An innovation policy framework for upgrading firm absorptive capacities in the context of catching-up economies

Abstract

The paper addresses the 'regional innovation paradox' referring to the lower capacity to absorb public funds earmarked for the promotion of innovation in the peripheral regions. The key aim is thus to propose and test a conceptual framework of tailored innovation policy routes that aim at stimulating absorptive capacities of firms. Literature analysis helps to distill determinants of absorptive capacity at firm and system levels. Analysis of innovation policies applied by the Central and Eastern European (CEE) countries in 2007-2013 is used to determine the gap between mainstream innovation policies and business capacity building needs. The paper presents an integrative conceptual 'stairway of competence' framework, mapping four innovator types with alternative policy routes. An assessment of innovation policies in the selected CEE countries is provided. We find that mainstream innovation policies in the selected countries mainly focused on two routes: strengthening the capacities of mature innovators and the uptake of existing technology. There is little evidence that this approach had any clear effects on structural change in the CEE economies. These findings suggest that a more tailor-made approach to innovation capacity building is needed, taking into account the current capacity levels within the target groups. These findings are especially relevant to the use of European Union cohesion policy funds and the implementation of the smart specialization strategies. Although the CEE is the main context for the framework, its implications are applicable to other catching-up and peripheral regions more widely.

Drivers of structural convergence: Accounting for model uncertainty and reverse causality

“…Grossman & Helpman, 1980, 1991b) and empirical research (e.g. Chiappini, 2014), especially in the context of innovation and entrepreneurship (Crudu, 2019) as well as catchingup economies (Paliokaite, 2019). The results for PATENT affirm the role of technology for structural similarities.…”

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“…Furthermore, this study develops a framework to explore the processes through which open innovation intermediaries fill the aforementioned roles. In the context of transition economies, but also in general, SMEs often lack the innovation capabilities necessary to access and enter a business field featuring high turbulence and risk (Paliokaite, 2019). This study strongly suggests that cluster initiatives as open innovation intermediaries can provide effective assistance to the innovation processes of SMEs.…”

Global Value Chain Upgrading and Business-academia Collaborations: Case Studies of Successful Innovators

“…It shows that public entrepreneurs, acting in an enabling way, are crucial to start such triple helix collaboration initiatives with MNEs. It is intended to highlight the diversity of strategies and BA collaborations, offering potential insights for policy-makers interested to support upgrading through tailored and selective policies (rather than a one-size-fits-all approach), following Havas (2015) and Paliokaitė (2019).…”

“…Public research, on the other hand, plays a more significant role during the firms' ongoing projects (Cohen et al 2002). Furthermore, Paliokaitė (2019) and Havas (2015) observed that firms face different needs, possess distinctive capabilities and engage in different types of BA collaborations, but innovation policies (esp. in the CEE countries) tend to neglect this diversity, focusing mainly on strategic, long-term R&D (Havas 2015).…”