University of Calgary PRISM: University of Calgary's Digital Repository Graduate Studies The Vault: Electronic Theses and Dissertations 2018-01-17 Inside the Israeli Innovation System: its origins, development and evolution Fischer, Alice Fischer, A. (2018). Inside the Israeli Innovation System: its origins, development and evolution (Unpublished doctoral thesis). University of Calgary, Calgary, AB. doi:10.11575/PRISM/5424 http://hdl.handle.net/1880/106343 doctoral thesis University of Calgary graduate students retain copyright ownership and moral rights for their thesis. You may use this material in any way that is permitted by the Copyright Act or through licensing that has been assigned to the document. For uses that are not allowable under copyright legislation or licensing, you are required to seek permission. Downloaded from PRISM: https://prism.ucalgary.ca UNIVERSITY OF CALGARY Inside the Israeli Innovation System: its origins, development and evolution by Alice Fischer A THESIS SUBMITTED TO THE FACULTY OF GRADUATE STUDIES IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY INTERDISCIPLINARY GRADUATE PROGRAM CALGARY, ALBERTA January 2018 © Alice Fischer 2018 ABSTRACT This dissertation examines the origins and evolution of the Israeli Innovation System, which propelled the development of the country’s economy, focusing on how it is responding to the new challenges of green energy. The research is interdisciplinary, involving documentary historical and policy research, in-depth interviewing, and analysis within the Systems of Innovation theoretical framework. The findings indicate that the main reasons for the successes of the system have been the commitment of government through policies and programs; the technological developments by elite military units; a military and business culture that embraces risk and entrepreneurship; the role of its universities in applied R&D; and the Russian Jewish immigration that brought a wealth of human capital. The findings also show that although the Israeli Innovation System has been very successful for the last 20 years, ‘innovation’ in the system itself is now required if its success is to continue. The main weaknesses of the Israeli innovation system include its narrow focus on research and development (R&D), and the practice of exporting new technologies instead of developing them into domestic industries. The conclusion is that culture and public policy are equally important in technology transfer and innovation, possibly making it difficult for other countries to copy the Israeli Innovation System. ii ACKNOWLEDGEMENTS My PhD research has been an amazing journey, because of Israel’s incredible achievements and because of my love for this country. I am thankful to many people, whom without their support I would have never achieved this huge step in my life. I am very grateful to Dr. Richard Hawkins, my main Supervisor, for his invaluable guidance and support. Very grateful to my Supervisory Committee, to Dr. Harrie Vredenburg, for his advise and very generous financial contribution to my research trip in Israel. Very thankful to Dr. Cooper Langford who often thought of me and sent me ‘life saving’ articles for my research, and for agreeing to have me as a teaching assistant. My deepest appreciation to Dr. Ehud Sharlin for joining my Supervisory Committee a couple of years ago, as required by the Interdisciplinary Graduate Program (IGP). I was also very lucky to study under the IGP program, with the support of Dr. Valerie Haines and Pauline Fisk and for the much needed scholarships I received from the department. Thank you as well to Dr. Lorry Felske for taking me under the Department of Communications, Media and Film after IGP closed. My deepest thanks to Ines Kubicek from the Faculty of Sociology, who became our point of contact as well, after IGP closed, for her invaluable help and kindness. My heartfelt gratitude to David Ince and Terry Ross, my university colleagues, who graduated before me, who always had the time to talk with me, provide advice, and even useful articles for my research. My deepest appreciation for the Israelis who very generously and graciously offered their time to be interviewed, notwithstanding their busy schedule. Without their knowledge and insights into the Israeli Innovation System I could have never completed this dissertation. My sincere ‘thank you’ to Uzi Arad for his advice and suggestions, which helped my interviews follow the right path. I am especially indebted to the researchers at the Samuel Neaman Institute, whom I interviewed and also consulted until the submission of my dissertation to the Defense Committee, and who kept me up-to-date on the latest events shaping the Israeli Innovation System. Their input helped to provide my research with a deeper perspective. iii To my beloved children Yamit and Oren, and to Kituna, my dear pet who was my sweet companion for several years during this journey, with lots of love and gratitude for their support during this special learning experience. for enrolling me in a Hebrew School ,ז״ל Thank you with all my heart to my parents in Mexico City, where I grew up, became fluent in Hebrew, and learned to love Israel, my Mother Country, with all my being. iv TABLE OF CONTENTS CHAPTER 1: INTRODUCTION .................................................................................... 1 1.1 ORIGINS OF THE ISRAELI NATIONAL INNOVATION SYSTEM ................. 1 1.2 DEVELOPMENT OF QUESTIONS ....................................................................... 3 1.3 INTERDISCIPLINARY APPROACH AND METHODS ...................................... 6 1.3.1 Case Study method ........................................................................................... 7 1.3.2 Grounded Theory method ................................................................................. 8 1.3.3 Review of historical and policy documentation ............................................... 9 1.3.4 Interviews ....................................................................................................... 10 1.3.5 Analysis .......................................................................................................... 13 1.3.6 Limitation of the Case Study and Grounded Theory Methods ....................... 14 1.4 KEY FINDINGS AND CONTRIBUTIONS ......................................................... 14 1.5 THESIS ORGANIZATION .................................................................................. 20 CHAPTER 2: LITERATURE REVIEW SYSTEMS OF INNOVATION THEORY ................................................................... 23 2.1 INTRODUCTION ................................................................................................. 23 2.2 BASIC THEORY OF INNOVATION .................................................................. 24 2.2.1 Joseph Schumpeter (1883-1950) .................................................................... 24 2.2.2 The Neo-Schumpeterians ............................................................................... 25 2.3 SYSTEMS OF INNOVATION ............................................................................. 27 2.3.1 National Innovation Systems (NIS) ................................................................ 28 2.3.2 Origins of National Innovation Systems ........................................................ 30 2.3.3 Catching-up through national innovation systems ......................................... 31 2.4 INNOVATION AT THE FIRM AND INDUSTRY LEVELS ............................. 34 2.4.1 External direct and indirect sources of innovation ......................................... 34 2.4.2 Firm Size......................................................................................................... 36 2.4.3 Incremental and radical innovations ............................................................... 36 2.4.4 Innovation by the public sector ...................................................................... 37 2.5 TECHNOLOGY-PUSH AND MARKET-PULL CONCEPTS ............................ 38 2.5.1 Technology-push innovation .......................................................................... 38 2.5.2 Market-pull innovation ................................................................................... 39 2.5.3 The coupling model of innovation.................................................................. 39 2.5.4 The integration and parallel development models of innovation ................... 40 2.5.5 Internal characteristics of the firm .................................................................. 41 2.5.6 External environmental characteristics of firms ............................................. 42 2.6 GOVERNMENT SUPPORT POLICIES .............................................................. 42 2.7 BASIC OR PUBLIC RESEARCH ........................................................................ 44 2.8 RESEARCH AND DEVELOPMENT (R&D) ...................................................... 47 2.9 INTELLECTUAL PROPERTY (IP) ................................................................... 48 2.9.1 Patenting and licensing ................................................................................... 48 2.9.2 University patenting ....................................................................................... 52 2.10 GREEN TECHNOLOGY INNOVATION ........................................................... 54 2.10.1 Innovation in the fossil fuel industry .............................................................