RISE Project - Research Institutes in the Service Economy - Wp4 Policy Learning

8/6/2019 RISE Project - Research Institutes in the Service Economy - Wp4 Policy Learning

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RISE - RTOs in the service economy

Workpackage synthesis report, wp4

On policy learning and the interactionbetween policy makers and researchersPer M. Koch, Johan HauknesSTEP - Studier i teknologi, innovasjon og ekonomisk politikkStorgaten 1, N-0155, Oslo, NorwayDirect line: +47 22 47 73 16Email: [email protected]

A final report of RISE: RTOs in theservice economy - Knowledgeinfrastructures, innovationintermediaries and institutional changeRISE reports may be downloaded from:http://centrim.bus.brighton.ac.uk/go/rise /

sRISE coordinator: Dr Mike Hales

CENTRIM - The Centre for Research in

Innovation ManagementDirect line: +44 1273 642190

Email: [email protected]

This report constitutes a deliverable specified inthe RISE work programme

Contract number: SOE1-CT98-1115

Funded under the TSER programme by theEuropean Commission, DG Research

Date: November 2000



RISE Work Package 4

On policy learning and the interaction between policymakers and researchers

Summary report

Per M. Koch and Johan HauknesSTEPOslo, December 2000

This report is based on material provided by:

Ulrich Wurtzel, DIW, BerlinMike Hales, CENTRIM, Brighton, UK

Nils Markusson, NUTEK, StockholmLennart Norgren, NUTEK, StockholmBrigitte Preissl, DIW, BerlinMargarida Fontes, INETI, LisbonJohan Hauknes, STEP, OsloPer M. Koch, STEP, Oslo



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Table of contents

SUMMARY ................................................................................................................... 4

The RISE programme .............................................................................................. 4The systemic approach ............................................................................................ 4

Research and technology services ........................................................................... 5The public role ........................................................................................................ 6

POLICY MEMORANDUM ......................................................................................... 8

THE A NNUAL CABINET BUDGET CONFERENCE : O N THE ROLE OF RESEARCH ANDTECHNOLOGY SERVICES IN THE INNOVATION SYSTEM ..................................................... 8

Proposals of the Ministry of Finance ....................................................................... 8 Market Failure ........................................................................................................ 8The systemic view of innovation .............................................................................. 9

Competence and learning ...................................................................................... 11 Institutional failure ................................................................................................ 12Systemic policy measures ...................................................................................... 13Conclusion ............................................................................................................ 17

APPENDIX: RESEARCH AND TECHNOLOGY SERVICES AND POLICYDEVELOPMENT ....................................................................................................... 19

The rise of systemic innovation theory ................................................................... 19Theory and reality ................................................................................................. 19

Research and policy making, another ’linear model’ ............................................. 20 Mentalities ............................................................................................................ 20

Research vs. policy making ................................................................................... 23 Policy learning ...................................................................................................... 24The learning processes of policy makers ............................................................... 28

Researcher/policy maker interaction ..................................................................... 29 Interaction vs. independence ................................................................................. 31Systemic failures in the policy apparatus ............................................................... 34The ministerial memo, a didactic experiment ......................................................... 35

RISE and beyond ................................................................................................... 38

LITTERATURE ......................................................................................................... 38

Selected RISE Material ......................................................................................... 40



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Summary

The RISE programmeThe main goal of the RISE programme is to gain new insight into the role of research

and technology organisations (RTOs) and knowledge intensive business services(KIBS) in the innovation system. 1 The programme is an attempt to map in which waythese institutions function as research and technology services for companies, i.e.units that can help companies build up the competences needed to innovate.

The systemic approachRISE is grounded in modern innovation theory, a view of economic activity that seesinnovation as a result of interaction and competence flows in the innovation system. 2

The innovation system consists of companies, public organisations, R&D institutionsand others. The ability to innovate is considered a function of the ability to build

competences, while the ability to develop relevant competences is seen as a result of the companies' ability to take actively part in the innovation system. They mustconnect to the system in order to gain access to the knowledge and technology presentin this network.

Firms cannot passively start using new technologies just by reading about them.Although companies may gain access to manuals or machinery, the ability to use thisknowledge rests on the ability to understand, use and integrate this technology into itsown learning and innovation processes. This ability depends on the employees'education, work experience, organisational, social and technological expertise as wellas their ability to fetch relevant competences from firms and institutions outside thecompany.

If firms for some reason fail in finding, absorbing and utilising relevant competences,their ability to innovate is weakened. If this is a problem common for many firms in agiven industry, region or network of related firms (clusters), we are facing a so-called

systemic failure , where the flow of knowledge and technologies in the system is blocked or hindered in a significant way.

It should be noted that there can be no such thing as an optimal or ‘perfect’ flow of competences in social structures like these. In the real world it will always be possibleto develop new networks or to improve the existing ones. Moreover, the systemconstantly generates new competences that can be combined in new and innovativeways to create new forms of behaviour and – as a result of this – new products,

processes and services. This alone makes a state of a perfect flow of informationimpossible.

Ultimately it is the firm that must decide when it has developed learning practices thatwill make it able to absorb new knowledge and new technologies in a sufficientlyefficient way. In order to make this decision, however, it must have a relatively clear view of the competences available in the innovation system. Given the large amountof knowledge and expertise present in any part of society, this is not an easy task.

1 For a discussion of the term ‘innovation system’, see Lundvall (1995).2 See for instance Metcalfe 1952, Dosi et. al. 1988.



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Hence, the company not only needs help in order to develop its own competences, for instance by co-operating with a research institution. It normally also needs assistancein order to map the sources of competence that can potentially be used in thedevelopment of the firm, i.e. it needs ‘pathfinders’ as well as ‘co-workers andteachers’.

Research and technology servicesIn order to improve the functioning of the whole system, one might argue that there isa need for expertise that can develop vectors that can help strengthening the firms'ability to learn and collaborate with other firms and institutions. From the company

perspective these vectors – which can include various R&D programmes andinstitutions, advisory boards, consultancies, technology attachés, financial measuresand more – can be viewed as research and technology services , i.e. units that servecompanies the competences needed to succeed and that help them find relevantsources of competences. They are helpers, assistants and partners. 3

The relationship between a company and its service provider will not be based on a passive reception of knowledge and technologies. Very often competence building isa result of a form for co-operation and collaboration where both firms are experts intheir own field. Hence they both learn from this competence building innovation

process. Moreover, a firm that provide research and technology services to onecompany may in its own right ask for competences from another – i.e. it will be aservice provider in one arena and a competence seeker in another. These relationshipsreflect the systemic nature of competence building and innovation.

It can be argued that the market will and should provide the research and technologyservices needed for company competence building and innovation, and – indeed – theRISE data shows that there has grown up a rather large sector of so-called knowledgeintensive business services (KIBS) – i.e. various forms of private consultancies thattogether with the research institutions provide technology and advice. Hence thereshould be no need for government intervention in this arena. Several of the policymakers contacted by RISE are of this opinion.

Others, however, argue that especially small and medium sized companies lack thecompetences needed to find, develop and make us of contacts in the innovationsystem. They are in effect unable to find the competences needed to succeed in the

market. These policy makers argue that it might be in the public interest to help thesecompanies. The companies may, for instance, contribute to much needed economicgrowth or employment or their competences and technologies may give importantinput to the development of other sectors of society. If this is the case, one can arguethat someone should implement, encourage and support policy vectors that can helpthese companies learn where to find competence sources and how to interact withthem.

3

It should be stressed, however, that although these policy vectors, measures and institutions mayfunction as services vis-à-vis the companies, this is not necessarily their only purpose. An R&Dinstitution will often have public tasks that go beyond the needs of industry.



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The public roleFirms seldom have the ability to consider the welfare of the whole innovation system.The individual company is mainly responsible for its own survival and success. Their managers neither have the resources or the competences needed to improve theoverall flow of competences in a particular industrial cluster or the nationalinnovation system as a whole.

If the individual companies cannot be expected to take responsibility for the’gardening’ of the whole system, then who can? In some fields large multinationalcompanies can do their part in developing a certain sector. Then there are theindustrial associations, which attempt to improve the working conditions of their members. The fact remains, however, that the only institutions that have the resourcesneeded to look after the whole system, is the national governments, or – on theEuropean level – the European Union.

Policy development and learning Although several European governments have developed policy vectors aimed atimproving the competence flows in the system, this is a task that goes beyond thenormal market failure rationale used to legitimise public intervention in the field of innovation and technology development. 4 In order to develop and gain support for new measures in this field, policy makers need a coherent argumentation that can beused to develop and explain such policy vectors.

Unfortunately there have not been many relevant studies of learning in policy-makinginstitutions or the political system. Hence it is hard to fine-tune a set of tools that can

be used in order to develop the policy system's competences in the field of innovation

systems theory and research and technology services. However, the RISE team havedone some preliminary studies of competence building in ministries, directorates,research councils and other relevant institutions in order to gain insight into thelearning processes that take place there.

The RISE interviews and innovation policy workshops reveal a complex system of policymaking and policy development institutions, which defies simple explanationsof policy formulation. The policy makers operate within a diverse organisationalculture, where he or she has to take a lot of factors into consideration, including theideology of the political leadership, the role of the media and public opinion, theruling ‘mentality’ within the ministry, organisation or unit, power struggles and the

need for financing and more.

Research is only one of many forms of input into these processes, which means thatthe policy maker will take the other factors into consideration when commissioning,interpreting and using research that is to contribute to the competence base of policydevelopment. Most of the policy makers involved in this part of the RISE study,express a need for policy-oriented research, i.e. research that may be easily used in

policy development. Many criticise innovation research for being too theoretical andacademic, and not targeted towards the practical problems facing the policy agencies.Some ask for concrete policy advice, while others would like the researcher to map

4 For a general introduction to innovation policies based on systemic approaches, see the forthcomingOECD reports on the national innovation systems (OECD 2000).



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various alternatives as regards policies and policy vectors and to analyse the possibleconsequences following various lines of action.

In any case there seems to be a need for improved forms of communication between policy makers and researchers, so that the researchers may better understand the

competence needs of the policy makers, and give the policy maker a better understanding of the potential and the limitation of research in this field. Moreover,from a competence perspective, the passive reading of research reports is aninefficient form of policy learning. In order to fully grasp the implications of innovation theory and research, the policy maker need to interact with researchers indifferent fora and in various stages of the research process.

There is also an important dividing line inside the policy apparatus, between thosewho are familiar with systemic innovation theory and those that are not. It turns outthat many policy makers find it difficult to make this way of thinking understandablefor the ‘outsiders’. This makes it difficult to promote and defend policy vectors basedon these premises. The fact that so many of them find research reports ‘academic’ andhard to read does not make their task any easier.

Hence there is a need for more accessible presentations of theory and results, presentations that can lay the ground for more effective learning processes within theministries and policy agencies. This is a challenge that may benefit the researchers, asthey will be forced to understand the ‘lifeworld’ or cultural context of the policymaker in a better way. By doing so, they will learn more about the environment inwhich the research shall be used.

As an experiment we have written a fictional memo to an unnamed minister of innovation, explaining the basis of the RISE programme and discussing the need for aresearch and technology services policy. The memo follows this summary. Thisdocument also includes a wider discussion of the memo, policy learning and the roleof research and technology services.



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Policy Memorandum

Ministry of InnovationDepartment of Innovation Services

MEMO

The Annual Cabinet Budget Conference: On the role of research and technology services in the innovation system

To the Minister,

We refer to Cabinet meeting document No. 2001-27, containing theMinistry of Finance’s budget proposals in the area of knowledge

production and dissemination. This Memo contains arguments that might be used in the Cabinet discussions.

Proposals of the Ministry of FinanceBudget cutsproposed bythe Ministry of Finance

As expected the Ministry is proposing substantial cuts in the publicfunding of R&D and innovation support, arguing that the economy isoverheating and that there is a need to curb public spending. The Minister of Finance maintains that a further increase in the inflation rate will harm

the competitiveness of our industry, which in the long run may lead tohigher unemployment and social unrest.

The Minister also claims that the beneficial effects of the Government’sinnovation policies have not been documented, and that competence

building and knowledge acquisition and dissemination for competitivenessis a task for industry itself.

The Department of Innovation Services has reason to believe that theMinistry of Finance assumes that a further increase in public spending onhealth, pensions and social services is unavoidable of political reasons. The

Minister of Finance will therefore fight hard to reduce expenses in other parts of the budget.

The Department suggests that the Minister co-operate with the Minister of Education on the topic of funding of basic university and college science(see separate Memo on the overall R&D budget).

This Memo will concentrate on the issue of producing, distributingand upgrading competences in the innovation system.

Market FailureThe Minister of Finance will accept that there is a need for public supportfor research and development. She will do so on the basis of the traditional



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market failure rationale. The argument goes like this:

The Marketfailureargument

R&D that leads to new or improved products, processes or services willnot only benefit the company that perform or finance this activity. Thecompanies and people that use this new product will also profit from

increased efficiency. A new drug will not only benefit the pharmaceuticalcompany, it may benefit the whole society.

According to the market failure argument, firms are prone to invest toolittle in R&D, as they are unable to harvest the profits following from this

spin off effect . This is a problem if the competitors benefit as much fromthe innovation as themselves. Moreover, R&D is always a risky adventure,which may stop some firms from investing.

Although this department is sceptical towards some of the premises behindthe concept of market failure (especially the idea that the chaotic nature of everyday business is but a deviation from ’perfect’ or ’balanced’ marketconditions), there is no need to argue against it. It is certainly true thatsociety at large may benefit much more from an innovation than thecompany doing or financing the research. This is a strong argument for

public support for R&D.

The systemic view of innovationTraditionally economists have tended to view innovation – i.e. thelearning-based process of developing new, and improving existent,

products, processes and services – as something that is introduced into the

economy from the outside (’an externality’). Although most – if not all – economists now agree that technological development is a major contributor to economic growth, innovation policies are normally notconsidered a part of economic and financial policies.

Modern innovation theory argues that: 5

Innovation isan integratedpart of theeconomy

Technological change cannot be seen as something delivered from theoutside into the economy. Innovation is rather seen as an integrated

part of economic development. Managers, workers, engineers andresearchers all take part in a process aimed at producing and

developing products that someone asks for or might need in the future.The most successful firms are most likely those that manage to advancenew or improved commodities or services.

Companiestake part inclusters

No company is an island in itself. All firms take part in complexnetworks of suppliers, customers, partners, consultants and researchinstitutions, as well as various forms of public governance andregulations.

Studies show that companies are more likely to interact with some

5 For a general introduction to modern innovation theory, see the RISE literature review or Innovation policy in a knowledge-based economy , European Commission, Luxembourg 2000.





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including laboratories and research institutes) and KIBS ( Knowledgeintensive business services – predominantly private consultancies).

The EC RISE study shows that in quite a number of clusters RTOs andincreasingly KIBS provide all sorts of knowledge-related service

functions that help actors in this cluster to innovate and to adapt. Themix of service functions and the balance between what services are

provided by RTOs vs. KIBS’ vary from cluster to cluster. However, thegeneral trend is that RTOs tend to move more downstream providingmore hands on and implementation like services, whereas KIBSincreasingly perform services that used to be associated with RTOs andinstitutions of higher education only.

Competence and learningInnovationdepends onthe ability tolearn

Modern innovation theory argues that the companies’ ability to innovaterests on their ability to learn. By this is meant not only learning throughtrial and error within the companies’ own walls, but by learning fromothers in the system of innovation.

Learning is not the passive absorption of information. Information is initself worth nothing unless you know where to find it, and how to mobiliseit in a relevant context – hence the need for close interaction with other

people and institutions.

In order to learn and stay up to date the companies and their employees

must stay in touch with related companies, institutions, and other sourcesof knowledge and competence building (including everything fromresearch laboratories to trade fairs, conferences and professionalassociations).

Knowledge isnot a ’free’ or common good

The Minister of Finance may argue that knowledge is a common good – freely available to anyone who knows how to read. In practice, however, itis not. In firms knowledge is but an aspect of competence, meaning theability to perform significant tasks and to solve problems that enable firmsto compete effectively and sustainably in markets. Abstract theoreticalknowledge is of small value unless it is utilised in innovation practice .

Another company cannot just download a competitor's organisation or work and life experience from the Internet.

This is why companies invest in R&D in spite of the market failure, andthis is why companies adopt innovative practices and organisationalstructures. For a period of time they will have competitive advantage basedon improved competence that may be hard to imitate, even if they areunable to patent the innovation.

Tacitknowledge

Knowledge includes so-called ’tacit knowledge’, including the contacts of individuals, intuition and creativity, social intelligence, backgroundknowledge, a sense of context and appropriateness, and more.



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Culture andsocial skills

At the collective level, knowing ’what to do’ in a firm involves companyand business culture, shared ’genres’ of practice, and the local languagesand stories that are ’part of the furniture’ of a workplace. Competences – afirm's abilities to do significant things in markets – include such tacit aswell as explicit and formal elements.

Machinery Competences also include the material apparatus of the firm – concreteconfigurations of capital assets such as machinery or computers, materials,documents, the communications infrastructure, the physical and practicalorganisation of space, etc. In practice, the competences of a company takethe form of the entire organisation of resources available to actors in thefirm.

Tradeableassets

Consequently learning is related to the acquisition of assets, includingtradable knowledge assets, the ’public goods’ of basic science and ’hard’technology and machinery. But tradable assets and public goods are not, inthemselves, competences. Further investment is required to ’configure ’them into significant competences – to make them useful.

Whether a firm succeeds in developing the much-needed competences,depends to a large degree on its ability to build linkages to relevant firms,organisations and research and technology services. Although a firm can

be said to belong to a certain ‘industrial cluster’ (which is a theoreticalconcept), that does not necessarily mean it is good at ‘networking’.

Institutional failure

The Minister of Finance would like to cut the budget of several programmes targeting competence building in firms and knowledgedissemination, claiming that this is the responsibility of industry. Sheclaims that the public’s responsibility should be limited to fundinguniversity and college science.

Lack of networkingand the abilityto find,understandand use newknowledge

However, recent research from the EU research project RISE and othersconfirm the need for such programmes. A lot of companies lack thecompetences needed to make use of university science in specificcompetitive settings. The staff may not have the education that is needed,they may lack the necessary contacts in the university sector or they may

lack the experience of transforming academic knowledge into industrialcompetences.

As it happens, most innovation is done without direct use of universityresearch. 6 For most companies it is more important to build learningrelationships with other firms, suppliers as well as customers.

6 Meaning that they are not using results from basic research directly and that they are not in contactwith universities and other institutions doing basic research. However, they may use knowledge andtechnologies, which have components that have been developed through basic research. For instance:

All companies use computers, and although modern computers are not developed in science labs, theycontain materials developed through basic science and software based on logical systems developed inuniversities.



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Moreover, they may also lack the experience to evaluate how relationshipswith external sources of knowledge, skill, assets and insights mightcontribute in a practical way to new, improved, relevant competences.

Systemicfailure: Plugsin theknowledgeflows

Companies thus often face what researchers have called systemic failure ,

i.e. they are unable to mobilise resources needed to perform certaininnovation activities. They cannot get access to a relevant competence(from an external specialist) or the means of building a relevantcompetence within the firm. One could say that flows of knowledge andother competence resources in the innovation system are restricted in sucha way that it hinders much needed innovation. This is especially true for small and medium-sized firms that often lack the personnel andcompetences needed to access the relevant networks and institutions.

Issues of perception are involved, together with interpretation (’makingsense’ of unfamiliar arrangements), communication, practical abilities toget certain things done, finding the right institutions etc., which make theminvisible to potential beneficiaries.

In a sense these are all ’market failures’. A perfect market would havenone of these problems because all information would be perfectlymeaningful and all resources perfectly available. But in real-time and realspace, real humans and real firms have these problems of institutionalfailure. ’Hard’ institutional failures are in formal organisations (e.g.universities, government departments, firms), ’soft’ failures are in culture:good practice, norms, language, expectations, stereotypes, etc.

Some policy makers argue that the impressive growth of the KIBS market,shows that the private technology services do meet the demand of industryand that there for this reason is no need for public measures. However, theRISE programme has documented that research and technology servicesmay be marginal in particular clusters of innovating firms, whilesimultaneously being viable as revenue-generating companies. In other words, the market in research and technology services does not guaranteethat the companies that need them most use these services.

Systemic policy measures

Public supportto thedevelopmentof a networkof researchandtechnologyservices

This is why the Ministry of Innovation has decided to support thedevelopment of so-called research and technology services . These areservices provided by firms, institutions, organisations or programmes thathelp firms get access to much needed competences in these externalorganisations, or to factors that enable them to build and upgradesustainable competences in-house, as well as exploiting the existing assets,resources and competences of the firm.

The Ministry of Finance will probably argue that the public contribution toresearch and technology services should be the responsibility of publicuniversities, colleges, R&D institutes and laboratories only. These doindeed play important roles as suchservice providers.



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However, the Minister could argue that institutions like the universities andcolleges have tasks that go far beyond the needs of industry. Their role of

providers of basic, long-term science often demands a culture that is notalways compatible with the short-term horizon of small and medium-sized

businesses. A too strong focus on industry needs may undermine the long-

term aspect of university research. Furthermore, what the firms need isoften not new basic science, but more practical technological or organisational solutions based on already existing knowledge.

RTOs andKIBS

The main business oriented competence services today are the research andtechnology organisations (RTOs, mainly industry-oriented, public-fundedtechnology institutes or research laboratories) and knowledge intensive

business services firms (KIBS, including various forms of privateconsultants and professional services firms). Under pressure of reduced

public funding many RTOs increasingly operate as KIBS, perhaps on a private non-profit basis.

The recent RISE study shows that RTOs are so diverse in their institutionalform and service activities that it is impossible to give a clear definition,and misleading even to offer a typology. From an innovation policy and

functional point of view it is probably better to talk about researchinstitutes, laboratories, consultancies as research and technology services .To these services one should also add units performing routine operationsassociated with the productive use of technological apparatus – for example, testing and certification, maintenance, health and safety audits – and providers of machinery and new technology. These may not all betargeting innovation directly, but by improving the competences of thefirm they strengthen the firm’s ability to innovate.

It should be added that from an institutional and administrative point of view, it may still make sense to speak about R&D institutes, RTO, KIBSetc.

Some research and technology services do an excellent job connectingfirms with firms, firms with R&D institutions, and firms with relevant

public measures, but the effect of their work varies from region to region,industry to industry. This variation is partly due to individual, cultural and

historical differences in the institutions, but mainly due to the differingdynamics and requirements of the clusters that the RTOs and KIBS serve.

Of course, innovation systems and clusters are dynamic, i.e. they changeover time, and the relevance or effectiveness of public-funded RTOs, for example, may change (especially if RTOs or universities themselves do notchange).

Theinnovationsystem isvaried and

constantlychanging,hence the

This variation means that one cannot base innovation policy on atheoretical basis that treats all firms, industries, regions and research andtechnology services in the same way. This is why the Ministry of Finance

is mistaken when they claim that there is no need for public measures inthis field. The individual business owner cannot – and probably should not



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need for dynamicinnovationpolicies

– concern herself with the overall functioning of the innovation system. Itis her job to develop a successful firm where she is. The same applies tomanagers of RTOs; they have a difficult job maintaining the excellence of their services, balancing the budget and identifying appropriate, competentclients for their services.

The publicinstitutionshave theoverallresponsibilityfor developingthe innovationsystem

On the other hand, the public policy makers, the industrial corporationsand relevant researchers should be able to develop an overall view of thenational and regional innovation systems, including the public and privateresearch and technology services provided within them.

The public sector may contribute to the development of a comprehensivesystem of knowledge institutions and innovation programmes that canimprove the flow and distribution of relevant competences and competencefactors in various industries and clusters.

Private KIBS will always play an important role as competence suppliersfor firms, but they are not able to fulfil the needs of the whole system.There will also be a need for publicly organised and funded policy vectors.

The RISE programme identify several core elements for policy related toresearch and technology services (RTOs as well as KIBS):

• Build firms’ competences to use external research and technologyservices (In most advanced countries, articulating demand is moreimportant than increasing the supply of research and technologyservices).

• Facilitate a sound division of labour between various kinds of suppliersand different kinds of service content.

• Match services to cluster requirements in strategically important cluster (‘high-tech’ as well as ‘low tech’, new as well as traditional industries).

• Integrate actions across policy areas and government functions.• Assess research and technology services’ contribution in specific

clusters, and give priority to existing clusters when developing public-funded or sponsored vectors/measures.

• The various institutions contain mixes of economic and social tasks or functions, which vary from cluster to cluster and from country to

country. When developing policies it is important to identify the actualinnovation functions of these units.• Safeguard multiple roles of RTOs under other aspects of policy

(including employment, labour relations, the environment, health, public welfare, culture and social affairs).

The innovation White PaperChange andOpportunity

The Minister could remind the Cabinet of the recent proposals forwardedin the white paper on innovation policy Change and Opportunity – on

Industrial Innovation and Creativity . This clearly states that theGovernment wants to go beyond the traditional research policy, where the

State focuses on supporting R&D institutions only. The paper states that:



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To establish astructure of competenceinstitutions

• ’It is the goal of the Government to establish a well functioninginstitutional structure of R&D institutions, knowledge-intensive

business services, public measures for high risk financial support,and programmes aimed at improving the competences of firms tolearn.’ (p. 17)

Dynamiccapabilities of firms

• ’ One should increase the dynamic capability of firms, thusstrengthening their absorptive capacity and generating and updatingtheir strategic technological competences.’ (p. 18)

Upholdmoderneducation

• ’It is the goal of the Government to uphold a modern, adaptivesector of education of high quality that may bring out skilled andcreative people that can fulfil the needs of our society, our cultureand our economic life.’ (p. 35)

However, this is not enough. When focusing on the needs of business, the paper also focuses on the systemic nature of innovation and knowledge-creation:

Developpublicresearch andtechnologyservices for interactionand co-operation

• ’The Government will continue to develop public services aimed atimproving the interaction between the participants in the innovationsystem. These will include publicly funded, chartered or franchisedresearch and technology services in areas of the economy wherethere are few or no relevant private companies. Where theopportunity offers, these will be 'prototypes' of potentially viablecommercial services. (...)

’The main effort, however, will be targeted towards programmesfor co-operation and interaction within and sometimes acrossvarious industrial clusters: ‘collaborating for competition’. Thesemeasures will counteract institutional failure of both anorganisational and a cultural kind within the system, failure that

prevents resources and competences outside the firm from beingidentified or used in innovation. (...)

’Sometimes market failures of a straightforward kind are involvedand appropriate financial measures (e.g. public venture capital) will

be integrated with 'institutional failure' measures.’ (p. 45)Regulatoryreform.

• ’The Government will continue to improve structural elements inthe system, including regulatory frameworks, taxation, technicalstandards, risk-management rules, health and safety regulations.’(p. 46)

Programmeaimed atstrengtheningthe learningcapacities of firms.

A system

The white paper also announces (pp. 54-60):

The creation of a new programme aimed at supporting the building of systematic competences of firms to evaluate and use external sources

of knowledge and capability,



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based on amix of privateand publicinstitutions.

Programmefor strengtheningthecompetencesof policymakers.

The development of a service system based on a sound mix of privateand public institutions, including hybrids based on public as well as

private finance and participation,

A new programme aimed at building in the strategic and administrative

competences of policy makers involved in innovation policy and thedesign of research and technology services. The Government shallidentify the actual innovation functions performed by public-fundedsuppliers and R&D services in the various industries, clusters andregions, and get a better insight into their various roles and tasks.

Some RTOs have functions going beyond the role of research andtechnology services, including scientific advice to the public, inputs to

political debate and decision making, inputs to judicial processes,operational services to firms and government departments, or – even –

basic research. The Government has been criticised for trying to sacrificethese long-term public tasks on the altar of ’short-sighted’ innovation

processes in industry. Some of the ministers may repeat these concerns onthe conference, especially the Minister of Culture and the Minster of Health and Social Affairs.

The Minister can refer to the White Paper's discussion of these matters. Itstates that these functions should not be weakened, as the interaction

between the various functions will strengthen their long-term ability to perform research and technology services, as well as their capability of accomplishing other tasks.

ConclusionUniversityscience andindustry

There now seem to be broad agreement on the need for strong support toour R&D institutions, and especially for university science and 'bridging'mechanisms between university R&D and industry such as the Foresight

programme and various regional networking initiatives.

Clearly university research has cultural and social goals that go far beyondthe needs of industry. From an economical point of view, however, theGovernment has a responsibility for making certain that relevant

competences and resources developed in these institutions are utilised byindustry in the most efficient way possible.

Exploiting thecompetencesof industry

It is also important to ensure that the competences of our industry areexploited effectively, since these constitute a far larger national resource

base than the whole of the university sector. This can only be done by atwo-pronged strategy.

Establishing alearningframework

• Establishing a framework that improves the companies’ ability tolearn, mobilising, generating and using new competences.

Improvinginnovation

• Improving the linkages between firms and between firms andinstitutions (including firms) that provide research and technology



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linkages services in the form of either ’ready to use’ competences for innovation, or various factors for competence-building (includingdata, information, staff, physical technology and intangible assets).

An innovativeindustry givesa strongeconomy

Our economy and our welfare rest on an industry that is able to innovate

and adapt to constantly changing environments. Hence it is in the interestof both society and the Ministry of Finance to support measures thatimprove the competitive edge of industry.

Need for strong publicinstitution for innovationand co-operation

In order to develop such instruments and policies, there must be room for strong public institutions and offices that have the financial resourcesnecessary to learn the nature of the various clusters and industries, and theresearch and technology services that are available or relevant for these

purposes. There must also be institutions that can evaluate these measuresand suggest improvements.

The Ministry of Innovation must therefore oppose the proposed cuts in theresearch and innovation budgets, and asks that the proposals forwarded inthe white paper on innovation is carried out according to plan.

END OF MEMO



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Appendix: Research and technology services and policydevelopment

The rise of systemic innovation theory

Rise is part of a longer series of studies of the innovation systems in Europe, whichgained ground with the OECD TEP-programme and the publication Technology in aChanging World .7

In this document one finds a policy statement on technology and the economyadopted by the OECD Council at ministerial level dated June 4 and 5 1991. In thestatement the Ministers ’...reaffirm the importance of fostering diffusion and wideacceptance of technology within their economies and societies,’ and ’underscore thecritical importance of human resource development and mobility for thecompetitiveness of firms and countries’ (p. 9).

Since the late 1980s the systemic view of innovation and technological developmenthas come to the forefront. More and more often policy makers and politicians usearguments based on modern innovation theory, i.e. a view where innovation is seen asthe fruit of an efficient flow of competences, knowledge and ideas in a larger network of firms, organisations, public institutions and regulations.

Theory and realityHowever, when discussing these matters with researchers and policy makers, onesoon get the impression that this way of thinking is in no way taken for granted. In aritualistic manner both policy documents and research reports often opens their

analysis by declaring ’the death of the linear model’, meaning the end of the view thatnew ideas and concepts normally are born in university science laboratories andoffices.

’We all say that the linear model is dead,’ one interviewee told one of the NorwegianRISE researchers, ’still a lot of policy makers act as this is not the case. Maybe theyhave not grasped the true implications of the new way of thinking, or maybe they findit opportune to use more old fashioned arguments.’ 8

The RISE Work Package 4 studies show that there is no simple explanation for this phenomenon. No country has a monolithic policy apparatus characterised by total

ideological consensus and common goals. Instead one will find large variations asregards ways of thinking, policy strategies, educational backgrounds, historicaltraditions and institutional frameworks. We have found ministries where theworldview in one department differs significantly from the basic concepts used inanother. 9 In this way policy-making milieus are no different from academic circleswhere one school of thought may compete with another.

7 Technology in a Changing World , OECD Paris 1991.8 From an interview with a Norwegian ministerial policy maker June 2000.9

This used to be the case in the Ministry of Industry and Trade in Norway, where the Department of Research used innovation theory actively, while the Department of Industry tended to use base itsthinking on traditional macro economic theories. The two departments have now been merged.



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For instance, within innovation studies one continue to differ between ’neoclassicaleconomics’, ’new growth theory’ and ’evolutionary innovation theory’. 10 Althoughthere are no absolutely clear boundary lines between the various schools, the terms do

point to significant differences in the way one picture the reality at the root of moderneconomic development. One will find some of the same dividing lines within the

political apparatus of European countries, although in these environments thedifferences are not always formulated in academic terms.

Research and policy making, another ’linear model’However, there is no one to one relationship between social and economic studies and

policy development. Strangely enough, researchers studying innovation and thesystemic nature of competence building, often fall back to a quite linear understanding on how research on innovation and knowledge creation influence

policy development, i.e. policy makers ’transform’ the objective analysis of researchers into relevant policy measures.

The RISE study shows, however, that the day-to-day reality of policy makers is muchmore complex. Research results are only one of many factors influencing policydevelopment. Policy makers and politicians must also bear in mind the importance of overall policy goals beyond the sphere of innovation and industrial development.Then there is the press and public opinion to consider, cultural and ideologicaldifferences, as well as the constant struggle between the various parts of the politicalapparatus for funding and power (Edwards 1999).

Moreover, it would normally be wrong to picture policy makers as ’clients’ asking’experts’ (i.e. the researchers) for help. Policy makers are experts in their own field.

Not only do they know much more about the nature of the political and administrativesystem than the average social researcher; many of them are experts on the interaction between industry on the one hand and public institutions and measures on the other.One could therefore argue that it is essential that the contact between researchers and

policy makers go beyond the posting of a research report. There a should be adialogue between them, so that the researcher may gain a better insight into the lifeand needs of the policy maker, while the policy maker can get a better understandingof the theoretical and factual basis of the research done.

Mentalities

Periods with dominating mentalitiesIn 'Innovation polices in the post-war period' Hauknes and Wicken (1999) outlinessome aspects of recent innovation policies in Norway and points to some possibletrends of these policies for the upcoming years. The main concern is to elicit what theunderlying presumptions about industrial production and ‘value creation’ is and whatthe ultimate aim of ‘modern’ competitive industry was.

A core assumption in the paper is that industrial innovation policies in any period basically find their political aim in the perception of a gap between what is regardedas the 'idealised modern' industry and characteristics of the present industries. Thisideal may vary over time, and an identification of key ideal models in various phases

10 See for instance Smith 1994.





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as well as in policy practices and instruments. They constitute a framework for policydiscourse among policy makers and between these and the relevant policyenvironment.

Mentalities and ideologiesMentalities are often considered ‘self-evident’ and are not necessarily explicitlyformulated by policy makers. Researchers and scholars may, however, try to give aclearer description of such worldviews, developing what one can call ‘ideologies’, i.e.systematically developed models based on a given mentality or view of ‘reality’. 13

Studies of innovation may for instance be linked to one or more of the dominatingschools of economics, including traditional neo-classical economics, new growththeory and evolutionary innovation theories. These may be considered the ideologiesof innovation research and policy making.

There is, however, no one to one relationship between these ideologies and the

mentalities of policy makers. The RISE studies show clearly that any idea of policydevelopment as being solely a product of ideologies or practical research ismisconceived. There is no linear process starting in the universities or researchinstitutes leading to new and improved policies in the ministries and policyinstitutions.

This should come as no surprise to people involved in innovation policies andinnovation theory, given the strong slant towards systemic thinking in these circles.

Nevertheless, the fact that there have been so few studies of policy learning has oftenled to an oversimplified understanding of the relationship between research and policymaking.

Decisions of development and implementation of innovation policy programmes,funding schemes and other policy instruments are made in a complex environment of heterogeneous power distribution and responsibilities. This implies that simplemodels of rational policy choices and implementation does not resemble ‘policymaking in action’. It also implies that simple models or analytical alternatives cannotaddress concrete policy issues and choices in a sufficiently rich way, relevant to theincentives structures, necessary trade-offs and negotiation processes of the policymakers’ working context.

In analysing the interaction of research and analysis with innovation policydevelopment, it is necessary to approach the two environments as different cognitivesystems or fields of expertise, with different incentives structures.

13 An ’ideology’, theory or philosophy may, of course, also give birth to a new mentality. However,one should be very careful picturing any linear process form mentality to ideology or visa versa.Researchers, philosophers and policy makers all take part in a complex social and cultural systems,where competences, ideas and cognitive structures may influence and inspire various individuals and

groups in a wide variety of ways. One way of interpreting the development of new ideologies would beto model a feed-back loop where the ruling mentality of a social group or school inspires researchers todevelop new theories that ultimately challenges the basis of this mentality, thereby changing it.



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Research vs. policy making

The culture of AcademiaSocial researchers are raised in academic environments that reward new models andnew insight into social processes, regardless of any practical implementation of this

knowledge. This gives their publications a strong theoretical slant, which is reflectedin terminology and forms of publication. The scholar or academic is normally writingfor fellow researchers and scientists, not policy makers or the general public, whichcan make the text inaccessible for persons that are not familiar with the presentdiscourse within these disciplines.

Researchers employed in institutions oriented towards applied social science andeconomics are more likely to know the policy makers’ frame of reference, whichshould make it easier for them to communicate. In other words, researchers familiar with the needs and competences of the policymaker should be able to transfer their own competences to the policy makers’ in a more efficient way.

Practical use of researchHowever, many of the policy makers taking part in RISE interviews and workshopscomplain that it often is hard to read the main message of reports and that the materialis too ‘academic’ or not relevant to policy and policy vector development. This seemsalso to be the case for research produced by institutions of applied research. Thiscould mean that the researcher has failed to understand the needs of the partycommissioning the research, or that he or she is unable to communicate the newinsight in an efficient way. In any case, one is facing a sub optimal learning process.

In general the policy makers taking part in WP4 have degrees from institutions of

higher education – very often a masters degree or an equivalent. Hence one shouldexpect that they are familiar with basic scientific methodology and terminology. Thisis probably the case in most instances, and the discussions taking place in theworkshops and in the interviews, clearly shows that many of them are familiar withvarious forms of social and economic theories, including modern innovation theory.This means that at least some of these policy makers should have the competencesneeded to read and understand research in general. If they find the researchinaccessible or not useful, one will have to look for other causes.

Given the description of mentalities above, one possible explanation may be a conflictof mentalities or worldviews. Modern innovation theory is a fairly new discipline,

and policy makers with a more traditional educational background may fail to graspthe essence of systemic thinking. The terminology used may also be unfamiliar.

The deficient learning process may also be caused by an ideological conflict. The policy maker may perfectly well be aware of the message given in the report, but heor she disagrees with the theoretical basis or find it uninteresting. Some of the RISEinterviewees reflected on different intellectual traditions existing side by side invarious departments, organisations or ministries.

These traditions may be rooted in different mentalities or ideologies (or both). In the Norwegian Ministry of Industry and Trade one will find groups adhering closely totraditional neoclassical economics, while others use modern innovation theoryactively in policy development. In Sweden a green paper recently presented a



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traditional linear university-oriented approach to research and innovation. 14 That thereis a general interest in systemic innovation theory on the policy level is neverthelessreflected in the name of one of the heirs to NUTEK: Verket för innovationssystem(The Organisation for the Innovation System). 15 The reception RISE-relevant researchgets will to a certain extent be dependent on the frame of mind of the recipient: his or

her mentality and ideological convictions.

There may, however, also be more pragmatic reasons for a lack of communication between researchers and policy makers, some of them caused by the work environment and the organisational structure of the policy agency or ministry at hand.

As there has been little research on the learning processes in policy-makinginstitutions, and RISE only has been able to make some preliminary studies, RISEcannot venture solutions as regards how to improve the learning conditions in unitslike these. It is, however, possible to map some of the most important aspects of learning and innovation in such institutions and give a presentation of how some of the policy makers themselves experience their situation.

Policy learning

Definition of policy learning We define policy learning as the process underlying any changes in the political‘behaviour’ of an agency, its portfolio of policy vectors (institutions, programmes,funding schemes, regulatory frameworks etc.), objectives and management for or of these, their constitution and the relative weight of vectors in the portfolio.

We broadly regard policy learning as having taken place within a policy agency whenthe agency alters its policy behaviour, i.e when it

alters specifications and orientations for subsidiary institutions, programmes, or the policy legitimisation of these, etc.

introduces new or altered policy vectors or new internal and external monitoring or management systems, expands or contracts its main constituencies.

The process underlying these changes is a complex process including various forms of learning, types of competences and sources of knowledge.

Models of learning An organisations ability to develop relevant knowledge-based policies is to a largeextent based on its ability to develop relevant competences, i.e. it is based on learning.Four generic models of learning has been used as part of the analytical basis for case-analysis in WP4:

Explicit conceptual delivery and acquisitionAn explicit and direct interaction between the policy making agency and an

14

SOU 1998:128 Forskningspolitik -Forskning 2000 ( Research 2000 ). Stockholm.15 See Forskningsfinansiering i samverkan , Delrapport från organisationskommittén för Nymyndighetsorganisation för forskningsfinansiering, 2000. http://www.nutek.se/information/forskfin.pdf



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external institution, furnishing new analytical perspectives, presenting and performing research to policy makers, contract work to commissions, agencies onspecific issues or suggestions in new or altered policy initiatives or objectives etc.

Learning networks

Policy agencies are often involved in permanent or long-term networks where a primary objective is the sharing of information or other conceptual resourcesamong its members. Such networks may include individual experts’ formal andinformal professional networks, long term institutional networks, dialogue withthe members of the constituency the relevant policies address, intra- or inter-ministerial networks, and international networks (e.g. EU and OECD-basedworking groups).

Benchmarking and other indicator-based or best-practice approachesAt one end of the spectrum are formalised indicator based reporting systems, atthe other ’one shot’ or sporadic assessments, evaluations and analytical studies.

Continuous improvement Of informal processes, most notable is learning-by doing, which generatescapabilities and competences that are operational and experience-based. These

processes and capabilities are shaped by the impact of an evolving policy‘culture’, including the ministerial or departmental perception of the organisation's

policy agenda; the governing, more general, political objectives and how they areoperationalised, and divisions of labour between ministries and departments.

Individual and organisational learning

Several of the RISE interviewees and respondents have pointed to the discrepancy between individual learning and the learning processes of the whole organisation. For instance: Although the Research Council of Norway employs a lot of highlycompetent policy makers with experience from research as well as industry, theorganisation seem to lack an overall strategy competence building. In some respectsthe competences of the organisation are not much more than the sum of thecompetences of its employees.

Respondents from the Norwegian ministries give the same impression: There is a lotof individual ‘learning by doing’, but the ministries as a whole seem to lack long term

plans for strategic competence building. The Ministry of Education, Research andChurch Affairs has its own ‘KUF School’, offering various courses to its employeesthrough various colleges and institutions for adult education. It is, however, up to theindividual to take the initiative, selecting courses.

The commissioning of research and evaluations often take place on an ‘ad hoc’ basis,although the Research Council and SND have implemented policies of systematicevaluation of institutions and programmes.



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Individual learning A policy maker in a ministry or policy organisation is normally set to administer andmonitor excising policy vectors and to develop new ones. In doing so she or he willhave to take a lot of factors into consideration. Among these are: 16

• the wishes, ideas, worldview and ideology of the political leadership of theministry, or − in the case of subordinate policy organisations − the political signalsand demands coming from the relevant ministry or ministries

• the wishes, ideas, worldview and ideology of the non-political superiors (civilservants) 17

• public opinion, including social movements and organisations• the media• regulatory restraints• financial restraints• scientific expertise

One must also take her or his personal background and interests into consideration(the 'lifeworld' of this individual, to use the hermeneutic expression 18):

• personal experience• education• worldview and ideological background• networks and contacts

And finally, there are sources of information. These are of limited value if theindividual does not now how to find, understand and use this information. On theother hand, the process of learning becomes much more difficult if relevantinformation is not readily obtainable.

Policy makers tend to use a wide array of information sources:

• newspapers and magazines• newsletters• World Wide Web• specialist databases, including relevant statistics• books and periodicals acquired by the policy maker or her department• books and periodicals from the library of the institution (if it has one)•

books and periodicals from public libraries• government reports (including white papers and budget documents)• reports commissioned by the government (green papers)• reports from research institutes and consultants, including evaluations of

institutions, programmes and other policy vectors• in-house memorandums and reports• conferences, seminars, national and international organisations and working

groups

16 Cp. Arthur Edwards: 'Scientific expertise and policy-making: the intermediary role of the publicsphere', Science and Public Policy , June 1999.17

This does not apply to ministries in countries were large parts of the staff is politically appointed, asin the USA.18 As used by Jürgen Habermas..



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Although scientific knowledge does play an important role in policy development,any ‘linear’ model depicting the policy maker as a person who designs new policyvectors purely on the basis of expert advice must be false. Not only is the policymaker forced to take other factors into consideration − in a democracy he or she is

expected to do so.

However, many of the Norwegian respondents underlined the need for contacts in policy agencies, industrial organisations and research institutes that can assist the policy maker in gaining access to relevant competences. Hence researchers often playan important role as competence providers also outside the traditional relationship of commissioner/report producer.

The competence need of the policy makersThe policy makers look for various competences when hiring new employees or asking researchers for help. In the Swedish round of interviews policy makers

expressed a need for:• An understanding of the different cultures of industry, universities/university

colleges and industrial institutes. Work experience from the respectiveorganisation types was mentioned as a major contributor to such competences,

• Knowledge about relevant science and technology,• Factual knowledge about the relevant industrial sector (structure, organisation

etc.),• Awareness of what is currently going on in research, industry and policy

development,• Knowledge about what it is possible to do and how to do it (available instruments

and the limitations inherent in the policy area, system or technologies),• Experience from large development projects,• An inclination to act, even if one have a partial and imperfect understanding of all

the dimensions of the topic at hand,• An insight into the policy development in other countries,• An insight into the present interests of managers on various levels in the relevant

industries or parts of the system. 19

As one can see the policy maker has to develop a theoretical and factual insight intothe nature of the industrial innovation system. This they have in common withresearchers studying industrial innovation. However, the policy maker must alsoknow a lot about the workings of the political system and the relevant policy vectors.Moreover, this knowledge must go far beyond an understanding of organisationalcharts and formal procedure. They must develop an intimate knowledge of thecultural aspects of the political and administrative environment, and learn what is

possible within the present administrative structure and political context.

Researchers have the duty to give their advice on a more independent basis, regardlessof whether this advice is ‘politically correct’ or politically feasible at the present time.If they do not, research will very easily be reduced to a ‘legitimiser’ of the status quo.The researchers still need to gain a better insight into the political and administrative

processes in the public sector, however, and into the everyday life of the policy 19 RISE: Swedish results of interviews on policy learning.



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maker. They need this knowledge in order to understand the competence needs of the policy maker and in order to produce a realistic analysis of the consequences of thevarious findings and suggested policy vectors.

The learning processes of policy makersThe RISE studies of policy learning cover only a few countries and a few institutions.Hence it is hard make generalisations that cover all countries, cultures and policy-making institutions. Nevertheless, innovation policy makers in the European area allface some of the same challenges, which are to design, fund, implement, administer,control and evaluate public policies, institutions, programmes and regulations.

As we have seen from the RISE exercise the competences of the individual policymaker and the policy institutions depend on a combination of various factors,including recruitment, information sources, networks and education.

Recruitment The background of the policy makers come from is important. Some policyinstitutions tend to hire highly experienced people with a background fromuniversities, colleges, RTOs, firms and other policy institutions. The ability to do sodepends, to a certain extent, on the cultural status of these positions, as well assalaries.

In a country like Norway the salaries of ministerial officials tend to be much lower than salaries in industry. Hence one very seldom sees movement of expertise fromindustry to ministry bureaucracies. In institutions where there is a closer collaborationwith industry, the salaries tend to be higher, and the dissemination of experienced

people from industry to the public sector is normally more extensive. 20

Several of the interviewees underline the need for people with practical administrativecompetence, especially from local administration of publicly funded policy vectors,including programmes and institutions on the borderline between the public sector and industry.

The same laws of learning apply to the policy maker as the company employee.Information needs to be transformed into concrete competences. The policy makers’ability to find, use and understand the information given by various sources is to alarge extent anchored in their network of colleagues and contacts.

NetworksThe major source of competence building is day-to-day practice and collaborationwith colleagues and other people involved in the processes of policy development.Hence interviewees mention networks and personal contacts as the most importantsources of information and knowledge.

20

Nås (1998). See also DSTI/STP/TIP(2000)16 Focus groups on national innovation systems , draftfinal version of forthcoming OECD report on knowledge markets and innovation systems: Nurturingthe institutions of innovation (cf. OECD 2000).



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From the interviewees we gather that this contact building primarily is an individualactivity with little managerial input, although programme steering committees and

budget reference groups may be perceived as institutionalised instruments for networking.

Educational background The educational background of policy makers is of importance. Most of them have auniversity or college background, normally at a graduate level.

Many of them consider themselves generalists, and claim that the particular disciplines taken are not as important as the fact that higher education gives them theability to take part in the political culture and find, understand and utilise relevantliterature and research.

In other institutions and departments, the management tends to prefer recruits with a

specific type of education. There is, for instance, reason to believe that Ministries of Industry, Economics or Finance tend to have a larger proportion of economists thanmany other ministries and public institutions.

Researcher/policy maker interactionThe RISE studies have shown that one of the most important impediments for aneffective utilisation of innovation research in policy organisations is time – or, rather,the lack of it.

The hectic pace of modern ministries and directorates leaves often little time toreading and reflection. This does not mean that there is not room for learning. Policymakers develop their competences through their day-to-day practice, but they oftenlack the time needed to read through long reports or follow theoretical debates in theresearch community.

Moreover, many policy makers say that they need information and advice of directrelevance to the development of concrete policy vectors. Their patience often runs outwhen researchers start deliberating the purely theoretical aspects of a certainhypothesis.

In order to make certain that research is used and understood it is therefore importantto find other avenues for communication of research results. Several of the policymakers interviewed reported that they found an active dialogue with researchers veryuseful. Discussions in workshops and seminars seem to be efficient, more so thanlarge conferences where participants passively listen to selected speakers.

Commissioning research – phasesThe most important meeting place for researchers and policy makers seem to be the

process of commissioning research and evaluations. Such processes are divided intoseveral phases:

The preliminary phase, where policy makers try to determine the nature of thequestion that is to be asked. Informally, policy makers may get in touch with

researchers that are part of their network of contacts. Moreover, the issue at hand



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may be caused by questions raised by other reports or evaluations made byresearchers. In general, however, researchers are not much involved in this phase.

The commissioning phase , where policy makers get in touch with one or moreresearch institutions in order to get suggestions on how this research can be

carried out. This can be an important learning phase for policy makers as well asresearchers. The researchers must try to understand the needs of the publicinstitution in order to target the research or evaluation process as accurately as

possible. The policy maker need the expertise of the researcher to map the statusof research in this area, to decide what can be done, within a certain period of time, to a given price. By discussing these matters with researchers the policymaker may learn more about research in this field.

The research phase , when the research is carried out. The policymakers mayfollow this part of the process through follow up meetings, preliminary reports,workshops, seminars, participation in reference groups etc. The feedback theygive may teach the researchers more about the needs of the policy makers.Furthermore, as the policy makers often are experts in the field of activeinnovation policies, they may give the researchers useful feedback on the contentof the preliminary material, and input on how to proceed.

The finalising phase , where the research results are delivered, normally in theform of printed material, seminars and conferences. Several policy makers told theRISE researchers about reports and evaluations that have ended up i a drawer,never to be used in policy development. Others felt that the dissemination of results through seminars and conferences is more important than the final reportsin themselves. One reason for this is the lack of time for reading. Some policymakers admitted that they often read executive summaries only. However, if thereports are to be used in the development of new policies and new policy vectorsthe results will often be included in policy documents written by the policymakers. If this is the case, the chances are that the reports will be thoroughly read

by these policy makers.

The post-publishing phase , where policy makers may contact researchers inorder to clarify information given in the reports, where researchers may be askedto present the results in meetings with the policy institutions, and whereresearchers may be asked to carry out new research based on the previous mission.

Often policy organisations have agreements with R&D institutions, where the policy makers are allowed to discuss relevant issues with researchers, withoutmaking a new payment or signing a new contract. This service is often part of agreements made in connection with basic funding or long-term contracts for competence building.

The fact that an interaction between policy makers and researchers may take placeduring these various phases does not mean that it necessarily does take place. The

process does show, however, that there are potentially many stages where researchersand policy makers may interact and learn from each other.



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Strategic learning It turns out that few of the institutions contacted by RISE have strategic approach tolearning through policy vector development. Policy learning is rather a useful sideeffect.

However, there are departments that use workshops and seminars consciously in order to improve the competences of policy vector administrators. The NorwegianBRIDGE-programme, which aims at improving the innovative capability of firms,continuously evaluates the various sub-programmes and projects belonging to the

programme. The central administrators in the Research Council of Norway travelextensively to the local representatives in regions and take part in project leader meeting and in term evaluation seminars. 21 Moreover, the Research Council of

Norway often recruits private consultants as project managers as well as programmeco-ordinators. These consultants often have a background from industry or industry-related services. The idea is to stimulate to competence flows between the advisersand civil servants of the Research Council, regional administrators and the companiesthemselves.

Interaction vs. independence

The role of scientific adviceArthur Edwards points out (Edwards 1999) that although the sciences have lost their authority based on knowledge and unanimous expertise, this has not led policy-makers to reduce their appeal to scientific advice-giving. 22 Edwards points to JürgenHabermas, who gives science a role in the communication between citizens and

policy makers in the ‘public sphere’. Edwards argues, however, that both the appealof the policy-makers to science and their uses of scientific expertise are oftentactically motivated and dependent on a variety of factors that bear on the ‘politicalattention’ an issue receives. Hence the potential impact of scientific insights on the

public sphere is anticipated or used instrumentally by policy makers. On the other hand scientists participate in public agenda-setting and make use of media attention infurthering their normative stands on issues as well as their own strategic aims.

The use of policy oriented research‘Deconstructivist’ research within the sociology of knowledge, philosophy and thehistory of ideas have increasingly interpreted the use of science, research or any formof communication as tools in struggles for power and influence (Aarnes 1987).However, one should be careful reducing all uses of research input into tools of

opportunism.

The RISE interviews and workshops do indicate that policy makers may commission,select or use results that strengthen their own position and arguments. We havewitnessed policy makers (and scientists from the universities!) focusing on indicatorsthat seem to support an analysis of reality that strengthens their position in thestruggle for R&D funding. Indicators that point in another direction are not discussedwith the same enthusiasm. There is reason to believe that policy makers commissions 21 Cf. http://program.forskningsradet.no/bro (includes English presentation); Programkatalog 2000Området for industri og energi, The Research Council of Norway; Country report from Norway in the

EC Trend Chart exercise (http://ed230.eurodyn.com/Trendchart/).22 Cf. Weingart 1999.



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evaluations, not solely to gain insight into the present state of affairs, but to be able tolegitimise reorganisation or political reform. Hence one can clearly argue that policymakers do not always use research results in a balanced, fair and ‘objective’ way.

On the other hand, there is no reason not to believe policy makers when they say that

they commission research in order to gain insight into the workings of the innovationsystem or the effectiveness of various policy vectors. Not only are many of these

policy experts genuinely interested in the ‘academic’ aspect of innovation andlearning, they also need this knowledge in order to develop new, effective policyvectors. Their legitimacy as civil servants rests to a certain degree on their ability to

produce effective policy actions that can strengthen the political credibility of the politicians.

Politicians may also be genuinely concerned about finding solutions that might helpindustry, and even if this is not always the case, their success as politicians rests ontheir ability to be perceived as competent and pro-active. This does not guarantee arealistic utilisation of relevant research – like most human beings, politicians may findit useful to suppress information that does not strengthen their own cause – but it mayalso stimulate their interest in the topic at hand, making them more receptive to newresearch.

Several of the policy makers contacted in this study are very aware of ethical problems related to the use of research in policy development. Their interest is partlygrounded in pragmatic concerns. They argue that the credibility of the research andthe use of it depend on trust. If any party can raise doubt about the validity of a reportor an evaluation, it might easily become useless from a policy perspective.

This line of reasoning often brings up the role of public opinion or the public spherementioned by Edwards. These policy makers argue that the best defence against abuseof research or a lack of impartiality on the side of the researcher is an open publicdebate where alternative research bodies may criticise the findings.

Others perceive a possible conflict with more classical ideas of what science andresearch should be. This is often based on the ideal of the disinterested naturalscientists. Many researchers hesitate when asked to give concrete policy advice, oftenon the grounds that it is the task of policy makers to do so – researchers shall onlysupply the factual base for this decision-making.

The neutrality of the researcher There is also the idea that researchers should stay neutral in political matters, and thattheir objectivity may be threatened if they engage in the development of policyvectors. This understanding is based on traditional views of the ideal universityresearcher as a person that stands on the outside of society, looking in, giving thenecessary corrections to ‘manoeuvring politicians’ and ‘predisposed policy makers’. 23

The policy makers are presumed to be too immersed in the complexities of socialleadership to get the overview needed to make unbiased judgements. Andinterestingly enough, when policy makers commission research from researchers, it is

23 Often called the ‘Weberian ideal’ after the German sociologist Max Weber.



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often to get an independent view and a more refined understanding of the problem athand. An independent review may also give a political legitimacy.

There may indeed be a possible conflict between the need for dialogue andunderstanding between policy makers and researchers on the one hand and academic

independence on the other. This conflict must be taken seriously and should bediscussed thoroughly.

The results from the RISE project indicate, however, that it is very hard – if notimpossible – to uphold the ideal of the isolated observer. Not only are researchers – like all human beings – influenced by ideological trends and personal preferences,ambitions and prejudices, they also need a close dialogue with the users in order tounderstand the commission, and to produce relevant and useful research. As we haveseen, this dialogue is also needed to strengthen the learning processes in the politicalapparatus.

There is, on the other hand, a danger that researchers may be ‘held hostage’ by policymakers that deliberately or unconsciously try to influence results in a way they finduseful, for instance in order to legitimise a certain policy. Policy makers may alsointerpret results in a certain way in order to achieve political goals.

There may also be instances when the researchers have their own political agenda or when they consciously or unconsciously try to please the commissioners in order toget more funding. Hence it is essential that applied research of this kind uphold thesame methodological and ethical standards as other forms of science and research.One must make certain that there exists several alternative research institutions or environments studying related fields, so that there might be fruitful discussions andscholarly criticism.

Several of the policy makers contacted by RISE argue that researchers should becareful suggesting one – and only one – policy solution. The complexity of bothinnovation systems and political systems gives reason to believe that there are nooptimal solutions to specific policy problems. There is rather a wide array of variouscombinations of possible policy vectors and organisational structures. When asked for concrete policy advice, it is probably better that researchers map possible avenues of action and give an analysis of potential consequences following the variousalternatives. It can be useful to give examples from other countries, these policy

makers argue, although one should always discuss the main similarities anddifferences between the relevant national innovation systems.

As there is no single solution that can be objectively characterised as ‘the best’, itmust eventually be up to the policy advisers and policy makers to use their experience, expertise and faculty of judgement to suggest concrete policy vectors. Theresearcher has the luxury of withholding his or her final judgement arguing that thereis need for more research. It is the task of the policy maker to make decisions, in spiteof a lack of knowledge.

Systemic failures in the policy apparatusEven if researchers and policy makers in the field of innovation policy havesucceeded in developing a common frame of reference and are able to discuss these



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matters in a constructive and useful manner, there remains another stumbling block for the development of a modern and flexible innovation policy. This is the strugglethat takes place within the policy apparatus.

The political system consists of a large number of institutions, organisations and

ministries. Each institution is divided into various departments, and each of them mayhave their own culture, ideology and policy. Several of the interviewees pointed tothe importance of the leaders of the relevant departments; their interests, opinions,contacts and psychology. In a small organisation one person may to a certain extentshape the development of policies within its own field of interest. The researchersoften communicate with lower or medium level civil servants and policy advisers.Whether the managers of these units absorb and make active use of the competencesin the organisation depends on their ability to communicate with the rest of the staff.

These managers must also be able to explain the policies suggested by this unit tomanagers and politician higher up in the system. If there is a struggle for influenceand funding going on inside the organisation, the fate of a policy vector may rest onthe manager’s ability to convince the upper echelons of its usefulness.

Policy vectors based on systemic innovation theory often conflict with traditionaleconomic thinking and research policies. The manager cannot take a common frameof reference for granted. The struggle for influence will therefore often become astruggle to establish a new worldview and a new vocabulary. From a didactic point of view this is a very difficult task, especially as the senior managers and politicalleaders often are older, experienced men and women. Through a long life they havedeveloped their own perspective and their own ways of doing things, and they canfind it hard to abandon these in favour of new and seemingly radical ideas. Even if they do accept the new way of thinking, they may avoid using arguments based onthese theories in fear of loosing the struggle for money and influence.

There may also be a conflict with other departments and organisations that are notinvolved in innovation policy formulation. This is particularly the case in the centralgovernment. In the annual budget cabinet meetings, the ministers will have toconvince his or her colleagues about the wisdom in funding their particular policyvectors.

Although it seems that the success of a certain policy to large degree rests on the

competences of individual managers, their competences are interconnected with thecompetence flows in the policy system. The preliminary studies made by RISE mayindicate that there are large differences between organisations as well as countries inthis respect. It seems, for instance, that the culture of Norwegian and Swedishministries are characterised by a rather ‘flat’ command structure, meaning that junior civil servants and policy advisers can communicate with the managerial level in afairly efficient way. This means that the competences developed in co-operation withresearchers more easily will reach the political level of the system.

Moreover, innovation policy is not that politically or ideologically charged in thesecountries. There seems to be a broad consensus as regards the overall policy goals.

This leaves more room for civil servants to suggest and implement new policymeasures. Both Norwegian and Swedish R&D and industry policies are increasingly



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based on innovation systems theory, and this development is to a large degree basedon bottom up initiatives, i.e. the new policy vectors are often based on suggestionsmade by the bureaucracy, not by the parties or the politicians.

In other countries, like Germany, policy development seems to be characterised by a

top down culture, meaning that the political level to a greater extent influence thelimits of policy formulation. This may restrict the flow of new ideas from researchand lower level civil servants.

The ministerial memo, a didactic experimentHaving met several policy makers involved in innovation, industry and R&D policesin Britain, Sweden, Germany, Portugal, the Netherlands and Norway, the RISE teamhas decided to make a didactic experiment, trying to make the RISE results moreaccessible and relevant for policy makers in the European area. We have established afictional Department of Innovation Services in an imagined Ministry of Innovation inan unnamed European country. This department is given the task of briefing theMinister of Innovation before an important budget meeting in the Cabinet.

The Minister is to defend the Governments funding of certain RISE-relevant policyvectors against a more traditional Minister of Finance that wants to curb publicspending and keep a balanced budget. By doing so the Minister will have to articulatethe basic concepts used by RISE for an audience of Ministers that are not necessarilyfamiliar with this kind of thinking.

This is by no means an unlikely scenario. Although no European countries have aseparate Ministry of Innovation, there are always one or more ministers that are

responsible for innovation polices, normally ministers of research, industry, theeconomy or – even – education. These ministers have to legitimise funding of policyvectors aimed at knowledge development and competence building. Traditionallythese ministers have focused on the importance investments in R&D and higher education when doing this, and they have often used arguments based on a linear understanding of innovation in addition to theories of market failure.

Although there have for a long time existed programmes for technology diffusion inmany European countries, these have often been based on the idea of transferringknowledge and new ideas from universities, colleges and RTOs to industry. Theyhave not been that concerned about the interaction between the various actors, nor the

learning processes in firms.

The increasing popularity of systemic models of innovation, however, has led to thedevelopment of policy vectors aimed at improving the competence flows in thesystem, e.g. between companies and RTOs/KIBS 24, firms and firms and companiesand universities. Although university and RTO science and research are consideredequally important for industry today (although partly for different reasons), the focusof policy interest has therefore shifted somewhat to the companies themselves. 25

24 Research and technology organisations and knowledge-intensive business services, includingresearch institutions, government laboratories and private consultancies25

For a discussion of recent innovation policy developments see Innovation Policy in Euorpe 2000 , areport from the European Trend Chart of Innovation programme (EC 2000). More reports can be foundat http://ed230.eurodyn.com/Trendchart/.



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From an innovation policy standpoint, universities, RTOs, KIBS and various publicinstitutions, programmes and schemes are viewed as service providers that can

provide firms with much needed competences, contacts and collaboration. 26

Moreover, there is a new interest for institutions and measures designed to foster

interaction in the system.

These policy vectors often go beyond the traditional sphere of public support andintervention. In order to defend and explain these measures, the policy makers and

politicians cannot take RISE’s common frame of reference for granted. He or shecannot expect the listeners to know the nuances of modern systemic innovationtheory, and must therefore try to make this worldview understandable and acceptable

before defending the funding of concrete policy vectors.

If the listeners are entrenched in an older mentality or a conflicting ideology, it is hardto make this way of thinking understandable in a short period of time. Cabinet budgetmeetings do not normally leave room for long speeches, and our minister will have to

be very brief indeed. We have to admit that our memo will not help him or her in thatrespect. Still, it will hopefully give the Minister some ideas on how to approach thesubject.

Our discussions with policy makers and our own experience indicate that theacceptance of these kinds of systems approaches may rest on several factors.

It is normally easier to non-economists to accept the systemic integrated view of innovation, as it seems more "common sense" and "true to life" than neo classicaltheories. Economists steeped in traditional economics might find it harder to

break loose from the standard models of economic growth. We suggest that theMinister appeal to the listener's own experience with learning and networking.

Some policy makers are unfamiliar with RISE's use of the cluster concept. This isespecially true in Britain, where policy makers tend to think of clusters as aregional phenomenon. Hence we suggest that the Minister explain the variousforms of clusters, naming regional clusters as one of them.

The idea of a hybrid economy of research and technology services is problematic.Many may find the inclusion of government funded programmes within the

category of ‘research and technology services’ confusing, even if they providefinancial services and facilitation components (e.g. consortium-building) that areunavailable in commercial forms of innovation-services provision. Many policymakers focus on the institutional structure , not on the services these institutionssupply. This is why we feel that the Minister must stress the functional role theinstitutions have in the innovation system. What counts is what the institutionsare doing, not their historical role or what they are called.

On the other hand, policy makers that do focus on the services these institutionssupply, tend to find the distinction between RTOs and KIBS disturbing. From the

26

That is not the same as saying that these institutions are seen solely as instruments for industrialdevelopment. There seem to be broad agreement that science and research have cultural and socialgoals that go far beyond the sphere of economics.



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firms perspective it is not important whether an institution is called a researchinstitute or a consultancy. The firm is looking for competences, and it does notmatter much whether these competences are based on research or work experience. Policy makers, however, are obliged to look beyond theseinstitutions' roles as research and technology services. There may, for instance, be

a need for government laboratories and publicly funded research for cultural,social or welfare reasons. Governments must also consider the need for a stable,long-term development of competences; research that is not directly relevant for companies today. The Minister must therefor remind his colleagues of the broader

perspective.

We suggest that the policy maker normally use the word ‘competences’, as thisincludes the idea of learning processes . European policy makers often use wordslike ‘knowledge’ and ‘information’ instead, in spite of the fact that these termslack the dynamic aspect of ‘competences'. Our use of ‘competences’ reflect asimilar drift in educational policies, away from a word like ‘teaching’ – signifying diffusion of knowledge – towards ‘learning’ – pointing to theinteractive aspect of competence building. The minister should not spend toomuch time on this point, however, as the message is more important than theterms used. He or she may, however, use the distinction to make a point. Byexplaining the use of terms, the minister may draw the listeners’ attention to animportant aspect of new innovation theory.

There is no absolute division between innovation services and operational services(production services) involving the deployment of technology, or betweenresearch and technology services and manufacturing supply (e.g. of capitalequipment or intermediate products within a supply chain). Acquiring new‘things’, machinery included, implies the acquisition of new competences, partlyas the employees must learn how to operate the technology and integrate it intothe innovation process and partly because the functionality of the ‘thing’ is basedon competences. However, the minister must choose his points with care and notmake his exposition too complicated. We therefore suggest that he or she doeselaborate on this. We have, however, decided to use the term ‘research andtechnology services’ in order to encompass RTOs and KIBS as well as regular suppliers of machinery and technology.

International and inter-sectoral comparisons and benchmarking for R&T services

may be viable. But because of historical differences in institutions, cultures andindustrial structures and trajectories there can be no generic, abstract model of asuccessful research and technology services operating strategy. Unless theminister feels that his audience has grasped the gist of systemic thinking, he or sheshould not complicate matters by going into concrete examples from other countries. However, in another context concrete examples may be a usefuldidactic instrument.

We suggest that the Minister introduces the term systemic failure . Some of hislisteners may already know this term; to others it will represent a new way of thinking. RISE researchers have discussed the use of an alternative terminology,

for instance by classifying the concept of systemic failure at as another type of market failure (‘market failure mark II’). This might make it easier to get the term



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accepted by traditional economists. On the other hand it may also strengthen thetraditional understanding of market failure, giving the listeners the impression thatthere may exist a social state of affairs where this failure is totally absent (‘perfectmarket conditions’). In order to draw the listeners’ attention to the systemic natureof systemic failure, we therefore suggest that the minister uses the term, while at

the same time explaining that it also can be explained as a sort of market failure.

RISE and beyondOur studies of the national systems for innovation policy development have shown usthat sound innovation policy advice not only depends on a proper understanding of the industrial innovation system. The researchers must also gain insight into thenature of the system of policymaking, its institutional structure, its culture and socialframework. Like companies and clusters, this is also an arena for learning andinnovation, although the policy makers are operating under different ‘marketconditions’ than company managers and employees.

It should also be said that in one respect this system of policy making is actually partof the overall national system of innovation. This does not only apply to publicinstitutions for R&D, financial support and research and technology services. It alsoapplies to the political and administrative apparatus that design these policy vectors.Their understanding and their decisions may have a profound impact on the workingconditions of firms.

We therefore believe that innovation research should increasingly focus on‘innovation policy innovation’. Hopefully, RISE can function as a starting point for

such studies.

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