Industrial development centres (IDCs) as a regional innovation tool: comparing policy practices in Finspang, Sweden and in the Hunter Valley, Australia.

SUMMARY

This article analyses what happens when policy-makers use and implement their policy concepts and their knowledge of regional innovation and economic development within their regional contexts. Our focus is on the policy implementation phase, especially the implications of how policy-makers and firms, in different institutional settings, interpret similar policy concepts in different ways. The regional innovation policy concept explored is the conceptual idea of Industrial Development Centres (IDCs), which constitutes an example of an innovation support organisation. This policy concept was investigated through an empirical study of two cases, namely an IDC in Finspang, Sweden and an IDC in Hunter Valley, Australia.

The results from the study showed that even though policy concepts in different regions may appear on the surface to be identical, the implementation of concepts into practise still differ in significant ways. Furthermore, the context of policy practise redefined the meanings of the abstract concepts, and thereby contributed to the different outcomes. The article outlined four dimensions across which the context influences policy practice, given that policy implementation is part of the process of regional development. Accordingly, significant differences in the policy outcome were due to deep-rooted differences in the policy-makers' interpretation of abstract explanations to their specific regional context and what kind of role policy could play in regional economic development.

This article thus contributes to the debates over industrial policy outcomes, including evaluations of the means, goals and results of innovation policy. Our argument is that the links between the operationalisation of concepts, the local context of policy practise, and the resulting policy outcomes must be explicitly analysed in regional innovation policy.

KEYWORDS

regional innovation policy; operationalisation of academic concepts; policy practice; policy outcomes

1. INTRODUCTION

Innovation policy has become an increasingly important component of government policy for stimulating the development of regions. However, government agencies have a difficult problem to solve, when designing and implementing policy for regional economic development--namely, how to create conditions for economic growth. This article will argue that when policymakers use and implement academically derived concepts for regional innovation and economic development, they will do this in relation to their specific regional context and this will have an impact on the design of the policy measure/tool as well as its outcome. Hence, the focus is on the policy implementation phase and the implications of how policy-makers and firms, in different institutional settings, interpret similar concepts in different ways. The article examines one particular type of regional innovation policy, namely the Industrial Development Centres (IDCs), through two cases. This article explores how policy concepts are translated into such processes of regional development and why this process of translation will influence the policy outcome, using the two cases of IDCs.

The contemporary economy can be characterised by two paradoxical processes of globalisation and regionalisation (or localisation). Both processes exist--and may even be complementary (Asheim, 1999). On the one hand, markets are tending to expand globally and economic coordination is increasingly globalised. On the other hand, localisation in terms of the immediate geographical and cultural environment of firms also has a significant impact on how well those same firms perform in this global economy. Within these dual processes of globalisation and localisation in competition, innovations have been identified as crucial for firm competitiveness and economic growth. Some innovations help cut costs whereas others add value.

Regional innovation policy is here seen as a broad set of policies which involve government resources or involvement, but it may also involve different types of actors, such as government agencies, public-private-partnerships, groups of regional business actors, etc. This type of policy is intended to stimulate employment growth and economic development at the regional level. The formulation of regional innovation policy often relies on the application of academic (consultancy) concepts and theories about which factors will influence innovations and development. Consequently, similar concepts appear in policy documents from around the world, such that in the 1990s, many regions wanted their Silicon something (Valley, Alley, Corridor, etc.).

However, the dilemma that policy-makers face is how to somehow 'create' endogenous economic growth. On the one hand, policy-makers are involved in many attempts across the globe to stimulate and create the 'right' institutions, networks and knowledge. On the other hand, the forces underlying regional development are often thought to be created spontaneously, through markets, social relationships, existing industrial structures, etc. Therefore instead of directly 'creating' growth, governments often try to create conditions for growth by influencing underlying factors like education, innovation, existing national champion firms and start-up companies. This implies that policy-makers have ideas and visions of what they would like to achieve with policy--but that they cannot directly 'create' growth. Instead, the actual design of policy programmes and specific policy tools as well as the subsequent policy implementation are themselves part of the process of regional development.

Section 2 reviews literature, in order to explore how and why regional innovation policy is linked to the process of regional economic development in a globalised world. Many of these theories explore what we can call the differential economic performance of different regions, that is, why some regions have increasing attractiveness to other actors and increasing economic success, over time. This literature review helps us identify four factors explaining regional development. These four factors are:

1. Regional competencies;

2. Socio-cultural context and learning;

3. Tacit knowledge and trust;

4. Co-ordinating network and assets for innovation.

These four factors are used in the analysis to identify how policy-makers interpret and adjust the policy to align it with what they view as their specific socio-cultural and institutional context.

Section 3 discusses the research design and methodology, especially in relation to the two cases. The main rationale behind the choice of these cases was to compare two cases that specifically used the policy concept of Industrial Development Centres (IDCs) as a policy tool. Thus, the comparison focuses on the IDC as a policy tool used in one region in Sweden and one region in Australia. Both of these regions have been traditionally dependent upon heavy manufacturing and engineering, but they are now attempting to find ways to renew their industrial structures and to enhance their competitiveness in the new global markets. The two cases explore the same regional policy tool, and the regions are similar in some dimensions but different in other dimensions. This research design allows us to begin to explore whether, and why, the same abstract concepts may be implemented in different ways, when the policies are put into practise.

Section 4 presents the case of the Swedish IDCs, and the IDC of Finspang more specifically, as well as the case of the Australia IDC, in Hunter Valley. Both policy cases are described as historical cases, where the IDC concepts and the implementations are part of the regional development process. The cases are told chronologically, with specific emphasis on the four factors explaining regional economic development. By examining how the policy-makers have taken into consideration these four factors in their design and implementation of the IDCs, we can enhance our understanding of how policy-makers interpret policy concepts and what they see as the regions' specific needs in this process.

Section 5 compares and contrasts the empirical results of the comparison. The comparison enables us to explore how policy practise led to different interpretations of the same concept. If there are differences, then policy-makers need to learn about how underlying aspects of regional development affect their policy outcomes. If there were no differences in interpretation of policy concepts, then policy-makers can more easily imitate regional innovation policy, which would also quickly lead to convergence of practise. Section 6 presents the main conclusions and discusses the implications for policy learning about regional innovation policy, and economic development of regions more generally.

2. WHY REGIONS AND REGIONAL INNOVATION POLICY MAY MATTER IN A GLOBAL WORLD

This section reviews the arguments about why regions may still matter in a global world. In this theoretical overview we identify four major explanations as to why some regions show increased attractiveness and economic success, as compared to others. These explanations are rather diffuse, leaving it up to policy-makers to interpret the concept during policy implementation. The underlying argument is thus that public policies for regional innovation and development have been designed as an attempt to implement specific concepts through choices, as regard, for example, as to whom may participate, ownership structures, developing trust and network relationships, etc. This literature review thereby highlights the key areas which policy-makers might attempt to target with policy tools.