Defining the entrepreneurial discovery process in the RIS3 framework Dominique Foray Pisa workshop S3 Governance September, 2014 Chair of Economics and Management of Innovation

The language of entrepreneurial discovery and smart specialisation is becoming commonplace in the EU cohesion policy. But what we see being implemented in practice is often the rhetoric not the substance.

Knowledge for Growth expert group (EC) D.Foray, P.A.David and B.Hall Smart Specialisation: the Concept

Knowledge economy Top regions Spillovers? Less developed regions Innovation culture in SMEs Doctoral programs Access to finance

A shift in the policy logic and a new problem A shift from horizontal to vertical : building capabilities in specific domains/technologies/sub-systems A new problem: identification Two recommendations –Don’t start from scratch; the selected domains will be most likely related to the existing structures –The goal of the new domains is to transform these structures But where does the information about promising domains come from? What is the role of entrepreneurial discovery? –Why is it central? –How to give it an operational content? –What role for government? Chair of Economics and Management of Innovation

What is the nature of priorities in S3? Not « global world or Grand Challenges » priorities –health, energy and climate, ageing society, Not high tech roadmap (photonics) Not structures or sophisticated matrix Chair of Economics and Management of Innovation Grand challenges Key enabling technology HealthEnergy efficiency ICT Personnalized medicine Photonics Renewable energy

What is the nature of priorities in S3? Priorities should reflect the emerging processes of opening and exploring a new domain of opportunities within the context of the region The mapping of strategic domains (matrix, structural analysis) is useful as an informational tool but is not a substitute to entrepreneurial discovery Chair of Economics and Management of Innovation

Entrepreneurial discovery - 1 The government does not have innate wisdom. Against the usual logic according to which the government knows from the start which domains should be developed and therefore confines the policy to setting up the incentives for private industry to carry out the plan ! The discovery and collective experimentation process forms an integral part of political action and must be carried out within the framework of strategic interactions between the government and the private sector. Embeddedness

Entrepreneurial discovery - 2 Entrepreneurial discovery instead of entrepreneurial innovation ED does not only amount to innovation – but it increases its probability It is the exploration of a possible evolution path starting from a specific industrial situation ED does not reflect any particular degree of novelty: an ED can be very much incremental while initiating significant structural change A strong learning dimension: an ED is socially valuable in redirecting productive decisions Chair of Economics and Management of Innovation

Bag that if you ask for something and push the button it gives you immediately what you have asked for…………. Key enabling Technology Shoes and bags high quality production : a Marche Region Traditional Sector Smart Specialisation Eugenio 2007

Operational content of ED - 1 Two situations High/medium intensity of ED thanks to a high level of private capabilities –Large firms as well as network of SMEs or industrial consortia involving universities : they generate numerous process of opening and exploring new domains –Micro-systems of innovation are doing well! –Examples Low intensity of ED –EDs are missing and so the RIS3 cannot get started Chair of Economics and Management of Innovation

High/medium intensity of ED thanks to a high level of private capabilities Detection, information / EMBEDDEDNESS Ex ante assessment Policy to support early growth and to select new priorities at any time…..but also to support ED in the low tech/less dynamic sectors of the economy (inclusiveness) Chair of Economics and Management of Innovation

Nine criteria to assess ex ante projects or domains and select priorities *Proximity to market *Does the activity open a new domain potentially rich in innovation and spillovers? *What is the degree of collaboration, the number of partners involved? *Is public funding needed? *What is the significance of the activity for the regional economy? *What is the capacity of the region to keep the successful activity on its territory? *Can this activity drive the region towards leadership in the selected niche? *What is the degree of connectedness of the activity vis-à-vis the rest of the regional economy * Private firms are ready to submit themselves to monitoring and performance audits.

Low intensity of ED (in the entire region, in some sectors) Improving ex ante the conditions to increase the intensity of ED Problems of networks and connections to structure and integrate the entrepreneurial knowledge which is dispersed and fragmented –Platform, consortia, public-private partnerships Problems of leaders and integrators –Role of local universities, regional agencies of PRO, large companies Problems of connections with extra-regional sources of competences –Pipe line strategy, teaming/twinning instruments, diaspora Chair of Economics and Management of Innovation

Less advanced, transition regions

Chair of Economics and Management of Innovation Most advanced regions Less advanced transition regions

Operational content 2 What is prioritized is not a sector but the new activity –Sectoral prioritization creates distorsions –Activity level is the right one to see in detail the pieces of the knowledge economy that a region or country can take as a basis for its S3 – i.e. to detect ED Inclusiveness : not just a high tech policy –Sleeping giant, excited goblins and hungry dwarfs Evolving prioritisation Ex ante and ex post evaluation

The language of entrepreneurial discovery and smart specialisation is becoming commonplace in the EU cohesion policy. But what we see being implemented in practice is often the rhetoric not the substance. –What is needed? Understanding the role and the operationalisation of ED requires understanding the nature of priorities in RIS3 Priorities should reflect emerging domains or process to transform the local structures They can only be known by the “entrepreneurs” (in a broad sense) Two kind of situations –Regions/sectors with high intensity of ED –Regions/sectors with low intensity of ED

Thank you