Innovating for a better world: examining regional policies in response to societal challenges

ABSTRACT

Innovation and technological advancements have always enabled individuals, companies, and regions to address societal challenges more effectively. Regional innovation policies have consistently supported and accelerated these advancements, playing an increasingly important role in promoting sustainable and responsible innovation in a changing world. Over the past decades, the Regional Innovation Policies Conferences have been significant events for researchers, policymakers, and practitioners. These conferences have provided a platform to discuss the strengths and weaknesses of existing policies and to explore new ideas and potential improvements. This special issue summarizes key contributions from the 16th edition of the conference, focusing on the role that regional innovation policies can play in addressing future challenges. It places particular emphasis on radical and sustainable innovation, and discuss the way European regions and clusters can remain innovative and competitive in the face of global rivalry.

KEYWORDS:

• Breakthrough innovation
• sustainable and green innovation
• regional and cluster innovation policies
• technological and global collaboration

Introduction

For more than a decade, the Regional Innovation Policies Conference has been a significant event for researchers, policymakers, and practitioners interested in regional innovation, development, and innovation policy. The 16th edition of the conference was held in Padova, during the celebrations for the 800 years of the University of Padova with the focus on ‘Radical and Sustainable Innovation in Clusters and Multi-Specialized Regions’. This theme is particularly relevant in the current era of grand societal change, where innovation policies must adapt to the growing need for sustainable and responsible innovation (Owen and Pansera 2019; Pacifico Silva et al. 2018). Therefore, this special issue discusses the crucial importance of innovation policies in the face of societal challenges and the critical role of regional innovation policies in promoting sustainable and radical innovation.

The importance of innovation policies in the face of societal challenges

The world is currently facing a series of complex challenges that require innovative solutions. Sustainability, climate change, poverty, inequality, and the COVID-19 pandemic are only some of the significant issues that policymakers and innovators must address (Asheim and Herstad 2021). Sustainable development goals have been established to provide a framework for addressing these challenges (Dugarova and Gülasan 2017). Innovation policies play a crucial role in meeting these goals, as they can promote the development of new technologies, products, and services that address societal challenges (Gerstlberger, Praest Knudsen, and Stampe 2014; Kanie and Biermann 2017; Van Der Waal, Thijssens, and Maas 2021).

Innovation policies have evolved significantly over the years. Early innovation policies focused primarily on promoting research and development (R&D) activities, without considering the broader societal implications of innovation. However, policymakers now recognize that innovation must be responsible and sustainable to achieve long-term benefits for society (Valdivia and Guston 2015). Innovation policies must, therefore, take into account the environmental, social, and economic impact of innovation. They must also promote inclusiveness, collaboration, and networking to ensure that innovation benefits all members of society.

The role of regional innovation policies in promoting sustainable and radical innovation

Regional innovation policies are widely recognized for their significant role in fostering sustainable and radical innovation (Nill and Kemp 2009; Truffer and Coenen 2012). Clustered and multi-specialized regions serve as crucial catalysts for innovation and economic development. (De Noni and Belussi 2021). These regions bring together a diverse range of stakeholders and actors, such as individual inventors, companies, universities, research institutions, and government agencies, all of whom require encouragement and incentives to collaborate effectively in promoting sustainable and radical innovation.

From this standpoint, policymakers have partly embraced the smart specialization framework to foster innovation within and across regions (Foray 2014). This framework entails identifying a region's strengths and concentrating on specific innovation areas with considerable economic and societal potential by drawing on entrepreneurial discovery process and technological relatedness concepts (De Noni and Ganzaroli 2023). However, policymakers need to extend their efforts beyond this framework to encourage sustainable and radical innovation (Boschma 2005; Fuchs and Shapira 2005). This entails offering incentives for breakthrough inventions, supporting exaptation opportunities, and fostering networking activities within and beyond regional innovation systems. Such measures will facilitate the creation of new technologies and processes that promote sustainability and social inclusivity.

The 16th Regional Innovation Policies Conference in Padova provided an opportunity for researchers, policymakers, and practitioners to discuss the role of regional innovation policies in promoting sustainable and radical innovation in clusters and multi-specialized regions. They were tasked with introducing new comprehensive approaches to promote networking and cooperation within and across clusters and regions, aiming to develop new capabilities for sustaining more path-breaking and sustainable innovation processes. Additionally, they were called upon to advocate for novel and unconventional innovation strategies, such as social innovation, exaptation, and retrovation. In this light, promoting collaboration among diverse actors and multidisciplinary perspectives engaging unexpected sources is not only essential for fostering knowledge sharing and the co-creation of new ideas, but it can also facilitate the transfer of knowledge and technology between advanced and lagging regions, fostering inclusivity and equitable development. In doing so, these efforts can cultivate conditions to transcend a linear innovation model and foster a more inclusive, sustainable, and innovative ecosystem considering the broader societal implications of innovation.

From this perspective, the conference provided a platform for exchanging knowledge and experiences involving researchers, policymakers, and practitioners from around the world to share their insights and perspectives on regional innovation policies, covering a wide range of related topics:

• The role of regional innovation policies in promoting sustainable and responsible innovation

• The challenges and opportunities presented by the current era of grand societal change

• The smart specialization framework and its potential for promoting innovation in regions

• The role of clusters and multi-specialized regions in driving innovation and economic growth

• Inclusive innovation policies that promote social inclusiveness and equitable development

• The transfer of knowledge and technology between advanced and developing regions

• The impact of innovation on the environment and strategies for promoting sustainability

• The role of collaboration and networking in promoting innovation in regions

This special issue synthesizes some of the most relevant contributions from this conference and underscores the importance of further developing the regional innovation policy framework by integrating innovation approaches with sustainability strategies. Despite the advantages of the smart specialization strategy, in fact, the escalating sustainability challenge suggests that the entrepreneurial discovery process could benefit from exploring less conventional innovation approaches and strategies. This involves rethinking the role of clusters and regions, as well as the roles of locally embedded leading companies and global leaders, not only to support innovation but also to facilitate the transition to a more sustainable global world. It entails expanding collaboration from advanced regions to less developed regions globally, focusing on finding global solutions to global issues. Additionally, it involves strengthening unconventional innovation approaches to develop sustainable innovations, including exploring opportunities through revisiting the past, reimagining existing applications, and tackling social challenges.

The first article written by Davide Parrilli (Paper 1) opens this special issue showing the evolution of cluster policies over a significant period of time (the last 30s years), from an initial approach of promoting hard networking and cooperation (to increase scale and scope economies within clusters) to the building of a novel framework based on the issue of smart specialization which implies favouring inter-regional coordination of industry and more specialization. Related to this we can find a related varieties approach, which supports the development of new capabilities. In the current period (2020s) the knowledge economy has come to the forefront. Continuous cluster policy evaluation is a mean to produce more effective and efficient regional government intervention. Moreover, the importance of social and environmental sustainability has indicated the problem of moving beyond the RIS approach encountering new factors and element for an equilibrated regional development. The public effort to increase innovation within cluster networks has not to be taken for granted, and must be continuously the innovation policy together with the evolution of the specific regional smart-spec strategies.

Silvia Rita Sedita’s contribution (paper 2), offers some deep insides on some novel innovation strategies, namely social innovation, exaptation, and retrovation, as pioneering modes of responsible innovation uniquely suited to address the prevailing societal conundrums. Responsible innovation can mitigate the drawbacks (or the dark side) of innovation and stimulate the development of novel technologies, new business models, and new production processes. Social innovation addresses not only economic but also social and environmental aspects of innovation. It explores novel approaches to societal challenges and encourages collaboration between various stakeholders to develop innovative solutions with a positive societal impact. Exaptation allows the reuse of knowledge or existing technologies for new challenges. It offers a sustainable approach by leveraging existing resources and knowledge, potentially reducing the need for extensive and resource-intensive research and development. Retrovation, or the reevaluation of past practices and technologies, can be another valuable source. It involves revisiting and modernizing proven, historical approaches that may have been overlooked in the pursuit of more recent innovations. This approach can offer resilience and sustainability in addressing contemporary supply chain challenges.

The article of Andrea Ganzaroli is focused on the entrepreneurial discovery process in the Smart Specialization Strategy (S3) policy framework (paper 3), which has been the European Commission’s flagship policy tool for driving growth, environmental transition, and social inclusion. It discusses the implication of these changes in the context of innovation gaps between knowledge-intensive and lagged behind regions in the EU. It advocates a process of collective experimentation and learning where serendipitous encounters or the accumulation of incremental learning can lead to innovation breakthroughs. Entrepreneurial discovery should be placed on a data-driven approach, tailored on the specificities of the local context, resources, actors, and technological trajectories developed in the past. The author defines this process as a ‘lean start up’. It is not a planned activity but a participatory mix of top-down and bottom-up experiments. This brings support to both related and unrelated smart specialization. In order to develop a local entrepreneurial discovery, policymakers should undertake a portfolio approach and support venture capitalists. The main idea developed in the paper is not to limit the new knowledge search to near areas of existing competences and capabilities but to develop ‘adjacent’ and novel technologies derived from the speciation tree of new possibilities.

For Haus-Reve Silje and Bjorn Asheim (paper 4), clusters can be considered change agents in aligning cluster policies with transformative actions, able to influence the innovation policy landscape. They propose a shift from an analytical ‘Porterian’ focus on industrial specialization towards a more integrated view of specialization and diversification. A more ‘diversified’ specialization can create the foundations for product differentiation, gaining competitive advantage. Their paper also focuses on the issue of global supply chain reshoring where strategies of near-shoring or re-shoring must be adopted by local firms to render clusters more resilient and sustainable. Numerous European examples are provided by the authors.

Sabbadin Elisa’s article (Paper 5) explores how local and global collaborations influence the technological competitiveness of European wind and solar energy clusters from 1998 to 2018. Positioned at the intersection of green transition and industrial cluster literatures, the study provides insights into collaborative patent outcomes among firms within and outside the clusters. Focusing on the Wind cluster in Navarra, Spain, and the Munich Solar cluster in Germany, the research examines spatial transformations of firms and networks in the renewable energy industry over time, challenging the assumption that extensive global collaborations are necessary for innovation. Instead, the article emphasizes the significance of not exclusively relying on global networks to bolster the competitiveness of high-tech clusters. By highlighting the efficacy of local partnerships and technologically aligned collaborations, it enriches the discourse on cluster dynamics, shedding light on how regional synergies can drive innovation within the renewable energy sector.

The Philip Cooke's paper (paper 6) represents a deep immersion on a very interesting topic: the dark side of entrepreneurial behaviour. He focuses particularly on large technological global leaders (Facebook, Google, Amazon, and Apple), and on the world of financial business services-KIBS, which help them to market manipulations, tax avoidance and tax evasion, and, generally speaking, inappropriate behaviours. They are well-known audit companies such as Ernst & Young, KPMG, and Deloitte. On one side, they offer business strategies that maximize company profits at the expense of the evolution of green and sustainable strategies, such as for instance, in the promotion of ‘fast fashion’, ‘over-tourism’ and ‘climate killer’ architectures, on the other hand they apply their knowledge and experience to manipulate reports, balance sheets, and company information, just to hide important information from the public scene. The paper contains a vast review of important international cases.

The article written by De Noni Ivan, Belussi Fiorenza, and Gu Yanting (paper 7), investigates the extent to which greenfield foreign direct investments (FDIs) can represent a bridge capable of stimulating technological collaboration opportunities between European regions and emerging countries. Utilizing a balanced panel dataset and focusing on European regions, the authors conduce a study that integrated the analysis of collaborative patent data and foreign investments with emerging countries. The analysis suggests the ineffectiveness of inward and outward FDIs per se and stress the mutually reinforcing effect of inward and outward FDIs to significantly enhance the technological collaboration between European regions and emerging countries. Considering the increasing technological capacity of emerging countries and the current low collaboration level with Europe, this means that European regional policymakers should encourage virtuous and engaging behaviours within hosting countries by reinforcing mutual greenfield investments between European regions and emerging countries.

The article of Hervas-Oliver Jose-Luis and Carles Boronat-Moll (paper 8), deals with the analysis of FDIs entry into industrial districts. The selected case is the ceramic tile district of Castellon (Spain). The important distinction discussed is between multinationals, which enter expanding business and operation by acquiring local firms, and those that are just expanding private equity funds (venture capital or buyout) which follows a buy-and-sell strategy, for the sake of maximizing profits in the short term. Positive and negative effects are scrutinized. Multinational investments can create challenges to local firms: they have in fact to compete against larger corporations bringing an existential threat to those lagging behind. The analysis of the questionnaire submitted to managers of the tile’s companies interviewed about the general feeling perceived in the case of foreign entry shows a positive (50.0%) and neutral (30.6%) opinion rather than a negative (19,4%) one. The motivation appears linked to cost-reduction, better managerial and economic decisions, synergies, more finance, and more internationalization. However, social capital and cooperation appeared not to be anymore important as in the traditional ways of doing things in the district. A negative aspect emphasized is the risk of offshoring the knowledge accumulated by firms in the district to other low-cost countries. Local firms are more skeptical about the impact of financial foreign investments, while they are positive about acquisitions by industry-related multinationals.

Luis Martínez-Cháfer, Fiorenza Belussi and Xavier Molina-Morales’ article (paper 9) represents a kind of involuntary confirmatory test article on the issue of multinational entry into mature industrial districts. It considers, again, the sector of tiles, studying, with the same methodological approach, the Italian (Sassuolo) and the Spanish district (Castellon). Because of the lack of data, the authors employ a sentiment analysis, based on a qualitative search strategy, to gather the general opinion of local actors (firms and local institutions) about the entry of foreign investments in the cluster, and the consequences that this entry may have had on local firms. In particular, the analysis referred to 35 investment funds and 38 MNE groups for the Spanish district as well as 6 investment funds and 28 MNE groups (included the leader of the district, Marazzi spa, which was acquired by the largest American competitor Mohawk) for the Italian one. The article shows a general positive view about the role of foreign investment (even though more positive in Italy than in Spain) able to provide financial resources in the districts and to introduce changes into the existing dynamics of knowledge exchange. However, this opinion changes based on the type of entry/acquisition. A clear difference emerges, in fact, between the entry mechanisms used by manufacturing MNEs and, in contrast, by financial investment funds. While the MNEs, motivations of entry were associated to a strategic decision of growth and specialization, financial funds aimed to obtain only short-term financial profits, with buying and selling decisions limited to 3-5 years.

The article of Sharon Mayho, Darren Mumford, Leanne Ellis, David C. Lloyd, Elizabeth C. Redmond and Nick Clifton (paper 10) explores the effectiveness of regional strategies aimed at enhancing ‘low-tech’ SMEs’ sustainable competitive advantage and innovation activities, in the food sector in Wales (UK). It utilizes the triple helix model to analyze these interventions, emphasizing the collaboration between government, academia, and industry. The food sector represents an ideal object where studying the innovation-focused regional development policies because of its global importance, related both to sustainability, health impact, and economic outcomes. This article uses a longitudinal case study approach, based on mixed-methods. It evaluates a series of programs over an extended period (12 years), all funded by the European Union via the Welsh Government. They notably improved product and processing innovation for SMEs, involving over 1800 new products, 2300 food safeguard initiatives, and supporting 64 new business start-ups.