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An analysis

TRANSFORMING REGIONAL ECONOMIES:INNOVATIVE PRACTICES

orBUSINESS AS USUAL ?

Prof. Panos H. KETIKIDIS, BSc, MSc, PhD

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About the presenter

Vice Principal Innovation, Research and External Relations, CITY

COLLEGE Chairman South East European Research Centre

(SEERC)President of the Triple Helix Association

Chapter of GreeceEmeritus President

The International Society of LogisticsEditor in Chief

The International Journal of Innovation and Regional Development

Professor Panos H. Ketikidis, PhDDepartment of Computer Science

The University of Sheffield International Faculty, CITY COLLEGE

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Outline of the presentation

Why Innovation / innovation metrics

Regional Development (RD) / Issues in RD

Possible Solutions / what it can be done ?

Recommendations

Conclusions

Competitiveness, Innovation, Knowledge

Explain the differences among creativity, innovation, and entrepreneurship.

• Creativity is the ability to develop new ideas and to discover new ways of looking at problems and opportunities.

• Innovation is the ability to apply creative solutions to those problems and opportunities to enhance or enrich people’s lives.

• Entrepreneurship is the ability of the entrepreneur to succeed by doing things in an innovative way.

innovation

creativityproblem

organisation

IPRs

individual or team

R&D

customers

new product development

to solve a

lead

s to

to create for

new markets existing markets

competitive advantage

growth

revenues new jobs

economy

for the

Why to Innovate ? The context

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(Source: 2013 EU – Enterprise and Industry)

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Note: Average performance is measured using a composite indicator building on data for 24 indicators goingfrom a lowest possible performance of 0 to a maximum possible performance of 1. Average performance in2011 reflects performance in 2009/2010 due to a lag in data availability.

Innovation scoreboard

Source: Going for Smart Growth report January-12, World Bank

Situation in Bulgaria (1/2)

Source: Global Competitiveness report 2011-12, World Economic Forum

Situation in Bulgaria (2/2)

Dynamic performance and convergence trends in innovation in the EU-27 and

other countries

Note : colour coding matches the groups of countries: green are the Innovation leaders, yellow are the Innovation followers, orange are the Moderate innovators, blue are the Catching-up countries. Average annual growth rates as calculated over a five-year period. The dotted lines show EU27 performance and growth.

SI

TR

NO

UK

SEFI

RO

P T

P L

AT

NL

HU

LU

LT

CY

IT

FR

ESGR

SK

IE EE

DE

DK

CZ

BG

BE

MT

CH

IS

LVHR

0.150

0.200

0.250

0.300

0.350

0.400

0.450

0.500

0.550

0.600

0.650

0.700

0.750

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%

Average annual growth in innovation performance

Inno

vatio

n pe

rfor

man

ce (

SII

2009

)

EU27 innovation performance in

2009

EU27 average growth rate in

2005-09

Innovation leadersDenmark, Finland, Germany,

Sweden, UK

Innovation followers

Austria, Belgium, Cyprus, Estonia, France, Iceland, Ireland,

Luxembourg, Netherlands, Slovenia

Moderate innovators

Czech Republic, Greece, Hungary, Italy, Lithuania, Malta, Norway, Poland, Portugal, Slovakia and

Spain

Catching up Bulgaria, Croatia, Latvia, Romania, Serbia and Turkey

Visible outcomes

• Less public resources• Volatile markets • Harsh economy • Business closure • Unemployment• Increased debt levels• Social crisis

The financial crisis has raised critical questions as to whether the current economic and development models are still able to reinvigorate the competitiveness of European regions ?

(Source: Ketikidis, Innova Berlin, 2011)

The financial crisis

• How can regions hit by the crisis transform their structures by better exploiting their non-tangible assets?

• How to capitalize on the strengths of the existing business eco-system to support this process?

• What are the Global Challenges ?

Questions – Financial crisis

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Global issues (1/2)

• Finding solutions for clean energy sustainability

• Wellbeing and assisted living. Health and ageing

• Finding solutions for climate change

• Providing safer water supplies & Food sustainability

• Managing demographic shifts

• Waste management & Green mobility

• Improving security

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Global issues (2/2)

• Transparency and trust on the political system

• Trust in the public administration

• Citizens mass participation

• Behaviour transformation

• Sense of belonging and identity

• Social inclusion and social integration

• World stability and Crisis of the world financial system

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Regional and economic development (1/2)

• Regional development is about transforming a region or locality, economically as well as socially.

• Berglund and Johansson (2007, p. 502) underline that

“regional development is about social change and transformation, and, as change means to go from something stable and known to something less stable and more unknown we could imagine there are – depending on the degree of stability – lots of interaction among the people involved”.

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Regional and economic development (2/2)

• Simplified, Economic Development is about growth in GDP and local income and net job creation and growth.

• Social regional development on the other hand may contribute to: (i) regional learning (Florida 1995)

(ii) “the development of cooperation, solidarity participation and trust within a region by bringing various groups and institutions together” (Seidl et al. 2003, p. 343), and

(iii) the creation of pride in and support for the region, its heritage and its economy (Anderson 2000a).

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Three types of regions

Type 1 – Peripheral regions * traditional industries, low technology services sector and an income below the national average.

Type 2 – Old industrial and decline * old industrial regions under restructuring, with medium level incomes.

Type 3 –Central regions * relative high income economies and a pool of highly qualified human capital resources.

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Issues in regional development (1/2)

• “How can regional development policy respond to the challanges of a global, informational and networked economy “ (COLLABS, 2009)

• Is there a “transition from an industrial to a knowledge based society” to overcome the crisis ? (Etzkowitz & Ranga, 2009)

• Do geographical borders between regions represent actual barriers to economy or the business sector defines its own application regions governed by its skills and competencies ? (COLLABS,

2009)

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Issues in regional development (2/2)

• How can development policies be global, national and local in the same time ? (COLLABS, 2009)

• What interrelationships between different actors must appear ? (COLLABS, 2009)

• Do current regional policies provide incentives for effective innovations ?

• How can economic disparity among regions can be mitigated so that poorer regions can be helped to overcome the crisis better ? (Shankar & Shah, 2009)

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How to overcome these issues ?

EFFECTIVE POLICY

INNOVATION

GROWTH

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Thus, the main question:

• Can we still model the current models ? • Are other business models needed ? • Can we use models from other disciplines ?

Could traditional Economic and Development models apply to emerging needs of the European

regions ?

‘We are not students of some subject matter, but students of problems. And problems may cut right across the borders of any subject matter or discipline’ (Popper, 1963)

Think about it !

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• Old model for business success (efficient utilisation of capital and labor) - no longer relevant in the next phase of the economy.

• The new emerging - the creation and application of innovative products, services and business models to serve the ever changing world.

Innovation and the economy

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The issue…

The financial crisis has raised critical questions as to whether the current economic and development models are still able to reinvigorate the competitiveness of European regions, notably that are least performing and often characterized by predominance of traditional manufacturing industries and low-tech services.

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What can it be done ? (1/3)

Not simply switching from traditional to advanced manufacturing or low to high-tech services

• Encouraging upgrading and innovation across existing areas of regional economic activity – For instance, low performing European regions, such as those

in SEE, must upgrade the level of entrepreneurship through the dissemination of technological developments, training in new technologies and improving the institutional environment for firms

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What can it be done ? (2/3)

• To achieve this, the only real way forward for lagging regions is to upgrade towards more knowledge-based economies.

• Through sustained exposure to international practices in other regions, particularly through regionally focused projects, such as those supported by the European Commission.

‘REGIONAL RESILIENCE’Latin root – resilire – to leap back or to rebound.

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Regions of knowledge - WHAT

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“The "Regions of Knowledge" responds to a need at European level to increase the overall capacity of regional players in enhancing innovation based on science and technology based development in full compliance with the priorities of the Europe 2020 strategy.“ (Jansen, 2012)

“Its purpose is to enable regions to strengthen their capacity for investing in and conducting research and technological development activities in a way which can contribute significantly to economic development.“ (Jansen, 2012)

REGIONAL PURPOSE

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Regions of knowledge - HOW

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• Promote the emergence of world class clusters in Europe• Create synergies between research, innovation and regional development policies (Jansen, 2012)

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• Triple Helix of “Universities-Industry-Government” was introduced by Etzkowitz* (1996). He sees University-Industry-Government (UIG) relations as an interwoven network of relationships among the three actors that influence each other.

Prof. Henry Etzkowitz, Stanford University, USA; President of the Triple Helix Association.

Also, focusing on the Triple Helix Model (1/2)

• TH model widely accepted by policy-makers !

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• University Industry Government (triple helix) interactions are the key to the fast paced development of the knowledge based society (i.e. western/northern EU countries, Silicon Valley) (Semlinger, 2008; Etzkowitz & Leydesdorff, 2000; Etzkowitz, 2003a; Etzkowitz, 2003b; Cooke & Leydesdorff, 2006; Farinha & Ferreira,2013)

Also, focusing on the Triple Helix Model (2/2)

Industry

Government

University

Innovation at the intersection of U-I-G

Innovation SpaceKnowledge Space

Consensus Space

timeEtzkowitz and Leydesdorff (2000)

Ranga and Etzkowitz (2013)

Innovation through dynamic, non-linear transitions between the TH Spaces

From Triple Helix “spheres“ to“systems”

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• Last conference finalized with great success in London ! – Theme: Bringing businesses, universities and governments

together to co-innovate and solve economic, social and technological challenges

• Next Conference - in Tomsk, Russia at TUSUR University in 2014.Useful Case studies sources:– Wilson Review– European Commission (University Business Cooperation case

studies)

Triple Helix - Dissemination and Networking

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• The THA Chapter of Greece aims to:– promote analyses and studies on the TH interactions

aimed at translating academic models into practical achievements

– provide a common discussion framework for TH actors in order to engage in regional development

– boost the innovation capacity, encourage and support entrepreneurship and fight the regional brain drain

CO-PRODUCE with all the stakeholders !

THA Chapter of Greece (1/2)

Chapter of Greece

OPEN INNOVATION

LIVING LABS

THE MOSH PIT MODEL

INNOVATION ECOSYSTEMS

INNOVATION CLUSTERS

FAST TRACK INNOVATION

MAINSTREAM INNOVATION

...

Innovation models

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Scenarios

Scenario 1a

Opinion visualisationLiving Labs

Crowd-sourcingSimulation

Social networkingMass collaboration/innovation

Scenario 1b Scenario 2

Scenario 3

Scenario 4Scenario 5Scenario 6

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Scenario 1CITIZENS’ STRONGER INVOLVEMENT IN POLICY

ISSUES•A complex societal problem is to be solved

•Citizens can input solutions into a tool which is able to process them

•Among 10,000 suggestions analysed, the system identifies the best – or a combination of the best

•The solution chosen helps deal with the problem. Collaborative solution of a complex problem

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Scenario 2LIVING LABS: A POSSIBLE SOLUTION FOR REGIONAL DEVELOPMENT

Living Labs

“open eco-systems engage and motivate stakeholders, stimulate collaboration, create lead markets and enable behaviour transformation”.

Territorial Living Lab “integrally applies the Living Lab approach to a territory and its citizens, its governance model, and its strategic plans for the future; in essence, it is a new model for regional development ” (MedLab, 2011)

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Scenario 3 (1/2)CREATIVE COMMUNITIES

The “Crowdsourcing” model

• Three main layers compose the innovation environment: • creative people • rules for collaborative innovation• virtual spaces and digital media

• This is a common perspective of innovation combining bottom-up people driven, ICT-enabled processes

• which is beyond the institutional paradigm of innovation

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Scenario 3 (2/2)CREATIVE COMMUNITIES

New innovation environments composed of three layers: (1) creative people, (2) rules for collaborative innovation, (3) virtual spaces and digital media

New innovation: bottom-up, people-driven, ICT-enabled processes.

Distributed knowledge; Distributed problem-solving; Crowdsourcing; Embedded spatial intelligence

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To consider: (1/3)HOW CAN REGIONS HIT BY THE CRISIS TRANSFORM THEIR INDUSTRIAL

STRUCTURES BY BETTER EXPLOITING THEIR NON-TANGIBLE ASSETS?

• Identification of regional stock and flow of knowledge and then utilising, transferring and commercialising these assets

• Key part of this culture relates to ‘risk-taking’, with many regional stakeholders – both public and private – still averse to investing time and resources in innovation, with a resulting lack of risk capital.

• The non-tangible assets are key drivers to operate this transformation and it is precisely these factors which need to be addressed if regional economies are to effectively exploit their intangible capital.

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To consider: (2/3)HOW TO CAPITALISE ON THE STRENGTHS OF THE EXISTING

BUSINESS ECO-SYSTEM TO SUPPORT THIS PROCESS? (1/2)

May rely on alleviating a continuing gap between the scientific community and the business community. There is need to better connect regional actors.

The ecosystem also needs to be more outward looking and most of the strengths and opportunities in these regions lie in the increasing awareness of the need to open up the ‘innovation system’ in terms of regional–global networking.

Key weaknesses and threats remain, especially the slow domestic response in reforming education systems and facilitating the commercialization potential of current and latent innovation activity.

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To consider: (3/3)WHICH NEW INSTITUTIONS AND ACTORS NEED TO BE INVOLVED IN INDUSTRIAL AND REGIONAL POLICIES IN ORDER TO BETTER EXPLOIT

ALL FORMS OF KNOWLEDGE AND CREATIVITY?

No need to introduce new institutions and actors unless absolutely necessary.

What is really needed is better leadership coordination across existing actors.

The leadership of professional networks is critical for economic development since the joint power of these organizations may enable the creation and accessibility of regional assets.

Video – Europe Innova 2011

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TITLEAnnual Partnering Event: Ketikidis10.14 minutes

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Conclusions and recommendations (1/3)

Regional policy development requires high coordination at European, national and regional level (Varga & Pontikakis, 2009)

Policies are often based on a “best-practice” approach rather than develop their own context-specific and tailor made program.

In order to increase the capacity of regional firms to innovate -increase the absorption capacity of all actors in the region.

Adaptation and change is a key process in the development of regional economies.

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Conclusions and recommendations (2/3)

• Untraditional methods are needed to reach SMEs and firms not contingent to knowledge institutions.

• Networking and learning within the region are vital for disseminating and creating knowledge as well as for redistributing the attracted flows throughout the region (COLLABS, 2009)

• Incentivize university-industry-government collaborations (Etzkowitz & Ranga, 2009)

• Promote innovation and entrepreneurship, especially in the community of the young generation of scientists and the future R&D human capital including high school students.

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Conclusions and recommendations (3/3)

• The overdependence of a region on only a main industry creates a great disruption if that sector is affected by a global crisis. Thus, industry diversification is needed. (Pavlinek&Zenka,2010)

• Re-orientation of regional policy and regional focus (Davis et al., 2010)

• Technological progress and dissemination is very important for regional development and in this aspect, investing in human capital proves to be a very sustainable action for the future (Akcomak&Weel, 2007)

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Innovate out of the economic downturn !

• Long term growth drivers:

Source: Sami Mahroum, Bloomberg Businessweek, 28.10.2008

INJECT CAPITAL

THINK Local – Act GLOBAL

FOCUS ON PUBLIC PROGRAMS

SUPPORT TALENT

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Innovate or be left behind ! • The faced challenges are so large and intertwined that

successfully tackle them requires dynamic new ways of working. The global recession has had significant impacts on the financial, economic and social fabric of the EU.

• Therefore, – those businesses that will continuously innovate their

products, services and/or business models, will be able to successfully compete in the market place while all others will fall on the wayside

and FINALLY

‘BUSINEES AS USUAL IS NOT ENOUGH’INNOVATE !

University of Sheffield

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About

THANK YOU ! Prof. Panos H. Ketikidis, PhDResearch Interests Innovation and Regional Development Supply Chain Management – Information Systems ICT Policy and Research Strategy Health Informatics

Contact information: ketikidis@city.academic.gr• Chief Editor of the International Journal of Innovation & Regional Development • Associate Editor of the International Journal of Logistics Economics and Globalisation