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Section 1 - Aims and Objectives
1.1 Introduction
The effectiveness of Scotland's innovation system plays a crucial if not critical role in shaping the nation's economic performance. This report provides a benchmark assessment of the effectiveness of the Scottish Innovation System ( SIS), and highlights the capabilities, role and connectivity of the key actors within the SIS. The aim is three-fold:
- To provide a 'rough guide' to the anatomy and function of the SIS with a particular focus on the capabilities, role and connectivity of the participating organisations;
- To identify the strengths and weaknesses of the system as it currently operates;
- To identify the key policy opportunities and develop some initial suggestions as to how these might be addressed.
These aims cannot, of course, be achieved solely by an examination of the internal dynamics of the SIS. Market and technological globalisation are making national and regional innovation systems ever more interdependent, emphasising the importance of external connectivity as well as that within the region. For Scotland as a region-state within the UK and EU, multi-level governance is also important with aspects of Scottish firms' operating environment being determined in Brussels, London and Edinburgh. So, when considering the SIS, not only do we have to take into account its international linkages but also its position within the wider UK and EU innovation systems 1.
Within the SIS the key foci are organisational capability and connectivity. As 'knowledge' becomes an ever more important competitive asset, Scotland's ability to create new knowledge will be a key component of the effectiveness of the innovation system. Innovation, however, requires more than knowledge creation, depending also on effective interaction between those organisations generating new knowledge - largely the universities - and the business sector. Spin-out companies, for example, can play an important role in the development and diffusion of new technologies. Local knowledge sharing between firms - through networking and collaboration - also plays an important role in maximising the retained value added from innovation and spreading best practice.
Government policy - both that directly related to innovation - and in other areas ( e.g. training, education) can play a crucial role in managing and integrating the SIS. The OECD have summarised the situation as follows, arguing that governments should 'address systemic failures that block the functioning of innovation systems, hinder the flow of knowledge and technology and, consequently, reduce the overall efficiency of R&D efforts. Such systemic failures can emerge from mismatches between the different components of an innovation system, such as conflicting incentives for market and non-market institutions ( e.g. enterprises and the public research sector), or from institutional rigidities based on narrow specialisation, asymmetric information and communication gaps, and lack of networking or mobility of personnel' 2.
1.2 Structure of the Report
We return to these issues in later sections of this report. Initially, however, we focus on understanding the recent performance of the SIS and its key actors. Our report is organised as follows:
- Section 2 provides a brief overview of the key characteristics of innovation systems. The focus is on the desirable characteristics of knowledge generating organisations ( e.g. universities), knowledge exploiting organisations ( e.g. firms) and the links between the two.
- Section 3 outlines high level overview of the architecture of the Scottish Innovation System, introduces the key actors and their roles and provides some structural and benchmark comparisons with other areas.
- Section 4 focuses in detail on knowledge generation within the SIS, identifying the key actors their roles and capabilities
- Section 5 focuses on the process of knowledge exploitation within the SIS and the specific role of policy in supporting innovation.
- Section 6 considers the level of interaction between organisations within the SIS and the role of policy ( e.g. the ITIs) in encouraging knowledge diffusion.
- Section 7 deals with the governance and co-ordination of the SIS, concentrating on the roles of the Scottish Executive, SE and HIE.
- Section 8 synthesises the key points from the earlier discussion and provides an overview of what we see as the key strengths and weaknesses of the SIS. Policy priorities are then identified.
1.3 Basis of the Report
Our report draws on a wide range of published and unpublished documentary material and statistical references. The analysis was also informed by a series of interviews with participants in the SIS. Our thinking was also helped by useful comments from members of the project Steering Committee, and to them and our informants within the system we express our thanks.
A key focus of the report was an assessment of the strength of linkages between different actors within the SIS. These linkages take many diverse forms involving exchanges of information, knowledge and funding for R&D and innovation projects. Given this diversity, any quantitative attempt to measure the strength of these linkages was beyond the scope of the current report. Our assessments of the strength of inter-organisational linkages are therefore subjective, although informed by our interviews with system participants and review of other evidence.
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