Aims and strategies in regional innovation and growth policy: A Danish perspective

Abstract

Innovations and the capacity to innovate are crucial factors for regional development. Regional growth is not an exogenous or independent phenomenon, but more or less ‘derived’ from the ability of the local business to perform and generate income. For this reason, attention has been on the factors facilitating growth and the mechanisms stimulating innovative behaviour in large, small and medium-sized enterprises. This paper aims to analyse the changing development strategies and policy set-up in Denmark with regard to regional development and innovation. Core elements are to improve the abilities for knowledge dissemination, innovation, and local entrepreneurship. The analysis provides a closer look into the role of innovation in regional policy, and which type of policies can stimulate innovative activities in business and industry. Recent examples from Denmark representing new approaches to the implementation of innovative development measures are presented and evaluated. Finally, the main results are presented with special attention to organizational and functional aspects of a knowledge-based regional development policy. Among the results are that untraditional measures are needed in particular if innovation policy should reach SMEs and firms not located adjacent to knowledge institutions.

Keywords:

• regional growth drivers
• knowledge dissemination
• Triple Helix models
• national and regional systems of innovation
• participatory approaches to knowledge transfer

Acknowledgements

This paper is a revised version of a paper prepared for the International Workshop on Creativity and Smart Policy as Signposts for Innovative Development, 29 and 30 May 2006, at the Tinbergen Institute, Roetersstraat 31, Amsterdam, the Netherlands. The results presented are based on a joint research project conducted within the framework of the EU-funded REKNOMA project – Regional Knowledge Management, Promoting Regional Partnerships for Innovation, Learning and Development (Federighi, Cornett, and Ljung 2007). The author would like to thank the participants, the referees and the editor for their comments. The remaining errors and shortcomings are the author's responsibility.

Notes

Notes

1. In this project innovation has to be seen as both an independent variable (i.e. a growth driver in Figure 1) and as a dependent variable with regard to policies to stimulate innovative behaviour in the firm or educational sector.

2. This is in line with the regional growth strategies launched in the last couple of years in Denmark; see the Ministry of Economics and Business (2003).

3. One example is the International Danish Entrepreneurship Academy, aiming to stimulate teaching entrepreneurship on all levels of the educational system (IDEA 2006).

4. For a presentation of the model and discussion of different concepts related to the model, see Etzkowitz and Leydesdorff (2000).

5. For an overview and an introduction, see Cheshire and Malecki (2004, 256–60).

6. For a brief introduction to the principal aspects, see Arne Isaksen (2003), National and regional contexts for innovation. In Regional innovation policy for small-medium enterprises, ed. B.T. Asheim et al., 49–77. Cheltenham, UK & Northhampton, MA: Edward Elgar.

7. Of particular interest are the so-called Lisbon strategies of the EU to create the most competitive economy in Europe by 2010, and the Barcelona targets to spend 3% of GDP on R&D in the EU.

8. Overall Thomas Sch⊘tt (2006, 1001) summarizes the importance of entrepreneurship for economic growth for the developed part of the world the following way: ‘If we look at just the developed countries, …, we can also see the tendency, the more entrepreneurship there is, the faster will the economy growth. The tendency is less obvious, though, when we just look at the developed countries (the correlation is weaker, and statistically it is less significant’.

9. This type of start-up was quite important in the 1990s when programmes were launched offering to receive unemployment benefits during the start-up period (usually 2 years). Another start-up subsidy now faded out aimed to lower the price of home services for private customers.

10. For a discussion of the concepts of innovation, see section 2.

11. According to the initiative, four centres of competence were established in the university towns Århus, Aalborg, S⊘nderborg, and Odense (Ministry of Science 2002). Another example is the so-called IT corridor in Western Denmark. More questionable is the dissolution the TIC-net as a part of the overall reorganization of the business development service from 2004 (Ministry of Economics and Business 2003, 13). Both are examples of the role of information technology as a driver of economic growth according to the Danish policy.

12. See the White Paper, ‘Clusters of competency in Danish business, a new element in business policy’ (in Danish), Ministry of Industry (2001). Clustering is also considered to be a central tool in the new region's regional business development strategies. For an overview, see Cornett (2007).

13. For a recent comparative analysis of regional systems of innovation, see Asheim et al. (2003).

14. For an assessment of the centre periphery discussion, see S⊘rensen (1997).

15. A part of this strategy was to support regional development strategies with DKK 20 million (approximately EURO 3 million) over the next 4 years. For details, see an interview with the Danish Minister of Economic and Business Affairs in the Journal of Nordregio (Nordregio 2002). See also the overview of recent Danish initiatives in Table 3.

16. A study for the Danish Ministry of the Environment concludes that there are no unequivocal results with regard to the beneficial effect of clustering with regard to employment or as a shelter against the threats of globalization (Andersen, Bollingtoft, and Christensen 2006).

17. This tendency was also reinforced by the concepts of ‘endogenous development’ in the 1980s. See also the latest White Paper on a new regional growth strategy, in which a number of regions in Denmark are designated as priority areas (Ministry of Economics & Business 2003). An analysis of the industrial structure and efficiency differences in Danish regions by the Danish Economic Council concluded that from an efficiency point of view there seems to be no reason for promoting a specific industrial structure on the regional level (Danish Economy, Spring 2003, 213).

18. For a discussion and classification of clusters as an instrument in economic development policy, see Pickernell et al. (2007) who are distinguishing between eight types of clusters. The key criteria is whether the objective of clustering is economic (cost reduction), knowledge-based or a combination of the two.

19. For an overview of Danish examples of ‘clusters’ not solely based on geographical proximity, see Erhvervs and Boligstyrelsen 2003, addressing clusters based on competencies and commodities. The Economic Council has been a little more reluctant in a recent report with regard to a proactive cluster-policy (Danish Economy, spring 2003, 213ff.). In the same direction points a recent study of manufacturing industries in Denmark located in or outside a cluster. See Engelstoft et al. (2006).

20. From a principal point of view the advisory system has to be seen in a two-layer perspective. The most general concept is the business development system (‘erhvervsfremme systemet’), covering all kind of initiatives and programmes (i.e. the cluster stimulating programmes), and the more specific and concrete business advisory and service agencies (‘erhvervsrådgivning/service’) dealing with on-site issues. The actor-oriented approach sketched in Figure 2 is mainly referring to the second type. The operational activities are now concentrated at the municipalities and a ‘greenhouse’ in each region with local co-operation agreements (Danske Regioner and Kommunernes Landsforening 2007).

21. For a study of ‘growth entrepreneurship in Denmark’, see Sch⊘tt (2008).

22. For an elaboration on this aspect, see Etzkowitz and Leydesdorff (2000, 113ff).

23. For an evaluation of the cluster performance, see Andersen et al. (2006). For the official government statements on globalization, see Regeringen (2005) and Growthforum Region Southern Denmark (2007).

24. For an alternative view see Kaufmann and Tödtling (2000), who stress the importance of the co-operation between science and firms (p. 1): ‘The results demonstrate that partners from science are more important than the firms’ customers for the introduction of products which are new to the market’.

25. For further elaboration of the concept, see Cornett and Freytag (2002, 204–08).

26. In the 7th framework programme a particular focus is on the issue of research for the benefit of SMEs and also the problem of property right related to the co-operation between the knowledge sector and SMEs. Furthermore the specific Programme ‘Capacities’ also provides support schemes for ‘Regions of knowledge’ (European Commission 2006, 20–3).

27. This is in accordance with the rather vague concepts of clusters used in the recently launched development programmes. Here clusters are often only represented by few firms in the regional area, but linked to a knowledge or production system outside the region.

28. The organizational reform on the regional level in Denmark is mainly motivated by the needs to create sustainable units for healthcare and the hospitals, but regional business promotion and growth are also within the responsibility of the new regions.

29. The growth forum framework reflects on the governance level in many respects, the above discussed ‘Triple helix’ approach to regional innovation and development. The probable most important regulatory change is that from 2007 it is compulsory for the regions to implement a regional business development policy, and to dedicate financial resources to the field. For municipalities the old system based on voluntary commitment will continue. Overall it is worth to note that the Growth Forum law is based on ‘Triple helix’ type of principle with regard to participation and procedures. The crucial issue will be to create a working division between policy and framework creation on the regional level and implementation and consulting in the responsibility of the new larger municipalities. The above-mentioned regional ‘Greenhouses’ have a central role in this process, and at least in the region of South Denmark the ‘Greenhouse’ has co-operative agreements with all municipalities.

30. The Innovation Council is a broad-based partnership between the most important sectors of Danish society. Bringing together the private and public sectors, as well as educational and research institutions, the Innovation Council is working to develop a successful common strategy, which will help the development of existing and new companies, as well as lead to the development of a range of Danish-based world-class knowledge environments …. The Innovation Council was founded on the initiative of the House of Monday Morning by the Ministry of Economics and Business Affairs, the Ministry of Science, Technology and Innovation, the Danish Ministry of Education, Danfoss, FUHU, Novozymes and The Danish Bankers Association… The Innovation Council was established in October 2003 (Innovationsrådet 2006).

31. According to the Growth Report 2004 (Ministry of Economics and Business 2004), the total public and private expenditure for research and innovation was 2.5% of GDP (34 billion DKK) in 2002. For 2010 the official target is more than 3%.

32. See Cornett (2000) and Ministry of Industry (2000).

33. For an analysis and survey of the advisory service with special attention to start-ups, see Bager et al. (2006).

34. The headlines are ‘International energy region for renewable energy’ (4), ‘Logistic Competency Centre In Padborg/Flensburg’ (1), ‘The Collegium Mare Balticum’ (4), a proposal for university co-operation, ‘Bilateral network for food related competence development’ (3, 4), see also the foodture case in the REKNOMA project, and ‘Intensified co-operation in the field of tourism’ (2). The relevance and synergies of the projects for the Danish strategy (Landesregierung Schleswig-Holstein 2007).

35. Both the Swedish and the Danish cases presented in the REKNOMA projects illustrate how efforts have been implemented to strengthen the demand and customer aspects of the business service in specific projects, i.e. the Knitting Academy or Foodture and Aegion (Federighi, Cornett, and Ljung, 105–29 and 155–79).

36. A recent survey in Western Denmark and Northern Germany shows a rather mixed picture, but at least is seems that most companies using the advisory system are satisfied. For details, see Cornett and Soerensen (2005), and Cornett and Thaysen (2006).

37. This is very much in line with the reasoning in OECD (2001). See also Audresch (2005, 2006).

38. This is also one of the conclusions in Kaufmann and Tödtling based on an investigation of innovative activities in European regions in 1996: ‘As a consequence, firms cooperating with science increase their ability to realize more radical innovations and to introduce products which are new to the market. Science-business relations can occur between separate organizations (e.g. universities and firms) as well as within certain organizations (e.g. profit-oriented contract research institutions). Both forms are basically viable, important is the well-working inter-systemic exchange. It is therefore a reasonable target of technology and innovation policy to find ways to increase the interaction between industry and science. It is of crucial importance, however, that the systemic diversity is maintained in order to improve the innovative performance of the involved firms. As a consequence, reducing the barriers blocking co-operation between institutions belonging to the two systems should not try to make all the operating principles of science-linked organizations similar to those of the business sector’ (Kaufmann and Tödtling 2000, 19).