Incremental Innovations in a Regional Network

Regional economies prosper and grow differently. However, there is a general consensus that knowledge and innovation are the major drivers of competitiveness and economic growth. Using the regional innovation system approach, we realize that there is an uneven geographical distribution of innovation and knowledge generation. This influences the innovation capabilities of regions differently. The geographical scale of a region influences knowledge creation and exploitation of its economic potential. The region needs to have local resources that need to be combined with the world-class knowledge necessary make it competitive. According to the innovation systems approach, innovation is the basis of forming a competitive economy. This diversifies competition from pricing to other aspects like the improvement of products, marketing strategies, as well as increased learning and innovation (Shearmur, Carrincazeaux, and Doloreux 2). This gives greater importance to innovation in promoting knowledge and resources to improve value. The innovation model is no longer liner, but it recognizes the complexity and interaction of cumulative knowledge and learning that involves multiple players. Reliance on research and development does not simulate regional economic growth. The collected information must be appropriated and applied to create quality products and services for the market. The impression about innovation is that multiple interdependencies and actors have to coordinate to realize development. The focus of development should not just be on research and development but sufficient circulation of knowledge in all the areas that generate innovation. For innovation to be effective, it is important that the region has other infrastructures for support. Innovation could become instinct without an appreciation of the fact that economies and technology are dynamic in their evolution.

Regional Innovation Systems

The concept of regional innovation system gained popularity in the 1980s after the rediscovery of industrial districts with the success of these regions resulted from flexible production systems and inter-firm networks. This led to external economies of scale that emphasized the importance of knowledge exchange and labor market development and supplies within the region. Space-specific factors are important in creating a competitive advantage to an organization. Knowledge, relationships and motivations are some of the resources that enable enduring competitive advantage (Asheim and Isaksen 77). The performance of innovation differs in different regions depending on various factors. The local and regional resources in some sub-national level are important in a firm’s effort to gain global competitiveness. The region becomes the basic component of necessary in understanding the dynamic global economy. When carrying out innovation, firms have to put in mind the regional resources unique to the local area as well as local cooperation. This forms the basis of regional innovation systems.

The development policies in Europe focus on two major fields, first, the research, innovation, and the innovative capacity of the specific regions. Secondly, there is a focus on the degree of competitiveness in production and European regional systems (Sabatino and Talamo 45). Development and competitiveness are necessary for innovation. Using the European Regional Innovation Scoreboard of 2016, we can be able to determine the degree of innovation in European regions. Comparing the 190 European regions of the European Union shows carried degrees of innovation performance in the regions. This is an indicator that the degree of innovation and the degree of competitiveness greatly influence development in different regions. Competitiveness is dependent on innovation in various ways. Innovation provides the strength for firms to engage in competitive economic trends. Through innovation, there is a need for more research and development, increase in technical and human skills for human capital, and consolidation of research centers and universities. This aims to create new knowledge that favors economic growth and development. The concept here is the cooperation among different institutions and the emphasis on new knowledge generation. Knowledge transfer and learning are possible in regions in geographic proximity with the necessary infrastructures and support system for knowledge generation. Transfer of knowledge over a distance faces several challenges, adding legitimacy to the concept of the regional innovation system.

The regional level is important due to three main reasons; first, it offers the regional governance structure. The region’s administration, legal structure, and institutional policies are important for development. Poor governance would discourage any form of investment and innovation in the region. The second importance of the regional level is long-term evolution and specialization of industries in the region. Industries that thrive in the region lead to the evolution and specialization in the specific industry than in other regions. The third reason for the regional level is the additional differences it brings in industrial structure. Our concentration of development should not only focus on the national level. The independent regions play a huge role in national development. We should assess the regional potential and its actual development in the individual regions and integrate to determine the national development. Learning institutions like universities also play a crucial role in providing technical know-how of coming up with new innovations (Markkula and Kune 10).

Incremental innovations in a regional network

Regions with innovation capability often remain market leaders in carrying out their businesses. For instance, the Sunnmore region thrived in shipbuilding due to the region’s innovation capabilities. An analysis of the ship manufacturing industry reveals that the interaction between user and manufacturer was one of the reasons the industry of shipbuilding thrived. Secondly, there were incremental innovations and the third reason was an exchange of local knowledge and lastly, there was cooperation of local organizations. This explores all the necessary requirements for innovation as elaborate in the regional innovation system. The interaction between the user and the manufacturer provided a chance for the manufacturer to know the tastes and preferences of the customers and build ships that need the needs. The needs and demands of customers keep on changing and the interaction led to the exchange of ideas on how innovation can be applied to achieve development. The interaction extends to the customers of the ships. This requires a conversation with sailors and other crew members. These groups are important sources of information in the design and actual building of the ships. The information they provide is feedback on the quality produced and any possible trends in the shipbuilding industry. People usually discuss and compare products in their daily routines. Such discussions offer a chance for the shipbuilders to integrate the ideas to manufacture the best ships with the desired qualities by the users.

Incremental improvement within the shipbuilding shop is another way in which the company attained innovation. As the engineers and workers keep working, they keep increasing their knowledge and competence as they share among themselves and make new discoveries. These innovations of finding out new ways to make better ships acts as a motivation for the workers to come up with better methods of making the best ships in the region. The industry benefits from the innovations and the community as a whole. The workers’ loyalty increases as they learn more skills in innovation. The commitment to produce the best products within the region sets in and this brings competition among firms that engage in shipbuilding. With the high spirits and the right attitude, the industry flourishes and so does the region due to small but consistent innovations.

Knowledge spill-over or exchange from other firms also provides a basis for innovation in the shipbuilding firm. There are different clusters of specialized firms within the industry. This gives room for some firms to consult and seek expert advice from specialized firms. This leads to knowledge spill-over due to the cooperation between two firms. There is a transfer of experience to other employees as they informally meet and share ideas concerning their working experiences. The shared information includes positive and negative experiences that the employees deal with at their respective firms and the general problems the industry faces. All these factors become possible due to location. A poorly developed region cannot have multiple firms of the same industry. The workers will then be operating in isolation without new experiences.

Cooperation through local organizations is another way in which innovation occurs. The local organizations include common colleges and associations that facilitate cooperation within the region. This leads to competence building and supports innovation on production. The associations provide vocational training among the employees, especially the engineers. The association will also promote common understanding in that the firms will agree on standard wages for their labor. This kills unfair labor competition that could see many workers leaving one firm to another one that pays higher wages than the rest.

Apart from spill-over knowledge, research and development is another source of innovation in most firms. Research and development activities are crucial sources of information concerning customer needs and how to fulfill the needs. Apart from relying on incremental innovations, some firms have research and development departments that cooperate with other technical institutes to produce products that suit international customer needs. This is an interaction of international innovation system that provides more knowledge and ideas than the regional innovation system. The extension of using global competence is necessary for the production of products that are at par with international standards (Freel 19).

The ubiquitous creation of new product innovations began in a single region in the Silicon Valley. This single region has been able to come up with new technological innovations that have changed the world in various aspects (Acs, Groot and Nijkamp 1). We credit all the introduction of computers, software, telecommunication equipment, semiconductors, and other innovations that are used all around the world today. The regional development of an area could have international development and economy. Therefore, more emphasis should be put on regional development to ensure that different levels of development are attained. The example of shipbuilding offers deeper insight into why regional competence is important in supporting innovation in different ways. The consistent factor in the example is that a region has to be technologically empowered for innovation to take place.

Some regions have the ability to generate high rates of radical innovation but others only manage incremental innovations. These differences occur due to differences in RIS (IRIS) configurations. There are institutional RIS and entrepreneurial RIS (ERIS). IRIS is best suited to promote incremental innovation because of the high interaction rate between use and producer. Additionally, this type of RIS supports industrial regulation and longer innovation perspectives. On the other hand, the ERIS offers good conditions that support radical innovation. New industries are likely to flourish under ERIS than IRIS. However, these types of RIS share some similarities in terms of their capitalistic approach to economies. At the same time, the national framework also influences regional development.

Regional challenges

Different regions face different challenges. The regions can be classified as agglomerations, traditional industrial regions, and peripheral regions. The rates of innovation in these regions differ. The agglomerations are metropolitan with many organizations that support regional innovations. There are learning institutions and sufficient facilities that support innovation. Additionally, the regions have policymakers that are well-versed with innovation. The regions form the ideal location for headquarters for most firms. The circulation of knowledge is rapid in such locations. Innovation is high in this location because it has the necessary equipment for innovation. In contrast, peripheral regions do not have the support of other organizations that can support innovation. Industries in the region and opt to source for the knowledge from external sources. From this analysis, it indicates that less developed regions struggle to make innovations. Investment in innovation for the underdeveloped regions faces challenges due to the high cost involved in innovation. This explains why underdeveloped countries and regions in the world do not have any RIS. Developed continents like Europe have regional innovation systems that support regional development in various regions (Koschatzky and Sternberg 487).

The underdeveloped regions lack the supporting infrastructure that could support innovation. Instead, the available infrastructure lacks standard networking. This constrains the efforts of creating innovations because knowledge-generating systems are unreliable. There has to be interaction among the national level, regional level, and industrial sectors. The RIS in developing countries has low capabilities in terms of infrastructure and the research and development from trusted institutions (Hollanders 3). Lack of these essential facilities in innovation makes it hard for the regions to develop using the RIS framework. Globally, RIS depends on sufficient inflow of knowledge, external financial support, and human capital investment.

Poland is an example of a region that has benefited from the European Union due to various factors. The country boasts of its ability to avoid the 2008-2010 economic crises. The explanation of this endurance is that Poland has strong policies and numerous structural challenges. However, a major reason for the economic performance is the country’s proximity to Germany and rapid innovation (Katil et al. 1).  The country diversified its manufacturing and upgraded it to large-scale and good international relations. The existing innovation systems in Poland include institutional infrastructure to as well as the programs that support the innovation system. External sources of funding also contributed to the economic strength of Poland.

Innovation requires a combination of different types of knowledge apart from the tacit and codified knowledge, there is the differentiated knowledge base approach that is applicable in regional innovation. The differentiated knowledge comprises of analytical, synthetic, and symbolic knowledge. Analytical knowledge is derived from scientific conclusions. Innovations also bring new information from discoveries out of collaborations between firms and research institutions. On the other hand, synthetic knowledge refers to engineering knowledge, which is problem-related. There is the creation of new knowledge through interactive learning and synthesis of knowledge from suppliers and customers. Tacit knowledge refers to the practical skill and craft of production. The synthesis of all knowledge about a concept to enable the interpretation of norms and habits is symbolic knowledge. With this knowledge, designers can come up with new designs. Each of the illustrated types of knowledge has significance in different fields.

The significance of RIS increases as more regions succeeding due to knowledge exchange and interaction. The RIS is an embedded system to other networks within the region and outside the region. The geographical proximity facilitates many issues that support knowledge sharing and generation. Industries within the same region can have the employees meet face-to-face to and learn interactively from their respective experiences. However, to exchange knowledge does not have to make physical appearances. External networks can capture external networks through which information can be shared. There are a variety of sources for innovative firms and knowledge-based firms.

The regional innovative system has been widely used and accepted framework that stakeholders use in the design and implementation of innovative systems. Policy interventions in RIS make it possible to identify system failures and open possibilities for new and flexible policies. This is useful in demystifying the need of having a single policy that fits in all regions. Some of the system failures happen due to negative lock-in in industrial regions due to lack of connectivity. The solution to this challenge is to apply other policies that support different paths of development. There is a high tendency of interdependency for effective utilization of the RIS to enhance absorptive capacity of the firm (Lau and Lo 99).

By understanding and acknowledging the various factors influencing regional innovation enables us to come up with a broad mixed policy that is necessary for the development of a certain industry. Radical innovations require different types of knowledge for it to be successful. For instance, analytical knowledge only cannot support innovation successfully. There should be support from other related industries within the region for the innovation to be successful. Firms that operate in isolation are very likely to fail to achieve innovation. The regional innovation system approach explains in detail all the requirements needed for effective innovation within a firm or region. The approach also enables stakeholders to successfully solve problems in distribution or implementation of innovative systems.

Conclusion

From the discussion, we realize that innovation and regional characteristics play a crucial role in development. Likewise, with minimal or no development, innovation would be futile in a given region. A region has to contain other facilities that support knowledge sharing and development of new knowledge. Without the formation of new knowledge and ideas, there will be no innovation. Cooperation among industries and research institutions leads to the creation of new knowledge that is necessary for development. Developed regions with different industries are ideal for rapid innovation due to their proximity to each other. There is a sharing of knowledge that makes it easier for the firm to gain new knowledge and receive customer feedback. These are essential in ensuring that the firm produces better commodities that meet the customer needs and preferences.

Works Cited

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