Measuring Innovation Capabilities in Southern and Northern Norway •
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STEP Working Paper ISSN 1501-0066 Thor Egil Braadland A-09 Measuring innovation • capabilities in southern 1998 and northern Norway Thor Egil Braadland STEP Storgaten 1 N-0155 Oslo Norway Working Paper prepared for the SMEPOL project Oslo, November 1998 Storgaten 1, N-0155 Oslo, Norway Telephone +47 2247 7310 Fax: +47 2242 9533 Web: http://www.sol.no/step/ STEP publiserer to ulike serier av skrifter: Rapporter og Arbeidsnotater. STEP Arbeidsnotater denne serien presenterer vi viktige forskningsresultater som vi ønsker å gjøre tilgjengelige for andre, men som ikke har en form som gjør dem egnet til publisering i Rapportserien. Arbeidsnotatene kan være selvstendige arbeider, forarbeider til større prosjekter, eller spesielle analyser utarbeidet for oppdragsgivere. De inneholder data og analyser som belyser viktige problemstillinger relatert til innovasjon, teknologisk, økonomisk og sosial utvikling, og offentlig politikk. STEP maintains two diverse series of research publications: Reports and Working Papers. STEP Working Papers n this series we report important research results that we wish to make accessible for others, but that do not have a form which makes them suited for the Report Series. The Working Papers may be independent studies, pilot studies for larger projects, or specific analyses commissioned by external agencies. They contain data and analyses that address research problems related to innovation, technological, economic and social development, and public policy. Stiftelsen STEP 1998 Henvendelser om tillatelse til oversettelse, kopiering eller annen mangfoldiggjøring av hele eller deler av denne publikasjonen skal rettes til: Applications for permission to translate, copy or in other ways reproduce all or parts of this publication should be made to: STEP, Storgaten 1, N-0155 Oslo Preface This paper has been prepared for SMEPOL, a joint research project between ge- ographers and economists in Austria, Spain, Italy, Denmark, United Kingdom, Netherlands and Norway. SMEPOL's target is to uncover best practises for re- gional growth policies through innovation in small- and medium-sized enter- prises. This report gathers statistical background material on industrial structure and innovation patterns in the two studied areas of Norway; five counties in south- eastern Norway and the three northern-most counties of Norway. The statistical material in this report has been assembled by Heidi Wiig, while Thor Egil Braadland has been responsible for writing up the report. Bjørn Asheim and Arne Isaksen are responsibles for the Norwegian part of SMEPOL, and they are also project managers for the European SMEPOL project. The core finance for SMEPOL is raised by the EU Commission programme Tar- geted Socio-Economic Research (TSER). The Norwegian part of the SMEPOL project is co-financed by the Norwegian Ministry of Local Government and Re- gional Development. iii Abstract This working paper looks at innovation capabilities in northern and southern Norway, focusing on indicators related to knowledge and technology creation and diffusion. The primary indicators used are education, R&D, product and process innovation and technology co-operation. There are distinct differences between the two regions. The industrial structure in Southern Norway reflects in many ways the industrialisation process the re- gion went through in the mid 1800s. The industrialisation in Southern Norway was socially and technologically similar to the industrialisation of England, with development of large factories and mechanical technology. Today, the area has evolved as a semi-urban district with several towns and large variations in in- dustrial activities, it has the largest population of the two regions studied here, it has more people in manufacturing industries, the firms in these counties spend more often money on R&D, they are more likely to perform technology co- operation, and they have access to population with an on average higher level of education, than firms in the north. Northern Norway, on the other hand, has - through political decision-making and an abundance of "house-hold friendly" natural resources - never been 'indus- trialised' in the same way as the south. In addition to infrastructural business sectors (as construction, hotels/retail and transport), Northern Norway has only one large industrial sector; fish processing. The region also has more small and medium-sized enterprises (SMEs) than the south, but at the same time more R&D institutes and colleges, more scientists, a university (in Tromsø) and more scientists per students than the south. In addition, firms from northern Norway rank higher than both the national average and southern counties in terms of performing process innovation. Although northern firms spend less on R&D, northern small firms are just as innovative as southern small firms. This report uses statistical information from Norwegian Enterprise Register, Statistical Yearbook from Norwegian Statistical Bureau (SSB), Ministry of Church, Education and Science (KUF), Norwegian Institute on Studies on Re- search and Development (NIFU) in addition to innovation data from the SSB R&D survey in 1995, to construct a basis for understanding the innovation ca- pability in these two regions. Keywords: Regional innovation systems; competencies; industrial structure; SME, Northern Norway; Southern Norway v Table of contents PREFACE .............................................................................................................................. III ABSTRACT .......................................................................................................................................... V TABLE OF CONTENTS ............................................................................................................VII LIST OF FIGURES ................................................................................................................. IX LIST OF TABLES ....................................................................................................................... XI MEASURING INNOVATION CAPABILITIES IN SOUTHERN AND NORTHERN NORWAY ....................................................................................................................... 1 1. Innovation capability ....................................................................................................... 1 2. Southern and northern Norway ................................................................................... 3 2.1. Population differences ........................................................................................................... 3 2.2. Firm size and employment ..................................................................................................... 5 2.3. Industries, employment and firms .......................................................................................... 6 3. Knowledge capital............................................................................................................. 8 3.1. Education levels ..................................................................................................................... 8 3.2. R&D ............................................................................................................................................ 11 4. Technology co-operation ................................................................................................ 16 4.1. Firms with more than 50 employees .................................................................................... 16 4.2. Firms with 10-50 employees ................................................................................................ 18 5. Innovation activities ...................................................................................................... 20 5.1. Innovation in firms with more than 50 employees................................................................ 20 5.2. Innovation in firms with 10-50 employees ........................................................................... 21 6. Analysis ....................................................................................................................... 23 6.1. Innovation and technology co-operation differences between small and large firms ........... 23 6.2. Innovation capabilities in northern and southern Norway ................................................... 26 6.3. Methodological remarks ...................................................................................................... 29 REFERENCES ............................................................................................................... 33 vii List of figures Figure 1: Innovation capability and relevant indicators for measuring technology and knowledge creation and diffusion. ........................................................................ 2 Figure 2: Basis information about southern and northern Norway. Source: SSB Statistical Yearbook 1997. .......................................................................................... 3 Figure 3: Share of employment with respect to different firm sizes in Norway, northern Norway and southern Norway, 1995. Source: Norwegian Enterprise Register. ......................................................................................................................... 5 Figure 4: Number of employees in privat sector industries in northern and southern Norway, and in manufacturing industries, 1995. Source: Norwegian