Innovating Regions in Europe MLP Final Conference Regional Innovation Benchmarking

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Innovating Regions in EuropeMLP Final
ConferenceRegional Innovation Benchmarking

• Brussels, 13 October 2006
• Alasdair Reid
• alasdair.reid_at_technopolis-group.com
• www.technopolis-group.com

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Topics

• 1. What do we mean by regional benchmarking
• 2. Identify region-specific needs for innovation
  benchmarking
• The performance of the region
• The performance of institutions in the regional
  system of innovation
• The impact of innovation policies.
• 3. Defining main benchmarking themes
• What to benchmark !
• 3. Selecting appropriate indicators for each kind
  of benchmarking
• 4. A working example from a recent EU wide study

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Benchmarking method

• The scope of benchmarking methodology is to
  measure the performance of an entity (region,
  organisation, cluster) using indicators and to
  compare its performance with that of other
  entities.
• Two benchmarking methods
• One-to-one benchmarking comparing an entity
  with another one showing best practice, thus
  illustrating the deviation of the entity in focus
  from the organisation showing best practice.
• One-to-many benchmarking comparing an entity
  with the statistics of many other entities,
  better or worse, thus positioning the entity in
  focus into the range between the best and the
  worst performance.
• Regional benchmarking follows the second method.
  We usually compare a geographical entity (region,
  city, locality) with a sum of other regions.

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Steps for implementing regional innovation
benchmarking

• Selection of indicators, which characterise and
  explain the performance of a region in the field
  of innovation.
• Creation of a benchmarking database, which
  concerns the gathering of information on regional
  performance and the calculation of selected
  indicators for different regions.
• Production of the benchmarking data, which
  highlights the main statistics and graphs for the
  selected indicators (min, max, mean, mode,
  quartiles) and the position of the region in
  focus within the range of these statistics.
• Analysis and interpretation of statistics, which
  tries to find out the causes of the observed
  performance and the practices that are
  responsible for this performance.
• Suggestions for improvement, based on worldwide
  best practice, the benchmarking process concludes
  with the suggestion of measures which should be
  taken to improve the innovation performance of a
  region.

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Critical issues for successful implementation of
benchmarking

• Indicators are of major importance for the
  measurement of the innovation performance and the
  drawing of comparisons.
• In order to obtain reliable results, indicators
  have to be fully defined, in terms of concept,
  variables involved, calculation process, year of
  measurement, etc.
• Data should be based on official sources which
  guarantee the validity and uniformity of the
  information collected.
• The selection of the comparison group depends on
  the scope of the benchmarking exercise.
• A region may be compared towards all entries of
  the database or towards a group of regions
  characterised by specific criteria set (i.e.,
  geographical area, GDP, population, innovative
  products, etc.).
• Best practice is usually linked to the top
  performance identified among the regions of the
  database.
• Interpretation of results defining the causes of
  a specific regional innovation performance
  depends greatly on the expertise of consultants
  involved in the benchmarking exercise.

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The innovative performance of a region

• What we would like to benchmark
• Longer term trends against a group of key
  competitors (markets, technologies, regions etc.)
• Outputs of innovation activity and their impact
  on growth and jobs
• The interactions in (and outside) the regional
  innovation system on knowledge creation,
  diffusion and application.
• What we manage to benchmark
• Short-term changes against regions with similar
  statistical datasets
• Intensity of investment in RD and survey data on
  innovation activity.
• Stocks and flows...(sometimes)

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Benchmarking regional organisations

• organisational benchmarking in the regional
  context - two levels
• organisation level - embeddedness in the regional
  system, individual performance in relation to
  capabilities and instruments, etc.
• organisation system - role and task division in
  the system (functional analysis), flows and
  relations on the systemic level (e.g. demand and
  supply of innovation related services), influence
  on regional innovation system functioning.

Example of ST services and service providers
present in different phases of product development
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Benchmarking policy has to to fit into a wider
pattern of understanding and improving the
Innovation System
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A framework for evaluating regional innovation
policy
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What should a region benchmark ?
Adapted from Radosevic, Slavo (2004) 'A
Two-Tier or Multi-Tier Europe? Assessing the
Innovation Capacities of Central and East
European Countries in the Enlarged EU', Journal
of Common Market Studies, Vol. 42, No. 3, pp.
641-66, September 2004.
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Indicators for each type of benchmarking

• 1. Knowledge Creation
• 1.1 RD expenditures ( of GDP)
• 1.2 RD employees (fte per 1000 empl)
• 1.3 Concentration of patent inventors
• 1.4 Concentration of publications in Life
  Sciences
• 1.5 Concentration of publications in Nanosciences
• 2. Absorptive Capacity
• 2.1 RD expenditures by firms BERD ( of GDP)
• 2.2 RD expenditures for higher education HERD (
  of GDP)
• 2.3 Population with tertiary education ( of
  25-64 age class)
• 2.4 Population with secondary education ( of
  25-64 age class)
• 2.5 Population with secondary or tertiary
  education (sum of 25-64 age class)
• 2.6 Population with lifelong learning ( of 25-64
  age class)
• 2.7 IS_population ( of households using www)

• 3. Diffusion Capacity
• 3.1 Technology diffusion infrastructure
• 3.2 Employment in high-tech services ()
• 3.3 Employment in manufacturing industries ()
• 3.4 Employment in agriculture ()
• 3.5 IS_enterprises ( of firms using e-banking)
• 4. Demand
• 4.1 GDP in Euro per capita
• 4.2 Cumulated growth of GDP
• 4.3 Unemployment rate ()
• 4.4 Population density (persons/km2)
• 4.5 Change in population density
• 5. Governance capacity
• 5.1 Participation to EU initiatives
• 5.2 E-Government ( of firms using
  e-administration)
• 5.3 Web-presence of regions (availability of
  website)

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Overall systems health indicators?
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A working example from a recent DG REGIO study

• Strategic Evaluation on Innovation Knowledge in
  the Structural Funds 2007-13

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Question asked the main regional disparities
needs from an innovation perspective?

• No clear link between GDP and employment data
  when compared to innovation performance
• Top performers are not the same !
• Ireland is a good example vibrant economy - weak
  innovation system...
• On Innovation knowledge
• Depending on indicator top performers differs
  again
• confirms need to identify specific drivers for
  different types of regional innovation systems
• Public and private RD expenditure strongly
  concentrated
• Surprising results e.g. Warsaw and Prague
  reached 1 of public RD, Brussels hasnt...
• Growth in RD intensity (96-02) is also polarised
  and regional disparities important (Germany,
  Netherlands, etc.).
• Challenge is to identify what factors are
  driving innovation potential in different types
  of regions ! And develop policy adapted to the
  diverse regional innovation systems

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Selecting indicators factor analysis
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Four key factors for understanding regional
innovation potential

• Statistical analysis highlights four key factors
• Public knowledge
• Urban services
• Private technology, and
• Learning families.
• Almost half of difference in GDP per capita in
  215 EU27 regions is explained by these four
  factors!
• Also explain variance in unemployment!
• An interesting conclusion is that public and
  private RD are not closely related
• implications for policies based on the European
  paradox...
• Led to definition of 11 types of regional
  knowledge economies
• three types dominate in terms of share of EU27
  GDP learning regions, central techno, high
  techno.

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Regional scorecards - position region against
national/cluster average
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Would take an hour or two to explain them all...
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A typology of innovating regions...
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Finally focus on four Strategic groups of
innovative regions
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Four groups with different strategic challenges
(1)

• Global Consolidation
• the crème de la crème
• Copenhagen, Ile de France, London, Prague,
  Stockholm, Vienna...
• Well above average for all four factors
  GDP/capita, except private technology !
• Challenge to continue competing globally and
  generate new local clusters of activities from
  advanced tech.
• Sustaining Competitive Advantage
• Strong industrial learning regions
• Baden-Württemberg, Flanders, Ireland, Piemonte,
  Rhône-Alpes, Salzburg, Scotland......
• Strong on private technology and on learning
  families but weaker in public knowledge and urban
  services
• Challenge to stay at leading edge in
  core-technology capacities and move towards
  knowledge based services.

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Four groups with different strategic challenges
(2)

• Boosting entrepreneurial Knowledge
• Second-tier capitals regions with strong public
  research
• Athens, Berlin, Bratislavasky, Catalunya, Lisbon,
  Midi-Pyrénées, Warsaw, Wallonia.....
• Strong on public knowledge and relatively
  competitive in terms of urban services
• but need to boost private technology and in
  particular learning family drivers.
• Entering knowledge economy
• Convergence regions - southern and Eastern rims
  of EU.
• Eastern EU regions challenge is make rapid stride
  towards higher technology activities based on
  current skills base, increased investment in
  knowledge and attracting more research intensive
  industries.
• For southern cohesion and rural areas depends on
  access to improved ICT networks, innovative
  tourist products and reconversion of agro-sectors
  towards new products (biofuels).

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