Turning innovative ideas and breakthroughs into new products and services also helps European competitiveness, growth and jobs.
and the bioeconomy 3. Secure, clean and efficient energy 4. Smart, green and integrated transport 5. Climate action, environment, resource efficiency and raw materials 6. Inclusive
At the same time, research and innovation help make people's lives better by improving things like healthcare, transport and digital services.
with a budget of around €79 billion (adjusted for inflation) over the seven years of the programme (2014-2020).
Knowledge is the currency of the global economy. If Europe wants to continue to compete in the 21st century,
The high level of competition for EU funding makes sure that taxpayers'money goes to the best projects that tackle issues that concern all of us.
http://tinyurl. com/cghra6v 2. More jobs, improved lives, better society EU Research and Innovation can help to exit the current economic crisis With an ageing population and strong competition from emerging economies,
Europe's future economic growth and job creation must come from innovation in products, services and business models.
This tangible investment in a healthy competitive European economy is every bit as important as our commitment to European debt and deficit reduction.
Spending 3%of EU GDP on research and development by 2020 could create 3. 7 million jobs and increase annual GDP by close to €800 billion by 2025.
Investment in research and innovation has a powerful multiplier effect, especially at the European level.
The European commission and the European Investment Bank Group are also working together to help innovative SMES access finance from commercial banks. 1 Source:
Direct investment remains vital as well, and Horizon 2020 will be the biggest EU research and innovation programme ever,
including more small and medium-sized enterprises (SMES). By supporting projects and ideas that boost competitiveness as well as tackle societal issues such as human health and protecting the environment, European research and innovation policy contributes to the individual and collective well-being
of citizens. Given the complexity, cost and critical mass considerations linked to high-level research, hardly any single research team, research laboratory
and ideas are therefore fundamental requirements for research in a globally competitive environment. Creating a better society By 2050,
and diversity, protecting the environment, combating poverty and social exclusion in short, to creating a better society for citizens.
Climate action, environment, resource efficiency and raw materials; Europe in a changing world-inclusive, innovative and reflective societies;
a healthy workforce is a prerequisite for a healthy economy and a healthy population means lower public health bills.
EU research and innovation is an investment in our health as it will keep older people active and independent for longer,
The return on this investment will include new ways to prevent disease, better diagnostics and more effective therapies,
which has consequences not only for citizen health but for the European healthcare system and economy.
and three small and medium-sized enterprises (SMES) all with a strong commitment to discovering new anti-infective agents.
postpetroleum society encompassing sustained changes in lifestyle and resource use that cut across all levels of society and the economy.
and aquaculture must be addressed, covering the whole food chain and related services, whether conventional or organic, from primary production to consumption.
while also contributing to the goal of moving to a low-carbon economy. By the end of 2013, EU research will have financed over 495 bioeconomy research projects, with more than 7, 402 participants, from 105 countries and with an SME participation rate of over 21%.
%Research funding brings together science, industry and other stakeholders working towards the common goals of:
The results obtained will feed now into the development of new online tools for more effective communication Europe has surpassed the US in the use of social media.
Online communication has a vital role to play in ensuring food safety, a research priority of the Horizon 2020 Framework Programme for research and innovation.
In this context, the improved REFERTIL biowaste treatment process opens new technical, economic, environmental and social improvement opportunities
http://tinyurl. com/ats7gzj The Importance of Energy Lighting, heating, transport, industry without energy, we would have none of these essential day-to-day services.
Energy drives our modern economies and it does indeed take a huge amount of energy to maintain the standard of living to which most of us have become accustomed in Europe.
Europe, the number two world economy, is currently overdependent on the rest of the globe for its energy.
It is essential then for the EU to spark a new industrial revolution that will deliver a low-energy economy
A common EU energy policy has evolved around the common objective of ensuring the uninterrupted physical availability of energy products and services on the market, at a price
the equivalent of between €5 billion and €10 billion saved and channelled back into the economy,
Transport drives employment, economic growth and global exports. It provides citizens, societies and economies with essential resources and means of mobility.
With an annual turnover of €780 billion and a value added of over €140 billion,
people's ability to travel and our economy could be restricted severely and quality of life eroded. In the transport sector, research is at the core of developing innovative technologies
Innovation has been further reinforced by focusing on prototypes, standardisation and social innovation in order to transfer research results to the market.
resource-efficient transport that respects the environment. Making transport and transport systems seamless: better mobility, less congestion, greater safety and security.
or collective transport service in areas of low or dispersed demand complementing the main public transport network.
A digital device used to transmit high speed communications between the ground and the aircraft satellite has been tested for the first time in flight during four days in June 2013 on a modified A320.
http://tiny. cc/ji7r0w The Importance of the Environment The era of seemingly plentiful and cheap resources is coming to an end:
There needs to be a decoupling of economic growth from resource use. With natural resources becoming scarcer, encouraging a more sustainable use of our limited natural resources is essential both for our well-being and for Europe's economic development.
Water is fundamental to human health food security, sustainable development and the environment. It is also an economic sector of growing importance for Europe with a turnover of some €80 billion a year,
water resources are constantly under pressure from climate change, urbanisation, pollution, overexploitation of freshwater resources and increasing competition between various user groups.
The ability of the economy to adapt and become more resilient to climate change, more resource-efficient,
this represents a major opportunity to boost competitiveness and job creation in European economies. What is EU Research
and Innovation doing to support the Environment? Helping to build a green economy a circular economy in sync with the natural environment is part of the answer.
The Societal Challenge‘Climate action, environment, resource efficiency and raw materials'will focus on investing in innovation for a green economy.
This will require great progress in public sector and social innovation. Activities will address gaps in the knowledge base necessary for a thorough understanding of environmental changes,
To begin with, waste and water have been selected as particular priorities, on the grounds of their substantial potential for business opportunities and job creation while tackling important resource efficiency challenges.
This will allow stakeholders from different sectors to work together in new ways. Citizens will also be involved in developing
and harnessing water research and innovation results for the benefit of industry, policy makers and citizens in Europe and worldwide. 5. Climate Action, Environment,
Resource Efficiency and Raw materials Fotolia. com Research and Innovation Efforts will be made to develop a low-carbon, resource efficient economy with a sustainable supply of raw materials.
activities relating to‘Climate action, environment, resource efficiency and raw materials'also relate to other challenges such as‘Blue growth:
'Since 2007, the EU budget has financed close to 500 environment research projects, with more than 7, 000 participants, from 126 countries and with an SME participation rate of 17%.
The EU-funded project AQUAFIT4USE is developing innovative ways to help the most water-intensive industries reduce their demand on this most precious commodity.
In 2013, EU research has focused on growth, employment and competitiveness (intangibles, youth, public finances), sustainable development (lifestyles, social entrepreneurship, welfare state), major trends in society (social
New forms of innovation (in the public sector, ICT government, business model innovation, social innovation community, ICT for learning and inclusion.
skills and territorial-that will have a major impact on employment, in particular for some groups in the labour force or sectors of the economy.
http://www. facebook. com/innovation. union http://twitter. com/innovationunion About EU-funded research into cyber security and online privacy The digital and online economy are central
The Commission is working to increase confidence in the online economy in particular through research into cyber security
helping to promote innovation and economic growth in the EU, while protecting Europe's society, economy, assets and fundamental rights.
The Commission wants to develop trustworthy ICT solutions ensuring a secure and reliable digital environment in Europe. 7. Secure and Innovative Societies Fotolia. com Research and Innovation Keeping fingerprint and facial recognition
systems safe from fakes Finger print, voice and facial recognition identification have moved from sci-fi fantasy and are now in many real life affordable devices, such as smartphones and tablets.
*Franz To dtling b a Austrian Research centers Seibersdorf, Systems Research Technology Economy Environment, A-2444 Seibersdorf, Austria b Department of City and Regional Development, University
of Economics and Business Administration, Roßauer La nde 23, A-1090 Vienna, Austria Abstract SMES are confronted with particular problems constraining their innovation activities.
Upper Austria 1. Introduction Innovation is one of the most important strategies of competition, both for small and large firms.
The more dependent a firm is on dominant customers, the more likely is the incremental character of their innovation activities.
The strategies of competition. Competition through improved quality and new functions favours innovation whereas price competition is less stimulating (Smallbone et al.
2000). ) Competition based on design leads to frequent product innovations, but they are usually incremental. This heterogeneity is one of the reasons why there are contradictory results comparing the levels of innovativeness between SMES and large firms.
Some studies have found evidence that SMES are generally more innovative (Pavitt et al. 1987; Acs and Audretsch, 1990),
because it makes it possible for competition to invade formerly safe market niches (Malecki and To dtling, 1995;
and transfer agencies) and the structure of the regional economy (dominant industries, availability of service firms and adequate suppliers, organizations providing innovation finance).
Formally the province has a wide range of competences for economic policy. In fact, however, the room for autonomous political activities is constrained by the small financial capacity compared with the state of Austria.
Upper Austria has an industrial core region formed by the three cities of Linz (the capital of the province), Wels, and Steyr.
and investment marketing in the region, the Technology and Marketing Corporation in Linz. It has formulated a strategic concept for the technology policy in Upper Austria focusing in particular on strengthening applied R&d, intensified collaboration in clusters (metal and steel, machinery, vehicles),
Other institutional deficiencies in the system concern technology transfer services and innovation management consultancy. 3. The innovation process of SMES and typical problems This chapter is a summary of typical
the survey in Upper Austria, covering the manufacturing sector as well as producer services, was conducted in 1998.
The distribution of the size of firms (in terms of employment) within the sample of respondents corresponds approximately to the regional economy.
because they are confronted particularly with a limited resource base anyway, regarding capital as well as time and know-how of the employees.
lack of financial resources, a small product range restricting the possibility to substitute for the lack of sales and profits through other products (cash cows) to the same extent as large firms, too few or insufficiently qualified personnel,
and influence the external environment than large firms (Smallbone et al.,2000). ) One of the consequences as far as established firms are concerned,
Customers, in particular, play an important role in guiding the innovation activities of their suppliers (von Hippel, 1988.
customers and suppliers being most important, less service firms and horizontal relations. A limited number of durable and selective user producer relationships are usually shaping
Furthermore, customers are often unwilling or not ready to assess unfamiliar innovations or to formulate an explicit need for them (von Hippel, 1988),
either on strong business partners usually dominant customers or small markets for specialized Table 2 External relations in the innovation processa%of SMES having%of large firms having any kind of relations cooperations any kind of relations cooperations Customers 78.6 48.6 87.5
53.1 Suppliers 60.7 40.7 79.7 39.1 Other firms (horizontal relations) 27.1 10.0 37.5 15.6 Service firms 34.3 15.0 46.9 20.3 Universities
SMEPOL-survey Upper Austria. products or services, without being able to substitute for other products
In Upper Austria this applies primarily to the firms'business relations customers suppliers, and horizontal relations whereas in the case of service firms and technology centres the large firms,
The advantages of proximity and institutional settings specifically adequate to serve the needs of the regional economy are the reasons why the region is an important spatial level in innovation systems (Braczyk et al.
, personnel problems in the electrical equipmentand-electronics industry, lack of funds and dependency on clients in the case of producer services.
8 Lack of time 15.0 12.5 No need for innovation 5. 0 12.5 Deficiencies in marketing or 7. 1 4. 7 commercialization Dominating external demands
A related problem is the narrow focus of many SMES on their customers, making their innovation process dependent on them.
Frequently this is reinforced by the neglect of systematic search activities concerning new market opportunities. It is important not to neglect other types of problems than financial
however, that organizational improvements could lead to an increase in the time available for innovation activities. 4. Support services offered by the investigated instruments 4. 1. Regional technology centres From the six technology centres in Upper Austria
located close to the capital of Linz. It is a technology and research centre for software development, industrial mathematics,
and related services, exclusively focusing on this technology field. The SWP was founded in 1987, initiated by a department of the University of Linz (Research Institute for Symbolic Computation.
They rarely perform additional functions like innovation consultancy or technical services. These centres are located in Linz (with 46 firms and organizations
and consulting services. There are hardly any manufacturing companies and only a few high-tech firms. The R&d intensity is rather low.
Services or functions which are less profitable are performed not which restricts the potential of these centres to support innovation activities of firms internal and external to the centre. 4. 2. Direct financial innovation support The Austrian Industrial Research Promotion Fund (Forschungsfo
, research and development of prototypes. The FFF is an autonomous funding institution under the control of the Austrian Ministry for Economic Affairs.
The Austrian industries most frequently benefiting from FFF support are machinery, information and communication technologies, data processing, medical, measurement and optical technologies, and chemicals.
Overall, the technologically advanced sector has much more weight in the FFF scheme than in the Austrian economy.
but it has to be considered that this is clearly less than the share of SMES in the Austrian economy.
Approximately half of the applicants per year had already been supported by the FFF before (the so-called regular customers.
Mostly the services of the centres are used only by the firms which are located there. The centres confine themselves, intentionally or actually, to the function of incubators (see also O sterreichisches Institut fu r Raumplanung, 1998.
In addition, most firms located in the centres see them as facility providers and do not indicate further services supporting their innovation activities.
Table 4 shows that the use of technology centres is less frequent than the participation in direct support programmes.
using regional centres'6. 4 25.0 services a Source: SMEPOL-survey Upper Austria. as an indication of the innovation support schemes not targeting the most important needs of the SMES.
or using services of Upper Austrian technology centres 6. 7 20.0 73.3 Radical innovatorse 17.1 29.3 53.7 Incremental innovatorsf 16.0 40.0 44.0 SMES
The most frequent positive effect concerns the co-funding of investments, followed by the co-funding of personnel.
As far as the co-funding of external consulting services is concerned, however, the clear majority of SMES did not think that the support improved their ability to innovate significantly.
investments Funding of personnel 50.7 54.2 Funding of external 31.3 33.3 consulting services Provision of technical 18.2 know-how Technical services 9. 1 Provision
SMEPOL-survey Upper Austria. 156 A. Kaufmann, F. To dtling/Technovation 22 (2002) 147 159 support more on personnel than other direct support schemes which aim more at investments.
and technical services is concerned. Such services are provided either not or of little value for the firms.
The provision of infrastructure seems to be taken for granted by firms located in the centres or they do not think that this has a positive influence on their innovation activities.
if they would offer additional services like innovation consultancy, knowledge transfer, and mediation of risk capital.
The ranges of products and services of the SMES responding to the SMEPOL survey in Upper Austria show that the FFF reaches disproportionally higher-technology firms.
and services (frequently software) while only 19 belong to the metal-and-steel industry, metal products, plastic products,
information and communication technologies, chemicals, data processing, and electrical equipment. Of course, there is no simple correspondence between industry and technological level (especially in the service sector),
Support services targeting these deficiencies are still missing. The support instruments in Upper Austria direct support as well as technology centres lack effects regarding strategic weaknesses, technology, innovation networking,
In the case of the technology centres this is mainly a consequence of their profit-orientation
This impedes the provision of important but not or insufficiently profitable innovation services. Most Upper Austrian technology centres (except for the research activities of SWP and FAZAT) concentrate on services
which can easily be put on the market. Therefore, important support services are offered not or are in short supply,
because they do not yield immediate or sufficient returns. In the case of direct support there is the problem that certain barriers constraining innovation cannot be targeted directly by financial means.
funds for investments, personnel, 76.9 38.5 Financial problems: lack of finance, too high risk consultancy, reduction of risk Technological effects:
technical services, technical know-26.9 10.3 Technological problems: lack of technical know-how, how inavailable or too expensive technology Manpower effects:
dominating customers, secrecy requirements firms or science of clients a Source: SMEPOL-survey Upper Austria. the financial bottlenecks of innovation projects are concerned.
The availability of venture capital has been increasing in Austria in the recent past, but the major innovation support schemes have not yet adopted the provision of risk capital as a major instrument.
Considering the modest effects of technology centres regarding technical know-how and technical services the cause is not only insufficient or inadequate supply but also the lack of demand.
and here predominantly the customers SMES have few external relations in the innovation process. The lack of interaction with knowledge providers from outside the business sector seriously restricts the external influences enabling or stimulating innovation.
Learning regions in a globalised world economy: towards new competitive advantages of industrial districts? In:
High technology Industry and Innovative Environments: The European Experience. Routledge, London. Braczyk, H.,Cooke, P.,Heidenreich, R. Eds.
The Globalising Learning Economy: Implications for Innovation Policy. Report to the DG XII, TSER, Brussels. Maillat, D.,1991.
The new flexible economy: shaping regional and local institutions for global competition. In: Bertuglia, C.,Fischer, M.,Preto, G. Eds.
Technological Change, Economic Development and Space. Springer, Heidelberg. Meyer-Krahmer, F.,Schmoch, U.,1998. Science-based technologies:
Journal of Industrial Economics 45,297 306. Pyke, F.,Sengenberger, W. Eds. 1992. Industrial Districts and Local Economic Regeneration.
Culture and Competition in Silicon valley and Route 128. Harvard university Press, Cambridge, MA. Smallbone, D.,North, D.,Vickers, I.,2000.
The resurgence of regional economies, ten years later: the region as a nexus of untraded interdependencies.
Territorial Development in a Global economy. Guilford Press, New york. To dtling, F.,1994. Regional networks of high-technology firms the case of the Greater Boston region.
Alexander Kaufmann obtained his Mag. and Dr. degrees from the Vienna University of Economics and Business Administration.
working as a researcher at the Austrian Research centers Seibersdorf in the division Systems Research Technology Economy Environment.
Franz To dtling is Professor at the Department of City and Regional Development, Vienna University of Economics and Business Administration.
Franz To dtling has published also in a number of professional journals such as Regional Studies, Environment and Planning, Papers of the Regional Science Association, European Planning Studies, Research Policy, and Technovation
Creating a RTD Investment Policy for Regions in Emerging and Developed Economies Contract no: 029746-CRIPREDE Workpackage 2, Deliverables 2. 1 and 2. 2 Project Co-ordinator:
Baltic International Centre For Economic policy Studies (BICEPS), Latvia: Alf Varnags, Zane Leduskrasta. Impressum: Prof. Dr. Friederike Welter Professur für Betriebswirtschaftslehre, insbesondere Management kleiner und mittlerer Unternehmen Universität Siegen Hölderlinstraße 3 57076 Siegen Telefon:(
From Rural area to High-tech Economy...52 4. 2. 8. Prato: Flourishing Industrial District of Traditional Industry...
although simultaneously emphasizing the role of dynamic entrepreneurs and enterprises, regardless of firm size, for economic development (Schumpeter Mark I hypothesis). Following Schumpeter,
because they have less commitment to existing practices and products than larger enterprises, thus emphasising the flexibility of a small firm size.
) between 1994 and 1996 than large enterprises (Craggs and Jones 1998): Across Europe the proportion of innovating firms by size class varied from 73%of large firms, 49%of medium sized firms to 37%of small firms.
Another study demonstrated that the largest enterprises have consistently been a disproportionately important source of innovation in the manufacturing sector in the UK (Tether et al. 1997.
and dynamic complementarities exist between large and small enterprises (Tether et al. 1997; Rothwell 1983. This variety across firm size has led some authors to attempt to classify the various roles that small firms play in relation to innovative activities.
Specialised suppliers such as engineering or software industry frequently carry out product innovations, often together with customers.
For example, incremental improvements of design could be innovations in sectors with broadly standardised customers demand such as textile industry or furniture production;
in the‘New Economy'innovations would contain the introduction of new software products and services or the development of new customer segments.
which however are new for the enterprise. Examples for a higher degree of innovation would be products and services
which are new for the market or industry as happened for example during the transition towards market economies in Eastern europe (Smallbone et al. 2002).
These concepts are based on the fact that innovations appear to be dependent on their environment which includes for example the scientific and institutional infrastructure of regions
Spatial R&d and innovation clusters reflect the formal institutional settings and the inherent division of labour between enterprises and institutions, in short:
The main characteristics of any such system are its enterprises, public research institutions and transfer organisations, the educational system, the legal and institutional framework and public policy (Fritsch and Lukas 1999.
(or regional) innovation system. 6 RTD is seen as part of chain R&d Innovation Entrepreneurship Market/Regional performance. 7 The general idea of a‘national system'which creates competitive advantages
interregional and sectoral differences in R&d activities then could be explained as a result of the predominant innovation systems at various levels as well as the specific development paths of industry and enterprises (Breschi 2000).
enterprises often are used not to articulate R&d needs, which leads to a low level of R&d, partly due to a lack of trust and cooperation between actors at regional level.
which leads to them being trapped in a vicious circle of low demand for R&d and poor matched public funding. 2. 1. 3. The Development Paths Of high-Technology Industry A common question to be found in the RTD
, through the investment decisions taken on the kinds of research undertaken in specific institutions. Of particular importance in this regard for the development of high-tech industries are the quality
the overall quality of human capital and the numbers of star scientists employed in regional institutions and universities.
2005) concentrate on the role entrepreneurship plays in triggering the emergence of high-tech agglomerations. In contrast to the development of territories such as the Silicon valley, Route 128 or the Research Triangle Park in North Caro-9 Wolter (2004) distinguishes two dominant explanations for clustering tendencies,
entrepreneurship is triggered by exogenous events. In the second phase, entrepreneurship, organisations and institutional arrangements co-evolve,
reinforcing themselves, while in the third stage both industry and cluster mature. Although this study can be criticised for glorifying
insofar as they link entrepreneurship to RTD in a regional context, thus drawing attention to an often neglected factor of regional R&d development.
Moreover, the authors point out a process of coevolvement as an important element of regional RTD development where‘entrepreneurship facilitates the realization of innovation as firms are formed to commercialize
and international linkages of small and large enterprises alike, including the international migration of highly skilled personnel (e g.,
and the concepts used to‘explain'patterns of uneven regional development such as embeddedness,‘institutional thickness',cumulative causation, agglomeration economies, localisation economies, fungeability, labour market dynamics, quality of life and environmental amenity,
and in adapting research results to an enterprise context. As such, knowledge is needed an input for regional RTD,
Malecki (1997: 89) takes this one step further by indicating a need for a technical culture as one element needed for a favourable RTD environment.
‘What is needed for location to play a major role in enhancing technological communication'is a variety of communication channels (Antonelli 2000: 543.
thus creating an environment conducive for learning processes. Recent research picked up this topic in discussing collective learning which is understood as the learning process between different agents (enterprises, public research institutions, etc.
rather than organisational or individual learning. Collective learning includes the regional accumulation of knowledge which is shared freely
Collective learning is said to be linked closely to proximity, as it is based on conversations and interactions among stakeholders within a particular context,
labour mobility, the creation of spin-offs and dense networks, for example, between firms, customers and suppliers (e g.,
With regard to RTD, this draws attention to both the environment which is needed for technical and scientific knowledge to be existent
voluntary associations and other bodies through which small firms connect to the wider economy'(Curran et al. 1995),
and opportunities to meet new people. Thus, weak ties‘represent local bridges to disparate segments of the social network that are unconnected otherwise'(Elfring and Hulsink 2003: 411.
Uzzi (1997) pointed out that strong ties contribute to‘economies of time'as they add to an individual's capability to quickly capitalize on market opportunities.
Studies show for example that corporate investments in R&d, measured by corporate patenting by region within ICT industries in regions in the UK,
well-established universities), the presence of world leaders in specialised niches, sector-specific localisation economies and general effects of agglomeration, public support for training and technical initiatives,
'and‘that the role of‘proximity'in clusters needs to be interpreted with 12 Embeddedness is a concept widely used in entrepreneurship research.
and spatial proximity in attracting human capital and fostering technological regional development, which becomes visible in spatial patterns of a so-called‘geography of talent'.
'The author identifies a triangular relationship between his three‘t',namely talent (human capital), tolerance and high technology growth:
Talent is attracted to places with high levels of opportunity, low entry barriers (i e.,, good entrepreneurial environments) and high diversity of social groups.
For example, this is reflected in the general attractiveness of a region and measured by the‘gay'or the‘bohemian'index,
Approaches range from science and technology policies to innovation policies and promoting a supportive environment
which is attributed to their narrow focus on high-technology fields instead of applying a broader view to innovative enterprises.
In the context of globalisation and increasing international competition, its aim is to strengthen the innovation capability and competitiveness of European industries.
and Borrás (1997) as a policy‘that explicitly aims at promoting the development, spread and efficient use of new products, services and processes in markets or inside private and public organizations'.
and speedup learning and innovation processes within firms as well as between firms and their environment (Nauwelaers et al. 1999).
which emphasizes the role that regional and national environments play in influencing RTD and innovation in firms.
One focus of policy attention in this regard has been on regional clusters of innovative enterprises and the role of the external environment in fostering innovation (Lawson 1997.
and knowledge base are walking a tight rope between fostering the embeddedness needed for tacit knowledge to be codified externally and immigration of‘talents'to profit from new ideas.
'but also creating an attractive environment for living. 2. 3. 2. Is there a Role for Policy?
but policy can create the antecedents needed for cluster development, for example by investing in human technical capital and knowledge.
and classifying regional development paths with an emphasis on RTD, innovation and entrepreneurship in a wider meaning.
but also competition between actors (Lorenz 1992, Dei Ottati 2005). Examples of well-known industrial districts in Italy include the textile industry in Prato, furniture making in Poggibonsi, ceramic products in Sassuolo, machinery products in Modena, shoes in Montegranaro, the silk
and which could be the basis for the renewal of regional economies. For example, this happened in Prato where the traditional textile industry was able to survive
when confronted with radical changes as observed during the 1990s in terms of globalisation and international pressure on local economies as well as the post-industrial transition process.
Clusters are described as regional concentrations of enterprises across different sizes and their support infrastructure; this could be in one industry
and along the value chain (vertical cluster) or horizontally with enterprises competing in the same sector. 17 Spatial concentration is explained by drawing on agglomeration effects and relationships between firms, in particular the intra-regional interaction of competitors
For enterprises, clusters have several advantages (Maskell 2001, Malmberg and Maskell 2002: Firms are able to draw on a pool of qualified labour;
they can obtain a good overview of customers'needs; competition within clusters pushes their innovation capacities;
they share costs of infrastructure; spatial proximity reduces transaction costs and problems with free riders might be reduced because of mutual control mechanisms.
which produce specialised knowledge and trained personnel, industry associations offering specialised services or financing institutions such as venture capital fonds and business angels.
competitive strengths of these clusters are external economies of scope and scale with industrial districts being one sub-category of this cluster form.
The horizontal dimension covers issues of competition and variation, which the author considers crucial in understanding the cluster phenomenon.
which renders firms with complementary products and services more competitive through cooperation, and of untraded interdependencies (Storper 1995) such as the effects of embeddedness and localised learning.
and communication exposing firms to new information without actors consciously having to search for relevant information (Bathelt 2004).
as technological trajectories within clusters influence the development of the cluster, regardless of market chances and opportunities (Menzel and Fornahl 2005).
Consequently, policy support is focused on instruments such as science and technology commercialisation programmes, venture capital initiatives, or consulting in intellectual property rights and internationalisation.
For example, a study on Munich as a high technology region in Germany indicated that this local environment is characterised by extensive inter-and intraregional linkages as well as 31 by comprehensive co-operation between large and small firms
The milieu is seen as an incubator for innovations and the creativity needed to renew and develop regions.
although those need to be integrated into the local society and economy (Camagni 1995, Ritsilä 1999).
Such openness is of particular importance during periods of rapid technological change or intense global competition (De-Martino, Mchardy Reid and Zyglidopoulous 2006:‘
‘Without external interaction, the local production system could suffer from intellectual‘lock in'hindering the region's ability to successfully adapt to new changing environments
but with a relatively high R&d orientation and actually could also be classified as an industrial district because of its SME-structured economy
which has been included because of the university environment, and Boston/Route 128, which has been chosen for its demonstrated potential to overcome a crisis. Montpellier in South France stands for The french technopole concept,
Bangalore, known as the‘Garden City'of India, is the capital of the Indian state of Karnataka situated in the southeast (cf.
space technology (Indian Space Research Organisation) and IT (esp. international computer hardware and software enterprises that have operations in Bangalore).
The enterprise structure consists of many branches of MNCS (e g. Texas instruments, Infosys Technologies Ltd..In total, Bangalore is the most important centre of civil and military aircraft and aerospace industry and IT in India.
In a historical context, the US major enterprise Texas instruments that‘discovered'Bangalore as a location is of great importance.
education system and media and provides stability and reliable circumstances for foreign enterprises even nowadays. Additionally, the regional identity plays an important role.
'This refers to the often heard criticism that Bangalore's success is only a result of the foreign investment because of low cost advantages
and has not a real impact on economic development and local entrepreneurship. There is a need for a larger vision beyond competing only on the cost advantage (Saxenian 2002) or, in other words,
which consisted of heavy central government investment in strategic goods, was followed by liberalisation (market opening).
While the first helped to settle technology orientated public enterprises in Bangalore, the latter made the settlement of foreign MNCS possible.
For instance, a lot of investments were made in infrastructure (e g.,, data networks) that supported the settlement of foreign enterprises.
In Bangalore subsidies were given on an enterprise level (e g.,, free trade area and establishment of the‘Software Technology Park')so that the support reached the beneficiaries directly (Balasubramanyam and Balasubramanyam 2003.
Furthermore, the government supported close relations for knowledge transfer between various actors. Although the headline of this chapter‘Silicon valley of India'is seen widely not as an appropriate labelling for Bangalore (e g.,
The enterprises were focused mainly very and centralised vertically high integrated systems locked into an inefficient technological trajectory (Bathelt 2001.
From this example one can see how the enterprises changed while responding to the market challenges.
Although scientific competition could lead to cutthroat behaviour, instead in Boston it created a‘virtuous cycle':
The technological development worldwide (increasing importance of sectors like biotechnology, internet services etc.;dislocation of emphasis from hardware to services) was a benefit for Boston that‘was poised ideally to take advantage of the rise in returns to skill that so marked the last quarter of the twentieth century.'(
'Glaeser 2005: 151. Contrary to regions such as North Jutland or Bremen, policy and governance is of no greater importance for regional development.
which has an additional impact on local entrepreneurship and innovation. In general, Boston's regional culture is characterised by technological awareness and optimism, a valuable basis for regional economic development.
Moreover, the several crisis situations Boston had to face throughout its history had an influence on the people's attitude towards entrepreneurship.‘
failure is seen not as an obstacle for starting a new venture.‘‘Boston's continuing survival is the result of repeatedly successful responses to adverse shocks.'(
These market or structural changes can be seen as main external triggers for change and the search for and the acceptation of new market opportunities and the change of technological focus (lately, emergence of biotechnology and internet services.
Bremen is also Germany's‘Brand Capital'in food and semiluxurious products. It is home to important brands‘made in Bremen'like Beck & Co.,Kraft Foods, Milka, Jacobs, Kelloggs, Tchibo, Kaffee HAG, Hachez, Frosta, Vitakraft, or Nordsee.
services for enterprises Number of employees in the 14 lead and growth sectors 93.500 1, 20 (1, 0) Regional importance of the 14 lead and growth sectors=specialisation
With this framework Bremen is putting a main emphasis on developing new innovation fields like T. I. M. E. telecommunications, information technology, multimedia and entertainment), health care services and environmental economics etc.
It is the capital of the region Languedoc-roussillon and administrative capital of the Hérault department (cf.
Today, ca. 33,200 enterprises, mainly SMES, are settled in the urban community and Montpellier has one of the highest firm birth rates in France (Lasch 2003).
Additionally, the development of the population had in 46 important impact on the local economy: In the 1960s, the repatriation of Algerian-French people‘who were typically industrious
and often possessed ressources'brought, besides a remarkable increase of population and workforce,‘a new spirit of enterprise to the city'(Hansen 1999: 94).
6 incubator and technology parks (the flagships are‘Cap Alpha'for biotechnology, ‘Cap Omega'for ICT and‘Cap Gamma'for pharmacy) and the start-up-centre CEEI (centre européen d'entreprises et d'innovation) also support the economic development.
Since 1987, more than 300 enterprises have been accompanied by the CEEI within the Montpellier agglomeration with an above-(national) average probability of surviving.
A major strength of Montpellier is its communication and outreach strategy. Image campaigns successfully stress the combination of life quality
business infrastructure and environment as key arguments for investing and living in Montpellier. This is ac 47 companied by special support services for firms planning to localise in Montpellier (Lasch 2006.
Another success factor for the economic development is the regional identity, which can be characterised by a traditional sense of rivalry with the capital Paris and a strong sense of regional culture.
small-structured economy encourage a high unemployment rate because of the absence of low wage jobs and SMES only providing very few additional jobs.
Already since 1977 the settling policy aimed at future orientated enterprises (Schmude 1990) accompanied by a strategic urban development
The economy is dominated by SMES with a heterogeneous economic structure. There is still a fairly large share of low-tech industries such as primary industries,
The cluster is focused on production and development of mobile communications equipment, cordless systems modem and fax equipment for wire and wireless systems as well as various equipments for maritime communications and navigation (Dalum et al. 1999;
Stoerring and Dalum 2006. The second cluster is an emerging medical technology cluster(‘Biomedico'.'This is an active,
whether a‘bottom up'approach like the Norcom cluster where enterprises/spin-offs originally were the 50 main actors
The only exceptions to this are the Nordic pharmaceutical firms and some others with large R&d investments and good collaboration with universities (OECD 2001.
It is positioned‘uniquely to attract industrial and financial investments in the biomedical area'(Boston Consulting Group 2002.
It is the most important investment region in Scandinavia and ranked number three in Europe when it comes to the number of investment projects (Oresund Region 2006).
A main issue for the region is knowledge and learning, which helped making this region successful in terms of knowledge transfer between research and education institutions and industry:
Strong basic academic research and a long tradition for clinical research as well as a good cooperation climate between research and economy help fostering knowledge spillovers (Boston Consulting Group 2002.
,‘Big Pharma'is represented with approx. 70 enterprises in Medicon Valley) is a main element fostering economic development (Toedtling et al. 2006),
The latter, a joint non-profit-making organisation for the biomedical firms in the Oresund 52 area, acts as an intermediate between universities, enterprises,
Although integration problems do still exist one has to admit that the Oresund has grown‘into a modern and dynamic diversified economy'(Hospers 2004). 4. 2. 7. Oxfordshire:
From Rural area to High-tech Economy The county Oxfordshire, consisting of five districts, is located in the south east of England to the west of London (cf.
because it has undergone a‘dramatic transformation in its economy in the last 40 years'from‘being a rural county with a historic university
'(Lawton Smith et al. 2005: 455). 53 This high-tech economy is rooted in its industrial past when motor car and component manufacturing,
Especially, the biotech sector forms a small but significant part of the high-tech economy in Oxfordshire (Lawton Smith 2004.
Knowledge and science is of great importance for Oxfordshire's economy. The resident workforce is amongst the most highly qualified in the country.
Though, one successful example of an institutional arrangement is'The Oxford Trust',a local charitable organisation that aims at encouraging science and technology enterprise.
For example, the Trust has an innovation centre with incubator units and runs business seminars (Lawton Smith et al. 1998.
and its capital is the city of Prato (cf. Figure 8). Overall, there are approx. 241,000 inhabitants.
'Dei Ottati 2004: 9). 24 See Dei Ottati 1994 for further information on Prato's history. 56 because of the worldwide decrease of demand for textile products (Dei Ottati 2004;
Today, Prato's economy is based still mainly on the textile industry despite a marked reduction in terms of establishments and workers compared to the 1980s.
Another success factor in Prato's history was its ability to rapidly adapt to changes in the international competitive environment (Dei Ottati 2004, 1996b.
For instance, as a reaction to the downturn phase in the 1980s, the business models changed: While in the past the enterprises in Prato had a high degree of productive self-sufficiency,
nowadays some intermediate production is being subcontracted to or bought from outside the district, often from countries with a lower level of labour costs.
The latter refers to a remarkable birth and fast growth of firms specialised in producer services due to, for example, the outsourcing of activities before and after the production process or the emergence of new needs for, e g.,
As in every industrial district, the enterprise structure in Prato is characterised by an extensive division of labour.
This means the enterprises are highly dependent on one another to be able to carry out their own tasks.
The enterprises‘have to construct a network()of business relations with other firms for the most part possessing complimentary specialisations.'(
As most enterprises in the industrial district Prato are SMES they are also highly dependent on their employees'skills in order to guarantee high product quality.
According to this, in Prato's enterprises an atmosphere of high collaboration and absolute trust can be observed,
The example of Prato shows how a region in a traditional economic environment with a rather low R&d level can perform well by benefiting from spatial and social proximity
entrepreneurship and creativity that can be found in the local system, precisely thanks to that fabric of trust relations in which economic transactions are embedded.'(
The cluster's enterprise structure is dominated by SMES with the exception of only some major enterprises (e g.,
The two biggest enterprises within the cluster offer nearly half of all jobs, only 42 enterprises employ more than 20 employees,
and more than 200 enterprises do not have any employees at all. Because of the high specialisation and concentration there is also high competition within the cluster (Nadvi and Halder 2005;
Halder 2005. But Tuttlingen's producers also benefit from economies of agglomeration in the cluster, e g.,
, economies of scale and scope, low transaction costs, good reputation in the global market, and linkages worldwide through many local traders and buyers (Halder 2004).
they do strongly depend on international framework conditions (like the US dollar exchange rates) and international demand (Binder and Sautter 59 2006).
But on the other hand this could foster increasing competition and the danger of loosing specialised know-how to the subcontractors abroad
For instance, external connections from leading enterprises(‘pipelines')import new knowledge into the region. This is followed by the so-called‘buzz'in the cluster:
and the hard competition and mistrust within the cluster are a stimulus for entrepreneurship and innovation(‘structural mistrust').
‘The majority of the firms are avoiding direct competition by pursuing a niche strategy and using longstanding personal ties'(Binder and Sautter 2006: 157).
but also to satisfy even smaller demand volumes. This in itself is a success factor for the cluster again.
Summing up, Tuttlingen seems to be a‘good practice'region in terms of competing successfully in a globalised economy.
Infrastructure, human capital, institutional capital Regional image and identity Market resources Size, customer base, distribution channels Openness of customer base for new processes
, products, services Industry resources Age, size of industry base, technology orientation and level of technology use‘Curiosity',i e.,
business support agencies) Dense business networks Good general support infrastructure for entrepreneurship‘Open region'High level of cooperation and interaction between actors Individual High
level Creation of social capital in the form of trust-based and reciprocal relationships within region R&d Oriented Knowledge base Category Hard Factors Soft Factors Level Macro level Meso Level Micro level Macro Level
& social competencies Process Shift from individual and spatially dispersed learning to collective learning Creation of technical culture Creation of social capital in the form of trust-based and reciprocal relationships
its natural environment determining the quality of life within 63 a region, its industry base and market structures.
or the settlement of major multinational enterprises such as IBM in Montpellier,'Big pharma'in North Jutland and Texas instruments in Bangalore.
While a narrow cluster specialisation increases possible synergy effects between enterprises, this also results in strong technological commonalities of enterprises,
Firstly, the evidence presented in this report illustrate differences in regional RTD strategies presenting policy-makers with 27 Path dependency is used a concept in evolutionary and institutional economics to explain a‘lock in'to a non-optimal course of action.
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