Regional Innovation and Industrial Policies and Strategies - a Selective Comparative European Study
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REGIONAL INNOVATION AND INDUSTRIAL POLICIES AND STRATEGIES - A SELECTIVE COMPARATIVE EUROPEAN STUDY By Patricia Doherty B. A. (Mgmt.) Thesis submitted for the award of M.B.S. (Master of Business Studies) to the Dublin Business School, Dublin City University. October 1997. Supervisors: Mr. Joseph Davis, Senior Lecturer, Faculty of the Built Environment, Dublin Institute of Technology, Bolton Street. Mr. Gerry Sweeney, Managing Director, SICA Innovation Consultants. I hereby certify that this material which I now submit for assessment on the programme of study leading to the award of M.B.S. is entirely my own work and has not been taken from the work of others save and to the extent that such work has been cited and acknowledged within the text of my work. Signed : PryWuitx QoU/A-m Date : 6 ^ IQ? To the memory of Edith Acknowledgements There are a number of people without whose assistance this thesis could not have been completed. Firstly, I wish to express my thanks to my supervisors, Mr. Joe Davis and Mr. Gerry Sweeney, whose guidance, support and encouragement was vital to the completion of this study. I wish to thank Mr. Bob Kavanagh, Ms. Mary Sheridan, Ms. Christiane Brennan and all in D.I.T. Head Office for making this study possible. My thanks also, to the library and administrative staff of D.I.T. Bolton Street for all their help over the last two years. Sincerest thanks are due to all those in Denmark and the Mid-West region who gave their time for interview and special thanks is due to Mr. Billy Wixted, from Forbairt in the Mid-West region and Mr. Peer Kristensen and Mr. Claus Nygaard, from the Copenhagen Business School for their advice and help during the field research. To my fellow researchers in Bolton Street who always kept the spirits raised and to all those who gave their time in proof reading the thesis. Finally, special thanks to my parents for all their support and encouragement throughout my years at college. Table of Contents Acknowledgements........................................................................................ i Table of Contents............................................................................................ii List of Tables.....................................................................................................vii List of Figures..................................................................................................vii List of Maps...................................................................................................... vii Abstract.......................................... .................................................................. viii List of Abbreviations........................................................................................ix Chapter One: Introduction 1.0 Introduction.........................................................................................................2 1.1 Aims of the Thesis..............................................................................................3 1.2 Methodology Employed.................................................................................... 4 1.2.1 Secondary Research.................................................................................... 4 1.2.2 Primary Research.........................................................................................5 1.2.3 Analysis of Qualitative Research...............................................................8 1.2.4 Limitations of the Study............................................................................. 8 1.3 Thesis Structure and Content........................................................................... 9 Chapter Two: Literature Review 2.0 Introduction........................................................................................................ 13 2.1 Regional Disparities...........................................................................................15 2.1.1 Islands o f Innovation................................................................................... 16 2.1.2 Cohesion in the EU.......................................................................................17 2.1.3 Harmful Effects of the Single Market....................................................... 18 2.1.4 The Role for Regions in the E U .................................................................19 2.2 Addressing the Regional Problem....................................................................20 2.2.1 Learning Efficiency and Scientific Determinism..................................... 20 2.2.2 Culture..........................................................................................................22 2.2.3 Education System........................................................................................24 2.3 Small and Medium Sized Enterprises ........................................................26 2.3.1 Co-operation and Collaboration.................................................................27 2.3.2 Competition...................................................................................................28 2.3.3 Sophisticated Users.......................................................................................29 2.4 Industrial Policies..................................................................................................30 2.4.1 Skill-Based Models...................................................................................... 32 2.4.2 People............................................................................................................32 2.4.3 Branch Plants................................................................................................ 33 2.4.4 The Incentives to Invest............................................................................. 35 2.5 Financial Institutions...........................................................................................36 2.6 Systems of Innovation......................................................................................... 38 2.6.1 Regional Policies.......................................................................................... 39 2.6.2 National Advantages....................................................................................39 2.6.3 Diversity in Systems.....................................................................................41 2.7 The Role of Government.....................................................................................42 2.7.1 Their Respective Roles................................................................................ 43 2.8 Conclusion.............................................................................................................44 Chapter Three: National Systems of Innovation - Ireland 3.0 Introduction...........................................................................................................54 3.1 National Systems of Innovation......................................................................... 56 3.1.1 National or Regional.................................................................................... 59 3.2 Industrial Development Policy in Ireland..........................................................60 3.2.1 Industrial Development since the 1950’s.................. 63 3.2.2 Assessing the Public Role............................................................................70 3.3 Analysis o f the Elements of Industrial Policy................................................... 72 3.3.1 R&D in Irish Industry.................................................................................. 73 3.3.2 The Benefits of Inward Investment............................................................76 3.4 Education and Training...................................................................................... 77 3.5 Problems Encountered by Irish Indigenous Firms........................................... 80 3.6 An Innovation Culture....................................................................................... 82 3.7 Conclusion......................................................................................................... 83 Chapter Four: Regional Innovation - Theory and Practice 4.0 Introduction..........................................................................................................92 4.1 Regions in Europe..............................................................................................94 4.1.1 The NUTS Classification System,.............................................................95 4.1.2 Current EU Regional Initiatives............................................................... 97 4.2 Regional Systems of Innovation....................................................................... 99 4.2.1 Definitions and Diagrams.......................................................................... 99 4.2.2 Critical Factors in a Regional Environment............................................101 4.2.3 The Entrepreneurial Environment............................................................105 4.3 The Cultural Influence on Regions................................................................... 106 4.3.1 The High-Technology Path to Development...........................................107 4.3.2 Interpersonal Contacts and Networks.....................................................108 4.4 Local Government in Ireland..............................................................................109