Why innovation policies should include a multiple system perspective: the case of biotechnology in EC Member States' innovation systems.

SUMMARY

Traditionally, public policies in the field of innovation have been based on neo-classical assumptions about market failures concerning for example appropriability conditions and information asymmetry. In addition, during the last decade, policy makers at both the national and international level have adopted the concepts of innovation systems and system failures for the formulation, implementation and evaluation of their innovation policies. The innovation system concept broadens the rationale for government intervention as it introduces system imperfections by referring to inappropriate functioning of innovation systems. Nevertheless, the diversity in innovation system concepts and their relatively one-sided approach raise the need for reviewing innovation systems as a conceptual tool to innovation policy. In this paper we use the results of three EC funded studies on biotechnology developments in Europe to demonstrate that biotechnology innovation systems are simultaneously shaped by national, sectoral and technological characteristics and also their interplay. Therefore we argue that innovation policymakers need to take into account all of these aspects for the design and implementation of (more) effective policies.

KEYWORDS

national; sectoral and technological innovation systems; innovation policies; biotechnology

1. INTRODUCTION

Traditionally, public policies in the field of innovation have been based on neo-classical assumptions about market failures concerning for example appropriability conditions and information asymmetry. In addition, during the last decade, policy makers at both the national and international level have adopted the concepts of innovation systems (IS) and system failures for the formulation, implementation and evaluation of their innovation policies. The concept is attractive, as it seems to provide a sound framework for the analysis of all factors influencing the innovative capabilities and performance of national economies. It not only takes into account the major functions of production, diffusion and application of new knowledge, but also the actors and institutions within the system and the relations between them, in other words, the systemic character of innovation (Kern 2001). The IS concept broadens the rationale for government intervention as it introduces system imperfections by referring to inappropriate functioning of innovation systems. Increasingly, governments see their role regarding innovation as a combination of the more neo-classical roles with a 'modern' role for governments acting as a catalyst and facilitator in improving malfunctioning markets and innovation systems (Hauknes and Wicken 1999).

Nevertheless, the diversity in IS concepts--e.g., national, sectoral, technological--raise the need for reviewing innovation systems as a conceptual tool to innovation policy. The innovative capabilities and performance of a nation are not only influenced by nationally determined factors, but also by the idiosyncratic characteristics of specific economic sectors and technological fields. This means that in innovation policies the complexity and dynamics of innovation systems need to be taken into account by addressing both the national characteristics of innovation systems and the specificities of innovation processes across economic sectors and of the technological fields. In our opinion the approaches are not exclusive but rather complementary.

The aim of this article is to illustrate that the combination of these different approaches is necessary in order to understand the dynamics in biotechnological innovation systems. As these approaches and their interplay provide an analytical tool that addresses the specificities of biotechnological innovation systems, they also explicitly need to be taken into account when innovation policies are designed and implemented.

In section 2 we briefly elaborate on the studies providing the basis for this article, their goals and methodologies. In section 3, 4 and 5 we introduce what typical national, sectoral or technological elements determine the functioning and performance of biotechnology innovation systems in Europe. In section 6, we argue that not only distinct national, sectoral or technological elements are of importance but also their interplay. Finally, in section 7 we conclude by presenting a number of implications for today's innovation policies.

2. STUDIES' BACKGROUND, GOALS AND METHODOLOGY

The three studies were carried out in the period 1996-2004 and were all funded by the European Commission. The first study--'Inventory of Public Biotechnology R&D Programmes in Europe' (INVENTORY)--identified and analysed all the publicly funded R&D stimulation programmes for biotechnology in 17 European countries: the 15 (old) member states, Iceland and Norway. It described the diversity in national funding systems and research infrastructures for biotechnology and provided an in-depth analysis of the national competencies and priorities in this area. The study was unique both in its scale and depth, and by its approach. The main information sources were existing scientific literature, policy documents, and in particular the input provided by approximately 200 experts through in-depth interviews.

The second study with the title 'Effectiveness of Innovation Policies in High Technology Sectors in Europe' (EPOHITE) investigated the effectiveness of public biotechnology policies that have been running in the period 1994-1998 in European member states. Moreover, it investigated the relation between the performance of national biotechnology innovation systems and the specific policy profiles in these countries. The EPOHITE study clearly aimed at linking an important aspect of the input-side of biotechnology innovation systems, i.e. public programmes and instruments (gathered through the INVENTORY project), with their scientific and commercial output (e.g., publications, citations, patents, start-ups, venture capital). Among others, in-depth interviews and a large-scale survey among public sector research organisations, SME's and large international firms were used for assessing the usefulness and effects of the different public programmes and instruments. We also applied extensive bibliometric and patent analyses. The third study--'European Biotechnology Innovation Systems' (EBIS)--described in detail the innovation systems for pharmaceutical and agro food biotechnology in France, the UK, Germany, the Netherlands, Austria, Spain, Ireland and Greece. The main goal of EBIS was to investigate for a selection of countries (including large and small European countries) whether the development of biotechnology and the functioning of the biotechnology innovation systems were mainly influenced by national or by sectoral factors. The methodological basis for EBIS was provided by an elaborated review of the national and sectoral innovation systems concepts. Next to scientific literature, policy documents and sector reports, we used a major written survey among more than 700 firms in Europe involved in biotechnology. The survey addressed a multitude of subjects including their markets, activities, performance, and collaborations.

The studies together provide detailed information about biotech policies during the period 1984-1988, the structure of the R&D and the policy systems in 14 (old) member states (INVENTORY) and the scientific and commercial performance of these countries in the period 1995/1996 and 1999/2000 (EPOHITE) and for eight of these countries data about the biotech activities in and the specificities of the agrofood and pharmaceutical sectors (EBIS).

In the three following sections, and based on the data and results of the three studies, we will discuss which determinants influence the biotechnology innovation systems in the European countries. We have grouped the determinants according to the extent that they appear to be a typical national, sectoral or technological phenomenon (see Figure 1). Each of the determinants will be discussed in the following sections.

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3. NATIONAL DETERMINANTS OF BIOTECH INNOVATION SYSTEMS