Regional Innovation Economics and Its Actors

Subject: Economics
Pages: 6
Words: 1630
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Study level: PhD


Economical innovation on different levels has become a subject for discussion lately. The importance of this phenomenon is hard to overestimate; while the economy of every country is constantly developing, innovation is one of the main processes which signal this development. Some of the branches may need more time to find and implement some changes, others are quickly growing, but innovation takes place in every sphere (Lundvall, 8).

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Depending on the area where the innovation takes place, the innovation systems can be national, regional, sectoral, or technological (Fischer, 29). The proper work of the regional innovation systems is essential for the healthy development of a country’s economy.

Logically, innovation is realized by some actors. In other words, there have to be some people or institutions which encourage the innovation process and take part in it. Before naming the actors of the regional innovation, it is worth mentioning the types of innovation.

There are three basic types of innovations outlined by the economists:

  • radical (inventing some systems and implementing them);
  • major (changing some parts of an existing system);
  • incremental (minor changes of the current system). (Freeman, 15).

Depending on the type of innovation, there may be different actors interested in its implementation.

Actors in regional innovation

The actors in the regional innovation system can be distributed into four groups: (a) buyers, (b) sellers, (c) suppliers, and (d) different types of organizations. In other words, anyone who is interested in the innovation and is using it automatically becomes its actor. If to be more specific, the main actors in the regional innovation systems are:

  • customers
  • producers
  • subcontractors
  • consultants
  • firms
  • governmental institutions
  • research institutes
  • universities (Gregersen, 450).

All the mentioned actors take part in the innovation system equally. Moreover, the actors need to be able to cooperate. The better the actors cooperate, the more successful is the process of innovation. The innovation networks are often considered to be one of the most important types of business networks (Cooke, 41). In other words, the innovation system should function as a complex network, and its parts should be organized in a way that suggests the proper distribution of responsibilities and duties. In this case, the innovation will be effective. Therefore, the main role of the actors in an innovation system is to cooperate efficiently.

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It is also worth mentioning that all the actors are of equal importance in the innovation system. The innovation should be beneficial for every actor, and every actor should be interested in the changes. For instance, first, the research centers and universities should study the situation in the region and compare it o other regions to define the type of economical innovation needed and the degree of its importance. This information can be derived from some questionnaires, statistical data, etc. This requires communication between people; that is why, the innovation systems are sometimes referred to as social ones (Lundvall, 51). Next, the governmental institutions should define the innovations which are needed to be implemented in a certain region. In the case of the regional innovation system, this role may belong to the regional administration, which is responsible for sorting out the offered innovations. In addition, they should give financial support to those who are responsible for the realization of the innovation in the region. The producers and firms are to consider the results of the studies and implement the necessary changes, for example introducing new technologies for producing or promoting the goods. And finally, buyers and customers should approve the innovations introduced, which means that they should be ready for the changes, such as the implementation of the new technologies and services connected to them. For this purpose, the universities can prepare professionals in different spheres connected to different innovations. If some region of a country is concentrated on farming, the universities of this region must educate students about the new farming technologies and their application.

Such distribution of roles is vital; for instance, it would be impossible for an organization to invent and implement some innovation without all the other actors, as all the changes should be agreed upon them. That explains the complex character of an innovation system.

This process, however, can have a reverse character, where the idea or need for innovation occurs among the customers and then is expressed to the firms and governmental institutions, and later implemented. In both cases, we observe the cooperation between all the actors of the innovation system, which suggests that the innovations are successful. This can also serve as a criterion for comparing the development of economics in different regions. In the regions where the economics is static and the innovation is not intensive, the cooperation between the actors is probably lower. Thus, to implement the governmental plan for a generation of regional innovations the firms need to cooperate (Koschatzky, 737).

However, intraregional cooperation is only one aspect of successful innovation. The regional actors should also develop connections with the external sources, for example working with the other regions or foreign companies. This allows a healthy and balanced innovative policy to be implemented (Dosi, 82).

The importance of the regional innovation system actors, however, is not limited by internal and external cooperation alone. The actors with appropriate financial resources and status can organize a network, which is even more sufficient than a usual innovation system (Radosevic, 356). The network can be formed with any of the mentioned actors, including the regional administration, different organizations, firms that produce or supply goods, etc.

Innovation measurement

Having defined the innovation types and the actors of the regional innovation system, we face the need for innovation measurement. To what extend is economics innovated? And is there some method for measuring innovations?

These questions have been a reason for concern of the economists during the last few decades. The scientists still argue about what criteria should define the level of innovativeness in a particular region. If a region has some resources and potential for innovation, some interactive methods have to be implemented for its realization. The amount of the sources present in a region and the methods needed to make the innovation effective can be measured to define the level of innovativeness. However, such a formulation does not give any specific formula for the measurement of innovation.

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Firstly, it is necessary to list the features which point to the success of the innovation process:

  1. the knowledge should be derived from external sources and processed inside the regional innovation system;
  2. there should be a strict distribution of duties and responsibilities among the actors of the innovation system;
  3. the firms, organizations, and knowledge institutions should cooperate effectively;
  4. the networking within the different businesses should be developed (Morgan, 502).

The innovation policy is successful in case of satisfactory networking, learning, and leadership among the actors. In case all these features are present in a system, the innovation in the region is of a high level. However, such measurement is rather general. Therefore, it is worth introducing some other methods of innovation measurement, which could give more specific information.

Some authors (Lundvall, 82) suggest that there are two basic methods to measure innovativeness, namely the output type and the input type.

The main criteria of the output type are the results of the innovation. These may include the licenses and patents as the measures of innovation in some particular firm. However, the output measure can be individual for every organization. For example, the firm concentrated on producing goods may measure its innovation with the number of technological improvements, and the firm which gives services can count some new services offered to the customers. The key feature which can help to define whether an innovation is successful is the economic value of the innovation. Successful innovation is the one that is beneficial in the respect of economics both for the producers and the customers. In general, output innovativeness is rather hard to measure, as the different organizations are aimed at different outputs.

The input measures refer to the efforts which are put in the innovation by some firms or institutions. In other words, the input type method is concentrated on all the intellectual and financial activities which had been held for a particular innovation. This includes the work of the researchers, the gain and spread of knowledge, the money spent on some innovation, etc. (Karlsson, 34). On a regional level, the innovation can be undoubtedly measured with the costs given by the regional budget for the innovation. In addition, it is extremely important to consider the level of higher education in the region connected to the innovative activities, as only the highly qualified workers will be able to make the innovation profitable for the region and the whole country.

Most of the existing measures of innovativeness are concentrated on the economical value of the innovation. Thus, industrial or technological innovations are considered only if they are profitable. In addition, when comparing different regions, the measure of their innovativeness can be the quantity of the services using the new technologies. The more developed is the professional and technical support of the organizations, the higher is the level of innovativeness in the region.


To conclude, it is worth saying that the innovation system is very complex. The interaction and cooperation between its actors, such as customers, organizations, suppliers, government, etc. are vital for successful innovation. In addition, the connection with the external links, such as institutions from other regions or countries, is also important for the innovation system development.

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The level of innovativeness in a certain region can be measured with the help of few defining features. Among them is the level of education, technological support, quality of services, the economical value of the innovation, etc.


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