establishing a new university is made policy-makers should address at least two other questions The first question is whether there is a need for further capacity in the higher education system Since the 1960s the number of persons going to universities have grown dramatically, creating room for building new universities at the same time as the number of students at the old universities have increased When a new university is founded the policy-makers should make clear that there are room for further expansion of the university system making it possible for the university to reach a size, which is larg enough to make it possible for the university to fulfil its missions This statement raises the question at what size a university has reached its critical mass If we look at the nine studied universities, four have more than 10 000 students and three less than 000 students The smallest has just 900 students However, the critical mass is not just a question of the number of students The number must be related to how profiled the university is and to other local circumstances A profiled one faculty university hence reaches its critical mass earlier than a comprehensive university with 4-5 faculties The second question is whether an increased capacity in existing universities is a better strategy than building new ones Under certain circumstances it is a more efficient policy to increase capacity in established universities than founding new ones One such situation is when a number of existing universities have not reached their critical mass Up to now, a large increase in the number of students has made it possible for new universities to reach a reasonable size Today, however with a share of young people going to university is reaching 50 per cent and with an almost stagnant population, the room for further expansion is very limited If policy-makers in such a situation want to create new universities they have to move resources from existing universities to the new ones This is probably not an effective way of using limited national resources It is reasonable to conclude that the era of founding new university probable is coming to an end The major challenge now is instead to consolidate and develop existing universities If universities are considered as a tool for regional development, the cases highlight that the regional impact of a university depends on the character of the university Comprehensive universities with no technical faculty primarily have an impact on the educational level in the public sector in a region, while technical universities may have significant impact on industrial development in a region The lessons from University of Aarhus is that also a tech- 167 nical department like Department of Computer Science in a liberal arts university can have a significant regional impact Policy-makers often have an ambition to match the specialization of the university with the existing industrial structure in a region The experiences from the cases are that such an ambition is defensive At best a good matching contribute to strengthen the competitiveness of existing industry in the region As its worst, this kind of strategy conserves an existing mature and maybe outdated industrial structure and prevents a reconstruction into ne and growing industries Regional impact is larger if the universities are specialized in technological areas with a large growth potential The growth of ICT-firms in regions with a technical university illustrates the driving force in technologies with large growth potential In the last decades electronics and software has been such areas One great challenge for policy makers is to take initiative and catch new growth opportunities and early identify new promising technical areas with such a large potential A targeted innovation policy focusing on identifying such areas and supporting development of new university courses in these fields could be a way to increase the innovative capacity of regional systems of innovation There are great expectations of universities as an important source of entrepreneurs and new research-based firms As has been concluded, the number of spin-offs in our cases is rather limited and none of them has grown up to large successful international corporations One challenge for policy-makers could be to change this, to introduce measures that stimulate entrepreneurship and the growth of small and medium-sized knowledge-based corporations Our study gives no indication of the best way to this Traditionally innovation policy in the Nordic countries tends to focus on R&D-support Perhaps by adding a stronger entrepreneurial element the impact of innovation policy on industrial development would increase We can identify the Nordic countries taking the first step in such a direction The entrepreneurial element in the Nordic countries industrial policy has increased during the last years (Lundström 2003) No other Nordic country has like Denmark combined innovation and technical development with SMEs and entrepreneurship Norway has iniated a number of programmes in order to upgrade the competence and increase the morivation of entrepreneurs Sweden still has rather few measures in the area of entrepreeurship policy but a start-up line has been creatd and measures for stimulating individuals to start their own company has been introduced Iceland, which is the most entrepreneurial Nordic country, has made some improvements for innovative entrepreneurs Finland has declared the entrepreneurial decade and started a discussion of how to proceed However, none of the countries has a clear definition of thre concept of entrepreneurship policy On the other hand attention can be focused on the unique elements in each of the nine cases in order to explain the differences in development pattern in the regions Such an approach wills highlight certain circumstances, events and actors, and sketch a development pattern in which (un)fortunate circumstances and initiatives taken by individual persons become critical The 168 founding of DC Development ant its location to the science park in Aalboorg, NOKIAs acquisition of Mobira and the location of manufacturing relay stations to Oulu, and the founding of EP-data in Karlskrona are exemples of circumstances of great importances for the industrial development in the three regions In several of our cases single indivuals who has taken important initiatives have been described One conclusion from our cases was that the main impact of the universities on industry was through the attraction effect A number of expanding corporations have located subsidiaries close to the university in order to make it easier to employ young qualified labour In the 1990s large ICT-companies dominated this group In fact the truth is that two companies were the leading actors in this course Ericsson and Nokia were the main engines in the development of the ICT industry in, at first hand, Sweden and Finland, but to a lesser degree also in Denmark and Norway The success of both Ericsson and Nokia in the 1990s was to a large degree based on fortunate circumstances and good luck In the beginning of the 1980s Ericsson saw a future integration of markets and technologies in telecommunication and data processing Ericsson decided to reconsider its business strategy The new strategic idea was that Ericsson should develop from being a traditional telecommunication company, producing public and private exchanges, transmissions equipment and cablewas, to a broad information company, which made use of synergies in the ICT area Management in Ericsson saw the emergence of a new integrated market and their vision was that Ericsson should be a strong competitor in this new market Based on this new strategy Ericsson started to diversify by adding mini computers, personal computers, control systems for air traffic, typewriters and office furniture to the product portfolio These new products were combined with existent products like exchanges, handsets and other office system in a new subsidiary; Ericsson Information System, which expanded fast After a few years, the new firm got severe problems In the end of the 1980s Ericsson, due to severe economic problems, had to radically change strategy again Back to basic became the new slogan The new strategic task was to scale down the company and to concentrate on core business, which was defined as public telecommunication At this time the business of mobile telephony accounted only for a marginal part of Ericsson’s total turnover and was looked upon as a sideline activity This production was considered as a sideline activity that was not included in the core business Accordig to the strategy it should be settled However, for some reason, mobile telephony continued as a part of the new focused Ericsson A few years later radio communication exceeded public telecommunication and became the largest business of the firm (Mölleryd 1999) If top management at Ericsson would have implemented their strategy in a consistent manner, the firm had not been involved in mobile telephony today And with an Ericsson without mobile telephony Sweden would have lost its main locomotive in the expansion of the ICT-cluster in the 1990s The regional impact of the universities had been significantly weaker in Karlskrona/Ronneby and Luleå as well as in Stockholm, Lund and Linköping 169 The story of Nokia has similar elements Back in the 1970s, Nokia was a conglomerate dominated by production of rubber boots, cables and lavatory papers In the 1970s, the company started acquiring technology and electronics firms – mainly producers of computers and televisions Nokia became big in radiotelephones, and when Ericsson started to build an early cellular network in 1980, Nokia was the natural choice to provide the telephones This can bee seen as the beginning of Nokia’s transformation to a mobile telephone company However, it took another 11 years and huge crisis before the company had sloughed its skin The collapse of the trade with the imploding Soviet Union meant a huge blow to Nokia Nokia decided to leave some of its products areas One of the candidates for sale was the mobile telephone division because they had problems in getting the new GSM standard ready for the market Finally the problems were solved and the division was kept in the company One year later the manager of the division became chief executive and he decided to take a gigantic gamble He bet the company on becoming an international champion in mobile telephony The company gradually was transformed to corporation focused on mobile telephones and mobile systems of the GSM standard The road to success was full of obstacles, which Nokia passed by a combination of skill and good luck (Economist 2000) Without this success the regional systems of innovation in Oulu and Helsinki would have got another character Thus, the success of Ericsson and Nokia and the growth of mobile telephone clusters in Finland and Sweden were not the outcome of a national strategy Instead, development was formed by intertwined flows of decisions, actions and events, which involved business managers, entrepreneurs, researchers and public policy makers Certainly, public policy has exerted a strong influence on the process, but the growth of the clusters did not occur as a result of a national strategy In fact,, the process was not linear but rather a non-linear concurrent process consisting of an enormous amount of events and a large number of actors In such process it is almost impossible to identify strategic actions in advance Looking back, measures, which were considered of minor importance when undertaken, are revealed being of strategic importance because they became intertwined and changed the direction of the process On the other hand, policy measures, which are presented as strategic when decided often, when turned to history, only has had negligible impact on the deelopment pattern This perspective supports a mental map saying that the complexity of society is extremely large and public policy is just one of many factors, often of marginal importance but sometimes a strategic factor, forming regional development The impact of public policy depends not just on the measures taken but also of a complex set of local, regional, national and international circumstances It means that a certain measure taken at a given time in two different regions may have quite different impact on development, One measure taken in two different times in the same region may also have quite different effects Using this perspective, the high priority given in some Nordic countries to programmes aiming at creating regional innovation system seems to be based on wrong premises The room for public policy-makers to govern develop- 170 ment in a region towards defined goals are restricted This statement should be compared with the detailed specifications of the regional innovation systems programmes expressed by governments in some countries The ambition is not just to create regional innovation systems, which produced innovation and economic growth, but the results should be of a certain kind, often expressed in terms of sustainable growth, and the innovations should preferable be made by certain groups of people, in most cases women or in some cases immigrants As a result the programmes are intended to follow such a narrow road to the specified goal that the chances for success almost got lost That type of targeted policies primarily has a symbolic value expressing the policymakers concern with the issue of economic growth and regional development From this point of view policy-making is like continually confronting a new reality Lessons from the past are of restricted value because the world is continually changing Policy-making should be considered an innovative activity with the ambition of continuously meeting new situations in the best possible way Accepting the complexity of social systems make the challenge for public policy significant It is of no use to formulate objectives and then start implementing measures to achieve these goals There are no room for planning the future because public policy-makers can only control a fraction of all the factors forming development From this point of view public policies should be general primarily aiming at support institutions Innovation policy should be less of identifying and supporting promising technologies and more of giving institutions included in systems of innovations generous conditions, which make room for new initiatives Universities should be looked upon as an important element in the knowledge structure, which are financed through a general allowance from government Such a non-targeted policy must be based on trust in the universities’ ambitions to fulfil the missions given to them, and on their ability to catch opportunities created by scientific progress made in other countries If governments have an ambition to reorient the universities towards a more commercial role, they have to build incentives into the research-funding system to move the universities closer to industry, in their motivation and structure Such policy measures are based on a belief that actors are rational, and that the expedience of different actors in the system of innovation is a strong guide in stimulating cooperation between university, industry and government Actors are expected to take the initiatives and became involved in projects, which seems to bring back favours to them For the university the payback can take form of financial resources or better educational programmes which attract more students For the local municipal, joint projects with the university may stimulate local employment or contribute to attract more students to the town Finally, the industry’s motive for cooperation may be to get in touch with ambitious students, get help to develop new technical solutions or to contribute to strengthen the local industrial milieu The traditional question after presenting two different, in vital aspects contradictory, perspectives is which one that is true and which one that is false Often people answer the question based on their values and they conclude that the true perspective is the one they like Based on the political traditions in the 171 Nordic countries, perspectives stressing the importance of public policy in managing development normally are considered to be the true ones We have a tradition in preferring perspectives, which give an impression of that we are in a position to control development But, why we need to make a choice between the perspectives? 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