Measuring regional knowledge resources: what do knowledge occupations have to offer?

SUMMARY

In this paper we will examine one of the most locally specific resources within regions: their workforce. We will consider how the specific types and quantities of knowledge workers evident in a region could be measured, and suggest that these workers form an integral but underestimated component of a region's innovative capability. To illustrate this hypothesis we use an established breakdown of occupations by aspects of knowledge and function, by sub-regions for the metropolitan region of Sydney.

This paper aims to highlight two key points. Firstly the recognition that examining knowledge workers, especially in a broader sense than is currently utilised in the innovation literature (R&D scientific employment) is a useful way for examining and interpreting the knowledge dynamics of a region, and secondly, the importance of aggregation and scale when examining regional innovation systems. Adequate consideration for the distribution of these dynamics is essential for policymakers engaged in activities to encourage innovative activity as well as promoting equitable access to knowledge resources particularly in urban, metropolitan regions.

KEYWORDS

knowledge base; regional innovation systems; occupations; professionals; institutions; regional economic development

1. INTRODUCTION: INNOVATION AND REGIONAL INNOVATION SYSTEMS

The conditions for economic growth have evolved in past decades. Attention is now focused on knowledge and innovation as the driving forces of growth. There is much description of how the success of Western, developed economies to create wealth and maintain increasing standards of living relies on creating new knowledge and commercializing this knowledge into innovations (OECD 1996; OECD 1999; OECD 1999; OECD 2001; OECD 2001; Porter 2001; Acs 2002; Lever 2002). As a result economies are increasingly said to be knowledge-based. Innovations are defined as novel products or processes that have economic value. These novel products and processes allow firms to gain and maintain competitive advantages, sometimes for long periods of time (Braczyk, Cooke et al. 2004). Certain industries are more associated with innovation, industries traditionally aligned with high levels of R&D such as pharmaceuticals and computing however, generating innovative activity needs to be the focus of all industries in order to create and maintain competitive advantage (Maskell 1998; Smith 2000).

The distinction between types of innovation is important. The distinction between product and process innovation has a long history, originating with Schumpeter, who defined a new product as 'the introduction of a new good ... or new quality of good' and process innovation as 'the introduction of a new method of production ... (or) a new way of handling a commodity commercially' (Schumpeter 1937: 66). Similarly, the role of innovation in the design of new products and services and productivity gains through technological process innovations is also well established. A more recent realisation is the role of organisational and managerial process innovations to firm innovative activity. These processes relate to the managerial or organisational 'strategies, structures or routines of a business, which aim to improve the performance of the business' (ABS 2003: 58). Examples include changed corporate directions, implementation of advanced management techniques such as total quality management; improved business performance measures, significant workplace re-organisations and significant changes to communication and information networks.

Organisational innovations are of themselves an important source of productivity growth, and have also been shown to be closely related to the successful implementation of other innovations, both product and technological processes (Edquist, Hommen et al. 2001). Organisational process innovations are essentially important because 'all technologies are created by human beings and this is achieved within the framework of specific organisational forms. They are 'socially shaped' by the organisational forms' (Edquist, Hommen et al. 2001: 16). Hence the understanding of innovative activity must include activities broader than those associated with traditional measures of innovation.

The activities of innovation are critically linked to the processes of learning. Learning is dependent on interaction, and is inherently a socially embedded process, meaning the process cannot be fully examined and understood without also taking into the examination the institutional and cultural context surrounding the learning and hence innovation process (Lundvall 1992; Capello 1999). This context includes behaviours and practices, the 'rules of the game' in a specific setting or location. The recognition of the importance of these institutional and cultural factors and the interaction between them on learning has lead to innovation being examined within a systems approach (Lundvall 1992; Smith 1996; Edquist 1997; OECD 1997; de La Mothe 1998; OECD 1999; Cooke 2001; Braczyk, Cooke et al. 2004; Cooke, Heidenreich et al. 2004).

The 'systems of innovation' approach understands innovation as a socially embedded process, as the transformation of ideas and knowledge into novel technologies, products and services through the process of learning and searching (Cooke 2002; Asheim and Coenen 2004). Innovative activity is determined by various actors (firms and institutions) and the interactivity between these actors and the cumulative base of knowledge in which they operate. The approach was initially used to describe national systems of innovation (Lundvall 1992; OECD 1997; OECD 1999; OECD 2001) but further work on the dynamics of innovative processes has lead to the analysis of systems of innovation in regions (de La Mothe 1998; Cooke 2001; Martinez-Fernandez and Toner 2003; Simmie 2003; Braczyk, Cooke et al. 2004; Cooke, Heidenreich et al. 2004; Gertler and Wolfe 2004; Martinez-Fernandez, Potts et al. 2005) and sectors (Breschi 2000; Malerba 2005).

Regional Innovation Systems (RIS) developed from the acknowledgement that innovation is primarily a geographically bounded phenomenon. The importance of proximity, usually expressed in terms of geographical proximity, emerges from the complexity of the processes of knowledge and learning, and specifically the types of knowledge involved, codified and tacit. New and emerging knowledge usually has a higher reliance on the tacit form of knowledge. Tacit knowledge is best transmitted through face-to-face personal contact, and therefore geographical proximity, i.e. within a region provides an optimal mechanism for the transmission of this type of knowledge (Capello 1999; Simmie 2003; Asheim and Coenen 2004; Cumbers and MacKinnon 2004). The RIS approach see 'that specific local and regional resources' are important 'in firms' effort to obtain global competitiveness' (Asheim and Isaksen 2002: 77) and that 'the enduring competitive advantages in a global economy lie increasingly in local things--knowledge, relationships, motivations, that distant rivals cannot match' (Porter 1998: 78).

According to the literature a RIS is composed of three main aspects, firstly a regional cluster or concentration of firms, that is a number of firms within the same or closely related industry located in the same regional space. Secondly these firms are supported by a regional institutional and knowledge base, and thirdly that there is interactivity between the actors. As Hommen and Doloreux explains, 'a regional innovation system is defined as a set of interacting private firms and public authorities, research organisations, and other bodies that function according to organisational and institutional arrangements and relationships conducive to the generation, use and dissemination of knowledge. In this conception, the environment of an innovating firm consists of a multitude of actors involved in the innovation process' (Hommen and Doloreux 2003: 2). The theoretical reasoning of RIS has much empirical evidence, the most prominent examples usually describe highly successful clusters of firms and industries in regions across the globe, including Silicon Valley and Route 128 (Saxenian 1994), South West England (Cooke, 2002), Baden-Wurttemberg in Germany (Cooke 2001; Braczyk, Cooke et al. 2004) South West England (Cooke and Morgan 1998) the North Ryde corridor in Australia (Searle and Pritchard 2004).

However, with the recognised importance of innovative activity to the competitive success of all regions, and the descriptions of these highly successful regional systems mentioned above, prominent in the literature, RIS and associated policy development have become the focus of many regions and regional development authorities and institutions in the past decade. This is because the approach offers a method to understand innovation processes within a socially embedded and regional framework. As regional authorities have become aware 'that the economic growth and competitiveness of their regions depends largely on the capacity of indigenous firms to innovate, offering the appropriate support to these indigenous firms to be more competitive through innovation is a rising star on the regional policy agenda' (Cooke and Memedovic 2003: 8).