Academic journal article Innovation: Organization & Management

How Innovation Systems in Finland and Alberta Work: Lessons for Policy and Practice

Academic journal article Innovation: Organization & Management

How Innovation Systems in Finland and Alberta Work: Lessons for Policy and Practice

Article excerpt

Innovation - the introduction of new products and processes - facilitates human prosperity and well-being and is considered a significant driver of economic growth (Martin, 2012). Yet, the innovation process varies markedly in differ- ent countries and regions (Nelson, 1993), and scholars and policy makers want to understand why. Those studying innovation systems (e.g., Edquist, 1997, 2011; Freeman, 1987; Lundvall, Johnson, Andersen, & Dalum, 2002; Niosi, 2011) have identified organizations (such as firms, universities, research institutes, funding bodies) and institutions (e.g., routines, rules, laws, cultural norms and values) as important pieces of the puzzle and elements of innova- tion systems. Competency building and inter- organizational learning (Lundvall et al., 2002) and activities such as R&D, financing of innova- tions, and incubation (Edquist, 2011) have been added to the innovation systems approach to introduce dynamism to better explain and facili- tate the innovation process.

Despite recognizing innovation systems as dynamic, researchers view them as path depen- dent. Once organizations and institutions involved in innovation are established, they are assumed to 'lock in' and follow a trajectory that is difficult to change in the absence of external shocks (Carlsson, 2006; Edquist, 2011, p. 1732; Freeman, 1987), primarily due to a country's or a region's unique political and economic history (Nelson, 1993). Based on a historical compara- tive case study of two small innovation systems, Finland and Alberta, Canada, we argue that inno- vation systems do change and can be changed (Garud, Kumaraswamy, & Karnøe, 2010; Hart, 2009; Klochikhin, 2012). Understanding such change can be helpful to innovation practitioners and policy makers, particularly in avoiding piece- meal attempts at change, such as copying a single element from a different innovation system with the hope of facilitating innovation in another (Mowery, 2011; Stanley, 2007). Despite calls for research on change in and comparisons of innova- tion systems (Niosi, 2011), very few comparative studies exist (e.g., Akpolat & Chang, 2008), espe- cially those examining change over time (Edquist, 2011; Hart, 2009).

We chose Finland and Alberta for our compari- son for several reasons. First, Finland and Canada, and Alberta in particular, provide a good contrast. Finland, known as an innovation 'hot spot' (Kao, 2009), regularly places well in international com- parisons for innovation, whereas Canada tends not to do so well. For example, Finland placed third in the World Economic Forum Innovation Index in 2010-2011, while Canada was 11th of 15 countries (Tekes, 2012). Canada's rate of pro- ductivity growth - considered an indicator of innovation - trails the OECD average (OECD, 2012) and is commonly attributed to low busi- ness investment in R&D and lack of innovation (Council of Canadian Academies, 2009; OECD, 2012). Alberta, the most prosperous Canadian province, scores worst in productivity growth at a 0.8% annual increase 1996-2012 compared to 2.0% in Finland (Alberta Government, 2012).

Second, despite differences in innovation and productivity growth, Finland and Alberta have many similarities. They are similar in size - size of an innovation system has been found a rel- evant factor in the rate of innovation, and its inclusion in analysis has been encouraged (Hart, 2009, p. 653). In 2011, Finland had a popula- tion of 5.3 million and GDP of US$ 270 billion, whereas Alberta's population was 3.8 million and GDP US$ 295 billion.1 Both are sparsely popu- lated northern regions with abundant natural resources, although as its higher GDP suggests, Alberta's oil and gas have been more valuable than Finland's forests. Both innovation systems are also affected by the policies of the larger jurisdictions of which they are a part: The European Union and the Canadian federation.

Third, despite these similarities in regional or national characteristics, the two innovation sys- tems differ in the way they work. …

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