Technology and infrastructures policy in the knowledge-based economy

Exploitable results

The new agents of knowledge are not really 'new'. What is new is that in the meanwhile as economic actors they play a far greater role than in the past. The new actors are mostly small firms characterized by skilled knowledge workers. The study of Creplet et al. tries to analyse in more detail the role of two specific new agents of knowledge from a cognitive point of view. The study by Muller/Zenker is focused on knowledge intensive business services in general and their characteristics in creating, reengineering and diffusing knowledge. The core characteristics of the new agents are a very high degree of interactions with customers, a deep access to the knowledge structure of these customers and significant capability of knowledge re-engineering. As a consequence policy has to understand that this target group shows very different characteristics compared with the traditional target groups such as R & D performing firms within manufacturing industries. The study of Creplet et al. demonstrates the differences between consultants and experts with respect to a cognitive dimension: summarized in an over-simplified manner, consultants contribute to the problem-solving process of their customers by standardized methods, routines and processes and by their knowledge of best practices. The development of their competencies is mostly based on links with communities of practice. Experts mainly intervene in complex situation and create and operate a relatively new knowledge. The development of their learning process is mostly based on links with epistemic communities. This study demonstrates how different the new agents of knowledge behave due to their different roles and roots in epistemic communities or communities of practice. As a consequence simple policy conclusions cannot be drawn. Nevertheless, it is obvious that several policy shifts are necessary. This new target group of KOP has to pay attention far more to skills, competencies and personnel (instead of R&D), on soft factors such as management organisation, training (instead of hard factors), on changes of behaviour (instead of reaching technological advances) and on knowledge management (instead of R&D projects) than in a traditional policy perspective. With regard to knowledge intensive business services (KIBS) the case study of Muller/Zenker comes to the following conclusions: It shows that KIBS play a role of knowledge processing, reengineering and diffusing for innovation. Fulfilling this function implies knowledge transformation from its generation to its application in client firms. KIBS thus take on a go-between function between research organisations that produce scientific results and firms that use and apply this new knowledge. Since firms mostly cannot directly apply new knowledge and since KIBS know firm-internal processes and demands, they process "new" knowledge, diffuse it among their clients and support its application in firm innovation processes. This knowledge transformation process consists to a large extent in a modification and reengineering of codified knowledge made public by research organisations into tacit (or specific) knowledge that is communicated to firms and applied by them. Interactions between KIBS and SMEs lead to a circle based on the exchange of knowledge in both directions. This fosters innovations in both types of firms and can be described as mutual activation of knowledge resources. Cooperating manufacturing SMEs and KIBS treat certain problems commonly and they participate in shared learning processes. A very close interaction, a far reaching access to the knowledge structure of their customers and reengineering of knowledge are the very specific characteristics of KIBS as new agents of knowledge. In this respect, KIBS may also compensate for regional weaknesses in research infrastructure since they approach scientific results and prepare those results for application in manufacturing firms. As a consequence, the strategic aim will be to support the expansion of the KIBS industry in Europe and to acknowledge their activities in terms of innovation "boosting", both internally and in their clients. This has two implications for innovation policy: on the one hand, policy should devote more attention to these new agents of knowledge as a new target group. On the other hand, in order to stimulate co-operations between KIBS and other types of firms, the visibility of the former firm type should be raised, especially for small and medium-sized firms that often lack information concerning co-operation partners. A helpful means could be a special type of certification of KIBS in order to label their competencies. This could be useful for KIBS marketing as well as for manufacturing SMEs to get information about KIBS offers. Furthermore, innovation policy can increase collaboration by giving incentives for using KIBS services. The benefit from this kind of support cannot only be expected in innovation activities of manufacturing SMEs, but also in KIBS' internal innovation that are "nurtured" by knowledge they gain from co-operation with their manufacturing partners. The emittive capacities of KIBS, the absorptive capacities of SMEs and the level of interaction between both are the main targets of policy.

The promotion of university/industry relationships is a well-established science and technology policy area. A long tradition of different institutional settings, financial incentives and other tools of technology transfer are used. Although there is a broad consensus that the linear model of innovation is inadequate, the concept of the "one-way bridge" from public research to industrial research is still widespread in the discussion on technology transfer. The contributions of this volume support the need to refocus the traditional policy of technology transfer - the establishment of transfer institutions and incentives within the public research world - and to convert it into a concept supporting a "two-way bridge". A survey at German universities (Meyer-Krahmer, Schmoch 1998) has shown for all fields examined that the central linking element in the co-operation between universities and industrial firms is the exchange of knowledge in both directions. Although the institutional orientation of academic and industrial researchers is different, the exchange of knowledge can be considered a common denominator where both interests meet. The mutual exchange of knowledge in techno-scientific communities is obviously a broad phenomenon that is not limited to some exceptional cases, but applies to whole disciplines and sub-disciplines. Another major conclusion underlines a characteristic of a national innovation system which one could call "structural absorptive capacity". We call the absorptive capacity (of firms, research institutes or universities) "structural", because it largely depends on meso-level characteristics. This structural absorptive capacity depends, according to empirical evidence, on the science intensity of technologies, the industrial life cycle, and the firm size structure of the industrial sectors. Furthermore, the absorptive and emittive capacities depends on micro-level factors: internal R&D capacity of firms, and interaction patterns to relevant technologies outside traditional linkages, as well as formal co-operation and informal networks. The emergence of national systems of innovation has to be considered as a path dependent evolutionary process where various economic, technological, social and cultural factors interlock and strengthen each other mutually. The cognitive structures of universities are strongly influenced by the co-evolution of industry structure, technology and institutional factors (see also Nelson 1995), e. g. the close interaction of application-oriented university departments and industrial firms in the less science-based area of mechanical engineering in Germany has to be interpreted in this theoretical perspective. For many years, it has been a successful model of cooperation, but in the present situation, it implies risks of lock-in effects, which can be overcome only by deliberate efforts. There is broad evidence that in addition to the factors already mentioned, the specific cognitive structure in this area supports the relatively strong orientation of universities on application and hampers the openness towards new, more theory-based technologies. However, this aspect has not yet been studied in a systematic way. So we suggest that more research on cognitive structures of different technologies is undertaken, because it can contribute to an improved understanding of national systems of innovation, but also of related problems such as the organisation of inter-disciplinarity or the relations between science and technology. The paradigm of inter-disciplinarity affects these instruments by a shift from inter-organisational to intra-organisational linkages. The paradigm of science-based technologies calls for a renewal of traditional instruments to improve university/industry cooperation through new instruments linking academic communities with research communities in industry. Interaction and communication are more important than financial issues. This leads to the following set of conclusions. An important consequence for science technology policy is the necessary change of organization, communication, interaction and incentives within the public research world. The consequences for science-based technologies are the need for new ways of linkage between basic research and applied research. Also trans- and inter-disciplinarity need better horizontal linkages between disciplines. Often in the literature inter-disciplinarity is a misleading concept of integration and mixing disciplines. It is essential to understand that first-class trans- and interdisciplinary research is highly dependent on first-class disciplinary quality of the scientists involved in interdisciplinary research. Therefore, an efficient linkage between (and not the integration of) disciplines is crucial for the establishment and dynamics of such epistemic communities. Possible tools and mechanisms of such linkages are: - Organisation of research: problem orientation in the case of well definable social or industrial-technical problems. This requires, in contrast to the currently predominant internal objectives of science, new ways of project organisation and management. - A better linkage of the long-term application-oriented basic research with applied research would meet future requirements better. This could be achieved for example by a better institutional network, cooperation research with specific subjects, new models of financing, improved communication and other assessment criteria. - Team research: besides the currently predominant orientation of academic research towards individualized research setting, interdisciplinary team research must be strengthened by appropriate incentives. - Improved intra- and inter-sectoral mobility of researchers: on an international level and also between science and industry. - Increased flexibility of research structures: more rapid taking-up of new developments by flexibilisation of the present rigid public service rules and budget laws, deregulation of the academic administration, and networking of research institutions for a limited time, especially in an international framework ("virtual research institutes").

- Ex ante R&D Subsidies A first alternative to the patent system could be R&D subsidies (this idea goes back to Pigou, 1920). The granting of subsidies, proportionally to the amount of R&D investment, to the firms who invest in R&D can help to restore incentives. In this way, firms are urged to invest the quantity of R&D that maximises the social surplus and not only their own profits. However, several shortcomings can be pointed out: This method works only in a perfect world with no informational problems. The State must know ex ante not only the future private value of the invention which, most of the time, the inventor himself does not know, but it must know the economic value of the spillovers generated by the invention too. Moreover, a method of ex ante subsidies will generate moral hazard problems, due to strong asymmetries of information between the firms and the State. The latter holds the role of the principal in the principal-agent problem. Empirical studies (cf. for instance, Bernstein & Nadiri, 1988, 1991) showed that private R&D done with public subsidies is less productive than the R&D financed by the firm itself. Arrow (1962, b) speaks about a moral factor: Subsidies decrease the incentive of success because, like insurance, they decrease the risk associated with failure. Somehow, subsidies are an incentive to do R&D but not to do it well. - Ex post rewards (or patent buyouts) to preserve incentives while ensuring full diffusion. A system of ex post rewards, as compared with ex ante subsidies, would allow the State to benefit from more information about the social value of the invention and to solve the moral hazard problem. Moreover, when compared to patents, Kremer (1998) explains that such patent buyouts are attractive since they offer the opportunity to eliminate monopoly pricing distortions and incentives for duplicate research, while raising the incentives for original research. Thus, ex post rewards, or patent buyouts, would have the potential to perform better than both ex ante subsidies and patents. The idea of patent buyouts comes from the purchase of the daguerreotype (from the name of its inventor, Daguerre) by the French government in 1839. A reward system may not only allow a better diffusion of the produced knowledge, but increase the incentives to do R&D as well. Rewarded inventions would be put in the public domain, thus society would earn huge benefits in the form of more learning by using the now free technology and from increased pecuniary spillovers. As argued by Polanyi (1943), a sufficient condition for rewards to perform better than patents is to warrant to the inventor a reward at least equal to the expected monopoly profit he would have realised with a patent. We must never forget that our aim is merely to distribute prizes for successful inventions and that if the new system succeeds only in making these prizes as ample as, and not markedly less fair than, the rewards which are earned by patentees today, while maintaining practically complete freedom of the use of inventions by everybody, it may be said to achieve its purpose to the full. If the government were to fix the total sum allocated for public rewards at a level, which would just suffice to induce inventors to be as eager to obtain patents as rewards, the general public would be left with a handsome balance (Polanyi, 1943). Even smaller rewards than the expected monopoly rent would be sufficient to induce the same level of incentives because the monopoly holder faces a risk in exploiting its monopoly and usually economic agents are perceived as risk averse. The reward system would especially be profitable for small firms, which do not have the financial capabilities to use the patent system. It would secure a fixed remuneration for them while the patent system is too risky for them. As exposed by Kremer (1998), a major challenge for any system of patent buyouts is determining the price. From an economic efficiency point of view, the price that maximises the social surplus must take into account all the spillovers generated by the invention. Indeed, only this price can ensure that all the socially profitable innovations are implemented and only them. But how could this ideal price be computed. Lately, Kremer introduced an original and interesting method using an auction mechanism. To sum up, its method contains three steps: -- At the time t0 a firm decides to announce publicly the sale of one of its patents. -- Interested firms reveal their bids in order to buy this patent and at the time t1, fixed in advance, the State computes the private value of the innovation according to the different bids. -- From this private value, the State deduces the social value of the innovation, pays this price to buy the innovation and put it in the public domain. During the second step, the State would face problems of collusion and of crazy bidders. To solve these problems, the State could choose, for instance, to fix the private value of the innovation equal to the third highest bid or to compute an average. Moreover, in order to deter crazy bidders, some offers would be randomly accepted and sold to the winner of the auction. Within the third step, Kremer proposes to compute the social value of the invention in doubling, at least, the private value obtained in the second step. Finally, as a safeguard against confiscation of inventions, patent holders could choose whether to sell their patent or not. This system of auction may seem rather difficult to implement in practice. Thus, if the idea that among a particular industry, there exists a consensus about the value of an innovation (at least about the private value) is accepted, why not just set up a committee of experts, composed of several members considered competent in each industry, who would have the responsibility to estimate the private and the social value of each innovation? In this way, Polanyi (1943) proposed to let the market reveal the value of the innovation. Time after time, the State would reward the innovative firms at the end of each period according to the benefits due to the innovation, made by the society during this spell of time. According to Polanyi, the benefit arising from a particular invention could be traced with a certain degree of precision to a definite set of persons. Even if this is a very ambitious and strong guess denied by almost every econometric specialist, for the modest purpose of Polanyi, to perform better than patents, it may contain some truth. As the State would dispose of more and more information about the benefits of the innovation it would be able to reward it at its most exact value. Moreover, this solution would have the advantage to split the reward over time and so, to avoid giving too much financial power to one firm. Beside the problem of determining the ideal amount of the reward, four other shortcomings can be identified: -- To ensure big firms with important amount of cash is equivalent to displacing the problem, not to solving it: Firms would benefit from a financial power to build monopolies rather than a legal power. -- In allowing a fast and universal diffusion, rewards could lead to network effects and lock-in phenomena under efficient technology. -- If it is assumed that rewards create at least as many incentives as patents, the problem of duplication of R&D ex ante because of reward races, will be amplified. -- Maybe the most important problem faced by rewards is that the State has, ex post, an incentive to under-estimate the value of the innovation. As the innovator may know this tendency, he has less incentive to invest in R&D. Thus, a reward system can only succeed in a climate of mutual trust between the State and the firms. But, as explained by Taylor (1995), since contract courts seldom possess the ability or expertise necessary to evaluate technical research projects, contracts that base compensation on research output are usually impractical. It must be noticed that most of these problems occur with the patent system too. Thus, ex post rewards may be especially interesting to use in specific industries where the static loss of patents is important. - Research tournament or research race: A complementary solution to rewards. The reward system may not provide enough incentives in sectors where the social value of an innovation is high but not the private value. In such cases, firms may not be able to evaluate the social benefits of an innovation. A solution for the State to orient firms to this kind of sectors could be the sponsoring of research tournaments or research races. Basically this kind of sponsoring can be seen as a reward system directed to specific sectors. Taylor (1995) distinguished research race and research tournament. He compared the first with the 500 miles of Indianapolis, in the sense that the goal (the specific characteristic of the desired innovation) is fixed but the length of the race (the time needed to meet the fixed criteria) can vary, and the second with the 24 hours of the Mans because the time is fixed but the final performance of the output may change; the goal is to do the best you can in a limited time. In one case the sponsor controls the time to reach a specific goal, in function of the amount of money he is willing to invest and in the other, he controls the quality of the desired output. The other tools at the disposition of the State are the number of participants and the participation fee (which may be negative if there are important fixed costs). One of the biggest advantages of this system of tournament or race is that it can solve the problem of trust between the contractor and the inventor. In the case of a race all that a court will have to do is to compare the ex ante well specified criteria on, for instance, the global performance wanted for the invention, with the ex post propositions of the candidate (however, in the case of a tournament the court will still have to compare different candidates, maybe very close). As it is very easy to check if a reward has been paid or not to one of the participants, this kind of sponsoring is equivalent, for the sponsor, to gaining some credibility. Moreover if the sponsor is rational and does not have a favourite participant, he will have all the incentives to reward the best invention. Thus, this system may obtain good results in specific low market incentives.

The study by Muller/Zenker comes to the following conclusions: Compared to large manufacturers, small and medium-sized enterprises are characterised by a lower level of knowledge-intensive interactions. This means mainly that SMEs acquire less innovation-related information from competitors, suppliers and also from research institutes and thus have more limited access to external knowledge than large firms. This has two consequences: First SMEs have less knowledge they can use for innovation projects and second SMEs benefit from fewer opportunities to improve their absorptive capacities. These aspects and the lack of personnel, especially marketing personnel, are the major obstacles to innovation in comparison with large manufacturing firms. Since SMEs carry out R&D on an incidental basis while large manufacturing firms are permanently engaged in development activities, they have to a lesser extent the opportunity to codify the knowledge produced in the frame of these activities. Thus, through the development of routines, it can be assumed that large firms may codify their knowledge more easily and that therefore SMEs, in comparison, benefit only from a lower level of codified knowledge. Therefore the strategic aims for policy to achieve with regard to the situation of SMEs are: to raise awareness for the significance of knowledge and learning and to compensate knowledge codification weaknesses. One important measure to raise awareness concerning the issues of knowledge codification and innovation issues in general consists in providing manufacturing firms with information on innovation projects and on the importance of knowledge. This also includes the introduction of routines such as knowledge monitoring tools in the firm, comprising organisational, technical, financial and human factors. In order to distinguish their competencies, firms must define their specific strengths and consequently the contents of their knowledge bases. This is an important process, which requires in-depth insights concerning firm activities and equipment with capital goods and with staff. Firms must then find a way to organise their knowledge flows and to manage their knowledge base. This is supported by available tools such as computer networks or specific software tools, and requires a certain technical standard. All these mentioned aspects mainly refer to codified knowledge and rather to technical than to social or organisational knowledge. Knowledge monitoring forces firms to trace their innovation activities which allows for a better understanding of innovation processes and the respective (knowledge) inputs in different stages of the innovation process. Besides, this kind of self-monitoring forces firms to define and formulate their problems in innovation matters which serves as very important first step to solution finding and problem solving. On the other hand, firms should monitor their competencies, their skills and knowledge they can refer to. This might include codified knowledge that is stored in databases, containing information about available literature, brochures, internet web sites and further information, descriptions and comments about former experiences in innovation projects and specific skills of the staff. Especially the later aspect is difficult to achieve, but is crucial in order for a firm to use its opportunities and strengths optimally. Another important additional effect is the codification of knowledge internal to the firm that did not exist in codified form before: once a monitoring tool has been introduced and is maintained within the firm, firms codify at least parts of their internal knowledge in order to store it and use it for innovation projects. Policy measures in this respect would include incentives and project support in introducing routines of knowledge monitoring in small and medium-sized firms that may lack own (financial) capacities to purchase equipment and to train their employees. Innovation policy should also support "knowledge managers", i.e. persons that visit firms and raise firms' awareness for the importance of those knowledge subjects. Additionally, the development of - at least partly - standardised knowledge monitoring tools would be helpful for firms, since the "barrier" for each firm to develop their own measurement tools is high. Besides organisational skills and respective personnel this also highlights technical skills and experiences that are important for performing research and development activities, for preparing and realising innovative projects and for the absorptive capacity of firms. Recent studies mention the phenomenon of "innovation without research" emphasising firm networks as knowledge source. That is, individual firms are to a lesser extent seen as research performers as pre-requisite for internal innovations, but the innovation networks in which firms act and interact are emphasised. Nevertheless, a "non-researching, but innovating" firm has to acquire external knowledge and apply it to its individual problems, which implies that a firm has a knowledge appropriating capacity. In this context, the absorptive capacity of firm employees, i.e. the capacity to "know-what", to get familiar with external knowledge and to apply it internally is of crucial importance. Since a certain level of skills and knowledge is necessary to acquire new knowledge, the skill levels of firms' employees are referred to. Thus, political measures should increasingly include support for fostering skill levels in firms, for a qualified human capital in firms and for human capital mobility, for instance by exchange programmes with research organisations.

There is a range of policy issues to be addressed around the paradox of digital memory. This is a paradox because on the one hand many public and private organizations are keen to implement procedures and mechanisms for building organizational memories (with appropriate incentive structures and coordination devices); while on the other hand there is a general concern about the memory capacity of societies facing the challenges of storing and archiving huge amount of digital data and information. The problems and difficulties related to digital memory have three sources: Firstly, we should note that with information technologies, what we record are not documents but sets of instructions (Cowan, Foray, 1997). Because paper has a low acid content, printed books and journals can last for centuries. Physically, it deteriorates slowly and because the language in which it is written evolves very slowly, the interpretation of even very old texts remains relatively easy. This is not necessarily true for documents stored on magnetic or optical media. Magnetic tapes deteriorate fast from a physical point of view and, given the rapid changes in software technology and computer hardware, languages can disappear just as fast. The problem is that with information technologies, what we record is not documents but sets of instructions that have to be interpreted and managed by appropriate equipment and software before the information they contain can be used. Thus, although short-term storage and data retrieval costs have decreased, long-term storage (i.e. archiving) and access to old documents clearly remain a problem. Secondly, the rapidity of knowledge production and codification processes and the low and decreasing costs of storing codified knowledge make the problem of attention more acute (Simon, 1982). The classical formulation of that problem is that, more than ever, it is attention rather than information that is becoming a rare resource as screening and selection of information become important functions. Information abundance is generating a problem for agents to discriminate between information which are important to store and memorize and information that can be simply put in the basket. One should note that if you look at the web today, people are storing too much, and putting too little in the basket. However, this second problem can be formulated in a slightly different way: given the reasonable assumption that the attention management problem has always existed in some degrees, if we can make the claim that more knowledge is being stored and made available in codified form, the knowledge management problem changes shape. To use the Lundvall taxonomy, when the knowledge we seek (to understand) is tacit, "know-who" is extremely important. When it is stored in codified form, "know-where" becomes important. A new skill must be cultivated, namely how to find things using, for example, the search tools on the web. This has two aspects: the first is how to find likely documents. The second tool that has to be developed is how to judge quality. Because the cost of codifying (and publishing) has fallen so much, it is "too easy" to diffuse knowledge. There is a lot of codified "knowledge" available on the web that is misleading or just plain wrong. How to teach people to filter the good from the bad may be an important issue. In a sense, know-where and know-who should be combined to develop the real problematic of software agents: the best agents would not only be efficient in finding all the information corresponding to a certain question but they will take into account the peculiarities of the user and the situation. Thirdly, knowledge is divided and dispersed (Machlup, 1984). The division of knowledge is a result of the division of labour in the field of knowledge production. The dispersion of knowledge is related to local situations in which knowledge is produced (a site, a workshop, a laboratory). An increase in the division and dispersion of knowledge makes it more and more difficult for economic agents to locate and retrieve elements of knowledge that would be particularly useful to them. It is probably not disputable that the division of knowledge is increasing over time (specialization), raising the marginal cost of knowledge integration. The dispersion trend is less clear, but, as a law, one can expect a higher dispersion as knowledge production becomes more collectively distributed (located in many places). And this increasing tendency of knowledge division and dispersion again makes the problem of memory very difficult. How to build storage processes that are integrative; that is to say which are not just reproducing the state of division and dispersion of knowledge as it is at the moment of its creation. Facing those challenges problems posed by recording the set of instructions, by information abundance and by the division and dispersion of knowledge an important policy objective should be to reach a higher level of organizational procedures and capabilities in a way that could allow organizations and agents to overcome this digital memory challenge.

In order to test the theoretical hypotheses developed by the project, the TIPIK teams carried out a series of 13 empirical case studies. The case studies examine different forms of codification of knowledge. They emphasise various perspectives of the process of codification, from research activities in high tech industries to the writing of basic ISO procedures in traditional SMEs. They relied on different methods (postal survey, semi-structured interviews, reinterpretation of existing data, etc..). For all these reasons, the results from the case studies cannot be considered as comprehensive or representative. However, despite the variety of situations and perspectives, the case studies revealed a common main conclusion. What appears as particularly remarkable is that the focus on codification of knowledge is not limited to the research area and high-tech industry. In all social activities, whether in the production, mediation or use of knowledge, the process of codification of knowledge is becoming one of the main drivers of evolution. An in-depth understanding of the incentives to codify, of the nature and form of the codification process, are thus becoming essential for analysing the process of innovation and growth of the economy. The different perspectives enlightened by the case studies are the following.

The case study of Lissoni comes to the following conclusions: The results of the empirical research are relevant for outlining policy measures directed at sustaining the innovation capabilities of SMEs, both in the mechanical field and in a few traditional sectors, especially when located in local clusters. In particular, some rethinking of recent trends in technology transfer policies may be pushed up to the top of policy-makers agenda. The case study when placed within the conceptual framework derived from Steinmueller (2000) and Cowan, David and Foray (2000), goes against the typical description of (Italian) clusters of SMEs (especially industrial districts) as homogeneous cultural settings, wherein technological findings are quasi-public goods. Rather than flowing freely within the cluster boundaries, knowledge about those findings is shown to circulate within a few smaller epistemic communities, each of them centred around the machinery producers which the research chose to investigate, but often spanning outside the cluster geographical boundaries. We then observe that: - Those communities are better seen as made of people, linked together by personal ties of trust and reputation, rather than of inter-firm arrangements, although they arise from successful commercial partnerships and deals, and respect firms appropriation strategies. - The localisation of members of the epistemic communities is affected by the frequency of contacts required for transmitting information effectively, as well as bt the size of the members companies. - Public labs and universities seem almost totally absent from those communities. From these observations it follows that epistemic communities can be a better policy target than either firms or specific geographical units, which require specific policy actions: New firms may arise from community members seizing some technological opportunity, as it had happened when many SME clusters were born. Allowing community members to access knowledge from other sectors or from academic research may help, although policy measures in this direction may be in contrast with the appropriability measures and staff management practices of the employees of the epistemic community members. It should be noted that many technology transfer actions, which currently target existing SMEs as potential innovators, could be instead directed at giving some members of local epistemic communities the chance to found their own start-up. More generally, technology transfer policies, which focus on specific sectors and locations, but do not arise from an agreement with local members of the existing epistemic communities, are very likely to end up offering very generic, and possibly irrelevant services (as many assessment of technology transfer policies actually show). Since knowledge circulates within a number of relatively close networks, policy initiatives have to focus on access to knowledge and inter-personal networks, the degree of geographical dispersion of the relevant epistemic community, and the extent to which knowledge can be considered as public (i.e. shared by different communities) or semipublic (i.e. circulating only within one community). Some of the links between SMEs and larger firms, which many technology transfer policies try to set in motion, are already in place within the existing epistemic communities, as long as they include personnel from large suppliers of standardised (esp. electronic) components and materials. The study by Amesse/Cohendet views the process of technological transfer as a process that depends on the ways firms and other institutions deal with knowledge. On the one hand they underline the role of absorptive capacities as essentially active along the perspective suggested by Cohen and Levinthal. They show that the more groups, teams and communities within the firm are receptive to new ideas the higher are the chances of an efficient absorption of technologies from outside. On the other hand the quality of the process of technology transfer is also fundamentally dependent on the firms capabilities to emit knowledge outside its frontier. When firms provide significant assistance to their strategic partners, through multiplying functional interfaces and investment in knowledge sharing routines for instance, they in fact deliberately contribute to enhancing the absorptive and emittive capacities of their key suppliers. The authors also show, when negotiating the rights of access to complementary forms of knowledge that they need within networks, they carefully, and permanently assess the absorptive and emitting capacities of the other members of the network. In other words, the management of the technology transfer process is essentially bi-directional. What matters is more the co-evolution of the mutual absorptive and emitting capacities between partners, than the mere observation of the technology flow between an emitter and a receiver. Similar conclusions can be drawn in the case of university/industry linkages (see 3.4) and in the case of the dense interactions between knowledge intensive services and their customers (see Muller, Zenker and Creplet et al.). The study of DAdderio on software development demonstrates that standardized, coded procedures and models are of little use unless they are locally appropriated and effectively transformed into actional routines and prototypes. Diffusion of standardized practices, models and methodologies run the risk of seriously miss-stating the organisational costs and productivity effects of software adoption processes. As a consequence the study shows that software producers need to build greater flexibility and customization potential into their systems in order to facilitate the process of adaptation of generic systems to local, context specific, circumstances and requirements. These emittive and absorptive capabilities lead to specific requirements, to dynamic learning, translation routines etc. All these cases demonstrate that policy has to go far beyond R & D and to focus more on competencies.

The case study on ISO standards implementation emphasizes the importance of the way economic agents conceive the role played by industrial standards in the organization. If standards are considered as constraints by the firm, conformity process will follow the strict application of the normative document. Then, quality code-book is viewed as a technical requirement imposed by the institutional environment of the firm. A consequence of such a centralized vision of ISO code-book leads to a higher inertia in terms of organisation change. Resistance to change was, indeed, particularly stronger in SMEs sharing the vision of the ISO code-book as an external constraint. Thus an important part of the failure in ISO certification process comes from this attitude. In this perspective, relevant policy measures could be the following: - Extending the process of appropriation by economic actors through specific governmental actions (role of Squalpi from the Ministry of Industry or AFNOR in France). It seems important to inform enterprises of the true goal of organisational standards such as ISO devoted to the improvement of the system of management in accordance to their internal objectives. - Opening the participation of economic actors such as small firms in the work of norms determination in order to facilitate the diffusion. - Creating a normative pre-competitive co-operation at the European level. On the same order of magnitude than the big R&D pre-competitive European programmes from the eighties, a more specific action concerning now a "normative" framework could be imagined. In a competitive environment characterised by globalisation and a very high rate of technical progress, an ex ante normalisation (before products, technologies and property rights) could be a powerful tool in Europe for collective codification of knowledge and construction of common references in order to stimulate inter-enterprises relationships. Also, several questions concerning the implementation of quality assurance approach such as ISO 9000 in SMEs can be derived from the cases studies. Some of them have consequences in terms of public support devoted to industrial policy: - Without complete information about strategies of support for SMEs at the European level it could be interesting to build up a database reflecting the differences between European countries. Such a study should be useful in order to determine the possible role of the EU. In the adoption of quality assurance for SMEs. An inference of the former question is the necessity to produce economic studies on the efficiency of quality approaches on the performance of the firms concerned. Few evaluations have been carried out in European countries compared to the United States, but this basis appears necessary for the efficiency of a political action in that direction. - Mainly two types of quality justifications are deducted from our empirical investigation. There are firms, on the one hand, who are motivated by the commercial side of the ISO referential. On the other hand other enterprises consider mainly that ISO norms are a powerful lever for starting an organizational change. Pure commercial label or organizational norms, a political perspective for public support could be the opportunity to make the distinction and concentrate subsidies on a particular category of firms. On the same order, most of the time the success of the implantation of quality assurance is related to the efforts realized by the firm in terms of new tools of management. For instance, an activity based costing approach or a control system such as A.B.M. prepare the firm to a representation in terms of process. Such a representation facilitates the adoption of a quality assurance approach most of the time based on the notion of process mastery. Another question concerns the optimal date for introducing quality approach in SME in regards with the maturity of the organisational structure. If we refer with a classical result in terms of dynamic of organisational change, most of the firms start with an organic shape of structure (entrepreneurial structure) to a more bureaucratic form such as functional or divisional shape. Very often this evolution is due to a growth in terms of activity (market, number of references,...). Is the quality insurance more compatible with a specific type of organisation. Is there a risk of incompatibility between ISO norms and adhocratic types of organisation. After identifying specific population of firms and beyond the question of the optimal stage of development we may added the notion of limited human resources for a quality function in SME. In order to improve the diffusion of normalisation in some industrial sectors a regional assistance could be elaborate by providing human resources in SMEs, quality experts from consular institution (Chambers of Commerce) sharing there missions between several enterprises.

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