INNOVATION SYSTEMS IN A NEW GLOBAL CONTEXT: STILL A USEFUL FRAMEWORK? Michiko Iizuka UNU-MERIT Kuala Lumpur, Malaysia November, 2012 INTERNATIONAL SYMPOSIUM ON ACCELERATING INNOVATION IN DEVELOPING COUNTRIES

What is innovation? “ Implementation of a new or significantly improved product (good/service) or process, a new marketing methods, or a new organization methods in business practices, workplace organization or external relations.” ‘Implementation’ means introduced to the market (OECD/Eurostat 2005) 2

What is innovation system? Act as a ‘focusing device’ for policy via Identifying actors and firm as driving force Understanding interactions for knowledge flow Differentiate actors from contextual conditions Institutional settings Culture, religion Provided holistic vision of barriers/functions of innovative behavior (policy dimension) Policy aimed to accelerate innovation activities of firms 3

Innovation System 4 Innovation system (UNIDO, 2007)

Knowledge flow & Innovation system Importance of informal knowledge flow Factors that influence the degree and speed of knowledge flow Social capital Trust Culture History 5

Changing conditions for innovation process New challenges Globalization of knowledge diffusion & flow New types of innovation in changing world User Innovation Social Innovation Public sector innovation Innovation for inclusive development 6

Globalization of knowledge diffusion & flow Increasing interaction through trade, investment (FDI) and people (migration) created knowledge flow at global level Development of ICT (information communication technology) and provision of IPR(intellectual property right) also support flow of knowledge However, Mixed results for developing countries because Indigenous capability is required for adaptation Absorptive capacity Proper institutional set up/ intermediaries is required for appropriation of knowledge in equitable manner (benefit sharing mechanism) Local capacity needs to be strengthened 7

Story about commercializing indigenous knowledge - Need an idea - belong to different segment of society -Linking knowledge - Tacit/Traditional/Local & Generic/Scientific/Global -Intermediary linking institution -NGO, local government, Local academic institution, local community -Establishing mechanisms of fair distribution of benefits Globalization-opens opportunity but need local capacity 8

New types of innovation 9 User Innovation Social Innovation Public sector innovation Innovation for inclusive development

User innovation Creation or alteration of goods or services by user with an aim to increase the benefit of its use Consumers and users are the driving force for innovation User innovation may not directly contribute to the Market contrary to the official definition provided by the Olso manual Often very difficult to be noticed(though information being collected) Diffusion process varies (user-producer, user becoming entrepreneurs, users sharing the knowledge among themselves) 10

Social Innovation Innovation that served society and enhance social capacity to act or creates social impact in meeting social goals: ‘creating solutions’ Not directly connected to market Driving force is not always firm but some firms do Non pecuniary-measurement difficult: happiness, quality of life, desirable innovation? 11

Public sector innovation Improve efficiency and productivity of public sector in their delivery of services to the citizens Recently focused due to financial crisis in developed countries The innovation is not directly introduced to market but to users Needs to establish criteria for measurement 12

Innovation for inclusive development Focus on innovation in informal settings that allows marginalized population to take part in formal economy and benefit from it. Not connected to market—if not partially. Community/ marginalized group centered 13

Features of innovation for inclusive development Informal setting - Idea often comes from community (demand side) due to lack of services or goods to solve problems ex. Mobile phone banking and Multistakeholder knowledge diffusion and innovation Unconventional actors such as NGO, informal media, local corner shops Collaborative learning 14

Summary of emerging changes 1 Aim of innovation Productivity of firm Solution for society Driving force/main actor of innovation Firm Self organizing users and consumers/community Actors Conventional formal Non-conventional/ informal 15

Summary of emerging changes 2 Knowledge flow Interactions at multiple dimensions Global –local, formal-informal, Economic-Social, User-Producer Type of solutions Technology fix to Holistic solution Complex and out of box 16

Conclusion Innovation system need to expanded to accommodate Solve non pecuniary problem under less understood environment Informal Traditional Community of practice Involving unconventional actors and different types of interactions 17