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Southwest Norway - a Culture for Innovation? Soft Institutions and Regional Innovation

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Title: Southwest Norway - a Culture for Innovation? Soft Institutions and Regional Innovation


1
Southwest Norway - a Culture for
Innovation? Soft Institutions and Regional
Innovation
  • Rune Dahl Fitjar

2
Outline
  • Background for the project
  • Southwest Norway management culture
  • Indicators and comparisons
  • The relationship between soft institutions and
    innovation
  • Research questions, hypotheses and theoretical
    perspectives
  • Main findings

3
Background
  • Scenarios 2020
  • 2006 project outlining the past, present and
    future of regional development in four regions
  • Southern Norway
  • Dalane/Lister
  • Stavanger
  • Haugalandet
  • Conducted by IRIS (Gjelsvik, Nødland, Leknes and
    Holmen), Agder Research (Hidle) and Berrefjord
    Thomassen (Berrefjord, Thomassen and Dinesen)

4
Scenarios 2020 main findings
  • The Stavanger region as a model of
    innovation-driven regional development
  • The impact of cooperation
  • Private-public partnerships
  • Inter-municipal cooperation
  • Formal and informal networks
  • A set of regional values and attitudes serving as
    the basis for cooperation and innovation
  • See next slide

5
Values and attitudes
  • The Nordic Model
  • Egalitarianism, providing production of welfare
  • Trust, providing sharing of knowledge and
    information
  • Short distance to power, providing management
    based on participation and influence of workers
  • Inclusion, providing a wide basis of competence
  • Open-mindedness, providing flexibility, curiosity
    and the ability to change
  • Protestant work ethic, providing diligent and
    efficient workers who take personal responsibility

6
Attitudes of Regional Managers
  • 2007 project examining
  • whether the values and attitudes outlined by
    Scenarios 2020 are actually present in the four
    regions
  • the innovativeness of companies in the region
  • Based on survey data of regional elites
  • Businesses CEOs of companies with 5 employees or
    more
  • Public sector Senior officials in regional
    councils and schools
  • Politicians Representatives on municipal
    county Exec boards
  • The survey was completed in two stages
  • Telephone interviews (Oct/Nov 2007) 1670 in
    total.
  • Online questionnaires (Nov/Dec 2007) 706
    completed.

7
The sample
Haugaland Stavanger Agder
Telephone 329 684 585
Web 145 318 218
Public sect Politicians Businesses
Telephone 239 280 1151
Web 138 132 436
8
Attitudes of Regional Managers main findings
  • No major value differences between the four
    regions
  • If there is a regional management culture, it is
    common across Southwest Norway
  • Some indications of cultural cleavages with rest
    of Norway
  • Higher levels of trust, flexibility and openness
  • Lower levels of egalitarianism
  • An elite culture that differs from mass culture
    in the region
  • Lower levels of egalitarianism
  • Less respect for authority
  • Higher levels of flexibility and openness
  • A stronger presence of values and attitudes that
    are characteristic of the region

9
Regional Innovation Cultures
  • Project financed by the Stavanger Centre for
    Innovation Research
  • Purpose Examine the relationship between soft
    institutions, cooperation and regional innovation
    in Southwest Norway
  • Based on the data from the Attitudes of Regional
    Managers project, and testing key hypotheses of
    the Scenarios 2020 project
  • Conducted by IRIS (Fitjar) and LSE
    (Rodríguez-Pose)

10
Soft Institutions of Innovation
  • Innovation as a territorially embedded process
  • Need to understand social and institutional
    conditions of the space in which it takes place
    (Rodríguez-Pose and Crescenzi 2008)
  • Unique set of circumstances in each region
  • Institutions, policies, networks, social values
    and norms act as conditions rendering some
    courses of action easier than others (Morgan
    2004)
  • How do the soft institutions in SW Norway affect
    collaboration and innovation?

11
The Soft Institutions of SW Norway
  • Regional self-perceptions
  • The Harmony Culture
  • Intra-group trust and collaboration
  • Absence of conflict
  • The Open Port
  • Open-mindedness to foreign influences
  • Implementation of new ideas

12
Indicators of the Harmony Culture
  • Politicians and public sector managers trust in
    each other, themselves and business managers to a
    large extent
  • Business managers trust a lot more in each other
    than in the authorities
  • High level of agreement on the importance of
    maintaining regional employment rather than
    profit maximisation
  • Local authorities have a more positive perception
    of their relationship with regional businesses
    than do business managers
  • The differences between the three regions are
    small

13
Trust Most people can be trusted, agree
14
I trust politicians in this region, balance of
opinion
Trust politicians
Dont trust politicians
15
I trust public officials in this region, balance
of opinion
Trust public officials
Dont trust public officials
16
I trust business managers in this region, balance
of opinion
Trust business managers
Dont trust business managers
17
It is sometimes right to let employees get their
way even where other options would have been
better
Not right to let employees get their way when
other options are better
Right to let empl get their way
18
If employees participate in decision-making
processes, they often block the chances to reach
a decision
Employees often block decisions
Employees dont often block decisions
19
It is often easier to cooperate with local or
regional actors than people from other parts of
the country
Easier to cooperate with locals
Not easier to cooperate with locals
20
It is important to maintain employment in the
region, even if it should hurt the business
profits
Important to maintain employment in region
Business profits most important
21
We have good relations with businesses / with
local authorities, balance of opinion
Have good relations
Not good relations
22
We / Local authorities provide a good framework
for regional businesses / our company, balance of
opinion
Provide a good framework
Dont provide a good framework
23
Businesses / Local authorities are on our side in
developing the region, balance of opinion
On our side
Not on our side
24
Indicators of the Open Port
  • Some indications of a greater openness to new
    ideas and foreign cultures than the national
    average
  • The differences are partly, but not fully,
    explained by levels of urbanisation
  • Elites tend to be more open-minded than the
    general public
  • Public-sector managers and politicians tend to be
    more open to foreign cultures than business
    managers

25
The old and proven is usually better than
newfangled ideas, balance of opinion
The old and proven
Newfangled ideas
26
I need to improve my understanding of other
countries cultures, balance of opinion
Dont need to improve understanding
Need to improve understanding
27
I am most comfortable around people who are open
to change and new ideas, balance of opinion
Most comfortable around open people
Not most comfortable around open people
28
I wish Norway and Norwegians were more open to
the world around us, balance of opinion
Wish that Norwegians were more open
Does not wish that Norwegians were more open to
world
29
Work should always come first, even if that means
less leisure time, balance of opinion
Work should always come first
Work shouldnt always come first
30
The impact of the soft institutions
  • There are some indications that the Harmony
    Culture and the Open Port form part of the
    regional management culture in Southwest Norway
  • How does this affect innovation?
  • Do the managers values affect innovation?
  • Is collaboration helpful to innovation?
  • Do the managers values affect cooperation?

31
Research Questions
  • Does collaboration affect innovation, and if so,
    does the physical proximity of partners affect
    innovation?
  • Do soft institutional factors (regionalised
    values and attitudes) affect innovation?

32
The importance of collaboration
  • Collaboration matters for the innovative capacity
    of firms
  • Open innovation (Chesbrough 2003) External
    search for technology prior to internal RD
  • User-driven innovation (von Hippel 1986, 2005)
  • Creative Commons
  • Wikinomics (Tapscott and Williams 2006)
  • Value chains
  • The Strength of Weak Ties (Granovetter 1973)
  • Absorptive capacities (Cohen and Levinthal 1990)

33
Regional cooperation
  • The location of partners matters
  • Differences across regions in levels of economic
    development and innovation in spite of
    globalisation and the end of territory
  • Benefits of regional cooperation
  • Face-to-face contact (Florida 2005)
  • Relational assets, untraded interdependencies
    (Storper 1997)
  • The Associational Economy (Cooke and Morgan
    1998)
  • Non-substitutable locational assets (Brenner
    2002)
  • Territorially concentrated clusters (Porter 1990)

34
Global cooperation
  • The location of partners does not matter
  • The World is Flat (Friedman 2005) Innovate
    without having to emigrate
  • Benefits of international cooperation
  • Knowledge spillovers regardless of national
    borders (Audretsch and Feldman 2004)
  • Personal networks are increasingly international
    (Huber 2007)
  • Global value chains and production networks
    (Gereffi and Korzeniewicz 1994)
  • Regions as hubs

35
Hypotheses
  • H1 Collaboration with a wide range of partners
    has an impact on the innovative capacity of firms
  • H2A Collaboration within the region is most
    important
  • H2B Collaboration with international partners is
    most important

36
The social filter
  • Trust and open-mindedness as soft regional
    institutions in SW Norway
  • Values affect the absorption and diffusion of
    knowledge among businesses
  • Form part of regional social filter determining
    the innovation proneness of the region
    (Rodríguez-Pose 1999)
  • Technological learning capacity of firms in the
    region dependent on presence of innovative
    components in the social filter
  • Collective attitude towards innovation and social
    change form an important part of the filter
    (Crescenzi, Rodríguez-Pose and Storper 2007)

37
Innovation Proneness and the Social Filter
Rodríguez-Pose 1999 Innovation Prone and
Innovation Averse Societies
38
Trust and open-mindedness
  • Trust
  • Important for cooperative interaction (Fukuyama
    1995)
  • Promotes mutual assistance and diffusion of
    technical innovations (Putnam 1993)
  • Open-mindedness
  • Important for allowing ideas to develop
  • Realising potential in unexpected places
  • Accepting diversity of opinions and ideas
  • This affects capacity for
  • Product innovation
  • Radical product innovation
  • Engaging in collaborative innovation networks

39
Hypotheses (cont.)
  • H3 Trust and open-mindedness of the manager
    affects firms capacity for innovation
  • H4 Trust and open-mindedness of the manager
    affects firms propensity to collaborate with
    external partners
  • H5 Trust is more important for collaboration
    within the region, while open-mindedness is more
    important for collaboration with international
    partners

40
Analytical Model
  • Trust
  • General
  • Work-related

Cooperation
Innovation
Geographical orientation of cooperation
  • Open-mindedness
  • General
  • Work-related

41
Operational variables
  • Dependent variables
  • Product innovation
  • Has your company during the past 3 years
    introduced into the market new or significantly
    improved products (goods or services)?
  • Radical product innovation
  • Were any of these product innovations new to the
    market?

42
Measures of Regional Innovation
43
Regional Innovation Forms
  • Dominant forms of innovation
  • Innovation in-house
  • New products and processes are developed within
    individual businesses in the region
  • Innovation in collaborative networks
  • New products and processes are developed in
    cooperation between multiple partners
  • Innovation through adoption or assimilation
  • New products and processes are developed through
    copying and/or improving on someone elses
    innovations
  • What is the dominant form in SW Norway?

44
Innovation Forms in SW Norway
Products developed... Products developed...
mainly by our company 118 (53.4 )
in cooperation with other companies 81 (36.7 )
mainly by other companies 22 (9.9 )
N (Innovative companies only) 221
45
Operational variables (cont.)
  • Cooperation variables
  • Has your company cooperated with other companies
    and/or organisations on innovations over the last
    3 years? If so, what kinds of partners have you
    used and where were they located?
  • Three location types Local/regional, national
    and international
  • Seven partner types Other companies within the
    conglomerate, suppliers, customers, competitors,
    consultancies, universities and research
    institutes

46
Cooperation at different geographic levels
Geographical location of partner Used at least one partner Median no. of partners Mean no. of partners Std. dev. from mean
Regional 55 1 1.22 1.50
National 61 1 1.31 1.43
International 35 0 0.66 1.12
47
Use of partner types by geographical location
48
Trust dimensions created through PCA
General Eigenvalue 1.67 Rho 0.56
Factor loading Unexpl.
Most people can be trusted 0.34 0.80
I trust public officials in this region 0.66 0.26
I trust politicians in this region 0.66 0.26
Work-related Eigenvalue 1.22 Rho 0.41
Factor loading Unexpl.
I trust other business managers in this region 0.44 0.76
Right to include employees in dec-making 0.66 0.47
Right to let employees get their way 0.61 0.55
49
Open-mindedness dimensions created through PCA
General Eigenvalue 1.75 Rho 0.58
Factor loading Unexpl.
Most comf around people open to change 0.52 0.52
Improve understanding of foreign cultures 0.57 0.43
Wish Norwegians were more open to world 0.63 0.30
Work-related Eigenvalue 1.36 Rho 0.68
Factor loading Unexpl.
Work is what gives meaning to life 0.71 0.32
Work provides identity and belonging 0.71 0.32
50
Control variables
  • Managers level of education
  • Managers age
  • Company size
  • No. of company directorships held by manager
  • Share of company held by foreign owners

51
Two Models of Product Innovation
p lt 0.10, p lt 0.05, p lt 0.01
52
Introducing values and attitudes
p lt 0.10, p lt 0.05, p lt 0.01
53
Two Models of Radical Product Innovation
p lt 0.10, p lt 0.05, p lt 0.01
54
Introducing values and attitudes
p lt 0.10, p lt 0.05, p lt 0.01
55
Model of Innovation Networks
N 355, R2adj 0.08 Coeff. S.E. Beta
General trust -0.11 (0.08) -0.08
Work-related trust 0.18 (0.09) 0.11
General open-mindedness 0.21 (0.07) 0.16
Work-related open-mindedness -0.07 (0.07) -0.05
Education 0.07 (0.11) 0.04
Age -0.00 (0.01) -0.01
Company size (100s of employees) 0.15 (0.05) 0.16
No. of company directorships 0.08 (0.04) 0.10
Share held by international owners 0.01 (0.00) 0.10
p lt 0.10, p lt 0.05, p lt 0.01
56
Innovation Networks at Different Levels
N 355 Regional National Intnatl
General trust -0.00 -0.10 -0.06
Work-related trust 0.16 0.03 0.05
General open-mindedness 0.01 0.14 0.09
Work-related open-mindedness -0.08 -0.03 0.06
Education -0.27 0.18 0.15
Age 0.00 -0.00 -0.00
Company size (100s of employees) 0.11 0.17 0.10
No. of company directorships -0.03 0.07 0.04
Share held by international owners -0.01 -0.00 0.02
Adjusted R2 0.05 0.08 0.32
p lt 0.10, p lt 0.05, p lt 0.01
57
Conclusion
  • Nearly half the businesses in SW Norway involve
    external partners in new product development
    processes
  • The proximity of partners does not matter
    Cooperating with international partners is most
    helpful to the development of new products, as
    well as for radical product innovation
  • Work-related open-mindedness is helpful to
    product innovation
  • General open-mindedness of the manager is
    important when building an international network
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