The applicability of the concept of national innovation systems to transition economies.

Therefore, transition countries have, on the one hand, to strengthen learning-by-feedback and systematic and organized searching, as these two types sustain the social and technological capability of the country. Both types of learning require strong interactions and networks. On the other hand, they have to change old habits of thoughts, routines and structures in order to adjust to the new technological and institutional environment. Combined with the argument, that private firms are the main location in accumulating technological capabilities, we can draw the following conclusion: In order to guarantee effective learning processes in transition economies, firms have to learn how to fulfill their role of searching for new knowledge. Furthermore, private firms have to be admitted into the network of knowledge creation and diffusion, as firms are in the center of the production process. We can draw the same conclusion as Dyker and Radosevic (2000). Transition countries have to manage a threefold task: First, as firms are now becoming business units, they have to learn how to improve its technologies used in the production process and to search systematically and in organized form for new knowledge by themselves. Second, as old structures and interaction processes are breaking down, firms have to develop new linkages to other firms at home and, above all, abroad, in order to be able to learn from others. Third, the structures of learning processes and innovation have to change fundamentally as the transition process takes place.

The need for fulfilling this threefold task can be exemplified with the help of the Slovenian company Gorenje, even if this is not a typical multinational from transition economies since it is a completely endogenous Slovenian company. Already during the socialist era of the country Gorenje was trying to improve its technologies to be competitive on domestic and international markets. In times of crisis the majority of companies downsize R&D efforts. Gorenje, however, has been constantly strengthening R&D efforts in-house by starting its own R&D institute very early and cooperating with Slovenian and foreign institutes and universities. The result was the transformation from a labor-intensive producer into an innovation-based company. The success and high-quality orientation of Gorenje was enabled by extensive training of its employees. In 1999 almost three-quarters of its employees underwent various types of training. Furthermore, the company spend up to ten times more than the average Slovenian company on in-house training. Linkages and interaction with domestic and foreign companies have a long tradition in Gorenje, as it was the case in other socialist economies, i.e. licensing agreements between Fiat and AvtoVAZ or Fiat and Zastava. Gorenje's internationalization strategy started first with exporting to the main export destination countries, second, by establishing sales units abroad and, third, by founding production units in more distant countries. Unlike most socially-owned companies Gorenje started exporting not only to get foreign exchange, but also to be permanently in contact with up-to-date technologies and innovations and with market needs and norms. In order to overcome its low price competitiveness, cooperation with the Italian company Rex-Zanussi started in the early period of Gorenje's growth during the 1960s, which provided the basis for technology, know-how and innovation. Compared to the average socially-owned company in the Soviet-era of Central and Eastern Europe, Gorenje has started very early to gain know-how and know-who by building up linkages to Western European firms. This behavior gives Gorenje a competitive edge after the breakup of the country. Today, Gorenje exports up to 93 percent of its total production; 80 percent of these exports go to the Western European area. The success of Gorenje throughout the socialist era of the country and the transition process during the 1990s up to now was expedited by the combination of the specific form of Yoguslavian socialism and a very market-oriented Slovenian local government that allows for open and developing structures of learning processes and innovation--a situation that should be existent in transition economies now.

CONCLUSION

In this paper, three questions concerning the NIS in transition countries are answered. First, the importance of NIS for economic development has been examined. This is reflected in the fact that the elements contained in a NIS are those elements necessary for a successful process of development. Hence, trying to analyze the prospects of a technologically backward country to develop raises the question about the actual state, effectiveness and development of the NIS of the country.

This consideration results in the second question about the applicability of different, literature-based approaches of NIS to transition economies. The main literature on innovation systems defines organizations and institutions as its main components, as they constitute the structure of an innovation system. As pointed out, this structure-based approach is not appropriate to describe and analyze the innovation systems of countries being situated in a transition process. The process-based approach, however, is more appropriate in this context, as it describes the actual processes taking place in the considered system. Knowledge creation on the basis of learning processes is the least common denominator for analyzing differing systems of innovation.

Third, referring to the fact that a process-based approach uses activities as determinats building new and combining existing knowledge with the help of learning processes, we have to identify the most important types of knowledge and learning processes for a transition economy. As we have seen, firms as the main location for accumulating technological capabilities in an economy have to gain skills that help them, on the one hand, to understand new technology and its requirements and, on the other hand, to develop relationships to specialized domestic and foreign groups. To gain these skills formerly socially-owned firms have to fulfill their role of searching for new knowledge in a systematic and organized form in the future in order to be competitive on global markets.

The aim of analyzing systems of innovation in transition countries is to gain a deeper insight into the processes occuring at the level of knowledge creation, diffusion and use in order to identify the prospects of becoming and staying competitive on the global market. For this, we have in the long run to step from a general definition of activities to an agreement on specific activities that should be included in an innovation system to be in the position to examine the performance and division of labor in every kind of economy.

Acknowledgment

I would like to thank Dennis Kirchhoff, Bielefeld University, for his very helpful comments and advice.

Received 26 July 2006

Accepted 16 May 2007

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