The National Innovation System Management Essay

The National intromission System Management EssayFirms expose blueprint an essential factor to increase sustainable profits and mart sh atomic number 18 delinquent to the rapid globalisation and commoditization in goods and services (Westland, 2008). Miozzo and Walsh (2006) besides state that trustys effectiveness in competitive inter field trade in goods and service depend on two factors, which beThe scale of RD and otherwise proficient activities.The way in which the available resources ar managed and organised twain at the level of enterprise and at the interior(a) level.Thus, National purpose System (NIS) go forth enable a country with limited resources to actualize rapid progress through suitable combinations of imported technology and local adaption and exploitation (Freeman, 1987). With these combinations, national firms pull up stakes transform to a market leader and countrys economy to flourish.Hence, in my essay, I will delimitate meaning of NIS, my a ccord of systemic aspect of noesisableness and dissertate the different institutions knobbed in NIS in section 2. Section 3 and 4 will discuss how fundamental fundamental fundamental fundamental interaction in NIS support come to the modernistic process of national firms with a case study of mainland China re in the altogethering system in section 5. Lastly, section 6 will provide a cobblers last of my findings, and the gaps determine for future look.National Innovation SystemSince the 1980s, dissimilar authors (Freeman, 1987 Lundvall, 1992 Nelson, 1993) analyze the concept of national innovation system (NIS) which is expendd as a of import conceptual modeling for analysing technological c been, and to lay the foundations to improve the frugal development of a nation. NIS bath be categorized under designate and broad definitions. The narrow approach (Lundvall 1992) is except be by some(prenominal) Nelson (1993) and Freeman (1987). Freeman (1987) defined NIS as The entanglement of institutions in the universe and orphic sector whose activities and interaction initiate, import, modify and diffuse bran- impertinently technologies and Nelson (1993) defined NIS as a inured of institutions whose interactions de confinesine the innovative procedure of national firms.Lundvall (1992) defined the broach approach of NIS by saying that NIS includes all split and aspects of the economic structure and the institutional bent-grass-up affecting learning as easy as search and exploring the resultion system, the marketing system and the system of finance present themselves as sub-systems in which learning takes place.To summerise all the definitions supra, I will use the definition by Metcalfe (1995). Metcalfe (1995) defined NIS as That set of distinct institutions which vocalizely and individually contribute to the development and distribution of new technologies and which provides the framework within which governments form and implement policies to influence the innovation process. As such it is a system of interconnected institutions to create, store and shipping the intimacy, skills and artefacts which define new technologies.This led me to understand that NIS is a system to manage innovation and the meaning of systemic aspect of innovation. The system consist of various actors and institutions which the main components of the system. The term systemic aspect of innovation refers to how all these actors and institutions interact with all(prenominal) other in comp some(prenominal) to implement NIS effectively. Innovation is based on learning by collaborating and interacting with organisations and not by innovating in isolation (Edquist 19977, p20-22). This is further supported by Fagerberg (2005) who emphasis the systemic aspect of innovation processes. Lundvall (1992) and Nelson (1993) withal stress that for innovative mental process to improve, it is necessary to understand the linkage among the instituti ons involved in the innovation process.Main Component of NISBefore we understand the interaction among institutions that is key in NIS, it is necessary to understand what argon the different institutions involved. However, the term institution is very subjective as different authors themselves have their feature definition. Nelson and Rosenberg (1993) defined institutions as organisations, whereas Lundvall (1992) defined institutions as the rules of the blue. This makes the understanding of institutions confusing. Therefore, to make a clear distinction for institutions in the essay, I shall use the definitions make by Edquist and Johnson (1997).OrganisationOrganisations are the formal structure where the players or actors in NIS are created with a purpose and coatings (Edquist and Johnson 1997 47). They are a total of four players (Pavitt. K and P.Patel, 1994 Capron et al., 2000).Institutions of Industrial RD (Capron et al., 2000). They are the line of reasoning firms who are t he major investors on question Development (RD) in each nation economy for technological wobble activities (Pavitt. K and P.Patel, 1994).Institution of education (Capron et al., 2000). They are the universities providing basic research for the business firms and related training to the undergraduates (Pavitt. K and P.Patel, 1994).Institutions of mankind/private research (Capron et al., 2000). They are the public/private institutions providing general education and vocational training for the work force (Pavitt. K and P.Patel, 1994).Institutions of technology bridging (Capron et al., 2000). They facilitate the interaction of institution in the innovation process to resolve mismatch or exploit the expiry of research performed by public research institutions to enhance the absorption power of real firms and uphold the creation of new-venture firms and university spin-offs.InstitutionInstitutions, on the other hand, are the rules of the game which consists sets of common habits, routines, established practices, rules, or laws that regulate the relation and interactions mingled with individuals, groups and organisations (Edquist and Johnson 1997 46) which emplacement the behaviour of firms and other organisations by creating constraints and/or incentives for innovation (North 1990) that affect learning, searching and exploring activities (Bozeman and Dietz, 2001). There are a total two institutions.Institution of policy formulation (Capron et al., 2000). They are the government bodies performing a variety of activities to promote and regulate technological change (Pavitt. K and P.Patel, 1994).Institution of promotions of entrepreneurship (OECD, 1999). It is the ethos, culture, and attitude towards entrepreneurship and happen taking that wad have an important influence on the innovative executing of firms (Miozzo and Walsh, 2006).Interaction of organisations and institutions in NISIn the past, NIS takes the form of a one-dimensional model in acquaint ance flow (Stoke, 1993). However, thither are limitations to the elongate model. This is because, in practice, ideas innovation derives from various sources and can be from any window pane of stage in the linear model. Further more, OECD (1997) said that innovation occurs from complex interaction between institutions instead in a linear sequence alter knowledge flows to other institutions.As economic activities are becoming more knowledge-intensive, the success of firms, irrespective of size, depends on how effective it is in gathering and utilizing knowledge from various institutions. OECD (1997) identified four main interactions that occur within NIS. Chang and Shih (2004) made some changes to the main interactions identified in OECD (1997). They combined the concept of vocalise industry activities and public/private interactions and named it as RD collaboration, retained technology diffusion and personnel mobility, and added a new interaction called informal interaction. Lund vall (1985) excessively identified the user-producer interaction. Appendix 1 summarizes the main components of institutions and the interaction among institutions which are discussed below.RD CollaborationThe benefits of joint activities and public/private interaction have provided the firms a competitive favor and a positive effect on the firms innovative cognitive operation. This is proven by several empirical studies from Klomp and van Leeuwen (2001), Janz et al. (2003) van Leeuwen (2002), Loof and Heshmati, (2002), Criscuolo and Haskel (2003) and Faems et al. (2004).RD collaboration enables risk and follow sharing in times of uncertainty in technological developments ( cony andTeng, 2000Tyler and Steensma, 1995), shorter innovation cycles (Pisano, 1990), pooling of resources to achieve economies of scale and scope and gaining synergies from complementary human and expert assets (Kogut, 1988 Das and Teng, 2000 OECD, 1997) and increase firms competences and skills by monitori ng technology and market developments (Hamel, 1991 Roberts and Berry, 1985 OECD, 1997). RD collaboration also enables firms to discover new markets or market segment (Tether, 2002 Monjon and Waelbroeck, 2003). Furthermore, public/private interaction in RD collaboration enables firms to internalise and manage knowledge spillovers and carry away the negative effect of spillovers on RD (Amir, 2003 De Bondt, 1996 Kamien et al., 1992 Suzumura, 1992 Leahy and Neary, 1997). In addition, RD collaboration also enables knowledge to be transferred voluntarily to firms (Katsoulacos and Ulph, 1998).Informal InteractionInformal interaction unremarkably occurs in personnel communicating with one another in order to gain tacit knowledge and information more efficiently for riddle solving and learning which is beneficial for the firm (Chang and Shih, 2004). This is because individuals can elaborate or modify what was said to handle objections and misunderstandings effectively (Kraut et al., 1982 ). Furthermore, informal interaction can overcome different frames of reference or clarify ambiguous issues to change understanding in a timely manner (Daft and Lengel, 1986, p.560) and when coordination is need in times of uncertainty and equivocality (Daft and Lengal, 1986). This is proven by Argote (1982) literature as it shows that mess are more successful in performing their work.Technology spreadingTechnology diffusion is the dissemination of technical information and know-how from products developed by customers, suppliers, competitors and public institutions and the sequence adoption of new techniques and technologies by users (OECD, 1997 Tassey, 1992). Despite technology diffusion is slow-moving process, it is still important because the innovative performance of firms, regardless whether it is from manufacturing or service industries, depends on technology diffusion (OECD, 1997). This is because the innovative performance of firms depends heavily on innovation and produc ts developed elsewhere (OECD, 1997) to obtain the foundations for high-technology development in the firm (Hsu and Chen, 1998). military group MobilityAs tacit knowledge and skills are important to a firm, the mobility of personnel has become increasing important (Gruenfeld et al., 2000 Kraatz and Moore, 2000 Rao and Drazin, 2002). Personnel mobility is the movement of people and tacit knowledge that moves within industries and between public and private institutions (OECD, 1997 Chang and Shih, 2004). This whitethorn cause knowledge and skills to overlap which might result a firm in either reinforcing the firms current way of organizing or questioning the efficacy of existing organizing patterns (Tammy et al., 2003). In addition, Research from Argote and Ingram (2000) has shown firms knowledge depository library is initially facilitated by individuals. Hence, this determines that personnel mobility is important to the firms innovative performance.User-Producer InteractionProducers a nd users both have severe incentives to interact with one another (Lundvall, 1985). This kind of interaction is commonly found where the products are specialized and expensive capital goods. Producers can monitor process innovation within user firms and if it is successful, producers can use it to present to other users as product innovation. At the same time, users can monitor the competence of producers to identify which producers are competent to assist them in developing new product innovation. Hence, this helps to improve the innovative performance of firms as it enables them to produce new process or product innovation.Systemic blow in NISDespite that NIS approach is successful in various countries, there are still instances whereby systemic imperfections can occur jumper cable to lessen down the innovation as a whole. Literatures from Carlsson and Jacobsson (1997), Smith (1997), Malerba (1997), Johnson and Gregersen (1994) and Edquist et al. (1998) focused on systemic imp erfections, leading to a summerised list of systemic imprefectionsInfrastructural failure (Smith, 1997 Edquist et al., 1998) is the personal infrastructure that actors need to use and the science and technology infrastructure.Soft and big(p) institutional failure (Smith 1999 Edquist et al., 1998 Johnson and Gregersen 1994) that may regulate economic behavior and interaction which may stay innovation.Interaction failure (Carlsson and Johnson, 1997) from both strong and rachitic network failure can hamper innovation.Capabilities failure (Smith 1997 Malerba 1997) due to the neglect of capabilities to learn and absorb knowledge effectively resulting in lock-in with existing technologies and ineffectual(p) to use new technologies.Although there are four factors involved in systemic failure, I will only discuss on how interaction failure can affect the innovative performance of national firms of any sizes in relation to the essay topic.Interaction FailureThe innovative performance o f firms is dependent on the interaction between institutions to develop and design products (Smith 1999). In the next few sub-sections below, I will discuss how both strong and weak network failure can hamper innovation.Strong network failureCarlsson and jacobsson (1997) describe strong network failure happens when individual actors are guided by other network actors in the wrong education and consequently fail to supply each other with the required knowledge. These could be caused by the following factorsMyopia due to internal orientation. When relationships established for a long period of time results in trust relationship and habituation, this causes a certain degree of closure (Bogenrieder and Nooteboom, 2002). The group will be disinclined to exit the group or permit new entrants in leading to myopia and inertia (Nooteboom, 2000). This results insufficient attention to the development outside make a lock-in to existing products.Lack of weak ties. sluttish ties are the lin k to industries, educational and cultural background outside their inner circle. Granovetter (1983) and Burt (1987) emphasis the importance of weak ties leading to new knowledge and impulses or provide the knowledge that the individual firm lacks. These linkages can keep them updated with new developments and keep pass through on new knowledge, skills and resources.Dependence on dominant partners. The dependence may be due to asset specificity, switching costs or due to a lack of alternative partners that results in difficulty to find new partners for new innovation products or process.Weak Network failureWeak network failure (Carlsson and Jacobsson, 1997) happens when connectivity between complementary technologies and actors are poor, causing the possibilities for interaction learning and innovation to be under-utilised and failure to adapt new technological development. In addition, this will hinder the coordination of research movements and investment due to a lack of shared vision for future technology development.Taiwan Innovation SystemIn 1970s, Taiwan was an island nation with limited natural resources and a scarce domestic market. The government, local and foreign scholars recognized this problem believed they should set up an export-orientated strategy to develop high-technology industry to ensure a sustainable economy in Taiwan (Hsu and Chen, 2003)Hence, there was a joint effort by institutions and organizations to stimulate the development of high-tech industry. ST policies were formulated to assist the framework of Taiwan NIS (Hsu and Chen, 2003) shown in Appendix 2.Interactions in Taiwan NIS The Case line of business of IC IndustryTo illustrate the interactions in Taiwan NIS, this essay will be how the interaction of institutions (Appendix 3) led the growth of the IC industry in Taiwan (Appendix 4) to become the fourth largest producer in the world.As Fig. 3 shows, the Ministry of Economic Affairs (MOEA) is the main agency responsible for ind ustrial technology development in Taiwan. Their role is to transfer the research results to the private institutions for product development and commercialization through technical assistance, information diffusion and hands training. MOEA also works to strengthen the interaction between industry, government, universities and research institutions with the goal of optimizing the facilitation of industrial technology innovation. (Hsu and Chen, 2003)Industrial Technology Research Institute (ITRI) was promise by the government to act as the bridging institutions between industry firms and foreign public/private institutions. They interact with the private sector via technology transfer and collaboration to assist in technology development. National Science Council (NSC) also sponsored universities to collaborate with private sectors in joint research projects. By doing so, it provides technical assistance, technical information, and personnel training to the private sector. In addi tion, the introduction of new technologies, joint research, overseas investment and strategic alliance via the interactions between overseas corporations and research organizations also benefited the industry firms. (Hsu and Chen, 2003)Interaction Failure in Taiwan NIS The Case Study of Biotechnology IndustryDespite the successful effectuation of NIS in the IC industry as mentioned earlier, the Taiwans innovation system in Taiwans biotechnology industry, consisting mainly SMEs, is still fragmented as the current status of industry is still insignificant in the world ( sun, 2005).In Sun (2005) survey for the biotechnology industry, he identified several systemic failures. However, accord to the essay objectives, we will only focus the interaction failures that were identified. They are intimacy of public research made not available to public which prevented the transmitting of the knowledge to the industries to develop (Porter, 1990).Insufficient supply of scientific research caus ing a lack of linkage between firms and research institutes (Sun, 2005).Lack of cross-border RD collaboration prevented local biotech firms to have access to foreign knowledge (Bartholomew, 1997).Hence, all of these points mentioned pointed that a weak network failure, one of the causes for interaction failure, was the cause that prevented innovative performance of Taiwans biotechnology firm.ConclusionThis essay aims at discussing the interaction of institutions which will affect the innovation performance of national firms of any sizes. Based on the above discussion, I conclude that interaction of institutions can improve innovative performance of firms, but it can also hinder the innovative performance of firms as well.Strong interaction of institutions enables knowledge flows from one actor to another which is important to stimulate innovation. This enables firms to develop new technologies, products or processes to maintain its competitiveness for the firm or achieve cost saving s which are crucial for its excerption in the industry.At the same time, interaction of institutions can also hinder the innovation performance of firms. This is due to the factors mentioned above in interaction failure. Firms will not have access to new knowledge and technologies make them unable to innovate.Despite various literatures identifying the types of interaction among institutions, there is still room for advancement for future research in identifying the different types of interactions involved in institutions. check literature has been found to mention the types of interaction between government and the various organizations and institutions that helped to implement the preferred policies to enhance the innovative performance of firms. The interaction between them seems to be a one-way process. Hence, this calls for future research to identify what are the other interactions that can also help to improve the innovative performance of firms of any sizes.