Abstract
The paper seeks to develop a comparative analysis of approaches to innovation support in three self-governing regions of the Czech Republic. Its analytical section presents an in-depth analysis of the development of innovation policies in three regions: the capital city of Prague, South Moravia and the old industrial region of Moravia-Silesia. Key dimensions of regional innovation strategy in each of the three regions are closely scrutinized and critically examined, within the context of state-of-the-art European approaches to innovation policy. Profound differences, both in approaches to innovation policy design and in the results so far achieved, have been found between the studied regions, reflecting differences in both structural and soft factors in the regions in question. Rapid progress, in terms of innovation strategy implementation, is evident in a region where strong knowledge creation capacity (in both the academic and the business spheres) exists in harmony with professional and enthusiastic key personnel in intermediary institutions as well as steady political support from regional decision-makers. The authors believe that some of their observations will have relevance for innovation policy design and implementation in other Czech regions and in other regions of the European Union’s new member states.
Keywords
Introduction
In recent decades, innovation has become a frequent and important topic in the public policy agendas of the world’s most developed countries. It is becoming increasingly clear that the innovation context differs substantially not only between different countries but also between various regions within a single country, and, consequently, there has been a clear shift away from one-size-fits-all approaches to innovation support towards tailor-made strategies (Tödtling and Trippl, 2005, see also Tödtling et al. 2013, Sotarauta and Kosonen 2013). This creates a huge challenge for innovation policies in the new member states of the European Union (EU), which have many special features resulting from their unique sociocultural heritage from the communist period but also from the subsequent period of turbulent transition, which resulted in a plethora of political, economic, social and institutional changes. Moreover, these countries and in particular their various regions, which in many instances, including in the Czech Republic (hereafter Czechia), have only recently been (re)established, have practically no tradition concerning their own innovation policy. Consequently, the search for a suitable model of innovation support is cumbersome, primarily utilizing best practices and theoretical concepts from more developed countries. Czech regions embarked on this difficult road of setting up innovation strategies only after the turn of the millennium.
However, according to Asheim et al. (2011), even in developed countries, technology and innovation policies have failed too frequently, calling into question the way the regionalization of innovation policy has been implemented (see also Fritsch and Stephan, 2005). These failures can be attributed primarily to insufficient understanding of how regions diversify into new growth paths and of the extent to which public policy may affect this process (Asheim et al., 2011). And this is where this paper aims to contribute to the ongoing discussion. Using the perspective of a post-communist country (Czechia), with its particular cultural and historical heritage, as well as its specific institutional and policy context (both national and regional), this paper, on the basis of three case studies, aims to shed light upon whether theoretical concepts and a general understanding of the innovation process can actually be transformed into a successful innovation strategy in different regional backgrounds.
Czech regions present a very interesting setting for an analysis of evolving innovation policies and the factors behind the successful utilization of state-of-the-art theoretical concepts. Until very recently, the innovation policy of Czechia as a whole and of the various Czech regions employed a formal strategy based on copying foreign best practices, without a comprehensive understanding of underlying preconditions and without the necessary adaptation of such practices to the specific characteristics of particular regional innovation systems (Blažek and Žížalová, 2010; Žížalová, 2010; Tödtling et al., 2013; Blažek et al., 2011). Only now can one begin to observe more intensive, ongoing discussions, at both national and regional levels, about the need for more strategic and ‘fine-tuned’ approaches in designing strategies for enhancing competitiveness and innovation, while still building strongly upon foreign best practices. So far, the experience and results vary dramatically between the regions. Thus, one can observe how different approaches to innovation policy are being formed within divergent structural, institutional and social circumstances and what key factors differentiate relatively successful, ongoing implementation of regional innovation strategies from those strategies that remain, for the most part, only in written form.
The paper is organized as follows. We begin with a brief outline of the primary research questions, placed in the context of theoretical concepts recently developed within regional development and innovation research. In the next section we introduce the national context for regional innovation policy. We follow this with an outline of the methodology for the empirical research upon which the paper is based. The main section then presents the results of the three regional case studies and an analysis of their different approaches to supporting research, development and innovation (R&D&I) activities. Finally, we summarize the key findings by answering the research questions.
Theoretical framework
Recent literature concerning regional development and competitiveness has placed significant emphasis on the regional level and its capacity to ‘hold down’ the global (Coe et al., 2008). Regions are considered as repositories for tacit, specialized knowledge and patterns of behaviour connected to innovation that are crucial sources for obtaining and sustaining competitive advantage (Christensen, 2003). Ever since the seminal work of Alfred Marshall ([1890] 1920), literature on the subject has held to the notion that the locally bounded external economies of regional actors (firms and others) are of crucial importance in stimulating innovation and economic growth (Powell et al., 1996; Asheim and Isaksen, 2002; Gertler, 2004; McKelvey, 2004; Hart, 2009). The central idea of concepts such as clusters, industrial districts and regional innovation systems is their emphasis on stimulating the beneficial effects of the territorial concentration of various activities and actors, effects that are greater than those each actor could generate in isolation (see, for example, Asheim, 2000).
Recent theoretical advances concerning the geography of knowledge generation and knowledge sources can be characterized by a growing awareness of the heterogeneity of key factors and mechanisms, as well as the heterogeneity of actors relevant to knowledge economies and societies in various regions (see, for example, Tödtling and Trippl, 2005). Tödtling and Trippl (2005: 1204) therefore argue that ‘[p]olicy conclusions which are drawn from the analysis of “success stories” are only of limited use for less favoured regions, as their innovation capabilities deviate in many respects from these role models’.
This diversity of regional innovation systems is also acknowledged by the ‘constructing regional advantage’ (CRA) concept, which draws on existing theoretical as well as practical knowledge by stressing the need to shift away from any ‘one-size-fits-all’ approach (European Commission, 2006). The aim of the CRA concept is to provide a strategic framework for (regional) innovation policies in less successful regions. The key axioms of the CRA concept can be summarized in the following three points:
Regional advantage can be actively constructed/designed, which also implies a new and a more dynamic role for the public sector (including universities).
The region is the proper platform for mobilizing innovation creation because its invention is a highly localized process, but ‘local buzz’ should be complemented by translocal connections – ‘global pipelines’ (see Bathelt et al., 2004).
Innovation, talent formation and attraction, and entrepreneurship are the key components in CRA.
From these three axioms, the focus of our case studies should enable us to assess the relevance of the first point.
The key theoretical concepts upon which the strategic recommendations of the CRA approach are based are: related variety, differentiated knowledge bases and distributed knowledge networks (European Commission, 2006; Asheim et al., 2011). At present, the relevance of these concepts is widely acknowledged in the literature; consequently, only a brief summary of these concepts is provided here. The concept of related variety stresses the role of spillover effects among non-identical but related industrial branches, and thus combines the strength of the specialization of localization economies and the diversity of urbanization economies (European Commission, 2006). Therefore, in contrast to the notion of Jacobs’ externalities, which presumes that knowledge spillovers can be a source of additional competitiveness between any sectors, the concept of related variety argues that knowledge will effectively spill over from one sector into another only if they are mutually complementary in terms of competences (Frenken et al., 2007; Asheim et al., 2011). Boschma (2010) has demonstrated that the evolution of an industrial structure in a given region is a strongly path-dependent process that is driven by a region’s branching into new but related industries. Accordingly, plants or even industries tend to depart from regions when they are not supported by related industries at the regional level, that is, when a particular industry is not embedded in existing industries because there are no related industrial activities at the regional level (Boschma, 2010). Consequently, one possible approach for enhancing the competitiveness of a regional economy might be based on the stimulation of knowledge spillovers among related industries, either via support for labour mobility and mutual cooperation or via direct efforts to identify and stimulate the growth of industries that are currently absent from the region and are related to current industrial branches.
The second key concept enhancing our understanding of knowledge creation is the concept of (differentiated) knowledge bases. This concept is based upon the argument that the innovation process of firms and industries differs substantially between various sectors (Asheim and Gertler, 2005). Thus, synthetic, analytical and symbolic knowledge bases are conceptualized to reflect the differences in innovation processes in numerous spheres, ranging from different mixtures of tacit and codified knowledge to different talents needed for innovation processes to the organizational set-up for innovations and, finally, to the very nature of the innovation product (Asheim et al., 2007). Nevertheless, Moodysson et al. (2008) demonstrate that features of different knowledge bases can be identified even within a single firm, for example, during the different phases of product development. Therefore, the existence of a pluriformity of knowledge bases even within a particular innovation process calls for the highly reflective and responsive design of support policies and support mechanisms, which should be based on participatory analysis of the actual needs of particular firms.
The third key concept is the idea of distributed knowledge networks (Smith, 2000). Smith argues that ‘knowledge for many key activities is distributed among agents, institutions and knowledge fields’ (Smith, 2000: 1). This is reflected in the tendency of even large multinational firms not to rely exclusively on the knowledge created within their own technocentre(s), but to tap into global knowledge using a variety of methods to mobilize external knowledge. The European Commission refers to these changes as a ‘transition from an internal knowledge base of firms to (more and more) open and globally “distributed knowledge networks” (e.g. as part of global value chains organised by Transnational Companies (TNCs) or globally dispersed epistemic communities of scientists . . .)’ (European Commission, 2006: 50). This in turn may have strong implications for regional innovation strategies, because the relevant knowledge base for many industries is not internal to the industry but is widely distributed (European Commission, 2006).
In addition, the traditional premise that regional development efforts depend on proper institutions and the capabilities of decision-makers to find correct strategies for the future through the rational programming process has recently been questioned by Sotarauta (2005), who believes that ‘the more complex situations are, the more regional development is dependent on the leadership and the network management capacity of key individuals’ (Sotarauta, 2009: 896). Elsewhere, Sotarauta argues that a shift has occurred ‘from understanding policy-making as a rational decision-making and planning process proceeding from policy design to decision-making and finally to implementation, towards comprehending policy as a multi agent, multi objective, multi vision and pluralistic process in which the actual policy is shaped continuously’ (Sotarauta, 2010a: 388). Thus, according to Sotarauta, when one actor is dependent on the resources and competencies of other actors, and when gains can be achieved by pooling these assets, the role of leadership becomes vital.
In leadership studies, several basic tasks of leaders have been distinguished, such as: (i) creating strategic awareness about emerging issues and about future prospects, (ii) mobilizing and coordinating relevant actors and (iii) searching for a shared vision (Sotarauta, 2010a). Nevertheless, research on the role of leaders in regional development is not straightforward, because it is not always easy to identify leaders who really make a difference. Moreover, there is the danger of attributing too much credit to a given leader (Sotarauta, 2005). Therefore, Sotarauta uses the term ‘shared leadership’ to reflect the multi-actor (and multi-dimensional) nature of regional development. In similar vein, Harmaakorpi and Niukkanen (2002) stress the role of shared vision and network leadership in regional development. Despite the obvious difficulties surrounding any precise operationalization of these concepts, we will attempt to identify the key actors and leaders involved in innovation strategies in our three case studies.
Therefore, this paper aims to answer the following research questions:
What are the main features of the current national innovation policy and what are its primary implications for the design of regional innovation strategies?
What key actors and leaders were involved in establishing the innovation agenda in each of the three study regions?
To what extent are state-of-the-art approaches to innovation support reflected in the innovation strategies of the examined regions?
What key factors lie behind the profound differences in the content and the rate of implementation of the regional innovation strategies of the particular regions?
National-level innovation policy
According to the European Innovation Scoreboard 2009 (European Commission, 2010), Czechia is classified as a moderate innovator, with innovation performance below the EU27 average but a rate of improvement above that of the EU27. Czechia’s primary relative strengths include (i) its relatively high share of private sector investments in research and development (R&D), (ii) its innovators (that is, the share of innovative companies) and (iii) its economic effects. On the other hand, its relative weaknesses include weak R&D&I outputs, insufficient financial and public support and a lack of top-quality human resources (see Figure 1).
European Innovation Scoreboard: Position of the Czech Republic, 2009.
Czechia’s first national innovation policy was approved in July 2005, making it one of the very last EU countries to adopt such a policy. So far, the proposed reform focuses primarily on the administrative aspects of the R&D&I system, such as the concentration of R&D&I funding into fewer governmental institutions, the establishment of a special agency to support applied research – the Technology Agency of the Czech Republic (in operation since 2010) – and, especially, a brand new system of financing for this sphere. This new system is based on the evaluation of R&D&I results and seeks to provide strong stimuli to produce high-quality results. However, the evaluation model focuses exclusively on countable research outputs and fails to motivate researchers to cross the gap between academia and industry, which, within the Czech innovation system, represents a particularly strong cleavage (Blažek and Uhlíř, 2007).
Unfortunately, beyond these adjustments, practically no other significant changes have been made in R&D&I policies at the national level. For example, as yet, no broader strategic framework that would reflect the economic traditions and industrial specialization of the country has been effectively applied. Likewise, any overall consensus concerning a strategic vision for R&D&I policy remains rather underdeveloped in Czechia.
Innovation policy at the regional level
In 2001, 14 self-governing regions (NUTS 3 level) were created in Czechia and regional development strategies were subsequently formulated in all these regions. However, the elected regional representatives were overwhelmed with initiating the necessary execution of administrative functions and with the necessity to assume responsibility over technical infrastructure and so on. Consequently, issues such as innovation policy and R&D were, and to a large extent continue to be, beyond the scope of the majority of regional representatives.
To our knowledge, during the period 2003–10, 12 out of the 14 self-governing regions developed their own regional innovation strategy (RIS). However, they vary greatly in terms of their level of sophistication and still more in terms of progress in their implementation. This is reflected in the selection of our case studies. Prague is an urban region where innovation strategy is primarily a formal document. Southern Moravia is a region where remarkable progress in the implementation of a rather sophisticated RIS has already been achieved. And, finally, the Moravia-Silesia case study demonstrates how regional actors are embarking on a difficult road to rejuvenate one of Czechia’s most prominent formerly industrial regions. Table 1 presents a comparison of the basic characteristics of the three case-study regions.
Key R&D characteristics of the three case-study regions, 2008.
Note: GERD: gross domestic expenditure on R&D, BERD: business expenditure on R&D.
Source: CZSO (2009).
Methodology
The paper is based primarily on knowledge accumulated through diverse forms of our personal involvement in drafting and implementing regional innovation strategies in these three regions over the past 5–15 years. The activities in which we participated range from performing surveys among key regional stakeholders as part of a variety of background studies to directly participating in drafting the innovation strategies of these regions. A number of us have been (or still are) members of diverse formal and informal working groups and think-tanks (comprising both the decision-makers and the beneficiaries of various support mechanisms), related to either the preparation or the implementation of these strategies. Finally, one of us has, for the past five years, been personally engaged in RIS implementation as a project manager. Naturally, desk research of relevant policy documents was an indispensable part of the methodology. In addition, as part of a recent project, we undertook our own survey among firms within these regions. It focused on the geography of knowledge sources for knowledge-intensive industries (Skokan, 2009; Žížalová, 2009; Blažek and Žížalová, 2010; Tödtling et al., 2013; Blažek et al., 2011). Despite our personal affinity to (some of) these RISs, we have made every effort to ensure that our opinions have not been compromised.
Emerging regional innovation strategies in the case-study regions: key actors, design and progress in implementation
Regional innovation strategy in Prague
The relatively strong economic performance of Prague is not mirrored in the outputs of its innovation system (Žížalová, 2009). Prague is home to major Czech universities, approximately 90 research institutes and many firms in the progressive tertiary sector, including a number of R&D laboratories of foreign multinational companies (BRIS, 2005). This potential, however, is not reflected in the existing institutional and policy context. With a certain degree of hyperbole, one could state that R&D&I’s greatest ‘enemy’ in Prague is the city’s attractiveness for tourism along with massive internal debt in technical infrastructure (both transport and environmental), because these spheres predominantly occupy the attention of the city authorities.
Shortages in political support
The RIS was prepared under the initiative of the managers of the Technology Centre of the Czech Academy of Science, in cooperation with the Centre for Regional Development (an institution that is affiliated with the Czech Ministry for Regional Development) and Prague’s city authorities, between 2002 and 2004. Importantly, the RIS in Prague was prepared mainly on the basis of the availability of EU support (the 6th Framework Programme), but it lacked strong political support from Prague leaders and officials, who had (and still have) different priorities – in particular, as regards technical infrastructure. Therefore, the Prague RIS was clearly ‘product driven’ and not ‘demand driven’. As of now, this situation remains basically unchanged.
In contrast to other Czech regions, Prague is not considered a Convergence Objective region and, consequently, support from the EU Structural Funds is limited. Nevertheless, both Single Programming Documents (SPDs) – one co-financed by the European Regional Development Fund (ERDF), the second by the European Social Fund – for the 2004–6 period were drafted in conjunction with the Prague RIS (pursuant to a relevant EU Regulation) and it could be said that the allocations from these two SPDs were the dominant source for the implementation of at least certain measures of Prague’s RIS.
Similarly, Prague’s Operational Programmes (OPs) for the current programming period (2007–13) are, to a large extent, defined by EU Cohesion policy priorities. In addition to the EU policy strategic documents, Prague has also prepared its own strategy. The Strategic Plan of the City of Prague (approved in 2008) has a much broader scope and designates objectives for the next 10–15 years. In this way, the Strategic Plan represents something of an umbrella document for all city government activities, including innovation and competitiveness strategy. The current Strategic Plan has no direct link to the RIS prepared in 2004 and, therefore, the Prague RIS is now, to all intents and purposes, a formal document and future steps are defined by the much broader and much less innovation-focused Strategic Plan. The city’s political leaders are now discussing the preparation of a new regional innovation strategy. The primary impetus behind their efforts, however, is not any recognition of the importance of R&D&I for the city’s development, but rather external pressure to prepare strategic arguments for discussions concerning EU Structural Fund support during the next programming period.
According to our interviews with Prague decision-makers, there is still no clearly defined responsibility for the R&D&I sphere within city government and virtually no willingness to be more engaged with universities and other relevant R&D&I actors located in Prague. In short, R&D&I activities are seen as a national concern and, consequently, leadership is clearly lacking in the case of the Prague innovation strategy.
The relevance of key theoretical concepts and progress in implementation
Because Prague has not prepared any innovation strategy other than the 2004 RIS, we assess the content of this strategy and progress in its implementation in this section.
The analytical section of the Prague RIS is rather traditional in nature and focuses primarily on fashionable benchmarking, without any effort to better understand the needs and challenges of key R&D&I actors. This approach is the result of very reluctant support from city leaders, which meant that all analyses had to be carried out without backing from city officials. Despite the efforts of the Technology Centre’s core team, the RIS has several significant weaknesses, both formal and content-based in nature (see Tables 2 and 3).
Comparison of the formal design of the regional innovation strategies of the three case-study regions.
Comparison of the ‘content’ of the regional innovation strategies.
Importantly, the final RIS document did not contain a time schedule or any designation of responsibility for the envisaged activities. Nor did it propose any financial allocations for the planned measures (see Table 2). This confirms the notion that Prague leaders did not take the RIS seriously as a future strategy, but merely saw it as an opportunity to use foreign expertise and resources to prepare a fashionable strategy document. This resulted in poor chances for RIS implementation. Consequently, as stressed above, the only relevant mechanisms concerning the implementation of at least some parts of the RIS are the corresponding sections of both OPs, co-financed from the Structural Funds.
Regarding the use and influence of theoretical CRA concepts, which in light of the priorities of the Prague RIS and the EU-funded programmes (SPDs and OPs) should have been the RIS’s prime implementation tools, it is apparent that none of these concepts was actually appropriately considered. Nevertheless, the RIS in Prague did include measures intended to enhance the commercialization of R&D results as well as support for the innovation activities of private entities and, beginning with the new programming period in 2007, direct support for analytical knowledge creation, that is, direct support for R&D activities. However, these measures merely represent interventions copied from foreign RISs and, consequently, such measures were designed without any detailed knowledge of the regional economy and its specific needs. Likewise, no attempt was made to identify key weaknesses and barriers in the Prague innovation system or its unique competitive advantages. Stated simply, the Prague RIS is more a copy of foreign best practices than a tailor-made strategic document based on state-of-the-art theoretical concepts.
Concerning progress in implementation, as explained above, the key mechanism for the implementation of the RIS in Prague was, and still is, support via the EU Cohesion policy. The OP Competitiveness (co-financed by ERDF in the 2007–13 period) is much more focused on R&D&I then the former SPD, because the current OP has more than doubled the share of support (to 22.7 percent). Nevertheless, it is necessary to emphasize that the two OPs represent the only way in which the city budget (through co-financing OP projects) participates in support for R&D&I activities.
The most important activities envisaged by the Prague RIS that were implemented with EU Cohesion policy support include the establishment of (i) the Prague Business Incubator and (ii) two centres for technology transfer within the Czech Academy of Science and Charles University. On the other hand, certain RIS thematic areas were and, in fact, continue to be ‘omitted’ by both the SPDs and the OPs. These areas include cluster support, the development of new financial tools, and support for innovation culture. Altogether, therefore, it appears that at least some progress has been achieved in about half of the activities foreseen by the Prague RIS.
The case study of Prague RIS thus represents an unsuccessful example of innovation strategy built on foreign best practices without considering key underlining theoretical concepts and their relevance for a specific regional context. The strategy’s failure is not in its use of foreign practices but – as comparison with the other two cases shows – rather in the lack of strategic consideration of the available options. Such consideration should have resulted in the selection of truly needed and sophisticated measures that would recognize the region’s advantages and disadvantages. Therefore, the RIS entirely lacks an endogenous dimension, as stressed in regional innovation system theory as well as in the CRA approach. Nonetheless, the fundamental problem of the Prague RIS is the lack of political support and leadership. Considering the strong concentration of both public and private Czech research institutes and laboratories in Prague, we find it surprising that the lack of political leadership has not as yet been substituted (at least partly) by a leader from the R&D sphere. The lack of interest among key R&D actors in the RIS can be attributed primarily to the fact that these institutions often are the top national R&D centres and are oriented predominantly to building global pipelines. Other factors behind the rather passive approach of Prague’s R&D actors to the RIS might be related to ongoing resistance to the forced collectivism imposed under communism as well as to the fact that the R&D sphere has traditionally been a national concern, meaning simply that researchers do not expect much from city authorities. Under these conditions, the failure of Prague’s RIS is hardly surprising.
The regional innovation strategy of the South Moravian region
In spite of the fact that the South Moravian Region, with its regional capital Brno (the second-largest city and the second most important academic centre in Czechia), ranks among the more developed regions of Czechia, it still faces significant challenges concerning its socioeconomic development. The region specializes, on the one hand, in traditional sectors such as mechanical and electrical engineering and viticulture, but recently it has successfully developed various new activities, including biotechnology industries and the information technology (IT) sector. The attractiveness of the regional capital has recently risen owing to a significant number of foreign investments (for example, ABB, Celestica, Honeywell, IBM, Lufthansa, Siemens, Tyco Electronics).
The origins of innovation policy in the South Moravian Region date back to 2001, when the first-generation RIS was prepared within the EU project InterpRISe on the basis of the initiative of a close-knit group of local professionals who possess state-of-the-art know-how thanks primarily to their work experience abroad. The central rationale for preparing the RIS was to make the transition from a non-sustainable exogenous development strategy, aimed at creating jobs by attracting foreign direct investment (FDI), to a more endogenous approach. This policy reorientation received strong political support from the newly constituted regional government. According to our interviews, the main factors behind the initial political support were: the high unemployment rate; the delocalization of the first large FDI plant in Czechia, which resulted in the loss of more than 2000 jobs; and the beginning of the Lisbon Strategy debates.
The main outcome of RIS 1 was the establishment of the South Moravian Innovation Centre (JIC), which then became responsible for implementing the strategy. The JIC prepared the second generation of RIS in 2005 as a response to joining the EU and to take advantage of an opportunity to channel EU Structural Funds into innovation support measures. Both generations of RIS focused primarily on supporting start-ups. Therefore, one of the main strategic objectives of the third generation of RIS was to extend the scope of support measures. RIS 3 was adopted in 2009 and an analysis of its preparation is presented below.
The role of leadership in negotiations concerning RIS 3 in South Moravia
At the beginning of the drafting process for the new RIS, a partnership consisting of representatives of the regional government, the City of Brno, universities and intermediaries agreed on these goals:
to expand interventions from start-up support to cluster development, technology transfer, talent formation and attraction and the internationalization of R&D&I actors;
to prepare the region for the 2007–13 EU programming period to efficiently stream funds into the region because all Operational Programmes relevant for R&D&I are implemented from the national level;
to bolster already existing partnerships by establishing permanent structures, such as the Steering Committee (political group), the Coordinating Committee (expert group), and four thematic working groups.
After initial discussions within the above- mentioned structures, key industrial branches – mechanical engineering, information and communication technology (ICT), electronics and life sciences – were identified through desk research. Subsequently, field research among 185 companies and 20 research teams in the region was carried out. It focused on company strategy, position in the market and R&D activities, including collaboration patterns and challenges concerning human resources. Importantly, a demand analysis was done to test newly proposed support instruments. The survey was performed jointly by external consultants and by a representative of an intermediary body (JIC) in order to start building a partnership.
The formal design of RIS 3
RIS 3 is traditionally structured (analysis, strategy, Action Plan and rules of implementation). The strategy section consists of four priority axes based on the survey results (technology transfer, services for companies, human resources and internationalization), which are further divided into strategic goals with proposed activities. The Action Plan consists of 27 projects each having its own time schedule, financial sponsor and owner. These include the South Moravian Region, the City of Brno, implementing agencies (intermediaries) such as the JIC, the South Moravian Centre for International Mobility, and universities or their departments (for example, technology transfer offices). In terms of ‘political ownership’, the RIS is an official strategic document approved by both the South Moravian Region and by the City of Brno. According to one interviewee, the presence of an Action Plan with thoroughly formulated projects (including responsibilities) has been one of the key factors in the strategy’s approval and in its swift implementation.
The relevance of key theoretical concepts and progress in implementation
Owing to the personal connection of one of the managers responsible for RIS implementation with the CRA project, a deliberate effort has been made in RIS 3 to reflect at least the main CRA concepts (related variety, knowledge bases, distributed knowledge networks). In terms of related variety, several projects can be highlighted, such as innovation management training within a group of related companies, organizing brokerages of firms that operate along sectoral overlaps and the targeted attraction of foreign investors. However, ample room for policy improvement remains, because the effects of interventions motivated by the concept of related variety (see, for example, Boschma et al., 2009) depend significantly on proper analysis of the relatedness among particular companies. Such detailed analysis has not yet been performed.
As for analysing RIS interventions in terms of differentiated knowledge bases, up to now the RIS has not been oriented in such a way. However, a strong sectoral focus of public support via RIS is apparent. Particular attention has been given to the life sciences, which in South Moravia represent both tradition (Brno is the place where Gregor Mendel formulated the basic laws of genetics in the 19th century) and significant current potential. Consequently, the biotech sector has received dedicated support, for example, the establishment of a biotech incubator, which also provides consulting services, the organization of matchmaking events, and so on. Recently, several activities have been carried out in other key sectors, such as motivating ICT students to establish their own companies or setting up a research competence centre in the traditional machine tools industry in order to unlock the potential that has accumulated in this region.
Likewise, several activities have been carried out to integrate regional knowledge institutions into globally distributed knowledge networks, such as a regional programme to attract foreign researchers or to support the return of scientists and technicians of Czech origin who work abroad, organizing brokerages to motivate companies and research teams to join international projects and organizing international conferences. One positive example of these activities is a joint project, which is already under way, to establish a clinical research centre with the American Mayo Clinic.
Concerning progress in the implementation of the RIS in the South Moravian Region, it is difficult to talk about actual impacts, but several outcomes and results are evident. So far, out of the 27 projects envisaged within the RIS 3 Action Plan, 15 have been realized or are in the realization phase, another 9 projects are in the preparation phase and the remaining 3 projects have not started yet. Specifically, in 2008, a Technology Incubator was opened and, in 2009, the biotechnology incubator INBIT was opened. At present (2010), these two incubators house firms that employ more than 200 highly qualified people; however, additional firms, employing another 150 individuals, have already successfully moved out of the incubator. In terms of knowledge transfer, five spin-off firms have already been established by Masaryk University in Brno. In terms of other outcomes, 98 companies have been supported in cooperation with universities with innovation vouchers and 35 start-ups are being supported within the incubation programme. Concerning talent formation and attraction, 14 foreign researchers were attracted and approximately 50 talented PhD students per year are being supported. However small these figures may seem, the regional actors are learning quickly and the key results so far remain intangible in nature: the formation of a network and a solid, institutionalized platform that is able to prepare joint projects to submit to the newly established Technology Agency of the Czech Republic, as well as to the EU’s Seventh Framework Programme for the funding of research and technological development (FP7) and, particularly significant, the flagship CEITEC (Central European Institute of Technology) project (to be co-financed by EU Structural Funds) focused on exploring the synergy between the life sciences and nano-materials.
The fact that the South Moravian Region is regarded as a leader in innovation support in Czechia (Blažek, 2010) begs the question of the main underlying reasons for this distinction. Several interviewees stated that, without a strong political leader (at that time it was the deputy regional governor) and without a strong project manager overseeing RIS, the preparation work and implementation of RIS in 2001 would not have begun at all. Furthermore, they said that the commitment of a strong political leader representing the region and of strong management at both the South Moravian Innovation Centre and the South Moravian Centre for International Mobility have combined to ensure that the above-stated strategic goals are being fulfilled. Therefore, all three of Sotarauta’s (2010b) categories of regional leaders seem to be present: policy generalist (the deputy regional governor), persons of substance (managers of the intermediaries) and persons of process understanding (RIS project managers).
Regional innovation strategy in an old industrial region: Moravia-Silesia
The Moravian-Silesian Region (located in the north-east part of Czechia), with its socioeconomic core around the regional capital, the city of Ostrava (306,000 inhabitants in 2009), is the largest old industrial region in Czechia. As with other regions of this type, it faces the problem of excessive clustering and overspecialization in mature industries that experienced rapid economic decline during the 1990–2003 period. In this region, mining, metallurgy and heavy engineering are the key industries of the local economy. Within these industries, intricate restructuring has been undertaken. At the same time, measures were taken to strengthen the regional innovation system, including the establishment of new universities and faculties, business innovation centres and the Science and Technology Park.
In Moravia-Silesia, three stages in regional innovation strategy development can be distinguished. The first stage, from 1990 to 2002, is characterized by the implementation of implicit innovation measures in a rather unsystematic way, as the key regional actors focused primarily on attracting foreign investors with low-cost inputs. The most important regional actors were the City of Ostrava, the Union for the Recovery and Development of Northern Moravia and Silesia (originally called Northmoravian Economic Union), established in 1990 by major regional companies and municipalities as a lobbying institution to assist economic transformation and restructuring (Rumpel and Waack, 2004), and the Regional Development Agency in Ostrava (RDA), established in 1993 on the basis of a recommendation from a foreign expert hired via the EU PHARE programme to facilitate the transfer of innovative concepts in regional development. Already in 1993, the RDA assisted in the establishment of the Business Innovation Centre (BIC) in Ostrava. In 1997, the Science and Technology Park Ostrava was established. The first company located in the Park was a Technical University spin-off in IT.
The second stage of support to the regional innovation system started after the re-establishment of regional self-government in 2001. Subsequently, in 2003, the regional assembly of the Moravia-Silesia Region adopted a relatively systematic regional innovation strategy (RIS 1), which was prepared by the BIC in partnership with regional universities and was subsequently implemented by the BIC, the Union, and universities and later on by the RDA in Ostrava. The RDA began to support the establishment of regional clusters by facilitating interactions and cooperation between business and academia. Thanks to these efforts, the Moravian-Silesian Region can be called the ‘Clusterland’ of Czechia (Skokan, 2009). At present, there are nine different cluster initiatives in the region, including the National Engineering Cluster, the IT Cluster and the Moravian-Silesian Automotive Cluster. Other initiatives for building the innovation infrastructure were launched in the Technical University, resulting in the establishment of the Centre for Advanced Technologies, the Business Incubator and the Centre for Technology Transfer.
The period from 2003 to 2008 can be characterized as a period of a strong economic growth in Moravia-Silesia, accompanied by growing diversification of the regional economy through the development of the service sector and through the development and expansion of new industries, such as the ICT and automotive sectors, and further developments in tertiary education and R&D activities. The main structural constraints on the implementation of RIS 1 included the overly specialized nature of the regional economy in mature industries, such as mining, metallurgy and heavy engineering, which resulted in lock-in; a concentration of efforts and finances on attracting industrial FDI into industrial zones (Rumpel and Waack, 2004); and a lack of quality institutions and insufficient human resources in the field of R&D.
The third stage of formation of the regional innovation system in Moravia-Silesia began in 2009 with the preparation of a new generation of the regional innovation strategy (RIS 2) for the 2010–16 period. The RDA and the new political representation at the regional authority level after the 2008 elections initiated the formulation of RIS 2. The Technical University (TU) has taken the lead in supporting R&D&I in the region, in cooperation with local industries. This is especially due to the efforts of the Dean of the Faculty of Electronics and Computer Sciences (who was elected Rector of the Technical University in 2010), who is a distinguished scientist with vision and leadership capabilities who has gained the trust and support of regional political leaders. The TU leads the way with relatively strong organizational structures available for innovation activity and plays an active role in all of the clusters established in the region. The TU has also made extensive use of the Structural Funds to develop R&D&I activities.
The formal design of RIS 2
The strategy was designed on the basis of desk research of available sources as well as on interviews in companies. Through this approach, both the key traditional industrial sectors (metallurgy, heavy machinery) and new emerging branches (particularly ICT and automotive) were identified. RIS 2 has four priorities: technology transfer, human resources, international relations in R&D and coordination and implementation of the RIS. Specific objectives include the transfer of technologies and the commercialization of R&D results, cooperation among firms and research entities, the establishment of spin-offs, the development of human resources in knowledge institutions and international cooperation. Special attention has been devoted to RIS implementation and marketing. As part of the Action Plan for 2010 and 2011, 19 projects were identified with clear objectives, achievement indicators, time schedules, financial commitments and responsibilities for implementation.
The relevance of key theoretical concepts and progress in implementation
The strategic goal of RIS 2 is to improve the competitiveness of Moravia-Silesia’s regional economy in global markets. Despite the above-mentioned desk and field research preceding the formulation of RIS 2, a pragmatic attitude and simpler means of combining imitations of measures applied in South Moravia’s apparently successful and more mature RIS with regionally specific measures prevailed in strategy formulation and implementation. Coordination and monitoring of measures are provided by the RDA on behalf of the regional authority.
The concept of related variety and the envisaged support for cooperation among cognitively close firms is not explicitly addressed in RIS 2. However, in Moravia-Silesia, the members of local clusters often represent different branches that could contribute to knowledge spillovers, as expected in accordance with the concept of related variety (Boschma et al., 2009). For example, the ICT Cluster also hosts marketing companies, and the Automotive Cluster also includes firms from machinery industries. The RDA initiative Clusternet seeks to establish contacts between clusters from different industrial branches, an endeavour that is also in line with Porter’s notion of ‘cross-cluster spillovers’ (Porter, 2003: 569). Moreover, the key regional stakeholders believe that firms in the ICT Cluster should be able to improve the competitiveness of firms in other branches.
Similarly, the concept of differentiated knowledge bases is indirectly and partially presented in RIS 2. The strength of various knowledge bases in the region is very uneven, with the synthetic knowledge base showing a clear dominance. This reflects the strong engineering tradition of the region. Therefore, implicitly, the synthetic knowledge base is being strengthened by several measures in RIS 2, in accordance with well-developed regional industrial branches such as mechanical engineering, electronics, ICT and automotive. The analytical knowledge base is weak because of the nature of industries in the region and a lack of public research institutes outside of universities.
In accordance with Tödtling and Trippl’s (2005) policy recommendations, support exists for more open and globally distributed knowledge networks. However, this concept is only unintentionally reflected in the ‘Support programme for research and development in the Moravian-Silesian Region 2010’, which complies with the RIS and is carried out and financed by the regional government. The programme includes financial support for the mobility of foreign academics, which should facilitate the integration of local academics and scientific teams into European and international research projects or, at least, enable distinguished foreign academics to be invited for lectures or conferences and for contacts to be established with them. The global pipelines (for more, see Bathelt et al., 2004) are, at present, rather weak but they are nonetheless emerging, both for firms and for universities. The ICT firms have declared their intention to preferentially utilize national pipelines – they get their technological knowledge through Prague’s branches of global companies such as Microsoft, Oracle, IBM or SAP (for more on the geography of knowledge sources in ICT firms in the Ostrava region, see Blažek et al., 2011). Furthermore, in 2010, the regional government provided a special grant for the establishment of the Moravian-Silesian Centre for International Trade, which should assist the expansion of exports from regional, innovative small and medium enterprises (SMEs) into international markets.
Therefore, it should be stressed that, despite the fact that RIS 2 was adopted quite recently (in 2010), several envisaged projects and other activities are already proceeding, thanks to the activities of key regional actors such as the TU, the regional government and the regional chamber of commerce. The TU is supervising some of the key projects for the development of R&D infrastructure, such as the installation of a supercomputer within the ‘IT4Innovations’ project of excellence, supported by EU Structural Funds. Other recently launched projects, supported from the Structural Funds, include Regional Research Centres for Material Technology, Innovations for Environment, the Institute for Clean Technologies, and the Institute for Environmental Technologies.
The developments described above show how leadership in the Moravia-Silesia Region has changed significantly over the period investigated, in terms of both the composition of the network of key actors and the position of the leading institution (initially the RDA was dominant, but now the leading institution is clearly the Technical University).
Conclusions
This paper has developed a comparative analysis of emerging approaches to innovation support in three regions in a post-communist country (Czechia), which are evolving under the conditions of a weak national support framework. Not surprisingly, EU support via Structural Funds proved to be an important, even a definitive, vehicle in the implementation of innovation strategies in all three case-study regions. In several cases, European knowledge played an important role as well (for example, the advice of an EU expert to establish the RDA in Ostrava), or inspiration gleaned from at least some of the state-of-the-art European theoretical concepts (for example, European Commission, 2006).
Our first research question focused on the nature and implications of national innovation policy for the design of regional innovation strategies. Czech national innovation policy can be considered to be just emerging and developing under the contradictory process of institutional change-over related to the political, societal and political shake-up after the collapse of communism. This is still more evident in the case of Czech regions, which were (re)established only recently (in 2001) and which were, at that time, overwhelmed with basic tasks involving infrastructure, education and other spheres of public administration. Consequently, in the absence of a sophisticated national institutional support framework for research, development and innovation, the self-governing regions (or, more precisely, at least some of them) began to search for their own ways to enhance their development and innovation potential. Based on our three case studies, therefore, it is evident that the national framework for R&D&I played only an indirect and rather marginal role in the process of shaping new support mechanisms at the regional level. Nevertheless, this observation should not be viewed wholly negatively. The lack of a proactive approach at the national level creates a lot of room for the activities of regional actors, which then have to search for their own mode of coping with development and innovation challenges instead of applying a recipe that is more or less similar to what has been implemented at the national level. However, our case studies demonstrate that regional actors’ use of this space for bottom up approaches by regional actors is by no means automatic; rather it is conditioned by both structural and soft factors, such as leadership.
Regarding the second research question – identifying the key actors and leaders involved in establishing the innovation support agenda in the studied regions – our analysis shows that, in each of the three case-study regions, a different type of actor provided the primary impetus for embarking on a more proactive development trajectory.
Likewise, concerning the third question – to what extent state-of-the-art approaches to innovation support are reflected in the analysed regional innovation strategies – the evolution of attempts to design a more or less sophisticated and up-to-date policy approach exhibits highly specific features in each of the regions, based on differences in development potential as well as in key actors’ actual efforts to mobilize and enhance the existing potential.
In Prague, the initiative for more proactive innovation support came from a public research institute (that is, from the managers of the Technology Centre of the Academy of Sciences) but, so far, this initiative has failed to gain sufficient support from other actors, particularly from the city authorities. Therefore, there is a clear lack of leadership in Prague. Consequently, despite numerous actors involved in both knowledge generation and knowledge exploitation and despite the existence of positive examples, such as the implementation of several projects envisaged in the Prague RIS via EU cohesion support and a bottom up initiative to establish a biotech cluster, the city of Prague continues to lack a comprehensive institutional framework for innovation support. The main rationale behind the reluctant approach of Prague city authorities to RIS appears to be a unique type of lock-in. Specifically, the relatively high attractiveness of Prague for tourists and businesses, in light of its cultural and historical heritage and also owing to its position as a capital city with a strong concentration of various public sector institutions, allows the city authorities to refrain from more serious engagement with the needs of Prague’s innovation system. In addition, and in part as a result of this situation, Prague continues to lack intermediary organizations that would properly link the knowledge generation and knowledge exploitation subsystems of its innovation system, as envisaged by Cooke (2004). Concerning the extent to which state-of-the-art approaches to innovation support, such as differentiated knowledge bases, related variety and distributed knowledge networks, have been reflected in designing Prague’s innovation strategy, we can conclude that none of these concepts was seriously considered. On the contrary, the Prague RIS can be considered a traditional policy document without any clearly outlined tailor-made strategy.
The situation has evolved very differently in the case of the South Moravia Region. The regional government, established in 2001, soon became the key driver of the RIS. Initially, the strong commitment of regional government officials was motivated by socioeconomic problems and by the Lisbon Strategy, on the one hand, and by the initiative of a narrow group of local professionals who commanded state-of-the-art know-how based especially on their work experience abroad, on the other. Therefore, the core of the regional strategy centred on making the transition from an approach relying on the creation of jobs by attracting FDI to a more endogenous approach. The key measure was the establishment of the South Moravian Innovation Centre, which has since become a professional and committed institution responsible for implementing subsequent phases of the innovation strategy, based upon the gradually developing partnerships of key regional actors.
Owing to the personal connection of one of the RIS managers with the CRA project, a deliberate effort was made to transpose at least the main CRA concepts into the RIS. Whereas several policy initiatives were motivated by the concept of related variety, this was not the case with the concept of knowledge bases, which, so far, has not been explicitly applied. Instead, a strong sectoral focus of public support via the RIS is apparent, primarily targeting the life sciences. Several activities with tangible results focus on the integration of regional knowledge institutions into globally distributed knowledge networks (for example, the establishment of a joint clinical research centre with the Mayo Clinic in the US).
In Moravia-Silesia, the Regional Development Agency, established jointly by the state and by several regional actors in 1993, has become the most important institution in the region that is committed to the initiation and coordination of various activities that would transform this old industrial region. Nevertheless, at that time (1993), the region’s most important and successful development activity consisted of an exogenous low-road strategy of attracting FDI with low-cost inputs, which resulted in the creation of approximately 25,000 new jobs between 2004 and 2008. The situation changed after 2008, owing to reductions in FDI during the global economic crisis and to new opportunities to utilize EU Structural Funds for R&D&I infrastructures. The new regional political representation resulting from the 2008 regional elections is more focused on the promotion of innovation strategy. These factors – both external (the global crisis and the availability of Structural Funds for R&D&I) and internal (changes in political representation) – resulted in efforts to prepare a more endogenous regional development strategy and RIS 2. Despite recent significant efforts by several key regional actors, led by the Technical University of Ostrava (and supported by the RDA and local and regional authorities), to systemically enhance the regional innovation system, it is evident that the Moravia-Silesia innovation system continues to be subject (though at varying scales) to imperfections of all three of the types coined by Tödtling and Trippl (2005): lock-in of certain powerful regional actors, organizational fragmentation and even institutional thinness.
Nevertheless, in contrast to Prague, at least some theoretical concepts concerning innovation support have been recently addressed in Moravia-Silesia. The concept of related variety, stressing cooperation among cognitively close firms, has been addressed indirectly via support for several local clusters, but also through the RDA’s Clusternet initiative, which focuses on establishing contacts between clusters from different but related industrial branches. Similarly, propositions stemming from the concept of knowledge bases have been addressed only implicitly but, because industrial branches with a prevailing synthetic knowledge base clearly dominate the region, public interventions target this knowledge base in particular. In addition, during 2010, several policy initiatives were launched aimed at least partially at utilizing opportunities stemming from the concept of globally distributed knowledge networks.
The case of the South Moravia Region, in particular, demonstrates that state-of-the-art theoretical concepts can be very useful in at least two spheres related to innovation support. First, these concepts can aid in the design of more sophisticated innovation strategies, provided that the concepts are applied sensitively on the basis of a thorough understanding of the needs and challenges of regional actors, for both knowledge generation and knowledge exploitation subsystems. Second, these concepts can help legitimize, in the eyes of regional and city politicians, the allocation of public money to a less traditional but nonetheless needed sphere, provided that these expenditures quickly yield tangible results.
Finally, we turn to our attempt to answer the last and perhaps the most fundamental of our research questions, which moreover, is highly relevant from a policy perspective. That is, which are the key factors behind the profound differences in design and especially in the progress in implementation of regional innovation strategies in particular regions? Surprisingly, the best outcomes from regional innovation strategies were recorded not in Prague, which clearly has the largest R&D&I potential, but in one of the two regions that, during the transition period, were exposed to major development challenges, that is, in the South Moravia Region.
Thus, the comparative analysis of our three case-study regions suggests that significant results can be achieved (at least within a medium-term time span) only in cases in which the key actors are extraordinarily committed to achieving a desirable change or, more precisely, to setting the entire system into motion in a desirable direction, and where such efforts are not hindered by fundamental structural or institutional problems. In this context, one could even point to the favourable ‘constellation’ of key regional leaders that has emerged in the South Moravia Region. In addition, such a favourable ‘constellation’ should be supported by a professional intermediary organization(s) that would guarantee that projects supported with public money are not ‘blind’, but fit into a well-thought-out strategy that corresponds to the particular development context of the region in question, a context that can be revealed through properly designed and detailed research, preceding the strategy’s formulation. Therefore, soft factors, such as individual enthusiasm and willingness to devote time to acquiring knowledge and to building a network of relevant actors, seem to be decisive for success. This is related to the more general observation that, in contrast to a common perception among many decision-makers, in some cases (for example, in the case of technology transfer or incubation services) the major problem is not a lack of financial means but a lack of know-how and a lack of stable commitment from key actors.
Finally, the focus of our three case studies enables us to examine the relevance of at least the first axiom of the constructing regional advantage approach. This axiom, stating that regional advantage can be actively constructed or designed, provided the public sector (including universities) plays a dynamic role (European Commission, 2006), appears to be supported by both of our case studies in which public sector leaders committed themselves to support innovation (that is, South Moravia and Moravia-Silesia). Nevertheless, it should be stressed that this observation concerns regions that are not world or European innovation leaders, but that are catching-up regions without a tradition of innovation-related initiatives. Therefore, one must recognize that, under these conditions, it is relatively easy to achieve positive results of RIS when public support is starting, more or less, from scratch. Consequently, our results confirm that the CRA approach represents a suitable toolkit for regions that are, as yet, less successful in innovation. However, the success of its applications is conditioned by its ability to design a sophisticated strategy reflecting the unique potential and specific needs of regional actors, the leadership capabilities necessary to gain the support of key actors behind a shared vision and its ability to deliver expected results.
Footnotes
Acknowledgements
We thank the two anonymous referees for their insightful comments. The usual disclaimer applies.
Funding
This paper is the result of a collaborative project ‘Constructing Regional Advantage: Towards State-of-the-Art Regional Innovation System Policies in Europe?’ sponsored by Grant No. CRP/07/E005 from the Czech Grant Agency. The paper was finalized with support provided by the Ministry of Education, Youth and Sports of the Czech Republic, Project No. MSM0021620831, ‘Geographic Systems and Risk Processes in the Context of Global Change and European Integration’.