Geography of Innovation

what is the fundamental difference between invention and innovation?

invention is the creation of something completely new. innovation is the improvement of an existing product, service or process, focusing primarily on its market aspects.

what are the four types of innovation identified by the OECD’s Oslo Manual?

1. product: new or significantly improved goods or services regarding technical specs, software or user-friendliness

2. process: new or improved production or delivery methods

3. organizational: new methods in business practices, workplace organization or external relations

4. marketing: new marketing methods involving changes in design, packaging, placement or pricing

contrast incremental vs radical innovation

incremental involves small, continuous improvements that do not change the business model. radical involves a drastic change that brings a new paradigm and modifies the existing business model

explain Schumpeter’s mark 1 vs mark 2

mark 1 (theory of economic development): characterized by “creative destruction”, ow barriers to entry and new firms as the primary innovators

mark 2 (capitalism, socialism and democracy): characterized by “creative accumulation”, where large established firms dominate and technological change follows stable trajectories

define absorptive capacity

the capacity of a firm to recognize, assimilate and exploit external knowledge. it is the ensemble of skills that allow a firm to exchange information truthfully in the market

what are the main types of network centrality?

• degree centrality: nodes with the highest number of direct links, indicates influence or strategic placement

• eigenvector centrality: measures influence based on being connected to other highly connected, high-scoring nodes

compare specialization (Marshall/Porter) vs diversification (Jacobs)

specialization: proximity favors intra-industry knowledge transmission and efficient labor markets, local competition drives growth

diversification: variety is the engine of innovation, a high number of different labor divisions increases the capacity for new products

distinguish between related and unrelated variety

related variety: knowledge flows between sectors with cognitive proximity (similar enough to understand, different enough to learn), leads to incremental innovation

unrelated variety: hosting escorts with no cognitive links, prevents “cognitive lock-ins” and fosters regional resilience by stabilizing the economy during industry-specific crises

what is the difference between local buzz and global pipelines

local buzz: spontaneous information ecology generated by co-location, sustained by frequent face-to-face contact and shared social norms

global pipelines: conscious, high-investment channels used to access distant knowledge, information is often more formalized or codified

describe the linear model of innovation

a sequential process moving in one direction: basic research → applied research → development → mass production → diffusion

what are the strengths and weaknesses of using patents as innovation indicators?

strengths: linked to commercial potential, clear classification systems, data is freely available

weaknesses: they indicate inventions rather than innovations, many are mediocre and some technologies are not patentable

compare the three types of knowledge bases

analytical: deductive, formal models, low sensitivity to distance

synthetic: inductive, problem-solving through experimentation, high importance of spatial proximity and tacit knowledge

symbolic:creative recombination of images and culture, highly tacit, vary high sensitivity to spacial proximity

what are the five dimensions of proximity?

1. geographical

2. cognitive

3. organizational

4. social

5. institutional

contrast STI vs DUI modes of innovation

STI (science, technology, innovation): based on scientific/codified knowledge, R&D investments and global pipelines, focuses on know-why and know-what

DUI (doing, using, interacting): based on learning-by-doing, informal interaction and tacit knowledge, focuses on know-how and know-who

what is the third mission of universities?

beyond teaching and research, it is the dissemination of university outcomes and knowledge to society

explain the triple helix model

innovation results from the overlapping interactions between universities, industry and government. actors often assume each other’s role, such as universities acting as entrepreneurs

what are the narrow vs broad views of universities in regional development?

narrow view: focuses on the economic/technological dimension (entrepreneurial university, RIS university) through patents, licensing and spin-offs

broad view: focuses on social and cultural dimensions (engaged university) through solving societal challenges and civic roles

what are common barriers to university-industry openness?

different cultures and lack of complementarity

what are the differing motivations for researchers vs firms in cooperation?

researchers seek personal/research income and cooperation. firms seek to solve specific problems, save costs and access human capital

what is the risk of having too much cognitive proximity?

it can lead to “cognitive lock-in” or a “competency trap” where lack of novelty prevents new ideas

why is tacit knowledge a driver for geographical clustering?

because the marginal cost of exchanging tacit knowledge is lower with frequent social interaction and face-to-face contact, which is facilitated by proximity

according to Freeman, what constitutes a national innovation system?

it is the network of institutions in the public and private sectors whose activities and interactions initiate, import and diffuse new technologies

what are the three main types of regional innovation systems?

1. embedded RIS: characterized by lower technological sectors where innovation is driven by synthetic knowledge and inter-firm learning rather than formal R&D

2. networked RIS: features stronger systemic linkages between universities and industries, supporting advanced technologies by combining analytic and synthetic knowledge

3. regionalized NIS: operates in high-tech sectors where R&D and scientific research play a prominent role, following a linear model of innovation

contrast the focus of entrepreneurial RIS vs institutional RIS

ERIS is market-focused, driven by venture capital and radical innovations, whereas IRIS is technology/production-focused, driven by interactive learning and incremental innovation

what is path creation in the context of regional development?

It is the birth and growth of completely new industrial sectors based on radically new technologies, scientific discoveries, or new business models

identify the four types of system. failures that can hinder an RIS

1. Capacity failures: actors lack adequate skills

2. Coordination failures: lack of interaction or excessive lock-in between actors

3. Institutional failures: formal and informal institutions hinder innovation

4. Infrastructural failures: inadequate knowledge or physical infrastructure

what are the four dimensions of technological innovation used to analyze sectors?

1. Opportunity: the potential for generating frequent technological advances

2. Appropriability: the ability of innovators to protect inventions and capture economic returns

3. Cumulativeness: the degree to which current innovations build upon past knowledge

4. Knowledge base: the specific characteristics of technological knowledge, such as tacitness or specificity

how do core sectors differentiate from user sectors?

Core Sectors drive technological progress and act as net sources of technology for the economy, while User Sectors primarily adopt technologies to drive demand rather than creating them

what defines a sectoral innovation system?

a framework that analyzes how innovation occurs in a specific sector by looking at its unique knowledge base, actors/networks, and institutions

distinguish between home-based exploiting and home-based augmenting

Home-based exploiting centralizes R&D at home and uses foreign locations primarily to adapt technology for local markets

Home-based augmenting uses foreign locations to access complementary knowledge and create new assets, often requiring geographical proximity to absorb tacit knowledge

what is strategic technology partnering?

a cooperative agreement between firms in different countries that substitutes or complements internal R&D to explore new technological opportunities through interactive learning

how is a global production network defines?

it is an organizational agreement comprising interconnected firm and non-firm actors, coordinated by a lead firm, producing goods or services across multiple locations

what is a lead firm?

a powerful transnational corporation that coordinates the network and exerts control over other participants through its dominant market position

what are the core conceptual elements of GPN 2.0?

• Value Creation: the economic value firms extract from their position in the network

• Power: relational and transactional dynamics involving dependency and control

• Embeddedness: how the network interacts with the social, economic, and political dynamics of specific places

differentiate between traded and untreated interdependencies

traded interdependencies arise from formal trading relationships (reducing transport/transaction costs), while Untraded interdependencies involve intangible benefits like specialized labor pools and tacit knowledge transfer from co-location

what is the role of strategic partnering in a GPN?

they are firms with relationships that extend beyond simple manufacturing to include knowledge exchange and joint product or technological development

how does materiality influence GPNs?

in networks based on natural resources, lead firms have less flexibility and control because they cannot fully predict or reproduce natural processes

what is strategic coupling?

the process where regional economies benefit from GPNs because local assets and actors align with the strategic needs of the lead firms, enabling local value capture

what are the three modes of regional coupling?

• Organic: regional actors actively build the network (high autonomy)

• Functional: regional actors proactively meet the network's needs (moderate autonomy)

• Structural: external actors integrate the region into the network (dependency)

what is meant by value capture in a GPN?

the objective of firms to retain surplus value within their organizational boundaries, which is influenced by power dynamics and their position in the network

what are regulatory landscapes?

the formal institutional frameworks (such as trade policies and labor regulations) through which a state governs the operations of GPN firms within its territory

how does the capability literature view the process of catching up differently from neoclassical theory?

unlike neoclassical theory, which assumes automatic convergence due to technology being a public good, capability literature argues that catching up requires specific "capabilities" and is not automatic

what is social capability according to Abramovitz?

the infrastructure and institutions required to support development, including education, business infrastructure, and honest government

what does technological congruence refer to?

the degree to which a follower country's characteristics (like market size and factor supply) match those of the leader country

what is the significance of absorptive capacity in economic development?

it is a prerequisite for upgrading from a passive role of implementing imported technology to an active role of introducing improvements and innovation

according to new growth theory, what drives long-run growth?

it depends on appropriability conditions and the enforcement of intellectual property rights, favoring large countries or small countries with open trade