Final Report Summary - SMARTSPEC (Smart Specialisation For Regional Innovation)
Executive Summary:
The concept of smart specialisation was first elaborated in 2008, and emphasises the need for policy makers to make choices as to which technologies or sectors should be supported through public policies. Through focusing on areas of comparative strength it is also possible to avoid the mimetic strategies that have characterized innovation policy-making in recent years. The regulatory agreement governing the EU’s Cohesion Policy for the period 2014-20 places a condition on Member States to have in existence a national or regional smart specialisation strategy in order to be eligible for support under the European Regional Development Fund.
The introduction of Research and Innovation Strategies for Smart Specilisation (RIS3) has not been without its critics, particularly as it is regarded as one of the largest experiments in regional innovation policy ever undertaken across the globe. The SmartSpec project addresses the perceived gaps in our knowledge of smart specialisation and its implementation. It has been undertaken concurrently with the introduction of smart specialisation approaches across the EU and develops the conceptual underpinnings of the concept of smart specialisation, as well developing practical knowledge and understandings that can assist in the implementation of smart specialisation practices at a European, national and regional scale.
The project’s findings cast light on the following dimensions:
• The significance of governance in the development and implementation of RIS3, noting the roles taken by different organisations and their interaction, both in the design and implementation of strategies and also in the development of entrepreneurial discovery processes;
• The particular challenges faced by Member States and regions with less-developed research and innovation systems to design and maximise the impact of their smart specialisation strategies.
• The currently weak link between smart specialisation and social innovation, but the potential that this could offer if approached more substantially.
• Consideration of improved metrics, evaluation and monitoring of smart specialisation strategies, including the potential offered by well-developed peer review assessment procedures
• The design of asset-based multi-sectoral policy mixes to support RIS3 in different regional contexts;
• The identification of institutional and systemic bottlenecks for smart specialisation in a comparative perspective, with considerations of potential areas for reform.
Project Context and Objectives:
The aim of SmartSpec (Smart Specialisation for Regional Innovation) has been to provide substance, guidance and practical support to operationalise the concept of smart specialisation. It has done so through a mix of academic and more practice-orientated activities guided by an ethos of developing results that will be useful to actors in different regional contexts. It has done this by strengthening the analytical underpinnings of the smart specialisation concept, providing methodological guidance for practice and generating strategic intelligence for policy-makers. Through an integrated, multi-dimensional and place-based approach focused on 8 Work Packages, SmartSpec has developed robust practical and analytical findings to strengthen the implementation of smart specialisation strategies. With a strong emphasis on knowledge exchange and facilitated learning, SmartSpec has delivered useful results to inform practitioners and policymakers in the development and assessment of smart specialisation strategies, whilst extending the state of the art.
The concept of smart specialisation was first elaborated in 2008, and emphasises the need for policy makers to make choices as to which technologies or sectors should be supported through public policies. By making choices, it is argued, one can realize scale economies, through achieving critical mass, and develop distinctive paths based on areas of competitive advantage. Through focusing on areas of comparative strength it is also possible to avoid the mimetic strategies that have characterized innovation policy-making in recent years. The regulatory agreement governing the EU’s Cohesion Policy for the period 2014-20 places a condition on Member States to have in existence a national or regional smart specialisation strategy in order to be eligible for support under the European Regional Development Fund.
Known more generally as Research and Innovation Strategies for Smart Specialisation (RIS3), these are intended to promote the economic transformation of EU regions, particularly those that are lagging in development. A RIS3 is intended to identify selective knowledge ‘domains’, or priorities, in areas where a region (or a Member State) has a comparative advantage. The approach is intended to promote a concentration of resources on these domains for reasons of effectiveness and efficiency, both within the region and also across the EU, and stimulate a process of entrepreneurial discovery.
The introduction of RIS3 has not been without its critics, particularly as it is regarded as one of the largest experiments in regional innovation policy ever undertaken across the globe. This is not unexpected given its rapid, and, for some, rather hasty, move from conceptual idea to mainstream European Union policy, which has led some commentators to describe it as ‘a policy in search of a theory’.
The SmartSpec project was conceived and implemented to address the perceived gaps in our knowledge of smart specialisation and its implementation. It has been undertaken concurrently with the introduction of smart specialisation approaches across the EU and is intended to develop the conceptual underpinnings of the concept of smart specialisation, as well as to develop practical knowledge and understandings that can assist in the implementation of smart specialisation practices.
Inter alia, SmartSpec aimed to address the following key themes:
• Identification of institutional and systemic bottlenecks for smart specialisation and the possible need for reforms in a comparative perspective;
• The role of organisations and their interaction for the development and implementation of smart specialisation strategies;
• Assessment of the challenge for Member States and regions with less-developed research and innovation systems to design and maximise the impact of their smart specialisation strategies.
• The link between smart specialisation and social innovation: the role of social innovation in smart specialisation: social innovation as public service innovation, involvement of users and citizens in processes of design and decision.
• Supporting the production of better metrics, evaluation and monitoring of smart specialisation strategies and the design of an asset-based multi-sectoral policy mix;
• Development of processes of peer review assessment of strategies.
In addition, a number of more detailed objectives were also established. These have guided the delivery of the project over the past three years.
• To identify related variety and value chain components within EU regions to inform specialization choices
• To identify the role of organisations and their interaction for the development of entrepreneurial discovery and assess the role of network connectivity in facilitating intra- and extra-regional asset combination
• To identify institutional and systematic bottlenecks for smart specialization, and possible need for reform
• To understand how multi-level governance perspectives are integrated in smart specialization approaches
• To explore the conceptual link between smart specialization and social innovation
• To identify how social innovation can contribute to smart specialization strategies
• To identify regions with less developed research and innovation systems
• To identify the challenges for Member States and regions with less-developed research and innovation systems to maximize the impact of their smart specialization strategies
• To strengthen understanding of the features which make for strong design in smart specialization strategies
• To explore the features which underpin the successful implementation of regional innovation strategies
• To examine the features which underpin effective assessment approaches to smart specialization
• To explore the place-based characteristics of smart specialization
• To territorially ground the theoretical propositions developed in WP1-4
• To identify territorial capacities to act in comparative spatial contexts
• To assess the comparative roles for public policy intervention in alternative spatial contexts
• To embed user-driven perspectives in the development of practical smart specialisation support materials and inform academic concepts of smart specialization
• To develop a practice-based learning community with smart specialization capabilities able to inform wider communities of practice
• To effectively disseminate all outputs of the project throughout its term, using a variety of means and mediums
• To ensure close cooperation with the Smart Specialisation Platform
• To provide sound management and administrative support for the smooth delivery of SmartSpec
Project Results:
Is all growth good?
To support economic growth policy-makers across Europe are selectively choosing economic specialisation and diversification opportunities in line with entrepreneurial search processes as part of smart specialisation strategies. By nature or by history, some regions seem better endowed with growing or promising sectors than other regions. But even regions specialised in globally growing markets face continuous competition, and hence can become less competitive when other regions gain larger market shares in smart specialised niche markets. Thus, the performance of individual regions varies according to their positioning and performance in international trade networks. SmartSpec developed a methodology that allows regional policy-makers to identify whether the performance of the region is primarily related to the sectors in which the region is specialised, the performance of these specialised sectors in general across all regions, or the performance of region’s specialised sectors in comparison to the performance of those same sectors in other regions. Structural, local based growth is distinguished from demand-led growth, stemming from other regions. These aspects are important for profiling and understanding the underlying regional growth dynamics, and for distinguishing the extent to which region’s performance in a global context is a matter of its structure and patterns of local specialisation (prone to local policy) or a question of the performance of those specialisations vis-à-vis other regions (prone to network policies).
SmartSpec developed a decomposition method of local economic growth that shows whether regions grow because of generic rising (or declining) demand for the products and services produced (demand led growth), and/or because of strengthening their competitive market positions (structural growth). Performing for better or for worse on these two dimensions of growth shows that seemingly favourable total regional growth figures may be solely attributable to demand-led growth, while structural growth is negative – meaning that the region is not competitive and loses market shares structurally (“bad growth”). On the other hand, regions may operate on generally stable or slightly declining markets, yet gain substantial market shares. Apparently these regions are very competitive and strong in structural growth (“good growth”). Exploring the scores of European regions along the two dimensions of growth, SmartSpec shows that demand-led and structural growth are taking place simultaneously yet independently from each other and shaping the long-run competitive advantages of regional specialisations, and hence provide crucial information on the competitive smartness of prolonging these specialisations.
Not only does this identification of different types of growth have important implications for identifying regional development opportunities through smart specialisation, it also provides us with important policy recommendations. Policies focussing on regional conditions for competitiveness, like accessibility, labour market conditions, innovation of local firms, education, housing or agglomeration circumstances, basically impact on structural growth opportunities and are much less clear-cut on demand-led growth opportunities. Regions characterised by a large demand-led growth component therefore cannot easily better their growth positions by implementing place-based development policies (alone). Positions in international trade and investment networks are still prone to locational assets, but to a much lesser extent than localised and competitive structural growth are.
Our analysis has shown that about 30 percent of regional economic growth can be structurally characterised as related to the local competitive performance of firms and regional-economic circumstances. On the one hand this limits the possibilities of regional policy makers because to a large extent (75%) regional economic development is demand-driven and beyond their control. On the other hand, all (smartly) specialised regions in Europe face this structural disadvantage in their respective niche markets, and thus the - on average - 25% structural entrepreneurial and spatial-economic conditions can make regions win the game from competing systems elsewhere. A careful analysis of policies implemented by competitor regions will also give insights into best-practice regional policies that arguably can be successful in one’s own region. Performing for better or for worse on these two dimensions of growth shows that regions can have competitive ‘good growth’ (related to structurally gaining market shares) and ‘bad growth’ (with declining market shares).
By exploring the many European regions along the two dimensions of growth for a representative set of European regions we show that demand-led and structural growth are simultaneously, yet independently from each other, shaping the long-run competitive advantages of regional specialisations, and hence provide crucial information on the competitive smartness of these specialisations. Showing that the life cycles of industries, sectors and clusters can be plotted within the alternative outcomes of our growth decomposition, leads to important insights. Eastern-European regions, although lagging in income, may have better demand-led and competitive growth cards to play than Southern-European regions that are lagging in growth altogether recently. Traditionally powerful Western-European regions, like the Linköping/Őrebrö region of Sweden, which specialised in high-tech manufacturing, may face a loss in their competitive and demand-led growth power despite the generic growth in the sector. Such an outcome may function as a ‘wake-up call’ for regions which are experiencing sustained economic growth, while also becoming less competitive in their niche market specialisations as other regions catch-up and outperform them. This is, or should be, of genuine concern to the smart specialisation agenda- a policy-driven conceptualisation that by its nature puts a central emphasis on unique entrepreneurial search processes that eventually evolve in diversifying yet sustainable growth trajectories. Likewise, using our methodology we are able to identify large growth potentials for the chemical sector in Antwerp, Belgium, a sector that generally declines relative to the services sectors, but one which also is in niche markets showing particularly strong growth potentials. Given their positioning in the dynamic market structure, Antwerp has managed in recent years to become smartly specialised in exactly such niche markets.
The growth decomposition suggests that with regard to spatial and economic policy, any ‘one-size-fits-all’ policy settings are unlikely to be successful. Although there are general economic processes at work, these operate in specific geographical and product markets that therefore require location-specific policies. We find that regional economic development differs strongly among sectors and regions with a strong geographical component in the location of growth. Growth does not only take place in size-based classes of the largest conurbations or regions, but also in regions that have specific niche market characteristics or are embedded in typical niche-market networks. This supports European place-based development strategies, where becoming structurally and competitively better embedded and endowed involves market niche-based economic diversification processes that integrate skills and networks.
The significance of Networks
Despite the growing acknowledgement that entrepreneurship is an important driver of regional innovation, the role of networks in these processes has been less formally examined. In order to address this gap, SmartSpec explored the relationship between entrepreneurship and regional innovation, with the nature of the networks formed by entrepreneurs firms tested as a key determinant of regional innovation differentials.
Our work suggests that the relationship between entrepreneurship, innovation and regional economic growth is governed by a series of network dynamics relating to: (1) the nature of the firms established by entrepreneurs; (2) the nature of the knowledge accessed by firms; and (3) the spatial nature of the networks existing between those accessing and sourcing knowledge.
On this basis, a key determinant of regional innovation and growth differentials is the capability and capacity of entrepreneurial firms within regions to establish the network capital required to innovate in an increasingly open environment. Network capital is defined as consisting of investments in strategic and calculative relations with other firms and organisations in order to gain access to knowledge to enhance expected economic returns, principally via innovation. In particular, network capital, in the form of investments in strategic relations to gain access to knowledge, is found to mediate the relationship between entrepreneurship and innovation-based regional growth.
There are multiple mechanisms underlying the formation and development of inter-organisational networks by entrepreneurial firms, and it is through a range of complementary networks that firms are able to appropriately access and apply knowledge and subsequently develop innovative goods and services. Furthermore, entrepreneurs identify and mobilise the uniqueness of their knowledge base according to three underlying characteristics: the superiority, excludability and miscibility of knowledge, i.e. the capability to mix and combine different types of knowledge from different sources with their own knowledge stocks.
This suggests that policymakers need to pay increased attention to the role of network capital and inter-organisational connectivity when formulating regional innovation strategies, especially policies such as smart specialisation where entrepreneurial search dynamics form a key component. The findings are also applicable to entrepreneurs, as we find that:
• Innovation-seeking entrepreneurs should incentivise the accumulation of network capital within their firm.
• Entrepreneurs incentivising the accumulation of network capital are likely to have better access to economically beneficial and commercializable knowledge.
• Entrepreneurs need to be aware of the potential trade-offs between accessing knowledge that is relatively easy to source and absorb and that which may be more difficult to identify and integrate but potentially offers far greater economic returns.
• Entrepreneurs need to ensure management systems are in place to effectively search, screen and select the most appropriate knowledge to flow in and out of their firms.
• In order to access the highest quality knowledge, entrepreneurs should seek to invest in a balanced portfolio of networks encompassing both local and more global geographic connections.
Addressing institutional barriers and bottlenecks
A concern with the effects of institutional settings on economic development, as either facilitating or constraining factors, is increasingly shared by both academics and policymakers (Tomaney, 2014). For instance, in a report examining regional economic growth that covers a range of European regions, the Organisation for Economic Co-operation and Development (OECD) identifies a number of common institutional bottlenecks: “poor mobilisation of stakeholders, lack of continuity and coherence in the implementation of policies by institutions, institutional instability, lack of common and strategic vision, and lack of capacity and gaps in multi-level governance (MLG) frameworks” (OECD, 2012, p.23).
SmartSpec approached this topic of institutional and other barriers to smart specialisation from the perspective of contrasting market and system rationales for innovation policy. The early development of smart specialisation as a policy concept, particularly by Dominique Foray, has primarily been in reference to market (including coordination) failure rationales. This has led to the ‘entrepreneurial discovery process’, conceived as a collective process of a region identifying research and innovation domains that it should prioritise to stimulate structural change in its economy, being promoted as the core feature of smart specialisation strategies. System failure rationales, by contrast, have tended to be evoked in relation to smart specialisation only in the more general sense of supporting more differentiated and context-sensitive regional innovation policies. The basic argument of this paper is that the application of this system failure analysis should be strengthened to supplement market and coordination failure rationales for smart specialisation.
Our empirical research illustrates that system failures of different types exist that can act as barriers to the unfolding of smart specialisation dynamics in European regions. Typical manifestations are represented as low research/innovation or regional governance capabilities, economic or political lock-in effects, and fragmentation from a lack of network interaction or institutional duplication. These three forms roughly corresponded to the organisational thinness, lock-in, and fragmentation categories that underpin the territorial system failure perspective. However, our review shows that the occurrence of these failures in a particular region cannot just be presupposed from its general type (i.e. peripheral, old industrial, metropolitan). Instead, the different forms of system failure that act as possible barriers to regional evolution (either on their own or in combination) are the product of a range of factors.
The comparative analysis indicates that, for low innovation or governance capabilities, these include the sectoral and ownership structure of firms, the spatial organisation of the national public research system, and position of the region in multi-level governance arrangements; for economic or political lock-in effects, these include the dominant position of certain sectors in the economy and/or existing innovation policy of the region, weak institutional environments, and government instability or dysfunction; for fragmentation from a lack of network interaction or system cohesion, these include low knowledge demand or absorptive capacity of firms, poor incentives or culture for external engagement in public research organisations, and duplication of intermediaries preventing their growth above a sub-critical size. Many of these factors relate to territorially-specific features of institutional systems at the national and regional level. For regions to be able to take steps to address these system failures it will therefore be necessary for them to undertake an in-depth analysis to identify the particular bottlenecks they face and their underlying causes as part of the policy process.
The policy implication of this argument is not that smart specialisation should incorporate greater attention to the systematic aspects of innovation alongside the current emphasis on entrepreneurial discovery. Basic principles of smart specialisation, such as more regionally differentiated strategies and a focus on making links to the local productive base, are very welcome developments in thinking and indeed have the potential to strengthen the functioning of innovation systems. This is therefore not just advocating a return to previous Structural Fund programme periods that took the formation of regional innovation systems as their main goal, but the development of an approach in which elements of both can be combined in a mutually beneficial way. In theoretical terms, this project can be supported by future work that brings together market and system failure perspectives. For instance, along the lines of Bled and del Rio (2013) who (in reference to technological rather than regional innovation systems) use an evolutionary complex system perspective to highlight the role of markets in coordinating the underlying knowledge structure of a system and not just the operations of economic actors (also see Metcalfe, 2005).
In more practical terms, the form of this combination of smart specialisation with innovation system elements may have to vary between different regions. Although the comparative review above highlights that forms of system failure can be present in any region, many of them are more prevalent in less developed regions, such as those in Central and Eastern Europe that have continuing weaknesses in their economic structure and institutional environment. These countries therefore may have to dedicate a greater share of their strategy to measures that can continue the process of developing an effective innovation system, before the undertaking of an entrepreneurial discovery process can be expected to have the anticipated development impacts in terms of stimulating structural change in regional economies.
The significant role of Governance
Foray (2015) makes a clear distinction between the concept of smart specialisation and its reflection in an explicit strategy or policy. A smart specialisation strategy or policy, “involves putting into place a process whereby (the) dynamic of new speciality development ... can be facilitated thanks to punctual and targeted governmental intervention in order to support in a preferential way the most promising new activities” (p. 25, emphasis added). Thus while smart specialization marks a change of emphasis from more ‘horizontal’ regional policies its real novelty lies in the territorial entrepreneurial discovery process through which these priorities are identified and pursued. Better understanding of the governance requirements of territorial entrepreneurial discovery processes lay at the heart of much of the work of SmartSpec.
Existing conceptual understanding rests on the argument that discovery of the right priorities for a given territory should engage regional stakeholders from business, government, research/training and civil society, each of which hold different elements of the knowledge required to ultimately make the right selections. Interaction amongst this so-called ‘quadruple helix’ should be entrepreneurial and geared towards transformation of the economy, built around a motivation to innovate and change. By definition this requires extremely sophisticated multi-agent (and multi-level) governance that goes beyond more traditional governance forms that are strongly led by one agent (in the context of a regional strategy, usually government). The challenge in practice therefore is how to introduce new actors into territorial innovation governance and carefully articulate the role of each within re-invigorated processes.
Research during the initial phase of smart specialisation adoption suggested that the governance approach taken would be shaped by the existing institutional and governance context in different European countries and regions (McCann and Ortega-Argilés, 2014). This is in line with broader arguments around the importance of context in regional studies (Todtling and Trippl, 2005; Rodriguez-Pose, 2011), and we would indeed expect that the most effective (and feasible) governance settings for entrepreneurial discovery processes will differ according to specific regional context. General regional features factors such as the degree of innovation system development, the region’s relationship with its neighbours, the political degree of decentralisation, the strength of policy path dependency and the role and weight of different actors within the regional system, are all likely to be significant.
We suggest that the entrepreneurial discovery process (of the decision-making dynamics of RIS3) is affected by different elements: the general features of the region; and the regional innovation governance characteristics, which in turn include the actors, their structures and power and the degree of path dependency. These elements exhibit inter-relationships and are specific to each region. Indeed, the setting up of the entrepreneurial discovery process differs from region to region in line with the common understanding in regional studies that ‘one size doesn’t fit all’ (Tödtling and Trippl, 2005).
A common feature is the small involvement of firms and civil society in the early phase of RIS3. The government plays a leading role in the RIS3 process in most of the cases. Where their role is not as strong it is in regions in highly centralised countries, in which cases regionally-influential actors, often universities and HEIs, fill the void of regional government capabilities. In almost all the cases, the private sector was hardly involved in this early stage of RIS3, something that requires attention in the current and coming phases if the notion of territorial entrepreneurial discovery is to have real meaning. This raises questions around the extent to which territorial entrepreneurial discovery, as envisaged conceptually, is in fact taking place, particularly in those places where businesses have not traditionally been included in policy-making processes.
Furthermore, the concept of multi-level governance is largely limited to coordination between the national and the regional level, or/and by incorporating the local level. The coordination with “lateral” levels (i.e. with neighbouring (or more distant) regions) has been almost inexistent. We can see a broad typology of regions emerging. A group of single level regions where RIS3 decision-making dynamics, in their early phase, have been dominated by one level of government, without the involvement of other levels. A second group of regions characterised as top-down multilevel regions, in which the RIS3 design phase has been multi-level, but has been strongly determined from the national level, and a third group of networked multilevel regions, in which the RIS3 design phase has taken place with input from multiple territorial levels and with a relatively balanced engagement of those different levels. There are clear signs, however, that, in almost all of the cases studied, RIS3 is forcing multi-level governance issues to be taken seriously; the issue is now more firmly on the agenda.
Within the governance arena it is clear that actors, structures and power relationships within the regions exhibit path dependence, which is seen to condition RIS3 decision-making dynamics. It is particularly clear that in more developed regions previous paths (such as cluster policies or pre-existing STI plans) have strongly shaped RIS3 strategies and the governance that characterises the entrepreneurial discovery process underpinning these strategies (such as the role of national or local government in the strategies, or of certain businesses, clusters or knowledge agents). This leads to path extension in more developed regions and therefore to situations in which governance of the entrepreneurial discovery process has been built on past dynamics. In addition, in less developed regions we observe an important role for external shocks (EU directives, mainly) as mechanisms for change, but inertias and power from national level have thus far been difficult to break in strongly centralised countries.
Finally, our meta-analysis suggests that governments - at different levels - play by far the strongest role in regional innovation governance and that role is intrinsically related to the degree of decentralisation of the country. In this regard the national level plays a very strong role in some cases, and we also observe a perhaps surprisingly important role for the local level, suggesting that more research is needed around the articulation city and municipality level governance dynamics within regional entrepreneurial discovery processes. More collective, or shared, concepts of governance remain notable by their absence in most cases, with only a few regions demonstrating how this can add value over time.
Embracing Social Innovation
There has been considerable interest in the notion of social innovation and the concept has become central to the agenda of Europe 2020. It is argued that social innovations are “not only good for society, but also enhance society’s capacity to act” (BEPA, 2010 p.9). The concept of smart specialisation, as applied to date, is strongly economic in its outlook and largely overlooks concepts of social innovation and social and environmental outcomes of innovation activity. For example, our research demonstrates that few strategies consider the role of social innovation to any real degree, and that there is uncertainty as to how the concept can be applied in practice. This is an unfortunate oversight for it privileges certain activities and undervalues others, which can form the basis of future economic growth and, which, in themselves, provide social value.
Whilst some proponents of smart specialisation advocate the need to include social innovation within their strategies, it has not been clear how these two important concepts relate to one another. This is partly due to the myriad definitions and meanings applied to the term ‘social innovation’. This makes it difficult to prevent its co-optation by political and business entities, which are likely to undermine the goal of improving the satisfaction of unmet needs. At a basic level, then, greater conceptual clarity is required.
In seeking to couple the concepts of societal innovation and smart specialisation consideration also needs to be given to engaging with literatures on socio-technical transitions to help guide discussions as to what kind of obstacles radical, local or community-based initiatives are likely to encounter in the process of upscaling. At present, the notion of innovation in smart specialisation strategies is primarily focused on raising economic value from existing production processes or from on-going scientific research agendas. Consequently, whilst there is much activity in the field of societal challenges, this has not yet materialised into real action supporting social innovation.
Examples of public service innovation can be found in many Member States, but our research found very little evidence that PSI is being consciously articulated with or factored into national and regional smart specialisation strategies. PSI can be understood in one of two ways: innovation in the public sector, the internal dimension, and innovation through the public sector, the external dimension. Our research found some evidence that public administrations are genuinely trying to modernise their internal procedures and practices to render them more innovation-friendly, especially with respect to the way in which public procurement policy is designed and deployed for example. There is also evidence to suggest that public bodies have come to realise – through a combination of past experience and present austerity pressures – that they have to craft new and more innovative ways of working with external partners in the private and third sectors if they are to meet pressing societal grand challenges. This point was forcefully illustrated in our case study of Social Innovation and Assisted Living, where our research found that the public sector is a crucially important player given its multiple roles as commissioner, provider, regulator and funder of adult social care services. Perhaps the most important lesson from our PSI research is that the public sector is learning that social innovation needs to be treated more seriously because, in the assisted living case, the most successful schemes were those that had been designed with users rather than for them.
Long established models of innovation are trying to accommodate the increasingly significant role that users and citizens are playing in designing, using and maintaining products and services, a process that is variously referred to as co-production and democratic innovation. This co-production process has even generated new models of innovation, such as the Quadruple Helix, a development of the Triple Helix of academia, industry because it includes civil society as a fourth agent of innovation. In our research, users and citizens were found to be playing serious roles as agents of user-driven innovation not just in sectors like healthcare and social care, which might be expected, but also in the context of smart technologies and smart cities, where the social behaviour of citizens is as important as consumer preferences. These new forms of behaviour are the very stuff of social innovation and public policy needs to harness this civic energy if it is to meet societal challenges. A key question to emerge from our research is the question of how (if at all) the role of users and citizens can be formalised in the policy process because the latter agents set a high premium on local autonomy and self-organisation - attributes that render them highly suspicious of being co-opted and enrolled into the agendas of governments or corporations. The latter need to recognise and respect “lay” knowledge because the price of accessing it may be accepting the autonomy of users and citizens.
Social enterprises are one of the most tangible manifestations of and vehicles for social innovation. Although social enterprises have a critically important role to play in meeting societal grand challenges – especially with respect to healthy ageing, renewable energy transitions and food security and the like – our research found that they have great difficulty in relating to and being taken seriously by the conventional science, technology and innovation (STI) agents that dominate the smart specialisation policy process. This highlights the point that conventional models of innovation (and the established agents that figure in them) have yet to fully appreciate the potential power of social innovation and the role that social enterprises play in a process that could deliver a double dividend by generating opportunities for STI-type products and services as a by-product of meeting unmet social needs.
Smart Specialisation in regions with less developed innovation systems
A key question is whether smart specialisation strategies are applicable to any type of regions. It has been argued that regions with less-favoured research and innovation systems have a low potential to diversify into new industrial areas due to unfavourable economic structures and a weak endowment of knowledge organisations (Boschma, 2014b, Isaksen and Trippl, 2014a). In addition, some less-developed regional research and innovation systems suffer from weak policy and governance capacities, which could curtail the effective use of Cohesion policy funds (Charron et al. 2014) and may form major barriers to the successful formulation and implementation of smart specialisation strategies (Rodriguez-Pose et al., 2014).
Typically, the EU identifies less-developed regions as those with a GDP per capita that is less than 75% of the EU average. More developed regions are those with a GDP of more than 90% of the EU average. Is this, though, similarly appropriate for identifying regions with less developed research and innovation systems? We identify that in seeking to categorise regions there is a tendency to measure narrowly defined RIS, analytical (R&D based) knowledge and the STI mode of innovation and build typologies based on the findings of these exercises. Existing empirical approaches fall short of taking account of conceptual insights into system failures, organisational and institutional thinness, misconfigurations of RIS in relation to knowledge bases and weak RIS structures for different forms of path development. In other words: advances that have been made in conceptual debates on specificities of less-developed regions are only partly reflected in existing empirical approaches. The institutional dimension of RIS deserves further attention in our understanding of which regions might be described as exhibiting less developed research and innovation systems.
Our work also considered specific elements for our understanding of particular concerns faced by regions with less developed research and innovation systems. One novel approach taken was to explore the significance of value chains in shaping the innovation context in these regions, whilst also framing their path development possibilities. Crucial within this are pressures (or strategies) that influence the position of firms in these chains and networks, which can result in upgrading or downgrading. Our aim was to deepen the understanding of the multiplicity of possible repositioning strategies of firms engaged within Global Production Networks (GPNs) and to underline the variegated and flux nature of contemporary GPNs.
The general normative view is that upgrading in the value chain (or GPN) is a positive attribute. This could constitute: (i) process upgrading, especially representing cost-saving measures to enhance the efficiency of production; (ii) product upgrading, which is achieved by manufacturing more sophisticated products; and (iii) functional upgrading, a shift towards activities with higher value-added such as developing own brands or abandoning existing lower value-added activities (Humphrey and Schmitz 2002). However, while process and product upgrading have been documented as 'frequent' by research (e.g. Pavlínek and Ženka 2011), there is less agreement in the literature on the prevalence of functional upgrading, as it might be constrained by buyers eager to protect their core competence as well as by resource requirements and associated risks (Humphrey and Schmitz 2004).
In contrast, the concept of downgrading has received much less attention in the literature and remains underdeveloped. This is unfortunate as the number of cases of downgrading in practice can be surprisingly high and, in contrast to upgrading which is broadly referred to in the literature with a positive connotation, there is a negative connotation associated with downgrading. For regions with less-developed research and innovation systems, there is a suggestion that pressures for downgrading are more difficult to resist and more prevalent, particularly where such regions also contain a higher proportion of firms in lower value segments of GPNs. To address this gap we considered different potential forms that downgrading could take.
• The first type of downgrading – passive downgrading – represents an involuntary move by a company towards the production of simpler goods as a result of a decision (i.e. change of demand) by a higher-tier buyer; when the existing supplier is excluded from the production network either partially or even completely due to a drop in demand for one or more of its products by a higher-tier supplier, or where a higher-tier supplier decided to move out of the region. This is likely to undermine the firm’s technology capacities, to squeeze the profit margin, and consequently to expose the firm and its employees to negative consequences and may result in a decline in R&D capabilities elsewhere in the region and in negative multiplier effects upon other regional lower-tier suppliers.
• The second type of downgrading – adaptive downgrading – is not induced by the decision of a key customer, but follows from the decision of a firm’s managers recognizing that the company is unable to sustain the competitive pressure within its current market. If such a situation occurs, managers are likely to refocus either on lower or smaller market segments or on the production of components instead of the product for the end-market. Whilst this may secure market position (and in some cases enhance profitability) it may also increase the vulnerability of the firm to market shifts owing to higher levels of specialisation.
• Finally, strategic downgrading might arise as a result of change of business strategy by a highly capable supplier or even by a lead firm dissatisfied with its current profit margin. This strategy also has its fundamental pros and cons, depending on where the decision places the firm within the value chain of the GPN.
Our assessment of smart specialisation approaches developed too date suggest that there is little appreciation of the role of upgrading or downgrading on innovation capacities and economic transformations, nor consideration of the context in which RIS3 are set. This suggests that entrepreneurial discovery processes in regions with less developed research and innovation systems need to be reconsidered in the light of these findings. Our research also highlights other important considerations for entrepreneurial discovery processes in such regions. State-of-the-art regional development theories highlight the important role of informal institutional factors such as trust, responsibility, professionalism, partnership and shared leadership for regional development. This contrasts sharply with the under-developed institutional framework in regions with less developed R&I systems, which can be described as being over-bureaucratic, over-politicised, unprofessional, unstable, non-responsive, non-transparent, lacking strategic vision, with wide-spread rent seeking behaviour and most important of all – lack of trust among their key actors.
However, the public administrations in less developed regions tend to have a risk-averse or “play it safe” mentality, which limits the space for experimentation, manoeuvre and flexibility in decision-making and public initiatives. In addition, public servants in regions with less developed R&I systems tend to the
view that the interests of public sector bodies, private firms and the academy are mutually are different and divergent. In many cases therefore, the demanding process of entrepreneurial discovery, based on close cooperation between businesses, academics and the public sector, is poorly articulated and has no historical development.
Our research suggests that in institutionally weak regions the entrepreneurial discovery process should not begin in the conventional way, with regional stakeholders obliged to collaborate to discover new business opportunities. On the contrary, where mutual trust is minimal (not least because entrepreneurs may be meeting their colleagues for the first time), the first step should be to build mutual understanding among entrepreneurs (and among academics too if possible) as to the key bottlenecks that constrain the development of local businesses.
The role of knowledge institutions (particularly universities) in smart specialisation is a key theme in regions with less developed research and innovation systems. The introduction of smart specialisation as a guiding principle for European innovation policy is the source of a number of dynamics with different, and possibly conflicting, implications for the role of universities in these regional contexts. Universities are amongst the organisations that are most likely to participate in the development of smart specialisation strategies in less as well as more developed regions – ahead of, for instance, multinational firms and SMEs. This does, however, conflict with the theoretical suggestion that regions with only modestly developed research and innovation systems should develop strategies that are less reliant on local academic research capabilities unless these capabilities have the potential to become innovation domains that are related to (and possibly transformative of) their existing productive structures.
This is not to suggest that universities and other knowledge institutions will not continue to have a significant role to play in development of European regional innovation policy. In particular, our empirical work has identified two areas where these institutions should make a leading contribution to the development of smart specialisation in regions with less developed innovation systems. First, both survey and case study material emphasises the educational (rather than research) function of universities and related organisations as part of a broadly-defined innovation policy. This function is considered of greater importance in less developed than more developed regions. The relationship to higher education and training has not yet, however, been a main focus of the smart specialisation debate, and the clear finding of its importance here suggests that this is a topic that should be investigated in more depth in future studies. In particular, it raises a question about whether education in smart specialisation should be seen to have a predominantly more horizontal function in increasing future innovation capacity by enhancing the general level of human capital in the regional economy, or whether priorities for skill development should be concentrated on narrower fields aligned with the more vertical innovation domains promoted in the current RIS3. Second, engaged universities can potentially help enhance governance and networking capabilities of regions with less developed innovation systems so as to address the institutional barriers to them effectively implementing smart specialisation (through, for instance, conducting an entrepreneurial discovery process).
The design, implementation and assessment of smart specialisation strategies
The European Commission’s guidance for the design of smart specialisation strategies has proved to be highly influential in shaping the approach taken by regions to the process of strategy design and the format of the eventual content. However, this guidance notwithstanding, the S3 concept presupposes an advanced level of institutional development amongst regional actors and the results of SmartSpec research questions the institutional readiness of many regions to embark in such demanding exercises. As the important role of institutions for regional development is now more generally accepted, the uneven quality of regional governance, as evidenced by recent studies, is a challenge for S3. Looking at many specific features of institutional set up in regions with less developed research and innovating systems, and in particular the disjunction between private sector and public sector spheres, and the deep cleavage and mistrust between entrepreneurs and academics, combined with the unfavourable characteristics of their economies, SmartSpec finds that institutionally weak regions need a specific approach to S3 and to the entrepreneurial discovery process concept. This involves two adjustments. First, the setting up of horizontal priorities, in addition to vertical priorities, aiming at reinforcing the institutional environment and fixing bottlenecks in the innovation system. Second, the establishment of suitable triple-helix innovation platforms (including national and regional authorities) as an intermediary step, a vehicle to kick off an entrepreneurial discovery process, before defining “smart specialisation domains”.
The implementation of smart specialisation strategies is at an early stage of development. Despite this, SmartSpec has shed light on two concepts that both literature and practice have been using in parallel: territorial strategy and competitiveness policies. It analysed the link between these and discusses how a possible disconnection might lead to problems in territorial strategy implementation. This implementation should not be considered a stage in a linear model, but an interactive space in which dialogue takes place among different actors. The analysis highlights the wide policy and instrument portfolio that current policy-makers have to deal with, and its implications for instrument choice. A key argument is that the missing link between strategies and policies consists in “goal-oriented” policy mixes, i.e. sets of interacting instruments which together are able to influence conditions and actors in a territory, to reach the goal of the strategy. Policy complexity leads to challenges for territorial strategy implementation as there is no optimum recipe and policy-mix for each territory. Taking a policy mix approach implies combining different types of policies, covering horizontal and vertical priorities, involving several levels and layers of government and following different theoretical rationales. In addition, policy path dependency and inertia make the change in instruments difficult and leads to greater challenges to manage policy mixes associated to specific strategic goals. For success, policy mixes have to be adapted and aligned to strategic goals, which pleads for policy intelligence, coordination and coherence. This points to the importance of including evaluation tools and exercises in the design and implementation of strategies and policies as they help to assess the complementary effects of all types of policies and provide policy intelligence into the process, a theme that is developed further in our work in this area.
In assessing RIS3 it is well to remember that whilst there is a strong relationship between policy evaluation and strategy evaluation, they are not the same thing. Our work seeks to bridge the gap between the acknowledgement that evaluation should play an important strategic intelligence role in territorial strategy processes, and the practice that policy evaluations tend to remain isolated and not well-linked to the strategy process at territorial level. This leads to a proposed ‘territorial strategy evaluation framework’ that is learning centred. The framework makes a clear distinction between evaluation at different levels (strategy and policy) and emphasizes the powerful learning possibilities that lie between the two levels. The framework emphasizes the need to understand on the one hand how well the policy mix is aligned with both the content and the objectives of the strategy; and on the other hand how this policy mix interacts with the evolution of the content and objectives of the strategy over time. As such it constitutes the central arena for learning in the territorial evaluation sphere. A change in paradigm is required such that evaluations cease to be static pieces of information about individual policies’ effectiveness, and become integrated, dynamic learning processes, which tie together competitiveness policies and territorial strategies.
Similarly, SmartSpec also addresses the fundamental issue of monitoring and evaluation of S3. Starting from the recognition that all policies arise from a complex bargaining process between different stakeholders, different parties, different interest groups and different constituencies, we emphasize the necessity for an encompassing vision and a translation of this vision into clear objectives. Uncovering policy intentions and making them explicit is necessary both in order to ensure that the policy is designed as well as possible and also to allow for the policy to be evaluated: the use of outcome/results indicators allied with monitoring and evaluation exercises are essential for assessing the impacts of innovation-related policies. However, in practice, many policy interventions even in advanced economies have little explicitly-measurable objectives in-built in their design and very few are therefore amenable to comprehensive monitoring and evaluation exercises. Our work considers the application of properties of outcome and results indicators, along with the features of good evaluation and monitoring exercises, to the smart specialisation agenda. A key discussion relates to the idea that S3, as a particular type of results oriented policy, would require an explicit theory of change to be articulated ex ante. Such new policy initiatives though, take place in a context of a certain degree of ex ante uncertainty, and therefore require experimentation and ‘self discovery’; they also tend to be based on partial, indirectly-related or incomplete data. Therefore, that kind of policy is not readily translated in tightly-specified analytical model ex ante and instead proceeds in a more iterative manner, assembling knowledge and evidence as it arises. This that new data must be constructed during the life of the policy in order for the policy to be evaluated ex post, and that these data must closely relate to the theory of expected change put forward as the basis for the policy.
Smart specialisation is critical in articulating this theory of expected change. In order to commence the policy prioritization process, smart specialisation requires a detailed analysis of the current regional economic and industrial structure on the basis of the best available evidence currently available, i.e. baseline or profiling indicators. The results/outcomes indicators are designed to capture the changes in the intended results/outcomes, and the impact of the policy is the change in the results/outcome indicator which can credibly be ascribed to the policy intervention. Our work concludes that the logic of intervention, the theory of expected change, the indicators to be employed during the life of the policy, the data to be constructed, and the design of the policy, are all closely interrelated issues which cannot be divorced from each other. These results-orientation and policy monitoring and evaluation aspects have to be built into the policy design right from the beginning.
Despite these perspectives to evolve towards much more robust, systematic and codified, monitoring and evaluation systems for S3, based on enhanced use of result indicators, the need for system-wide evaluations also leaves room for other, complementary approaches. The experimental character of smart specialization strategies reinforces the need for reliable and detailed assessments, addressing design and implementation issues. SmartSpec argues that peer review methods, when used appropriately, can provide valuable contributions to support S3. These methods include elements that address the need for these strategies to be: open, well-informed, integrated, differentiated, shared and impact – oriented. Peer reviews are seen as effective mechanisms to lift policy learning, relying on a user-driven approach. Comparing the peer review experiences run by the OECD and the European Commission, the paper identifies success conditions such as: strong political endorsement, wide stakeholders participation, quality of peer review panel composed of a balanced mix of peers and experts, attention to all stages in the three-step/six stages peer review process. The analysis underlines the specific value of this technique, that combines tacit and codified knowledge in a purpose-oriented exercise ending up in applicable and realistic policy recommendations. The conclusion underlines the potential, but also the limits of peer reviews to help this new wave of policies reaching their ambitious goal. It suggests a model for peer review which is adapted to the emerging needs of S3 in the near future.
Regions as Living Laboratories
The context of place is a crucial consideration in our understanding of the operation of smart specialisation. The complex interplay of different factors within dense regional innovation ecosystems embedded in wider territorial and sectoral systems may have a significant bearing on the emergent outcomes of smart specialisation approach. To better understand the processes of smart specialisation, as shaped by territorial context, SmartSpec explored practices of smart specialization strategies 16 European regions. These differed strongly in terms of geography, size, socio-economic dynamics, innovation capacities and governance settings, providing a strong basis for exploring how various types of European regions engage in smart specialization approaches and how these approaches, as well as potential barriers to them, differ between various spatial contexts.
Inter alia, each Living Lab considered the following features:
• the entrepreneurial search and discovery process,
• the role of institutions in developing smart specialisation practices,
• the systemic and institutional barriers to developing smart specialisation practices,
• the role of social innovation in smart specialisation practices,
• the challenges facing regions with less-favoured research and innovation systems,
• the processes of designing, implementing and assessing smart specialisation strategies
As the focus of the research in this aspect of the study was the role of place-based features, our results focus on how organisational, institutional and systemic RIS factors have enabled or constrained emerging smart specialisation practices in less-developed, intermediate and advanced regions and if (and how) smart specialisation approaches have, in turn, triggered policy learning and RIS building/transformation processes in the respective groups of regions.
The findings demonstrate that smart specialisation challenges prevail in all three types of regions, albeit the sources and the scope of these challenges are very different, pointing to a distinct impact of region-specific policy capabilities, socio-economic conditions and organisational, institutional and systemic RIS configurations. We have also found evidence that RIS3 have an influence on the development of regional innovation systems. The nature of these effects varies markedly between less-developed and more advanced regions.
Place-based factors exert a strong influence on the ways by which smart specialisation is adopted in European regions. Our analysis of findings from the 16 regions suggests that it is the interplay of a set of RIS factors that shapes the development and implementation of smart specialisation practices in distinct ways. Degrees of industrial and organisational thickness and variety, institutional set-ups, systemic features, policy capabilities, past experiences with innovation strategies as well as levels of policy centralisation mould the spatial contexts in which the uptake of smart specialisation take place. Understanding the interrelations between a wide set of RIS factors and their impact on smart specialisation is of pivotal importance for scholars and policy makers alike. Place-based approaches which are at the heart of smart specialisation need to be further specified in terms of organizational, institutional and policy making capacities.
Emerging smart specialisation practices are influenced by and influence RIS characteristics. Focusing on the latter raises the question of what can realistically be achieved by smart specialisation. There are strong reasons to assume that this is contingent upon the spatial contexts under consideration. Hence, any evaluation of the success or failure of smart specialisation needs to take on a context-sensitive perspective, acknowledging that the initial conditions vary significantly across regions. In less-developed regions the core issues centre on developing an understanding of the importance of innovation and collaboration and learning how to set up inclusive, bottom-up governance structures for policy prioritisation. In more advanced regions, it is the unlearning of old and the experimentation with new forms of innovation and collaboration and the overcoming of too complex governance structures that rank high on the agenda of policy actors and regional stakeholders. Smart specialisation needs to be assessed in relation to these varying conditions; i.e. if and how it is able to address region-specific development challenges.
The findings presented in our work suggest that the advent of smart specialisation has induced policy innovations in less-developed regions whilst in intermediate and advanced regions, which have undergone substantial policy learning processes already in the past, the main effect of smart specialisation has been a re-orientation and upgrading of existing policy practices. Our results thus corroborate the findings from other recent studies (McCann and Ortega-Arquiles, 2016). However, there are also effects of smart specialisation on the wider RIS beyond the policymaking arena. Our analysis provides grounds for claiming that smart specialisation supports RIS building processes that are underway in less-developed regions and contributes to RIS transformation and re-configuration in intermediate and advanced regions. It remains to be seen how enduring these effects will be. Taking into consideration that the learning processes and changes outlined above hardly take place overnight but unfold in gradual, cumulative ways over longer periods of time, provides an argument in favour of the continuation of smart specialisation. However, our findings also reveal that there is a scope for improvements in further phases of RIS3. For example, there is a need to further specify how to address institutional challenges such as conflicting values in advanced regions and the questioning of the value of innovation in less developed regions. Furthermore, clear tools on how to build-up missing organizational capacities are also to be established.
Arguably, transforming European regions into more innovative places and promoting diversification through new path development can hardly rely on smart specialisation alone but will require an alignment with other policies and strategies at various spatial scales.
Smart Specialisation in Practice
An important element of SmartSpec was to integrate the experience of those tasked with developing smart specialisation practices in regions into the project. This provided an important user-perspective, helping to ground the findings of the academic researchers whilst also stimulating the wider learning and experience of those policy-makers. This was undertaken through a ‘Learning Journey’. The Learning Journey consisted of a series of ten themed events, which brought together 10 Regional Affiliates (Third Parties) and academic experts around a series of interconnected workshops to provide a cumulative learning experience.
This ‘learning journey’ not only supported the delivery of the overall objectives of SmartSpec but also provided individual and institutional benefits. Local workshops are held in each region on the day following the Learning Journey. These provide an important opportunity to widen engagement with the project and to strengthen and deepen awareness of smart specialisation approaches amongst regional actors.
The Learning Journey highlighted a number of opportunities, uncertainties and difficulties that the regional affiliates experienced in their development of smart specialisation practices. Whilst all regions are clearly different, and the opportunities and challenges are context-specific, a number of common themes emerge. It is not possible to extrapolate or generalise too broadly from these, but the messages are instructive and valuable for those considering the implementation of smart specialisation approaches in practice.
At the end of the Learning Journey regional affiliates completed a short questionnaire on how their knowledge had developed during the journey, and on key issues that they identify for smart specialisation. A particular feature of this was to examine where participants felt most and least confident around key themes. Whilst this identifies a number of common elements, such as a lack of confidence in the field of monitoring and evaluations and a strong confidence in themes such as Analysis and the Development of a Shared Vision within strategies, there are other areas where experience is mixed; such as governance.
Most confident Least confident
Shared vision (5) Governance (4)
Analysis (4) Monitoring and evaluation (4)
Governance (3) Priority setting (2)
Policy Mix (3) Policy mix (2)
Priority setting (1) Analysis (1)
Monitoring and evaluation (1) Shared vision (0)
A common message emerging from the Learning Journey is that in many regions there remains uncertainty over how the implementation of smart specialisation will take place in practice. This is symptomatic of the ‘learning by doing’ approach that appears to have characterised the introduction of smart specialisation to date.
A second common theme which emerges from the Learning Journey is, as noted, uncertainty over the appropriate governance arrangements and how this might be implemented over time in a dynamic context. Moving from a traditional government-led model of governance to an arrangement that is more strongly orientated towards more distributed models of shared or collective leadership is proving a challenging concept. This is exacerbated by weak patterns of multi-level governance.
The third area that merits individual mention, is the difficulty of developing smart specialisation approaches that reach outside of the region or Member State. Most strategies remain internally-focused and seek to strengthen intra-regional activities. There is very limited experience of seeking to develop approaches that are outward looking and seek to build collective notions of critical mass.
Finally, the over-riding message of the Learning Journey is the technical nature of most smart specialisation approaches. The development of RIS3 has tended to follow a technocratic process, utilising the design guide published by the European Commission and the previous experience of those responsible for the development of the RIS3. The need for a stronger embedding of RIS3 within wider political process was a common theme of the Learning Journey.
The notion of embedding also arose in the context of the experience of learning itself. Participants in the Learning Journey reported that most learning took place at a personal level and was embodied in the participants. It was a challenge to embed this learning in the organisations to which they belonged. In terms of what learning they had found most valuable, participants reported that it peer-to-peer learning that was most effective, such as that to be found in the Learning Journey and through specialist forums such as the Smart Specialisation Platform.
On the basis of the difficulties identified, which offer opportunities for future activities, the Learning Journey identified the following suggestions for future action:
• More attention is placed on governance models and future peer learning activities should concentrate on this topic. Monitoring, engaging business and internationalisation are other key themes. There has been much, and necessary attention, to monitoring and both DG Regio and the S3 Platform are aware of the need to improve knowledge of this important area
• That more guidance on a series of possible governance models is developed. This should reflect the variety of governance contexts and could be developed by the Smart Specialisation Platform in Seville. The Committee of the Regions should consider organising workshops on this topic with their members through a variety of training methods.
• More attention should be paid to how regional policy makers gain knowledge of new procedures and theories. Although many guides and other materials are available, more focused training sessions and courses need to be developed. This might be a role for universities in developing short courses delivered both through traditional face-to-face courses and through distance learning (blended learning and MOOCs)
The ‘Learning Journey’ was a unique and successful method to develop a community of purpose in smart specialisation. Future learning journeys should: clarify the final aims and objectives more clearly and develop during the first stops, the outcomes and possible impacts that could collectively be achieved and individually for each region and provide a ‘rest period ’around half way to check direction and needs such as widening or deepening topics.
Potential Impact:
Socio-economic impact
The socio-economic impact of SmartSpec will be found indirectly through its influence of public policy approaches at the regional, national and European Union level. It’s impact will be found in the extent to which policies are adopted, or amended, that improve the capacity and capability of regions to undertake innovation, through their firms, research actors and other agents, which are able to be translated into economic or societal outcomes, most notably the creation of new or better jobs and the realisation of economic growth.
SmartSpec has worked directly with 10 regions, through the Learning Journey. Each of these regions acknowledges the benefit of the learning gained through SmartSpec, which has had a positive impact on the development of smart specialisation approaches in their region. It is anticipated that this will help to enhance the impact that these approaches have in supporting economic growth and employment creation.
SmartSpec partners have also worked closely with policy-makers in a number of regions and have good links with national policy-makers in a number of EU Member States, such as the UK and Slovenia. This includes involving regional actors in relevant Thematic Seminars, such as that held on ‘Social Innovation for an Age-Friendly Society’. Held in North East England, this involved working with regional stakeholders to explore the local opportunities for innovation through smart specialisation in this field, whilst identifying generic opportunities and barriers that might inform policy development at the national and EU level. In North East Romania, SmartSpec researchers were invited to facilitate one of the first-ever meetings of all University representatives in the region, to consider the role of the University-sector in promoting smart specialisation in the region. SmartSpec partners have also worked closely with government officials and other stakeholders in the Basque Country and Navarre to provide live inputs that influence the ongoing implementation of RIS3 in these regions. SmartSpec partners, particularly ERRIN and EURADA, have promoted the findings of the SmartSpec project widely to their respective regional memberships, leading to potentially greater dissemination and socio-economic impacts than might otherwise have occurred.
A key route to socio-economic impact is through the links that the SmartSpec project has developed with EU policy makers and the Smart Specialisation Platform. A number of SmartSpec outputs are now incorporated into the publications, tools and resources of the Smart Specialisation Platform. SmartSpec partners have also supported the Platform at a number of workshops organised for regions, to assist in the development of RIS3. Within the European Commission, SmartSpec partners have also been involved in working with DG Regio, DG Research and Innovation and DG Education and Culture to ensure that the findings of the SmartSpec project are able to assist in the formulation of appropriate policies. This has included contributions to High Level events, supporting the development of new initiatives, such as that for Higher Education and Smart Specialisation, membership of expert advisory groups, and responding to requests for information from officials. SmartSpec was also invited to present evidence to the European Parliament Hearings on Cohesion Policy and Smart Specialisation.
Through wider dissemination actions, particularly invited contributions to policy-level events for Circumpolar regions and in Tunisia, the SmartSpec project is also contributing to distributing knowledge on the application of smart specialisation approaches to broader contexts external to the EU. It is anticipated that these actions will leave a small but potentially significant legacy in raising awareness of the potential for smart specialisation to promote innovation, economic growth and enhanced employment opportunities.
Main dissemination activities
SmartSpec has adopted an active dissemination strategy targeted on its key audiences of researchers and policy-makers. It has been opportunistic, in that it has taken advantage of opportunities that are offered, whilst holding to a core strategic dissemination strategy. The anchor points of this strategy have been founded on a series of conferences and seminars, planned publications, and a project website.
Conferences and seminars:
A number of conferences and seminars have been organised as part of the SmartSpec project. These have allowed the project to ensure that key audiences can be targeted at strategic times. In addition, SmartSpec partners have responded to invitations to address conferences and seminars where these would promote the overall objectives of the project, either through raising the academic profile of the work, or through facilitating contact with policy-makers.
Three Conferences were organised as part of the project.
• A Kick-off Conference was held in 2013 to launch the project. Hosted by the European Parliament, in Brussels this was aimed at regional policy-interests and secured a strong audience of more than 80 attendees.
• An Interim Conference marked the half-way point of SmartSpec and was aimed at a more academic audience. It was held in Prague, in order to promote the involvement of academics from CEE Member States, who are often underrepresented at such events. Again, more than 80 persons attended and the event was highly regarded by participants.
• The SmartSpec Final Conference took place in May 2016. It was hosted by the Committee of the Regions, in Brussels, and was targeted on a policy audience. More than 100 persons attended, demonstrating the reach, and continuing relevance, that the project had developed in its three-years.
SmartSpec organised 10 Thematic Seminars as part of its programme of activities. These were designed to reach a mixture of policy-makers, informed practitioners and academics to explore particular themes being considered by the SmartSpec researchers. Each offered an opportunity to share lessons emerging from the project, to challenge these findings and to highlight additional considerations that might also be relevant. The findings of the Thematic Seminars are available to the public on the project website.
Alongside its own conferences and seminars, SmartSpec researchers have sought to disseminate the findings of the project through participation in external conferences and events. These range from prestigious academic conferences to high level policy events organised by national governments or the European Commission. Headline events include the following:
• Papers delivered to the annual European conferences of the Regional Studies Association; to the annual conferences of the European Regional Science Association and to the annual conferences on Regional Innovation Policy.
• Papers delivered at the European Open Days (2014 and 2015) and to the annual WIRE (Week of Innovating Regions in Europe) conference (2014)
• Mobilising Higher Education for Smart Specialisation: a policy and practice seminar held in association with the Smart Specialisation Platform and DG Education and Culture.
• Summary contribution to High Level Conference on Mobilising European Universities for Smart Specialisation, organised by DG RTD, DG Regio and EUA (June 2014)
• Keynote addresses at the European Commission’s High Level Smart Regions Conference (June 2016).
• Keynote address at the European Commission’s High Level event in association with the Committee of the Regions on Innovation Ecosystems (January 2016).
• Contribution to Tunisian Government event on Smart Specialisation in Tunisia, in association with the Smart Specialisation Platform, arranged by DG NEAR.
Publications
The SmartSpec partners have published the results emanating from the project in a range of high-quality peer-reviewed journals, alongside a number of books. Highlights include:
• The publication of a book by Routledge setting out the findings of the SmartSpec project in the field of entrepreneurial search and discovery. Entitled The Empirical and Institutional Dimensions of Smart Specialisation, it will be forthcoming in the latter part of 2016.
• The publication of a book containing a number of chapters by members of the SmartSpec project, on the topic of Strategies for Shaping Territorial Competitiveness
• The publication of a number of articles concerning the findings of the project in a special issue of the journal European Planning Studies, on the theme of smart specialisation.
• Publications in the following leading academic journals: Journal of Economic Geography; Papers in Evolutionary Economic Geography; Revista Icade, and European Journal of Innovation Management amongst others.
Further publications are under review at the current time, and additional publications are also proposed by the partners.
Findings from the project have also been published in a regular newsletter available on the project website. These have been produced on a bi-annual basis.
The project has maintained a dedicated website for the duration of the project. Hosted by Cardiff University the site will continue to function following the closure of the project, ensuring that the results of the work undertaken continue to be accessible to a wide public audience. The website contains versions of the publications produced by the project, or links to versions contained in online repositories, ensuring that they are accessible to the public.
List of Websites:
http://www.cardiff.ac.uk/cplan/research/smartspec
contact details:
Prof. Kevin Morgan
School of Geography and Planning, Cardiff University, King Edward VII Ave., Cardiff, CF10 3WA
Email: MorganKJ@cardiff.ac.uk
Telephone: +44 (0)29 208 76090
The concept of smart specialisation was first elaborated in 2008, and emphasises the need for policy makers to make choices as to which technologies or sectors should be supported through public policies. Through focusing on areas of comparative strength it is also possible to avoid the mimetic strategies that have characterized innovation policy-making in recent years. The regulatory agreement governing the EU’s Cohesion Policy for the period 2014-20 places a condition on Member States to have in existence a national or regional smart specialisation strategy in order to be eligible for support under the European Regional Development Fund.
The introduction of Research and Innovation Strategies for Smart Specilisation (RIS3) has not been without its critics, particularly as it is regarded as one of the largest experiments in regional innovation policy ever undertaken across the globe. The SmartSpec project addresses the perceived gaps in our knowledge of smart specialisation and its implementation. It has been undertaken concurrently with the introduction of smart specialisation approaches across the EU and develops the conceptual underpinnings of the concept of smart specialisation, as well developing practical knowledge and understandings that can assist in the implementation of smart specialisation practices at a European, national and regional scale.
The project’s findings cast light on the following dimensions:
• The significance of governance in the development and implementation of RIS3, noting the roles taken by different organisations and their interaction, both in the design and implementation of strategies and also in the development of entrepreneurial discovery processes;
• The particular challenges faced by Member States and regions with less-developed research and innovation systems to design and maximise the impact of their smart specialisation strategies.
• The currently weak link between smart specialisation and social innovation, but the potential that this could offer if approached more substantially.
• Consideration of improved metrics, evaluation and monitoring of smart specialisation strategies, including the potential offered by well-developed peer review assessment procedures
• The design of asset-based multi-sectoral policy mixes to support RIS3 in different regional contexts;
• The identification of institutional and systemic bottlenecks for smart specialisation in a comparative perspective, with considerations of potential areas for reform.
Project Context and Objectives:
The aim of SmartSpec (Smart Specialisation for Regional Innovation) has been to provide substance, guidance and practical support to operationalise the concept of smart specialisation. It has done so through a mix of academic and more practice-orientated activities guided by an ethos of developing results that will be useful to actors in different regional contexts. It has done this by strengthening the analytical underpinnings of the smart specialisation concept, providing methodological guidance for practice and generating strategic intelligence for policy-makers. Through an integrated, multi-dimensional and place-based approach focused on 8 Work Packages, SmartSpec has developed robust practical and analytical findings to strengthen the implementation of smart specialisation strategies. With a strong emphasis on knowledge exchange and facilitated learning, SmartSpec has delivered useful results to inform practitioners and policymakers in the development and assessment of smart specialisation strategies, whilst extending the state of the art.
The concept of smart specialisation was first elaborated in 2008, and emphasises the need for policy makers to make choices as to which technologies or sectors should be supported through public policies. By making choices, it is argued, one can realize scale economies, through achieving critical mass, and develop distinctive paths based on areas of competitive advantage. Through focusing on areas of comparative strength it is also possible to avoid the mimetic strategies that have characterized innovation policy-making in recent years. The regulatory agreement governing the EU’s Cohesion Policy for the period 2014-20 places a condition on Member States to have in existence a national or regional smart specialisation strategy in order to be eligible for support under the European Regional Development Fund.
Known more generally as Research and Innovation Strategies for Smart Specialisation (RIS3), these are intended to promote the economic transformation of EU regions, particularly those that are lagging in development. A RIS3 is intended to identify selective knowledge ‘domains’, or priorities, in areas where a region (or a Member State) has a comparative advantage. The approach is intended to promote a concentration of resources on these domains for reasons of effectiveness and efficiency, both within the region and also across the EU, and stimulate a process of entrepreneurial discovery.
The introduction of RIS3 has not been without its critics, particularly as it is regarded as one of the largest experiments in regional innovation policy ever undertaken across the globe. This is not unexpected given its rapid, and, for some, rather hasty, move from conceptual idea to mainstream European Union policy, which has led some commentators to describe it as ‘a policy in search of a theory’.
The SmartSpec project was conceived and implemented to address the perceived gaps in our knowledge of smart specialisation and its implementation. It has been undertaken concurrently with the introduction of smart specialisation approaches across the EU and is intended to develop the conceptual underpinnings of the concept of smart specialisation, as well as to develop practical knowledge and understandings that can assist in the implementation of smart specialisation practices.
Inter alia, SmartSpec aimed to address the following key themes:
• Identification of institutional and systemic bottlenecks for smart specialisation and the possible need for reforms in a comparative perspective;
• The role of organisations and their interaction for the development and implementation of smart specialisation strategies;
• Assessment of the challenge for Member States and regions with less-developed research and innovation systems to design and maximise the impact of their smart specialisation strategies.
• The link between smart specialisation and social innovation: the role of social innovation in smart specialisation: social innovation as public service innovation, involvement of users and citizens in processes of design and decision.
• Supporting the production of better metrics, evaluation and monitoring of smart specialisation strategies and the design of an asset-based multi-sectoral policy mix;
• Development of processes of peer review assessment of strategies.
In addition, a number of more detailed objectives were also established. These have guided the delivery of the project over the past three years.
• To identify related variety and value chain components within EU regions to inform specialization choices
• To identify the role of organisations and their interaction for the development of entrepreneurial discovery and assess the role of network connectivity in facilitating intra- and extra-regional asset combination
• To identify institutional and systematic bottlenecks for smart specialization, and possible need for reform
• To understand how multi-level governance perspectives are integrated in smart specialization approaches
• To explore the conceptual link between smart specialization and social innovation
• To identify how social innovation can contribute to smart specialization strategies
• To identify regions with less developed research and innovation systems
• To identify the challenges for Member States and regions with less-developed research and innovation systems to maximize the impact of their smart specialization strategies
• To strengthen understanding of the features which make for strong design in smart specialization strategies
• To explore the features which underpin the successful implementation of regional innovation strategies
• To examine the features which underpin effective assessment approaches to smart specialization
• To explore the place-based characteristics of smart specialization
• To territorially ground the theoretical propositions developed in WP1-4
• To identify territorial capacities to act in comparative spatial contexts
• To assess the comparative roles for public policy intervention in alternative spatial contexts
• To embed user-driven perspectives in the development of practical smart specialisation support materials and inform academic concepts of smart specialization
• To develop a practice-based learning community with smart specialization capabilities able to inform wider communities of practice
• To effectively disseminate all outputs of the project throughout its term, using a variety of means and mediums
• To ensure close cooperation with the Smart Specialisation Platform
• To provide sound management and administrative support for the smooth delivery of SmartSpec
Project Results:
Is all growth good?
To support economic growth policy-makers across Europe are selectively choosing economic specialisation and diversification opportunities in line with entrepreneurial search processes as part of smart specialisation strategies. By nature or by history, some regions seem better endowed with growing or promising sectors than other regions. But even regions specialised in globally growing markets face continuous competition, and hence can become less competitive when other regions gain larger market shares in smart specialised niche markets. Thus, the performance of individual regions varies according to their positioning and performance in international trade networks. SmartSpec developed a methodology that allows regional policy-makers to identify whether the performance of the region is primarily related to the sectors in which the region is specialised, the performance of these specialised sectors in general across all regions, or the performance of region’s specialised sectors in comparison to the performance of those same sectors in other regions. Structural, local based growth is distinguished from demand-led growth, stemming from other regions. These aspects are important for profiling and understanding the underlying regional growth dynamics, and for distinguishing the extent to which region’s performance in a global context is a matter of its structure and patterns of local specialisation (prone to local policy) or a question of the performance of those specialisations vis-à-vis other regions (prone to network policies).
SmartSpec developed a decomposition method of local economic growth that shows whether regions grow because of generic rising (or declining) demand for the products and services produced (demand led growth), and/or because of strengthening their competitive market positions (structural growth). Performing for better or for worse on these two dimensions of growth shows that seemingly favourable total regional growth figures may be solely attributable to demand-led growth, while structural growth is negative – meaning that the region is not competitive and loses market shares structurally (“bad growth”). On the other hand, regions may operate on generally stable or slightly declining markets, yet gain substantial market shares. Apparently these regions are very competitive and strong in structural growth (“good growth”). Exploring the scores of European regions along the two dimensions of growth, SmartSpec shows that demand-led and structural growth are taking place simultaneously yet independently from each other and shaping the long-run competitive advantages of regional specialisations, and hence provide crucial information on the competitive smartness of prolonging these specialisations.
Not only does this identification of different types of growth have important implications for identifying regional development opportunities through smart specialisation, it also provides us with important policy recommendations. Policies focussing on regional conditions for competitiveness, like accessibility, labour market conditions, innovation of local firms, education, housing or agglomeration circumstances, basically impact on structural growth opportunities and are much less clear-cut on demand-led growth opportunities. Regions characterised by a large demand-led growth component therefore cannot easily better their growth positions by implementing place-based development policies (alone). Positions in international trade and investment networks are still prone to locational assets, but to a much lesser extent than localised and competitive structural growth are.
Our analysis has shown that about 30 percent of regional economic growth can be structurally characterised as related to the local competitive performance of firms and regional-economic circumstances. On the one hand this limits the possibilities of regional policy makers because to a large extent (75%) regional economic development is demand-driven and beyond their control. On the other hand, all (smartly) specialised regions in Europe face this structural disadvantage in their respective niche markets, and thus the - on average - 25% structural entrepreneurial and spatial-economic conditions can make regions win the game from competing systems elsewhere. A careful analysis of policies implemented by competitor regions will also give insights into best-practice regional policies that arguably can be successful in one’s own region. Performing for better or for worse on these two dimensions of growth shows that regions can have competitive ‘good growth’ (related to structurally gaining market shares) and ‘bad growth’ (with declining market shares).
By exploring the many European regions along the two dimensions of growth for a representative set of European regions we show that demand-led and structural growth are simultaneously, yet independently from each other, shaping the long-run competitive advantages of regional specialisations, and hence provide crucial information on the competitive smartness of these specialisations. Showing that the life cycles of industries, sectors and clusters can be plotted within the alternative outcomes of our growth decomposition, leads to important insights. Eastern-European regions, although lagging in income, may have better demand-led and competitive growth cards to play than Southern-European regions that are lagging in growth altogether recently. Traditionally powerful Western-European regions, like the Linköping/Őrebrö region of Sweden, which specialised in high-tech manufacturing, may face a loss in their competitive and demand-led growth power despite the generic growth in the sector. Such an outcome may function as a ‘wake-up call’ for regions which are experiencing sustained economic growth, while also becoming less competitive in their niche market specialisations as other regions catch-up and outperform them. This is, or should be, of genuine concern to the smart specialisation agenda- a policy-driven conceptualisation that by its nature puts a central emphasis on unique entrepreneurial search processes that eventually evolve in diversifying yet sustainable growth trajectories. Likewise, using our methodology we are able to identify large growth potentials for the chemical sector in Antwerp, Belgium, a sector that generally declines relative to the services sectors, but one which also is in niche markets showing particularly strong growth potentials. Given their positioning in the dynamic market structure, Antwerp has managed in recent years to become smartly specialised in exactly such niche markets.
The growth decomposition suggests that with regard to spatial and economic policy, any ‘one-size-fits-all’ policy settings are unlikely to be successful. Although there are general economic processes at work, these operate in specific geographical and product markets that therefore require location-specific policies. We find that regional economic development differs strongly among sectors and regions with a strong geographical component in the location of growth. Growth does not only take place in size-based classes of the largest conurbations or regions, but also in regions that have specific niche market characteristics or are embedded in typical niche-market networks. This supports European place-based development strategies, where becoming structurally and competitively better embedded and endowed involves market niche-based economic diversification processes that integrate skills and networks.
The significance of Networks
Despite the growing acknowledgement that entrepreneurship is an important driver of regional innovation, the role of networks in these processes has been less formally examined. In order to address this gap, SmartSpec explored the relationship between entrepreneurship and regional innovation, with the nature of the networks formed by entrepreneurs firms tested as a key determinant of regional innovation differentials.
Our work suggests that the relationship between entrepreneurship, innovation and regional economic growth is governed by a series of network dynamics relating to: (1) the nature of the firms established by entrepreneurs; (2) the nature of the knowledge accessed by firms; and (3) the spatial nature of the networks existing between those accessing and sourcing knowledge.
On this basis, a key determinant of regional innovation and growth differentials is the capability and capacity of entrepreneurial firms within regions to establish the network capital required to innovate in an increasingly open environment. Network capital is defined as consisting of investments in strategic and calculative relations with other firms and organisations in order to gain access to knowledge to enhance expected economic returns, principally via innovation. In particular, network capital, in the form of investments in strategic relations to gain access to knowledge, is found to mediate the relationship between entrepreneurship and innovation-based regional growth.
There are multiple mechanisms underlying the formation and development of inter-organisational networks by entrepreneurial firms, and it is through a range of complementary networks that firms are able to appropriately access and apply knowledge and subsequently develop innovative goods and services. Furthermore, entrepreneurs identify and mobilise the uniqueness of their knowledge base according to three underlying characteristics: the superiority, excludability and miscibility of knowledge, i.e. the capability to mix and combine different types of knowledge from different sources with their own knowledge stocks.
This suggests that policymakers need to pay increased attention to the role of network capital and inter-organisational connectivity when formulating regional innovation strategies, especially policies such as smart specialisation where entrepreneurial search dynamics form a key component. The findings are also applicable to entrepreneurs, as we find that:
• Innovation-seeking entrepreneurs should incentivise the accumulation of network capital within their firm.
• Entrepreneurs incentivising the accumulation of network capital are likely to have better access to economically beneficial and commercializable knowledge.
• Entrepreneurs need to be aware of the potential trade-offs between accessing knowledge that is relatively easy to source and absorb and that which may be more difficult to identify and integrate but potentially offers far greater economic returns.
• Entrepreneurs need to ensure management systems are in place to effectively search, screen and select the most appropriate knowledge to flow in and out of their firms.
• In order to access the highest quality knowledge, entrepreneurs should seek to invest in a balanced portfolio of networks encompassing both local and more global geographic connections.
Addressing institutional barriers and bottlenecks
A concern with the effects of institutional settings on economic development, as either facilitating or constraining factors, is increasingly shared by both academics and policymakers (Tomaney, 2014). For instance, in a report examining regional economic growth that covers a range of European regions, the Organisation for Economic Co-operation and Development (OECD) identifies a number of common institutional bottlenecks: “poor mobilisation of stakeholders, lack of continuity and coherence in the implementation of policies by institutions, institutional instability, lack of common and strategic vision, and lack of capacity and gaps in multi-level governance (MLG) frameworks” (OECD, 2012, p.23).
SmartSpec approached this topic of institutional and other barriers to smart specialisation from the perspective of contrasting market and system rationales for innovation policy. The early development of smart specialisation as a policy concept, particularly by Dominique Foray, has primarily been in reference to market (including coordination) failure rationales. This has led to the ‘entrepreneurial discovery process’, conceived as a collective process of a region identifying research and innovation domains that it should prioritise to stimulate structural change in its economy, being promoted as the core feature of smart specialisation strategies. System failure rationales, by contrast, have tended to be evoked in relation to smart specialisation only in the more general sense of supporting more differentiated and context-sensitive regional innovation policies. The basic argument of this paper is that the application of this system failure analysis should be strengthened to supplement market and coordination failure rationales for smart specialisation.
Our empirical research illustrates that system failures of different types exist that can act as barriers to the unfolding of smart specialisation dynamics in European regions. Typical manifestations are represented as low research/innovation or regional governance capabilities, economic or political lock-in effects, and fragmentation from a lack of network interaction or institutional duplication. These three forms roughly corresponded to the organisational thinness, lock-in, and fragmentation categories that underpin the territorial system failure perspective. However, our review shows that the occurrence of these failures in a particular region cannot just be presupposed from its general type (i.e. peripheral, old industrial, metropolitan). Instead, the different forms of system failure that act as possible barriers to regional evolution (either on their own or in combination) are the product of a range of factors.
The comparative analysis indicates that, for low innovation or governance capabilities, these include the sectoral and ownership structure of firms, the spatial organisation of the national public research system, and position of the region in multi-level governance arrangements; for economic or political lock-in effects, these include the dominant position of certain sectors in the economy and/or existing innovation policy of the region, weak institutional environments, and government instability or dysfunction; for fragmentation from a lack of network interaction or system cohesion, these include low knowledge demand or absorptive capacity of firms, poor incentives or culture for external engagement in public research organisations, and duplication of intermediaries preventing their growth above a sub-critical size. Many of these factors relate to territorially-specific features of institutional systems at the national and regional level. For regions to be able to take steps to address these system failures it will therefore be necessary for them to undertake an in-depth analysis to identify the particular bottlenecks they face and their underlying causes as part of the policy process.
The policy implication of this argument is not that smart specialisation should incorporate greater attention to the systematic aspects of innovation alongside the current emphasis on entrepreneurial discovery. Basic principles of smart specialisation, such as more regionally differentiated strategies and a focus on making links to the local productive base, are very welcome developments in thinking and indeed have the potential to strengthen the functioning of innovation systems. This is therefore not just advocating a return to previous Structural Fund programme periods that took the formation of regional innovation systems as their main goal, but the development of an approach in which elements of both can be combined in a mutually beneficial way. In theoretical terms, this project can be supported by future work that brings together market and system failure perspectives. For instance, along the lines of Bled and del Rio (2013) who (in reference to technological rather than regional innovation systems) use an evolutionary complex system perspective to highlight the role of markets in coordinating the underlying knowledge structure of a system and not just the operations of economic actors (also see Metcalfe, 2005).
In more practical terms, the form of this combination of smart specialisation with innovation system elements may have to vary between different regions. Although the comparative review above highlights that forms of system failure can be present in any region, many of them are more prevalent in less developed regions, such as those in Central and Eastern Europe that have continuing weaknesses in their economic structure and institutional environment. These countries therefore may have to dedicate a greater share of their strategy to measures that can continue the process of developing an effective innovation system, before the undertaking of an entrepreneurial discovery process can be expected to have the anticipated development impacts in terms of stimulating structural change in regional economies.
The significant role of Governance
Foray (2015) makes a clear distinction between the concept of smart specialisation and its reflection in an explicit strategy or policy. A smart specialisation strategy or policy, “involves putting into place a process whereby (the) dynamic of new speciality development ... can be facilitated thanks to punctual and targeted governmental intervention in order to support in a preferential way the most promising new activities” (p. 25, emphasis added). Thus while smart specialization marks a change of emphasis from more ‘horizontal’ regional policies its real novelty lies in the territorial entrepreneurial discovery process through which these priorities are identified and pursued. Better understanding of the governance requirements of territorial entrepreneurial discovery processes lay at the heart of much of the work of SmartSpec.
Existing conceptual understanding rests on the argument that discovery of the right priorities for a given territory should engage regional stakeholders from business, government, research/training and civil society, each of which hold different elements of the knowledge required to ultimately make the right selections. Interaction amongst this so-called ‘quadruple helix’ should be entrepreneurial and geared towards transformation of the economy, built around a motivation to innovate and change. By definition this requires extremely sophisticated multi-agent (and multi-level) governance that goes beyond more traditional governance forms that are strongly led by one agent (in the context of a regional strategy, usually government). The challenge in practice therefore is how to introduce new actors into territorial innovation governance and carefully articulate the role of each within re-invigorated processes.
Research during the initial phase of smart specialisation adoption suggested that the governance approach taken would be shaped by the existing institutional and governance context in different European countries and regions (McCann and Ortega-Argilés, 2014). This is in line with broader arguments around the importance of context in regional studies (Todtling and Trippl, 2005; Rodriguez-Pose, 2011), and we would indeed expect that the most effective (and feasible) governance settings for entrepreneurial discovery processes will differ according to specific regional context. General regional features factors such as the degree of innovation system development, the region’s relationship with its neighbours, the political degree of decentralisation, the strength of policy path dependency and the role and weight of different actors within the regional system, are all likely to be significant.
We suggest that the entrepreneurial discovery process (of the decision-making dynamics of RIS3) is affected by different elements: the general features of the region; and the regional innovation governance characteristics, which in turn include the actors, their structures and power and the degree of path dependency. These elements exhibit inter-relationships and are specific to each region. Indeed, the setting up of the entrepreneurial discovery process differs from region to region in line with the common understanding in regional studies that ‘one size doesn’t fit all’ (Tödtling and Trippl, 2005).
A common feature is the small involvement of firms and civil society in the early phase of RIS3. The government plays a leading role in the RIS3 process in most of the cases. Where their role is not as strong it is in regions in highly centralised countries, in which cases regionally-influential actors, often universities and HEIs, fill the void of regional government capabilities. In almost all the cases, the private sector was hardly involved in this early stage of RIS3, something that requires attention in the current and coming phases if the notion of territorial entrepreneurial discovery is to have real meaning. This raises questions around the extent to which territorial entrepreneurial discovery, as envisaged conceptually, is in fact taking place, particularly in those places where businesses have not traditionally been included in policy-making processes.
Furthermore, the concept of multi-level governance is largely limited to coordination between the national and the regional level, or/and by incorporating the local level. The coordination with “lateral” levels (i.e. with neighbouring (or more distant) regions) has been almost inexistent. We can see a broad typology of regions emerging. A group of single level regions where RIS3 decision-making dynamics, in their early phase, have been dominated by one level of government, without the involvement of other levels. A second group of regions characterised as top-down multilevel regions, in which the RIS3 design phase has been multi-level, but has been strongly determined from the national level, and a third group of networked multilevel regions, in which the RIS3 design phase has taken place with input from multiple territorial levels and with a relatively balanced engagement of those different levels. There are clear signs, however, that, in almost all of the cases studied, RIS3 is forcing multi-level governance issues to be taken seriously; the issue is now more firmly on the agenda.
Within the governance arena it is clear that actors, structures and power relationships within the regions exhibit path dependence, which is seen to condition RIS3 decision-making dynamics. It is particularly clear that in more developed regions previous paths (such as cluster policies or pre-existing STI plans) have strongly shaped RIS3 strategies and the governance that characterises the entrepreneurial discovery process underpinning these strategies (such as the role of national or local government in the strategies, or of certain businesses, clusters or knowledge agents). This leads to path extension in more developed regions and therefore to situations in which governance of the entrepreneurial discovery process has been built on past dynamics. In addition, in less developed regions we observe an important role for external shocks (EU directives, mainly) as mechanisms for change, but inertias and power from national level have thus far been difficult to break in strongly centralised countries.
Finally, our meta-analysis suggests that governments - at different levels - play by far the strongest role in regional innovation governance and that role is intrinsically related to the degree of decentralisation of the country. In this regard the national level plays a very strong role in some cases, and we also observe a perhaps surprisingly important role for the local level, suggesting that more research is needed around the articulation city and municipality level governance dynamics within regional entrepreneurial discovery processes. More collective, or shared, concepts of governance remain notable by their absence in most cases, with only a few regions demonstrating how this can add value over time.
Embracing Social Innovation
There has been considerable interest in the notion of social innovation and the concept has become central to the agenda of Europe 2020. It is argued that social innovations are “not only good for society, but also enhance society’s capacity to act” (BEPA, 2010 p.9). The concept of smart specialisation, as applied to date, is strongly economic in its outlook and largely overlooks concepts of social innovation and social and environmental outcomes of innovation activity. For example, our research demonstrates that few strategies consider the role of social innovation to any real degree, and that there is uncertainty as to how the concept can be applied in practice. This is an unfortunate oversight for it privileges certain activities and undervalues others, which can form the basis of future economic growth and, which, in themselves, provide social value.
Whilst some proponents of smart specialisation advocate the need to include social innovation within their strategies, it has not been clear how these two important concepts relate to one another. This is partly due to the myriad definitions and meanings applied to the term ‘social innovation’. This makes it difficult to prevent its co-optation by political and business entities, which are likely to undermine the goal of improving the satisfaction of unmet needs. At a basic level, then, greater conceptual clarity is required.
In seeking to couple the concepts of societal innovation and smart specialisation consideration also needs to be given to engaging with literatures on socio-technical transitions to help guide discussions as to what kind of obstacles radical, local or community-based initiatives are likely to encounter in the process of upscaling. At present, the notion of innovation in smart specialisation strategies is primarily focused on raising economic value from existing production processes or from on-going scientific research agendas. Consequently, whilst there is much activity in the field of societal challenges, this has not yet materialised into real action supporting social innovation.
Examples of public service innovation can be found in many Member States, but our research found very little evidence that PSI is being consciously articulated with or factored into national and regional smart specialisation strategies. PSI can be understood in one of two ways: innovation in the public sector, the internal dimension, and innovation through the public sector, the external dimension. Our research found some evidence that public administrations are genuinely trying to modernise their internal procedures and practices to render them more innovation-friendly, especially with respect to the way in which public procurement policy is designed and deployed for example. There is also evidence to suggest that public bodies have come to realise – through a combination of past experience and present austerity pressures – that they have to craft new and more innovative ways of working with external partners in the private and third sectors if they are to meet pressing societal grand challenges. This point was forcefully illustrated in our case study of Social Innovation and Assisted Living, where our research found that the public sector is a crucially important player given its multiple roles as commissioner, provider, regulator and funder of adult social care services. Perhaps the most important lesson from our PSI research is that the public sector is learning that social innovation needs to be treated more seriously because, in the assisted living case, the most successful schemes were those that had been designed with users rather than for them.
Long established models of innovation are trying to accommodate the increasingly significant role that users and citizens are playing in designing, using and maintaining products and services, a process that is variously referred to as co-production and democratic innovation. This co-production process has even generated new models of innovation, such as the Quadruple Helix, a development of the Triple Helix of academia, industry because it includes civil society as a fourth agent of innovation. In our research, users and citizens were found to be playing serious roles as agents of user-driven innovation not just in sectors like healthcare and social care, which might be expected, but also in the context of smart technologies and smart cities, where the social behaviour of citizens is as important as consumer preferences. These new forms of behaviour are the very stuff of social innovation and public policy needs to harness this civic energy if it is to meet societal challenges. A key question to emerge from our research is the question of how (if at all) the role of users and citizens can be formalised in the policy process because the latter agents set a high premium on local autonomy and self-organisation - attributes that render them highly suspicious of being co-opted and enrolled into the agendas of governments or corporations. The latter need to recognise and respect “lay” knowledge because the price of accessing it may be accepting the autonomy of users and citizens.
Social enterprises are one of the most tangible manifestations of and vehicles for social innovation. Although social enterprises have a critically important role to play in meeting societal grand challenges – especially with respect to healthy ageing, renewable energy transitions and food security and the like – our research found that they have great difficulty in relating to and being taken seriously by the conventional science, technology and innovation (STI) agents that dominate the smart specialisation policy process. This highlights the point that conventional models of innovation (and the established agents that figure in them) have yet to fully appreciate the potential power of social innovation and the role that social enterprises play in a process that could deliver a double dividend by generating opportunities for STI-type products and services as a by-product of meeting unmet social needs.
Smart Specialisation in regions with less developed innovation systems
A key question is whether smart specialisation strategies are applicable to any type of regions. It has been argued that regions with less-favoured research and innovation systems have a low potential to diversify into new industrial areas due to unfavourable economic structures and a weak endowment of knowledge organisations (Boschma, 2014b, Isaksen and Trippl, 2014a). In addition, some less-developed regional research and innovation systems suffer from weak policy and governance capacities, which could curtail the effective use of Cohesion policy funds (Charron et al. 2014) and may form major barriers to the successful formulation and implementation of smart specialisation strategies (Rodriguez-Pose et al., 2014).
Typically, the EU identifies less-developed regions as those with a GDP per capita that is less than 75% of the EU average. More developed regions are those with a GDP of more than 90% of the EU average. Is this, though, similarly appropriate for identifying regions with less developed research and innovation systems? We identify that in seeking to categorise regions there is a tendency to measure narrowly defined RIS, analytical (R&D based) knowledge and the STI mode of innovation and build typologies based on the findings of these exercises. Existing empirical approaches fall short of taking account of conceptual insights into system failures, organisational and institutional thinness, misconfigurations of RIS in relation to knowledge bases and weak RIS structures for different forms of path development. In other words: advances that have been made in conceptual debates on specificities of less-developed regions are only partly reflected in existing empirical approaches. The institutional dimension of RIS deserves further attention in our understanding of which regions might be described as exhibiting less developed research and innovation systems.
Our work also considered specific elements for our understanding of particular concerns faced by regions with less developed research and innovation systems. One novel approach taken was to explore the significance of value chains in shaping the innovation context in these regions, whilst also framing their path development possibilities. Crucial within this are pressures (or strategies) that influence the position of firms in these chains and networks, which can result in upgrading or downgrading. Our aim was to deepen the understanding of the multiplicity of possible repositioning strategies of firms engaged within Global Production Networks (GPNs) and to underline the variegated and flux nature of contemporary GPNs.
The general normative view is that upgrading in the value chain (or GPN) is a positive attribute. This could constitute: (i) process upgrading, especially representing cost-saving measures to enhance the efficiency of production; (ii) product upgrading, which is achieved by manufacturing more sophisticated products; and (iii) functional upgrading, a shift towards activities with higher value-added such as developing own brands or abandoning existing lower value-added activities (Humphrey and Schmitz 2002). However, while process and product upgrading have been documented as 'frequent' by research (e.g. Pavlínek and Ženka 2011), there is less agreement in the literature on the prevalence of functional upgrading, as it might be constrained by buyers eager to protect their core competence as well as by resource requirements and associated risks (Humphrey and Schmitz 2004).
In contrast, the concept of downgrading has received much less attention in the literature and remains underdeveloped. This is unfortunate as the number of cases of downgrading in practice can be surprisingly high and, in contrast to upgrading which is broadly referred to in the literature with a positive connotation, there is a negative connotation associated with downgrading. For regions with less-developed research and innovation systems, there is a suggestion that pressures for downgrading are more difficult to resist and more prevalent, particularly where such regions also contain a higher proportion of firms in lower value segments of GPNs. To address this gap we considered different potential forms that downgrading could take.
• The first type of downgrading – passive downgrading – represents an involuntary move by a company towards the production of simpler goods as a result of a decision (i.e. change of demand) by a higher-tier buyer; when the existing supplier is excluded from the production network either partially or even completely due to a drop in demand for one or more of its products by a higher-tier supplier, or where a higher-tier supplier decided to move out of the region. This is likely to undermine the firm’s technology capacities, to squeeze the profit margin, and consequently to expose the firm and its employees to negative consequences and may result in a decline in R&D capabilities elsewhere in the region and in negative multiplier effects upon other regional lower-tier suppliers.
• The second type of downgrading – adaptive downgrading – is not induced by the decision of a key customer, but follows from the decision of a firm’s managers recognizing that the company is unable to sustain the competitive pressure within its current market. If such a situation occurs, managers are likely to refocus either on lower or smaller market segments or on the production of components instead of the product for the end-market. Whilst this may secure market position (and in some cases enhance profitability) it may also increase the vulnerability of the firm to market shifts owing to higher levels of specialisation.
• Finally, strategic downgrading might arise as a result of change of business strategy by a highly capable supplier or even by a lead firm dissatisfied with its current profit margin. This strategy also has its fundamental pros and cons, depending on where the decision places the firm within the value chain of the GPN.
Our assessment of smart specialisation approaches developed too date suggest that there is little appreciation of the role of upgrading or downgrading on innovation capacities and economic transformations, nor consideration of the context in which RIS3 are set. This suggests that entrepreneurial discovery processes in regions with less developed research and innovation systems need to be reconsidered in the light of these findings. Our research also highlights other important considerations for entrepreneurial discovery processes in such regions. State-of-the-art regional development theories highlight the important role of informal institutional factors such as trust, responsibility, professionalism, partnership and shared leadership for regional development. This contrasts sharply with the under-developed institutional framework in regions with less developed R&I systems, which can be described as being over-bureaucratic, over-politicised, unprofessional, unstable, non-responsive, non-transparent, lacking strategic vision, with wide-spread rent seeking behaviour and most important of all – lack of trust among their key actors.
However, the public administrations in less developed regions tend to have a risk-averse or “play it safe” mentality, which limits the space for experimentation, manoeuvre and flexibility in decision-making and public initiatives. In addition, public servants in regions with less developed R&I systems tend to the
view that the interests of public sector bodies, private firms and the academy are mutually are different and divergent. In many cases therefore, the demanding process of entrepreneurial discovery, based on close cooperation between businesses, academics and the public sector, is poorly articulated and has no historical development.
Our research suggests that in institutionally weak regions the entrepreneurial discovery process should not begin in the conventional way, with regional stakeholders obliged to collaborate to discover new business opportunities. On the contrary, where mutual trust is minimal (not least because entrepreneurs may be meeting their colleagues for the first time), the first step should be to build mutual understanding among entrepreneurs (and among academics too if possible) as to the key bottlenecks that constrain the development of local businesses.
The role of knowledge institutions (particularly universities) in smart specialisation is a key theme in regions with less developed research and innovation systems. The introduction of smart specialisation as a guiding principle for European innovation policy is the source of a number of dynamics with different, and possibly conflicting, implications for the role of universities in these regional contexts. Universities are amongst the organisations that are most likely to participate in the development of smart specialisation strategies in less as well as more developed regions – ahead of, for instance, multinational firms and SMEs. This does, however, conflict with the theoretical suggestion that regions with only modestly developed research and innovation systems should develop strategies that are less reliant on local academic research capabilities unless these capabilities have the potential to become innovation domains that are related to (and possibly transformative of) their existing productive structures.
This is not to suggest that universities and other knowledge institutions will not continue to have a significant role to play in development of European regional innovation policy. In particular, our empirical work has identified two areas where these institutions should make a leading contribution to the development of smart specialisation in regions with less developed innovation systems. First, both survey and case study material emphasises the educational (rather than research) function of universities and related organisations as part of a broadly-defined innovation policy. This function is considered of greater importance in less developed than more developed regions. The relationship to higher education and training has not yet, however, been a main focus of the smart specialisation debate, and the clear finding of its importance here suggests that this is a topic that should be investigated in more depth in future studies. In particular, it raises a question about whether education in smart specialisation should be seen to have a predominantly more horizontal function in increasing future innovation capacity by enhancing the general level of human capital in the regional economy, or whether priorities for skill development should be concentrated on narrower fields aligned with the more vertical innovation domains promoted in the current RIS3. Second, engaged universities can potentially help enhance governance and networking capabilities of regions with less developed innovation systems so as to address the institutional barriers to them effectively implementing smart specialisation (through, for instance, conducting an entrepreneurial discovery process).
The design, implementation and assessment of smart specialisation strategies
The European Commission’s guidance for the design of smart specialisation strategies has proved to be highly influential in shaping the approach taken by regions to the process of strategy design and the format of the eventual content. However, this guidance notwithstanding, the S3 concept presupposes an advanced level of institutional development amongst regional actors and the results of SmartSpec research questions the institutional readiness of many regions to embark in such demanding exercises. As the important role of institutions for regional development is now more generally accepted, the uneven quality of regional governance, as evidenced by recent studies, is a challenge for S3. Looking at many specific features of institutional set up in regions with less developed research and innovating systems, and in particular the disjunction between private sector and public sector spheres, and the deep cleavage and mistrust between entrepreneurs and academics, combined with the unfavourable characteristics of their economies, SmartSpec finds that institutionally weak regions need a specific approach to S3 and to the entrepreneurial discovery process concept. This involves two adjustments. First, the setting up of horizontal priorities, in addition to vertical priorities, aiming at reinforcing the institutional environment and fixing bottlenecks in the innovation system. Second, the establishment of suitable triple-helix innovation platforms (including national and regional authorities) as an intermediary step, a vehicle to kick off an entrepreneurial discovery process, before defining “smart specialisation domains”.
The implementation of smart specialisation strategies is at an early stage of development. Despite this, SmartSpec has shed light on two concepts that both literature and practice have been using in parallel: territorial strategy and competitiveness policies. It analysed the link between these and discusses how a possible disconnection might lead to problems in territorial strategy implementation. This implementation should not be considered a stage in a linear model, but an interactive space in which dialogue takes place among different actors. The analysis highlights the wide policy and instrument portfolio that current policy-makers have to deal with, and its implications for instrument choice. A key argument is that the missing link between strategies and policies consists in “goal-oriented” policy mixes, i.e. sets of interacting instruments which together are able to influence conditions and actors in a territory, to reach the goal of the strategy. Policy complexity leads to challenges for territorial strategy implementation as there is no optimum recipe and policy-mix for each territory. Taking a policy mix approach implies combining different types of policies, covering horizontal and vertical priorities, involving several levels and layers of government and following different theoretical rationales. In addition, policy path dependency and inertia make the change in instruments difficult and leads to greater challenges to manage policy mixes associated to specific strategic goals. For success, policy mixes have to be adapted and aligned to strategic goals, which pleads for policy intelligence, coordination and coherence. This points to the importance of including evaluation tools and exercises in the design and implementation of strategies and policies as they help to assess the complementary effects of all types of policies and provide policy intelligence into the process, a theme that is developed further in our work in this area.
In assessing RIS3 it is well to remember that whilst there is a strong relationship between policy evaluation and strategy evaluation, they are not the same thing. Our work seeks to bridge the gap between the acknowledgement that evaluation should play an important strategic intelligence role in territorial strategy processes, and the practice that policy evaluations tend to remain isolated and not well-linked to the strategy process at territorial level. This leads to a proposed ‘territorial strategy evaluation framework’ that is learning centred. The framework makes a clear distinction between evaluation at different levels (strategy and policy) and emphasizes the powerful learning possibilities that lie between the two levels. The framework emphasizes the need to understand on the one hand how well the policy mix is aligned with both the content and the objectives of the strategy; and on the other hand how this policy mix interacts with the evolution of the content and objectives of the strategy over time. As such it constitutes the central arena for learning in the territorial evaluation sphere. A change in paradigm is required such that evaluations cease to be static pieces of information about individual policies’ effectiveness, and become integrated, dynamic learning processes, which tie together competitiveness policies and territorial strategies.
Similarly, SmartSpec also addresses the fundamental issue of monitoring and evaluation of S3. Starting from the recognition that all policies arise from a complex bargaining process between different stakeholders, different parties, different interest groups and different constituencies, we emphasize the necessity for an encompassing vision and a translation of this vision into clear objectives. Uncovering policy intentions and making them explicit is necessary both in order to ensure that the policy is designed as well as possible and also to allow for the policy to be evaluated: the use of outcome/results indicators allied with monitoring and evaluation exercises are essential for assessing the impacts of innovation-related policies. However, in practice, many policy interventions even in advanced economies have little explicitly-measurable objectives in-built in their design and very few are therefore amenable to comprehensive monitoring and evaluation exercises. Our work considers the application of properties of outcome and results indicators, along with the features of good evaluation and monitoring exercises, to the smart specialisation agenda. A key discussion relates to the idea that S3, as a particular type of results oriented policy, would require an explicit theory of change to be articulated ex ante. Such new policy initiatives though, take place in a context of a certain degree of ex ante uncertainty, and therefore require experimentation and ‘self discovery’; they also tend to be based on partial, indirectly-related or incomplete data. Therefore, that kind of policy is not readily translated in tightly-specified analytical model ex ante and instead proceeds in a more iterative manner, assembling knowledge and evidence as it arises. This that new data must be constructed during the life of the policy in order for the policy to be evaluated ex post, and that these data must closely relate to the theory of expected change put forward as the basis for the policy.
Smart specialisation is critical in articulating this theory of expected change. In order to commence the policy prioritization process, smart specialisation requires a detailed analysis of the current regional economic and industrial structure on the basis of the best available evidence currently available, i.e. baseline or profiling indicators. The results/outcomes indicators are designed to capture the changes in the intended results/outcomes, and the impact of the policy is the change in the results/outcome indicator which can credibly be ascribed to the policy intervention. Our work concludes that the logic of intervention, the theory of expected change, the indicators to be employed during the life of the policy, the data to be constructed, and the design of the policy, are all closely interrelated issues which cannot be divorced from each other. These results-orientation and policy monitoring and evaluation aspects have to be built into the policy design right from the beginning.
Despite these perspectives to evolve towards much more robust, systematic and codified, monitoring and evaluation systems for S3, based on enhanced use of result indicators, the need for system-wide evaluations also leaves room for other, complementary approaches. The experimental character of smart specialization strategies reinforces the need for reliable and detailed assessments, addressing design and implementation issues. SmartSpec argues that peer review methods, when used appropriately, can provide valuable contributions to support S3. These methods include elements that address the need for these strategies to be: open, well-informed, integrated, differentiated, shared and impact – oriented. Peer reviews are seen as effective mechanisms to lift policy learning, relying on a user-driven approach. Comparing the peer review experiences run by the OECD and the European Commission, the paper identifies success conditions such as: strong political endorsement, wide stakeholders participation, quality of peer review panel composed of a balanced mix of peers and experts, attention to all stages in the three-step/six stages peer review process. The analysis underlines the specific value of this technique, that combines tacit and codified knowledge in a purpose-oriented exercise ending up in applicable and realistic policy recommendations. The conclusion underlines the potential, but also the limits of peer reviews to help this new wave of policies reaching their ambitious goal. It suggests a model for peer review which is adapted to the emerging needs of S3 in the near future.
Regions as Living Laboratories
The context of place is a crucial consideration in our understanding of the operation of smart specialisation. The complex interplay of different factors within dense regional innovation ecosystems embedded in wider territorial and sectoral systems may have a significant bearing on the emergent outcomes of smart specialisation approach. To better understand the processes of smart specialisation, as shaped by territorial context, SmartSpec explored practices of smart specialization strategies 16 European regions. These differed strongly in terms of geography, size, socio-economic dynamics, innovation capacities and governance settings, providing a strong basis for exploring how various types of European regions engage in smart specialization approaches and how these approaches, as well as potential barriers to them, differ between various spatial contexts.
Inter alia, each Living Lab considered the following features:
• the entrepreneurial search and discovery process,
• the role of institutions in developing smart specialisation practices,
• the systemic and institutional barriers to developing smart specialisation practices,
• the role of social innovation in smart specialisation practices,
• the challenges facing regions with less-favoured research and innovation systems,
• the processes of designing, implementing and assessing smart specialisation strategies
As the focus of the research in this aspect of the study was the role of place-based features, our results focus on how organisational, institutional and systemic RIS factors have enabled or constrained emerging smart specialisation practices in less-developed, intermediate and advanced regions and if (and how) smart specialisation approaches have, in turn, triggered policy learning and RIS building/transformation processes in the respective groups of regions.
The findings demonstrate that smart specialisation challenges prevail in all three types of regions, albeit the sources and the scope of these challenges are very different, pointing to a distinct impact of region-specific policy capabilities, socio-economic conditions and organisational, institutional and systemic RIS configurations. We have also found evidence that RIS3 have an influence on the development of regional innovation systems. The nature of these effects varies markedly between less-developed and more advanced regions.
Place-based factors exert a strong influence on the ways by which smart specialisation is adopted in European regions. Our analysis of findings from the 16 regions suggests that it is the interplay of a set of RIS factors that shapes the development and implementation of smart specialisation practices in distinct ways. Degrees of industrial and organisational thickness and variety, institutional set-ups, systemic features, policy capabilities, past experiences with innovation strategies as well as levels of policy centralisation mould the spatial contexts in which the uptake of smart specialisation take place. Understanding the interrelations between a wide set of RIS factors and their impact on smart specialisation is of pivotal importance for scholars and policy makers alike. Place-based approaches which are at the heart of smart specialisation need to be further specified in terms of organizational, institutional and policy making capacities.
Emerging smart specialisation practices are influenced by and influence RIS characteristics. Focusing on the latter raises the question of what can realistically be achieved by smart specialisation. There are strong reasons to assume that this is contingent upon the spatial contexts under consideration. Hence, any evaluation of the success or failure of smart specialisation needs to take on a context-sensitive perspective, acknowledging that the initial conditions vary significantly across regions. In less-developed regions the core issues centre on developing an understanding of the importance of innovation and collaboration and learning how to set up inclusive, bottom-up governance structures for policy prioritisation. In more advanced regions, it is the unlearning of old and the experimentation with new forms of innovation and collaboration and the overcoming of too complex governance structures that rank high on the agenda of policy actors and regional stakeholders. Smart specialisation needs to be assessed in relation to these varying conditions; i.e. if and how it is able to address region-specific development challenges.
The findings presented in our work suggest that the advent of smart specialisation has induced policy innovations in less-developed regions whilst in intermediate and advanced regions, which have undergone substantial policy learning processes already in the past, the main effect of smart specialisation has been a re-orientation and upgrading of existing policy practices. Our results thus corroborate the findings from other recent studies (McCann and Ortega-Arquiles, 2016). However, there are also effects of smart specialisation on the wider RIS beyond the policymaking arena. Our analysis provides grounds for claiming that smart specialisation supports RIS building processes that are underway in less-developed regions and contributes to RIS transformation and re-configuration in intermediate and advanced regions. It remains to be seen how enduring these effects will be. Taking into consideration that the learning processes and changes outlined above hardly take place overnight but unfold in gradual, cumulative ways over longer periods of time, provides an argument in favour of the continuation of smart specialisation. However, our findings also reveal that there is a scope for improvements in further phases of RIS3. For example, there is a need to further specify how to address institutional challenges such as conflicting values in advanced regions and the questioning of the value of innovation in less developed regions. Furthermore, clear tools on how to build-up missing organizational capacities are also to be established.
Arguably, transforming European regions into more innovative places and promoting diversification through new path development can hardly rely on smart specialisation alone but will require an alignment with other policies and strategies at various spatial scales.
Smart Specialisation in Practice
An important element of SmartSpec was to integrate the experience of those tasked with developing smart specialisation practices in regions into the project. This provided an important user-perspective, helping to ground the findings of the academic researchers whilst also stimulating the wider learning and experience of those policy-makers. This was undertaken through a ‘Learning Journey’. The Learning Journey consisted of a series of ten themed events, which brought together 10 Regional Affiliates (Third Parties) and academic experts around a series of interconnected workshops to provide a cumulative learning experience.
This ‘learning journey’ not only supported the delivery of the overall objectives of SmartSpec but also provided individual and institutional benefits. Local workshops are held in each region on the day following the Learning Journey. These provide an important opportunity to widen engagement with the project and to strengthen and deepen awareness of smart specialisation approaches amongst regional actors.
The Learning Journey highlighted a number of opportunities, uncertainties and difficulties that the regional affiliates experienced in their development of smart specialisation practices. Whilst all regions are clearly different, and the opportunities and challenges are context-specific, a number of common themes emerge. It is not possible to extrapolate or generalise too broadly from these, but the messages are instructive and valuable for those considering the implementation of smart specialisation approaches in practice.
At the end of the Learning Journey regional affiliates completed a short questionnaire on how their knowledge had developed during the journey, and on key issues that they identify for smart specialisation. A particular feature of this was to examine where participants felt most and least confident around key themes. Whilst this identifies a number of common elements, such as a lack of confidence in the field of monitoring and evaluations and a strong confidence in themes such as Analysis and the Development of a Shared Vision within strategies, there are other areas where experience is mixed; such as governance.
Most confident Least confident
Shared vision (5) Governance (4)
Analysis (4) Monitoring and evaluation (4)
Governance (3) Priority setting (2)
Policy Mix (3) Policy mix (2)
Priority setting (1) Analysis (1)
Monitoring and evaluation (1) Shared vision (0)
A common message emerging from the Learning Journey is that in many regions there remains uncertainty over how the implementation of smart specialisation will take place in practice. This is symptomatic of the ‘learning by doing’ approach that appears to have characterised the introduction of smart specialisation to date.
A second common theme which emerges from the Learning Journey is, as noted, uncertainty over the appropriate governance arrangements and how this might be implemented over time in a dynamic context. Moving from a traditional government-led model of governance to an arrangement that is more strongly orientated towards more distributed models of shared or collective leadership is proving a challenging concept. This is exacerbated by weak patterns of multi-level governance.
The third area that merits individual mention, is the difficulty of developing smart specialisation approaches that reach outside of the region or Member State. Most strategies remain internally-focused and seek to strengthen intra-regional activities. There is very limited experience of seeking to develop approaches that are outward looking and seek to build collective notions of critical mass.
Finally, the over-riding message of the Learning Journey is the technical nature of most smart specialisation approaches. The development of RIS3 has tended to follow a technocratic process, utilising the design guide published by the European Commission and the previous experience of those responsible for the development of the RIS3. The need for a stronger embedding of RIS3 within wider political process was a common theme of the Learning Journey.
The notion of embedding also arose in the context of the experience of learning itself. Participants in the Learning Journey reported that most learning took place at a personal level and was embodied in the participants. It was a challenge to embed this learning in the organisations to which they belonged. In terms of what learning they had found most valuable, participants reported that it peer-to-peer learning that was most effective, such as that to be found in the Learning Journey and through specialist forums such as the Smart Specialisation Platform.
On the basis of the difficulties identified, which offer opportunities for future activities, the Learning Journey identified the following suggestions for future action:
• More attention is placed on governance models and future peer learning activities should concentrate on this topic. Monitoring, engaging business and internationalisation are other key themes. There has been much, and necessary attention, to monitoring and both DG Regio and the S3 Platform are aware of the need to improve knowledge of this important area
• That more guidance on a series of possible governance models is developed. This should reflect the variety of governance contexts and could be developed by the Smart Specialisation Platform in Seville. The Committee of the Regions should consider organising workshops on this topic with their members through a variety of training methods.
• More attention should be paid to how regional policy makers gain knowledge of new procedures and theories. Although many guides and other materials are available, more focused training sessions and courses need to be developed. This might be a role for universities in developing short courses delivered both through traditional face-to-face courses and through distance learning (blended learning and MOOCs)
The ‘Learning Journey’ was a unique and successful method to develop a community of purpose in smart specialisation. Future learning journeys should: clarify the final aims and objectives more clearly and develop during the first stops, the outcomes and possible impacts that could collectively be achieved and individually for each region and provide a ‘rest period ’around half way to check direction and needs such as widening or deepening topics.
Potential Impact:
Socio-economic impact
The socio-economic impact of SmartSpec will be found indirectly through its influence of public policy approaches at the regional, national and European Union level. It’s impact will be found in the extent to which policies are adopted, or amended, that improve the capacity and capability of regions to undertake innovation, through their firms, research actors and other agents, which are able to be translated into economic or societal outcomes, most notably the creation of new or better jobs and the realisation of economic growth.
SmartSpec has worked directly with 10 regions, through the Learning Journey. Each of these regions acknowledges the benefit of the learning gained through SmartSpec, which has had a positive impact on the development of smart specialisation approaches in their region. It is anticipated that this will help to enhance the impact that these approaches have in supporting economic growth and employment creation.
SmartSpec partners have also worked closely with policy-makers in a number of regions and have good links with national policy-makers in a number of EU Member States, such as the UK and Slovenia. This includes involving regional actors in relevant Thematic Seminars, such as that held on ‘Social Innovation for an Age-Friendly Society’. Held in North East England, this involved working with regional stakeholders to explore the local opportunities for innovation through smart specialisation in this field, whilst identifying generic opportunities and barriers that might inform policy development at the national and EU level. In North East Romania, SmartSpec researchers were invited to facilitate one of the first-ever meetings of all University representatives in the region, to consider the role of the University-sector in promoting smart specialisation in the region. SmartSpec partners have also worked closely with government officials and other stakeholders in the Basque Country and Navarre to provide live inputs that influence the ongoing implementation of RIS3 in these regions. SmartSpec partners, particularly ERRIN and EURADA, have promoted the findings of the SmartSpec project widely to their respective regional memberships, leading to potentially greater dissemination and socio-economic impacts than might otherwise have occurred.
A key route to socio-economic impact is through the links that the SmartSpec project has developed with EU policy makers and the Smart Specialisation Platform. A number of SmartSpec outputs are now incorporated into the publications, tools and resources of the Smart Specialisation Platform. SmartSpec partners have also supported the Platform at a number of workshops organised for regions, to assist in the development of RIS3. Within the European Commission, SmartSpec partners have also been involved in working with DG Regio, DG Research and Innovation and DG Education and Culture to ensure that the findings of the SmartSpec project are able to assist in the formulation of appropriate policies. This has included contributions to High Level events, supporting the development of new initiatives, such as that for Higher Education and Smart Specialisation, membership of expert advisory groups, and responding to requests for information from officials. SmartSpec was also invited to present evidence to the European Parliament Hearings on Cohesion Policy and Smart Specialisation.
Through wider dissemination actions, particularly invited contributions to policy-level events for Circumpolar regions and in Tunisia, the SmartSpec project is also contributing to distributing knowledge on the application of smart specialisation approaches to broader contexts external to the EU. It is anticipated that these actions will leave a small but potentially significant legacy in raising awareness of the potential for smart specialisation to promote innovation, economic growth and enhanced employment opportunities.
Main dissemination activities
SmartSpec has adopted an active dissemination strategy targeted on its key audiences of researchers and policy-makers. It has been opportunistic, in that it has taken advantage of opportunities that are offered, whilst holding to a core strategic dissemination strategy. The anchor points of this strategy have been founded on a series of conferences and seminars, planned publications, and a project website.
Conferences and seminars:
A number of conferences and seminars have been organised as part of the SmartSpec project. These have allowed the project to ensure that key audiences can be targeted at strategic times. In addition, SmartSpec partners have responded to invitations to address conferences and seminars where these would promote the overall objectives of the project, either through raising the academic profile of the work, or through facilitating contact with policy-makers.
Three Conferences were organised as part of the project.
• A Kick-off Conference was held in 2013 to launch the project. Hosted by the European Parliament, in Brussels this was aimed at regional policy-interests and secured a strong audience of more than 80 attendees.
• An Interim Conference marked the half-way point of SmartSpec and was aimed at a more academic audience. It was held in Prague, in order to promote the involvement of academics from CEE Member States, who are often underrepresented at such events. Again, more than 80 persons attended and the event was highly regarded by participants.
• The SmartSpec Final Conference took place in May 2016. It was hosted by the Committee of the Regions, in Brussels, and was targeted on a policy audience. More than 100 persons attended, demonstrating the reach, and continuing relevance, that the project had developed in its three-years.
SmartSpec organised 10 Thematic Seminars as part of its programme of activities. These were designed to reach a mixture of policy-makers, informed practitioners and academics to explore particular themes being considered by the SmartSpec researchers. Each offered an opportunity to share lessons emerging from the project, to challenge these findings and to highlight additional considerations that might also be relevant. The findings of the Thematic Seminars are available to the public on the project website.
Alongside its own conferences and seminars, SmartSpec researchers have sought to disseminate the findings of the project through participation in external conferences and events. These range from prestigious academic conferences to high level policy events organised by national governments or the European Commission. Headline events include the following:
• Papers delivered to the annual European conferences of the Regional Studies Association; to the annual conferences of the European Regional Science Association and to the annual conferences on Regional Innovation Policy.
• Papers delivered at the European Open Days (2014 and 2015) and to the annual WIRE (Week of Innovating Regions in Europe) conference (2014)
• Mobilising Higher Education for Smart Specialisation: a policy and practice seminar held in association with the Smart Specialisation Platform and DG Education and Culture.
• Summary contribution to High Level Conference on Mobilising European Universities for Smart Specialisation, organised by DG RTD, DG Regio and EUA (June 2014)
• Keynote addresses at the European Commission’s High Level Smart Regions Conference (June 2016).
• Keynote address at the European Commission’s High Level event in association with the Committee of the Regions on Innovation Ecosystems (January 2016).
• Contribution to Tunisian Government event on Smart Specialisation in Tunisia, in association with the Smart Specialisation Platform, arranged by DG NEAR.
Publications
The SmartSpec partners have published the results emanating from the project in a range of high-quality peer-reviewed journals, alongside a number of books. Highlights include:
• The publication of a book by Routledge setting out the findings of the SmartSpec project in the field of entrepreneurial search and discovery. Entitled The Empirical and Institutional Dimensions of Smart Specialisation, it will be forthcoming in the latter part of 2016.
• The publication of a book containing a number of chapters by members of the SmartSpec project, on the topic of Strategies for Shaping Territorial Competitiveness
• The publication of a number of articles concerning the findings of the project in a special issue of the journal European Planning Studies, on the theme of smart specialisation.
• Publications in the following leading academic journals: Journal of Economic Geography; Papers in Evolutionary Economic Geography; Revista Icade, and European Journal of Innovation Management amongst others.
Further publications are under review at the current time, and additional publications are also proposed by the partners.
Findings from the project have also been published in a regular newsletter available on the project website. These have been produced on a bi-annual basis.
The project has maintained a dedicated website for the duration of the project. Hosted by Cardiff University the site will continue to function following the closure of the project, ensuring that the results of the work undertaken continue to be accessible to a wide public audience. The website contains versions of the publications produced by the project, or links to versions contained in online repositories, ensuring that they are accessible to the public.
List of Websites:
http://www.cardiff.ac.uk/cplan/research/smartspec
contact details:
Prof. Kevin Morgan
School of Geography and Planning, Cardiff University, King Edward VII Ave., Cardiff, CF10 3WA
Email: MorganKJ@cardiff.ac.uk
Telephone: +44 (0)29 208 76090