Knowledge and innovation in the Lebanese software industry

Abstract

The software industry is strongly influenced by knowledge and innovation. The ability to develop new solutions and services is considered essential to firm survival and growth. The innovation process, being long and costly, relies heavily on interorganizational relations and the interaction between different types of actors (e.g., intermediary support organizations, universities, R&D centers) that can advance knowledge transfer and innovation. Consequently, innovation is seen as an open and interactive process. Many researches related to economic geography have demonstrated that the different types of proximity can be an important tool to facilitate interactions and knowledge exchange. The Information and communication technology (ICT) sector is recognized as a key driving force for Lebanon’s economy. It is a fast growing sector with an estimated market size of USD 436.2 million in 2016. Furthermore, Lebanon is emerging as a leading exporter of software development and services in the region. The methodology of this paper is mainly based on a literature review and interviews based on semi-structured interviews, which were conducted face to face, or by phone. The first objective of this paper is to analyze the characteristics and dynamics of innovation within the Lebanese software industry. The second objective is to provide a framework to analyze how the different types of proximity affect the innovation and the interactions inter-actors within this industry. The paper demonstrates that innovation in the Lebanese software sector is often driven by the demand and the client’s needs and request. In addition, we noticed that in Lebanon, the local R&D structures or the universities do not support this sector. Furthermore, the support offered by the Lebanese government is still weak and this is manly related to the complexity of the political and social system in Lebanon.

Keywords:

• proximity
• innovation
• knowledge sharing
• software sector
• Lebanon

PUBLIC INTEREST STATEMENT

The ICT sector is a key driving force for Lebanon’s economy. It is a fast growing sector with an estimated market size of USD 436.2 million in 2016. Lebanon is emerging as a leading exporter of software development and services in the Middle East. The ability to develop new solutions and services in this sector is considered essential to firm survival and growth. The innovation process, being long and costly, relies heavily on interorganizational relations and the interaction between different types of actors (organizations, universities, R&D centers) that can advance knowledge transfer and innovation. The main objective of this research is to understand and analyze the dynamics of innovation in the software industry in Lebanon.

Notes

1. Founded in 1977, Istisharat is the oldest software development company in Lebanon dealing with the banking, insurance, and manufacturing sectors. Istisharat gained very successfully the foreign markets by exporting its products to Europe, the Gulf, and the USA.

2. Our questionnaires are based on our previous researches, which were part of the ISRN project: http://sites.utoronto.ca/isrn/; with some modifications.

3. For example, the Banque Du Liban defines SMEs as enterprises with less than LBP 15 billion in annual turnover, while Kafalat defines SMEs as having less than 40 employees (Ministry of Economy and Trade of Lebanon, 2014).

4. Examples: Law No. 240/2000 of 2000 on “Patents” (it covers enforcement of IP and related laws, industrial property, IP regulatory body, inventions, plant variety protection, transfer of technology and trade secrets, etc.)

• Law No. 75/1999, Articles 89, 91, and 92 on “Protection of Literary and Artistic Property”. It covers the copyright law

• Law No. 69/20 of 23 May 1969 on “Rights of Creators of Musical Works”

• Circular No. A/1/4 of 25 May 2006 on “Protection of Computer Programs and Fight against Piracy”

• Circular No. A/1/5 of 25 May 2006 on “Protection of Literary, Artistic, and Scientific Works” (Economic and Social Commission for Western Asia (ESCWA), 2016)

5. Lebanon’s higher education is the oldest in the region and dates back to 1866, when the American University of Beirut (AUB) was found under the name of the Syrian Evangelical College, followed by the University of Saint Joseph (USJ) in 1875, then by the Lebanese American University (LAU) in 1947, as a Beirut College for Women. The Lebanese University (LU) which is the only public university in the country was found in 1951. Before the civil war, Lebanon had one of the best university systems in the Middle East and was a magnet for foreign students. Today, Lebanon encompasses 42 higher education institutions (BankMed, 2014a).

6. For instance, the average monthly wage of a software engineer in Lebanon is USD 1,700, which is 60% lower than in UAE, 235% less than in Australia, and 341% lower than in the United States (BankMed, 2014b).

7. https://en.annahar.com/article/499996-building-lebanons-innovation-roadmap (15 May 2017).

8. For more details about the concept of entrepreneurship ecosystem, see Stam (2015), Spigel (2017), and Malecki (2018).

Additional information

Funding

The author received no direct funding for this research.

Notes on contributors

Tarek Ben Hassen

Tarek Ben Hassen received his PhD degree in Urban Studies from the University of Quebec in Montreal (UQAM), in Canada. He is currently assistant professor of Policy, Planning, and Development in the department of International affairs, College of Arts and Sciences in Qatar University. His major research interests include economic geography, innovation networks, knowledge-based, and creative economy.