4th Ph.D. School on Innovation and Economic Development Globelics Academy 2007 “Innovation capabilities in the manufacturing industry of an underdeveloped country” Lisbon, May 2007 Carlos Bianchi Academic Unit of the University Research Council University of the Republic. Uruguay

Summary I.- A broad approach of the Innovation Process Innovation as a learning process II.- Methodology Innovation: an approach of opportunities and capabilities Complex concepts need several and different indicators III.- Results and summary conclusions Discussion of the “causes” of the innovation capabilities development The “incongruent modernization” process

Innovation in underdeveloped countries - Learning as a key for the innovation process Learning as the human capabilities to create abstract ideas from experience. In productive sense it refers to the human capability to solve productive problems - Innovation broader approach Innovation in product or process, novelties for the international market, as well as incremental improvement for the regional or local market, or also, for the firm activity. Several innovation activities are creative ways of knowledge application in the productive activities and are determinants of the competitive capabilities. Where the innovation is situated an how it is diffused? “If the innovation is in every place, it is not in any place: this is also the main obstacle for an efficient policy”

Relationships between object and methods Innovation capabilities: Capabilities that people and the social organizations (firms and countries) have to solve productive problems through the knowledge application. The innovation capabilities are understood as a potential of the enterprise to follow a learning path and to achieve innovations in product or process. The innovation capabilities concept becomes relevant as a key factor for the analysis of the developmental process. If we accept the innovation broader approach, we can not restrict the innovation process analysis only to the high-tech sectors, which are able to make radical innovations and have sophisticated methods to protect their new knowledge. This approach is based on the idea that innovation, as a learning process, can occur in every productive sector. It also recognizes the methodological complexity implied in this broad approach, which makes it necessary to work in an accurate definition of innovation indicators.

Methodology Opportunities and capabilities: Innovation capabilities are dynamic, they are reproduced trough the learning process. Then they can only be analyzed by the simultaneous study of the kind and number of opportunities that the agents have for capabilities applications Four dimensions to build indicators to measure innovation capabilities at firm level: - educational level and training activities of the firm’s personnel, - opportunities that this people have to devote time to innovative activities, - the linkage with external agents - innovative experience of the firm. How can we study the learning process and the innovative capabilities at firm level?

Methodological challenges - Object-method relationships o and data availability: broader theoretical approach and data failures. - How do we build appropriate indicators? - Relevance of aggregate measures (ICIu) that summarizes the key dimensions of the innovation process

Summarized results

“Incongruent modernization process” High qualified personnel, R&D and capital goods investment. Uruguayan manufacturing Industry Year Firms with professional devoted to R&D (%) Firms that answered to make R&D (%) Firms that answered invest in capital goods (%) 19859,3063,5063, ,004,8043, ,408,4043, ,3036,7040, ,4012,6321, ,7011,1620,73 Sources: CIESU, DECON 1990, 1994 and DINACYT 2000 and 2003

Is it possible to know the causes of the innovation capabilities development? The main findings of the analysis show that the innovative capabilities development in the Uruguayan manufacturing industry depends on several factors, including the idiosyncratic and specific characteristics of the firms. Nevertheless, it is possible to identify the influence of several variables in the innovative capabilities development. The impact of these factors is very variable, as a result of the fluctuations in the Uruguayan economy, as well as the very different methodological approaches of the surveys.

Some results about the causes of the innovation capabilities development in the Uruguayan Industry ICIu Variation according to independent variables Regression models Firm’s size (Coef. β) Productivit y (Coef. β) Exporting performance (Coef. β) FDI (Coef. β) Antiquity (Coef. β) 1985_10,321*0,197*0,122*0,097*- 0,109* 1990_10,068*0,131*0,059*-0,057*- 0,051* 1994_10,126* Not significant 0,079*0,159*Not available 1996_10,096* Not significant 0,127*0,067*- 0,244* 2000_10,191*- 0,111*Not significant - 0,074* 2003_10,210*0,068*0,140*0,059*Not significant *Significant to 95% confidence. Source: CIESU, DECON 1990,1994 and DINACYT 2000 and 2003.

“Technology independence” of the big firms Spearman’ Rho coefficient between the ICIu and the export performance regarding the firm size. Uruguayan manufacturing industry Firms with less than 20 employees Rho Coef.0,1120,0150,0590,0610,080 Sig0,000**0,2050,002**0,0730,000** Firms with 20 to 100 employees Rho Coef.0,1130,3780,081-0,1480,112 Sig0,000** 0,012**0,001** Firms with more than 100 employees Rho Coef.0,012-0,130-0,0260,0400,100 Sig0,4230,023*0,3570,3340,122 ** Significant to 99% confidence. * Significant to 95% confidence Sources: DECON 1990,1994 and DINACYT 2000 and 2003.

Summarizing: Rebuilding the obvious? - Rebuilding the obvious as a input for “learning policy” - The necessity to revise the collecting data methodology and the analysis of innovation surveys: How many theoretical questions can we make and how many can we empirically answer?