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Open Innovation challenging traditional approaches to innovation and Knowledge Transfer – the issues at stake


Written by Begoña Sánchez and Hanna Kuittinen, TECNALIA R&I

Reviewed by David Walburn

 

Key definitions

The concept

How to implement it?

Step in the RIS process

What can be expected?

A quote

References

Expert's comments

 

Key definitions


  • Knowledge Transfer is the mediator between new knowledge generation (research activities) and economic activities where the new knowledge is converted to value (innovation in firms) (Holi et al., 2008). 
  • Open Innovation is understood as the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively (Chesbrough, 2006).
  • Co-creation can be defined as integration of entire innovation ecosystem to innovation process (Debackere et al., 2014).

 

The concept


New knowledge created through research and development (R&D) activities is commonly agreed to be the main driver of technological change and economic growth. The literature shows how R&D could be an important factor for innovation, but not the only one. From the linear view of innovation, the innovation system approach is more extended, where innovation does not happen in isolation, rather it is characterised by feed-back loops inside and outside the organisations, and more and more, with actors outside boundaries.

There are several ways to understand Knowledge Transfer and none commonly accepted. On top of this, each innovation system agent understands it differently; governments and end users need to know about the costs and benefits of that flow, firms need to know how they can respond to potential customer needs and how to transform these technologies into market-ready products. Technology can be also translated as a "product" easily transferable between actors without additional costs and then, the transfer of technology is a very simple process. But technology can also be equated with "knowledge" generated through research and innovation. Then, technology transfer is a more complicated and expensive process, where knowledge circulates and is processed very differently between them depending on the capabilities of learning, of absorption and the conditions of the environment. Although traditionally, the focus was more on the mechanisms for technology transfer in Europe, this idea has evolved into the transfer of knowledge and how to facilitate a more comprehensive communication between science and industry (Arnold, 2012). Knowledge Transfer can be thus, considered as a mediator between new knowledge generation and economic activities (Holi et al., 2008).

The Open Innovation phenomenon is not new, and it has at least been attributed to increased global competition, complexity of technology and faster innovation cycles, as this directly affects firms’ operations, competition and innovation both internally and externally (OECD, 2008). Fostered by Chesbrough, this concept is understood as the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively (Chesbrough, 2006).

Although, the collaborative dimension of innovative activities is at the heart of these concepts, what is important to understand is how firms absorb, use and transform this knowledge needed for innovative process. This is the so called “absorptive capacity” (Cohen and Levinthal, 1990) which in occasions could be a barrier to innovations.

Open Innovation and Knowledge Transfer are seen as the main tools for unloose the innovation potential and economic growth of Europe and the challenge nowadays is to build and fund an ecosystem for Co-creation, that is to say, a new Open Innovation paradigm. Co-creation refers as the integration of the entire innovation ecosystem to innovation process, figuring out existing and future challenges involving the society, though stable relations and in depth interactions over longer periods of time (Debackere et al., 2014).

 

How to implement it?


Although, all these concepts are recognised as key processes for innovation, research and development; the scenario to reach industry is quite complex and generally speaking, follows the subsequent steps: from R&D and science, through applications/technology to industry and market penetration. The leap from science to application marketed is the hardest one. Despite the investments made, the European Union is aware that we have not yet reached optimal levels of intensity of research, and technological development, especially when compared to the USA and Japan. In addition, the main problem faced by the European Union is how to transform and transfer the knowledge generated into products and services. This gap between basic knowledge generation and trading of products and services is known as the "Valley of Death"(EC, 2011).

The European Commission set up an Expert Group on Open Innovation and Knowledge Transfer at the end of 2012, aiming to develop a set of policy recommendations on Open Innovation and Knowledge Transfer. This report shows that Europe faces the challenges on how to create sustainable growth given the public and private debt and the impact of new emerging Key Enabling Technologies (KETs). The idea is to build an ecosystem where Open Innovation and Knowledge Transfer, or Co-creation, can thrive. For this purpose, the following actions are foreseen (Debackere et al., 2014):

  • Place Open Innovation and Knowledge Transfer in the spotlight.
  • Embrace innovative businesses; grow innovative markets, innovation hubs and networks.
  • Make Universities and Public Research Organisations more entrepreneurial.
  • Smart integration of capital into the ecosystem.

 

Step in the RIS process


Regional Research and Innovation Strategies for Smart Specialisation (RIS3 Strategies) are integrated, place-based economic transformation agendas that focus on key priorities, challenges and needs for knowledge-based development; that build on each country/region’s strengths, competitive advantages and potential for excellence; that support technological and practice-based innovation to stimulate private sector investment; that get stakeholders fully involved and encourage innovation and experimentation and that are evidence-based and include sound monitoring and evaluation systems. Thus, the policy rationale behind RIS3 is to make innovation a priority for all regions; to focus investment and create synergies; to improve innovation processes and governance as well as to get stakeholders more closely involved (EC, 2014).

Within this context, Knowledge Transfer and Open Innovation are required for all RIS3 steps (as shown in the figure below) as RIS3 process encompasses a structural reform to boost the business environment and innovation ecosystems in the regions. The RIS3 process opens up new opportunities for collaboration, as said, Open Innovation and Knowledge Transfer are seen as the main tools for launching innovation potential and economic growth of Europe. The challenge nowadays is to build the ecosystem and support the entrepreneurial discovery process ensuring favourable conditions for interaction among actors.

Figure 2: Steps in RIS3 process (EC, 2012)

Source: RIS3 Guide: How to develop Smart Specialisation Strategies, S3Platform

 

What can be expected?


The European Union is conscious of the existing gap among knowledge generation and transfer to market through commercial applications. This gap is the so-called as the "Valley of Death". The big challenge that Europe faces is how to cross this Valley in order to strengthening economic development. The High Level Expert Group[1] from the EC has also identified the major difficulties Europe has in translating its ideas into marketable products and thus, crossing the "valley”. For this purpose, the Group recommends a strategy comprising three pillars and focusing on key stages of the innovation chain to launch a virtuous cycle from the generation of knowledge to market with feedback loops from the market to knowledge generation consisting of:

  • Technological research.
  • Product demonstration focusing on product development.
  • Production pillar focused on world-class, advanced manufacturing.

The “three pillar” Valley of Death

 

Source: HLEG. Final Report, EC (2011)

 

A quote


“...corporate sector, financial institutions, local communities and their citizenshave no option but to advocate and to support an open, networked andcollaborative innovation-led growth on which, in different ways, their ownintellectual, operational and financial vitality will.” from Debackere, et all 2014

 

References


  • Arnold, E., Knee, P., Brown, N., Javorka, Z., Giarracca, F., Sidiqui, S. (2012), Knwledge Transfer from Public Research Organisations, Science and Technology Options Assessment.
  • Chesbrough, H.W., Crowther, A.K. (2006). Beyond high tech: early adopters of open innovation in other industries, R&D Management, Vol. 36, nº 3, pp. 229-236.
  • Cohen, W.M., Levinthal, D.A. (1990). Absorptive capacity: a new perspective of learning and innovation, Administrative Science Quarterly, Vol. 35, pp. 128-152.
  • Debackere, K., Andersen, B., Dvorak, I., Enkel, E., Krüger, P., Malmqvist, H., Plečkaitis, A., Rehn, A., Secall, S., Stevens, W., Vermeulen, E., Wellen, D. (2014). Boosting Open Innovation and Knowledge Transfer in the European Union, Independent Expert Group Report on Open Innovation and Knowledge Transfer for the European Commission.
  • European Commission (2011). High Level Expert Group on Key Enabling Technologies. Final Report.
  • European Commission (2014). National/Regional Innovation Strategies for Smart Specialisation (RIS3), Cohesion Policy.
  • European Commission (2012). Guide to Research and Innovation Strategies for Smart Specialisation.
  • Holi, Martin T, Rochana Wickramasinghe and Matthijs van Leeuwen (2008), Metrics for the evaluation of knowledge Transfer activities at universities. Cambridge: Library House.
  • OECD (2008). Open Innovation in Global Networks, Paris.

 

Expert's comments


This is an interesting paper with clear explanations about the issues it sets out to discuss. Anyone new to the territory and the challenges which the EU faces in trying to match the innovation record of the US and Japan will gain much benefit from the paper.

However, the paper is chiefly a further exposition of the problems which have concerned the European Commission going well back into the 20th century, and which were the drivers behind the Lisbon Agenda and now Europe 2020. So far, effective solutions have evaded policy makers. It would be encouraging to see more papers seeking these solutions rather than further analyses of the problems with which we are already familiar.

 

Mr David Walburn


 

After a career in business David Walburn joined Greater London Enterprise in 1986 where he was responsible for venture capital and other small business support, before becoming Chief Executive of the organisation. He was the Chair of the London Business Angels Network and played a key role in the setting up of the European Business Angels Network. He has worked with the UK government and the European Commission on developing public policy initiatives to improve the financing of small and medium-sized enterprises. He was the Chair of Capital Enterprise, the umbrella body for organisations supporting micro business development in London, until 2012.

For the last ten years he has been a Visiting Professor at London South Bank University where he headed the Local Economy Policy Unit and was the managing editor of the journal Local Economy.

He has served as President of EURADA, and been a member of a number of advisory bodies of the European Commission.  He has been an active member of the International Economic Development Council in Washington DC and has a wide range of international contacts with economic development organisations.

He continues to write and lecture on small business finance and regional economic development.

davidwalburn@europe.com



[1] Launched by vice-presidents Antonio Tajani, Neelie Kroes and Commissioner Maíre Geoghegan-Quinn on 13 July 2010. New High level Expert Group was inaugurated on 27th February 2013, by the same vice-presidents and Commissioner including Commissioner Johannes Hahn.

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