southwest norway - a culture for innovation? soft institutions and regional innovation
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Southwest Norway - a Culture for Innovation? Soft Institutions and Regional Innovation. Rune Dahl Fitjar. Outline. Background for the project Southwest Norway management culture Indicators and comparisons The relationship between soft institutions and innovation - PowerPoint PPT PresentationTRANSCRIPT
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Southwest Norway - a Culture for Innovation?
Soft Institutions and Regional Innovation
Rune Dahl Fitjar
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Outline• Background for the project• Southwest Norway management
culture– Indicators and comparisons
• The relationship between soft institutions and innovation– Research questions, hypotheses and
theoretical perspectives– Main findings
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Background• Scenarios 2020
– 2006 project outlining the past, present and future of regional development in four regions:
• Southern Norway• Dalane/Lister• Stavanger• Haugalandet
– Conducted by IRIS (Gjelsvik, Nødland, Leknes and Holmen), Agder Research (Hidle) and Berrefjord & Thomassen (Berrefjord, Thomassen and Dinesen)
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Scenarios 2020 – main findings• The Stavanger region as a model of
innovation-driven regional development• The impact of cooperation
– Private-public partnerships– Inter-municipal cooperation– Formal and informal networks
• A set of regional values and attitudes serving as the basis for cooperation and innovation– See next slide
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Values and attitudesThe Nordic Model
– Egalitarianism, providing production of welfare– Trust, providing sharing of knowledge and
information– Short distance to power, providing
management based on participation and influence of workers
– Inclusion, providing a wide basis of competence– Open-mindedness, providing flexibility,
curiosity and the ability to change– Protestant work ethic, providing diligent and
efficient workers who take personal responsibility
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Attitudes of Regional Managers• 2007 project examining
– whether the values and attitudes outlined by Scenarios 2020 are actually present in the four regions
– the innovativeness of companies in the region
• Based on survey data of regional elites– Businesses: CEOs of companies with 5 employees or more– Public sector: Senior officials in regional councils and
schools– Politicians: Representatives on municipal & county Exec
boards
• The survey was completed in two stages:– Telephone interviews (Oct/Nov 2007): 1670 in total.– Online questionnaires (Nov/Dec 2007): 706 completed.
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The sampleHaugaland
Stavanger Agder
Telephone
329 684 585
Web 145 318 218Public sect
Politicians Businesses
Telephone
239 280 1151
Web 138 132 436
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Attitudes of Regional Managers – main findings• No major value differences between the four
regions– If there is a regional management culture, it is common
across Southwest Norway• Some indications of cultural cleavages with rest of
Norway:– Higher levels of trust, flexibility and openness– Lower levels of egalitarianism
• An elite culture that differs from mass culture in the region– Lower levels of egalitarianism– Less respect for authority– Higher levels of flexibility and openness– A stronger presence of values and attitudes that are
characteristic of the region
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Regional Innovation Cultures• Project financed by the Stavanger Centre
for Innovation Research• Purpose: Examine the relationship
between soft institutions, cooperation and regional innovation in Southwest Norway
• Based on the data from the Attitudes of Regional Managers project, and testing key hypotheses of the Scenarios 2020 project
• Conducted by IRIS (Fitjar) and LSE (Rodríguez-Pose)
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Soft Institutions of Innovation• Innovation as a territorially embedded
process– Need to understand social and institutional
conditions of the space in which it takes place (Rodríguez-Pose and Crescenzi 2008)
– Unique set of circumstances in each region– Institutions, policies, networks, social values and
norms act as conditions rendering some courses of action easier than others (Morgan 2004)
• How do the soft institutions in SW Norway affect collaboration and innovation?
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The Soft Institutions of SW NorwayRegional self-perceptions:• ”The Harmony Culture”
– Intra-group trust and collaboration– Absence of conflict
• ”The Open Port”– Open-mindedness to foreign influences– Implementation of new ideas
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Indicators of ”the Harmony Culture”• Politicians and public sector managers trust in each
other, themselves and business managers to a large extent
• Business managers trust a lot more in each other than in the authorities
• High level of agreement on the importance of maintaining regional employment rather than profit maximisation
• Local authorities have a more positive perception of their relationship with regional businesses than do business managers
• The differences between the three regions are small
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Trust:Most people can be trusted, % agree
0
10
20
30
40
50
60
70
80
90
100
Stavanger Norway
Public sect
Politicians
SMEs
Large comp
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I trust politicians in this region, balance of opinion
-40 -20 0 20 40 60 80
Agder
Haugaland
Stavanger
Public sect Politicians SMEs Large comp
Trust politiciansDon’t trust politicians
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I trust public officials in this region, balance of opinion
0 20 40 60 80 100
Agder
Haugaland
Stavanger
Public sect Politicians SMEs Large comp
Trust public officialsDon’t trust public officials
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I trust business managers in this region, balance of opinion
0 20 40 60 80 100
Agder
Haugaland
Stavanger
Public sect Politicians SMEs Large comp
Trust business managersDon’t trust business managers
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It is sometimes right to let employees get their way even where other options would have been better
0 10 20 30 40 50 60 70 80
Agder
Haugaland
Stavanger
Public sect SMEs Large compRight to let emplget their way
Not right to let employeesget their way when otheroptions are better
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If employees participate in decision-making processes, they often block the chances to reach a decision
-100 -80 -60 -40 -20 0
Agder
Haugaland
Stavanger
Public sect SMEs Large compEmployees oftenblock decisions
Employees don’toften block decisions
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It is often easier to cooperate with local or regional actors than people from other parts of the country
-30 -20 -10 0 10 20 30 40 50
Agder
Haugaland
Stavanger
Public sect Politicians SMEs Large comp
Easier to cooperate with locals
Not easier to cooperate with locals
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It is important to maintain employment in the region, even if it should hurt the business’ profits
0 10 20 30 40 50 60
Agder
Haugaland
Stavanger
SMEs Large comp
Important to maintainemployment in region
Business’ profitsmost important
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We have good relations with businesses / with local authorities, balance of opinion
0 20 40 60 80 100
Agder
Haugaland
Stavanger
Public sect and politicians Businesses
Have good relationsNot good relations
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We / Local authorities provide a good framework for regional businesses / our company, balance of opinion
0 10 20 30 40 50 60 70 80
Agder
Haugaland
Stavanger
Public sect and politicians Businesses
Provide a good frameworkDon’t provide a good framework
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Businesses / Local authorities are on our side in developing the region, balance of opinion
0 20 40 60 80 100
Agder
Haugaland
Stavanger
Public sect and politicians Businesses
On our sideNot on our side
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Indicators of ”the Open Port”
• Some indications of a greater openness to new ideas and foreign cultures than the national average
• The differences are partly, but not fully, explained by levels of urbanisation
• Elites tend to be more open-minded than the general public
• Public-sector managers and politicians tend to be more open to foreign cultures than business managers
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The old and proven is usually better than newfangled ideas, balance of opinion
-80 -70 -60 -50 -40 -30 -20 -10 0
Norway
Stavanger
Population Public sect Politicians SMEs Large comp
The old andprovenNewfangled ideas
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I need to improve my understanding of other countries’ cultures, balance of opinion
-20 0 20 40 60 80 100
Agder
Haugaland
Stavanger
Public sect Politicians SMEs Large compNeed to improveunderstanding
Don’t need to improveunderstanding
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I am most comfortable around people who are open to change and new ideas, balance of opinion
0 20 40 60 80 100
Norway
Stavanger
Population Public sect Politicians SMEs Large comp
Most comfortablearound open people
Not most comfortablearound open people
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I wish Norway and Norwegians were more open to the world around us, balance of opinion
0 20 40 60 80 100
Norway
Stavanger
Population Public sect Politicians SMEs Large comp
Wish thatNorwegianswere more open
Does not wish thatNorwegians were more open to world
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Work should always come first, even if that means less leisure time, balance of opinion
-40 -30 -20 -10 0 10 20 30 40
Agder
Haugaland
Stavanger
Total
Work shouldalways come first
Work shouldn’talways come first
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The impact of the soft institutions• There are some indications that ”the
Harmony Culture” and ”the Open Port” form part of the regional management culture in Southwest Norway
• How does this affect innovation?– Do the managers’ values affect innovation?– Is collaboration helpful to innovation?– Do the managers’ values affect cooperation?
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Research Questions”Does collaboration affect innovation, and if so, does the physical proximity of partners affect innovation?”
”Do soft institutional factors (regionalised values and attitudes) affect innovation?”
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The importance of collaboration• Collaboration matters for the innovative
capacity of firms– Open innovation (Chesbrough 2003): External
search for technology prior to internal R&D– User-driven innovation (von Hippel 1986, 2005)
• ”Creative Commons” • Wikinomics (Tapscott and Williams 2006)
– Value chains– ”The Strength of Weak Ties” (Granovetter 1973)– Absorptive capacities (Cohen and Levinthal
1990)
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Regional cooperation• The location of partners matters
– Differences across regions in levels of economic development and innovation in spite of globalisation and ”the end of territory”
– Benefits of regional cooperation:• Face-to-face contact (Florida 2005)• Relational assets, untraded interdependencies
(Storper 1997)• ”The Associational Economy” (Cooke and Morgan
1998)• Non-substitutable locational assets (Brenner 2002)• Territorially concentrated clusters (Porter 1990)
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Global cooperation• The location of partners does not matter
– ”The World is Flat” (Friedman 2005): Innovate without having to emigrate
– Benefits of international cooperation: • Knowledge spillovers regardless of national borders
(Audretsch and Feldman 2004)• Personal networks are increasingly international
(Huber 2007)• Global value chains and production networks (Gereffi
and Korzeniewicz 1994)• Regions as hubs
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HypothesesH1: Collaboration with a wide range of
partners has an impact on the innovative capacity of firms
H2A: Collaboration within the region is most important
H2B: Collaboration with international partners is most important
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The social filter• Trust and open-mindedness as soft
regional institutions in SW Norway – Values affect the absorption and diffusion of
knowledge among businesses– Form part of regional ”social filter” determining
the innovation proneness of the region (Rodríguez-Pose 1999)
– Technological learning capacity of firms in the region dependent on presence of innovative components in the social filter
– Collective attitude towards innovation and social change form an important part of the filter (Crescenzi, Rodríguez-Pose and Storper 2007)
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Innovation Proneness and the Social Filter
Rodríguez-Pose 1999: ”Innovation Prone and Innovation Averse Societies”
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Trust and open-mindedness• Trust
– Important for cooperative interaction (Fukuyama 1995)– Promotes mutual assistance and diffusion of technical
innovations (Putnam 1993)
• Open-mindedness– Important for allowing ideas to develop– Realising potential in unexpected places– Accepting diversity of opinions and ideas
• This affects capacity for – Product innovation– Radical product innovation– Engaging in collaborative innovation networks
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Hypotheses (cont.)H3: Trust and open-mindedness of the
manager affects firm’s capacity for innovation
H4: Trust and open-mindedness of the manager affects firm’s propensity to collaborate with external partners
H5: Trust is more important for collaboration within the region, while open-mindedness is more important for collaboration with international partners
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Analytical Model
Trust• General• Work-related
Open-mindedness• General• Work-related
Cooperation
Geographical orientation of cooperation
Innovation
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Operational variables
Dependent variables• Product innovation
– Has your company during the past 3 years introduced into the market new or significantly improved products (goods or services)?
• Radical product innovation– Were any of these product innovations
new to the market?
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Measures of Regional Innovation
431
(80.3 %)346
(19.7 %)85
Radical product innovation
431N
(47.3 %)204No
(52.7 %)227Yes
New products in the last 3 years
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Regional Innovation Forms• Dominant forms of innovation
– Innovation in-house• New products and processes are developed within
individual businesses in the region
– Innovation in collaborative networks• New products and processes are developed in
cooperation between multiple partners
– Innovation through adoption or assimilation• New products and processes are developed through
copying and/or improving on someone else’s innovations
• What is the dominant form in SW Norway?
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Innovation Forms in SW Norway Products developed...
mainly by our company 118 (53.4 %)
in cooperation with other companies 81 (36.7 %)
mainly by other companies 22 (9.9 %)
N
(Innovative companies only)
221
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Operational variables (cont.)Cooperation variables• Has your company cooperated with other
companies and/or organisations on innovations over the last 3 years? If so, what kinds of partners have you used and where were they located?– Three location types: Local/regional, national
and international– Seven partner types: Other companies within
the conglomerate, suppliers, customers, competitors, consultancies, universities and research institutes
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Cooperation at different geographic levelsGeographical location of partner
Used at least one partner
Median no. of partners
Mean no. of partners
Std. dev. from mean
Regional 55 % 1 1.22 1.50
National 61 % 1 1.31 1.43
International
35 % 0 0.66 1.12
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Use of partner types by geographical location
0
10
20
30
40
Inte
rnal
Supplie
rs
Custo
mer
s
Compe
titors
Consu
ltanci
es
Unive
rsiti
es
Resea
rch In
stitu
tes
% o
f co
mp
anie
s
Regional
National
International
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Trust – dimensions created through PCAGeneral Eigenvalue:
1.67Rho: 0.56
Factor loading Unexpl.
Most people can be trusted 0.34 0.80
I trust public officials in this region 0.66 0.26
I trust politicians in this region 0.66 0.26
Work-related Eigenvalue: 1.22
Rho: 0.41
Factor loading Unexpl.
I trust other business managers in this region
0.44 0.76
Right to include employees in dec-making 0.66 0.47
Right to let employees get their way 0.61 0.55
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Open-mindedness – dimensions created through PCAGeneral Eigenvalue:
1.75Rho: 0.58
Factor loading Unexpl.
Most comf around people open to change 0.52 0.52
Improve understanding of foreign cultures 0.57 0.43
Wish Norwegians were more open to world 0.63 0.30
Work-related Eigenvalue: 1.36
Rho: 0.68
Factor loading Unexpl.
Work is what gives meaning to life 0.71 0.32
Work provides identity and belonging 0.71 0.32
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Control variables
• Manager’s level of education• Manager’s age• Company size• No. of company directorships held by
manager• Share of company held by foreign
owners
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Two Models of Product Innovation
0.14 (0.08)
0.30** (0.13)
Model 2
488.64
Incl.
-0.03 (0.08)
National innovation partners
International innovation partners
495.11-2 log L
Incl.Controls
Local innovation partners
0.12* (0.07)Total innovation partners
Model 1N = 376
* p
< 0
.10,
**
p <
0.0
5, *
** p
<
0.01
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Introducing values and attitudes
462.96
Excl.
0.19**
0.12
-0.00
-0.03
0.36***
0.11
-0.07
Model 4
454.50
0.08
0.01
-0.06
0.27*
0.21**
Model 5
Incl.
0.12
-0.04
469.08-2 log L
General open-mindedness
Work-related trust
General trust
0.40***International Innovation Partners
Work-related open-mindedness
Excl.Controls
0.12National Innovation Partners
-0.08Local Innovation Partners
Model 3N = 355
* p
< 0
.10,
**
p <
0.0
5, *
** p
<
0.01
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Two Models of Radical Product Innovation
0.01(0.10)
0.42*** (0.14)
Model 2
352.01
Incl.
0.06 (0.10)
National innovation partners
International innovation partners
358.74-2 log L
Incl.Controls
Local innovation partners
0.13(0.08)Total innovation partners
Model 1N = 376
* p
< 0
.10,
**
p <
0.0
5, *
** p
<
0.01
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Introducing values and attitudes
331.69
Excl.
-0.05
0.23*
-0.21
0.21
0.42***
-0.02
0.01
Model 4
318.66
0.16
-0.19
0.18
0.37***
0.01
Model 5
Incl.
-0.03
0.04
340.05-2 log L
General open-mindedness
Work-related trust
General trust
0.44***International Innovation Partners
Work-related open-mindedness
Excl.Controls
-0.01National Innovation Partners
-0.00Local Innovation Partners
Model 3N = 355
* p
< 0
.10,
**
p <
0.0
5, *
** p
<
0.01
![Page 55: Southwest Norway - a Culture for Innovation? Soft Institutions and Regional Innovation](https://reader035.vdocument.in/reader035/viewer/2022070415/56814ea8550346895dbc5496/html5/thumbnails/55.jpg)
Model of Innovation NetworksN = 355, R2
adj = 0.08 Coeff. S.E. Beta
General trust -0.11 (0.08) -0.08
Work-related trust 0.18** (0.09) 0.11
General open-mindedness 0.21*** (0.07) 0.16
Work-related open-mindedness -0.07 (0.07) -0.05
Education 0.07 (0.11) 0.04
Age -0.00 (0.01) -0.01
Company size (100s of employees) 0.15*** (0.05) 0.16
No. of company directorships 0.08* (0.04) 0.10
Share held by international owners 0.01** (0.00) 0.10
* p
< 0
.10,
**
p <
0.0
5, *
** p
<
0.01
![Page 56: Southwest Norway - a Culture for Innovation? Soft Institutions and Regional Innovation](https://reader035.vdocument.in/reader035/viewer/2022070415/56814ea8550346895dbc5496/html5/thumbnails/56.jpg)
Innovation Networks at Different LevelsN = 355 Regional National Int’nat’l
General trust -0.00 -0.10 -0.06
Work-related trust 0.16** 0.03 0.05
General open-mindedness 0.01 0.14** 0.09**
Work-related open-mindedness -0.08 -0.03 0.06
Education -0.27*** 0.18* 0.15**
Age 0.00 -0.00 -0.00
Company size (100s of employees) 0.11** 0.17*** 0.10***
No. of company directorships -0.03 0.07* 0.04
Share held by international owners -0.01*** -0.00 0.02***
Adjusted R2 0.05 0.08 0.32
* p
< 0
.10,
**
p <
0.0
5, *
** p
<
0.01
![Page 57: Southwest Norway - a Culture for Innovation? Soft Institutions and Regional Innovation](https://reader035.vdocument.in/reader035/viewer/2022070415/56814ea8550346895dbc5496/html5/thumbnails/57.jpg)
Conclusion• Nearly half the businesses in SW Norway involve
external partners in new product development processes
• The proximity of partners does not matter: Cooperating with international partners is most helpful to the development of new products, as well as for radical product innovation
• Work-related open-mindedness is helpful to product innovation
• General open-mindedness of the manager is important when building an international network