ISL456U-TECHNOLOGY AND INNOVATION MANAGEMENT
Chapter 7: The Social and Economic Dimension of Innovation
Introduction
Innovation is a process that starts with an invention, continues with the development of this invention, and results in entering the market as a new product or service.
Companies can respond quickly and continuously to consumers’ changing needs only when they are open to innovation and can maintain their competitive abilities by continually innovating in service or product groups.
A competitive environment is essential to increase the standard of living and well-being of communities, and production rates must be increased to create a competitive environment. In this regard, the most vital concept that increases the productivity rate of production is innovation. For this reason, innovation is the key to economic progress and development and has a crucial role in raising employment and improving living standards at the macroeconomic level.
One of the fundamental reasons why countries innovate and develop is the contribution to economic growth. As the economy grows, its positive repercussions on society are essential for the well-being of a people. Innovation, which is among the most critical sources of development today, brings economic power, and improves the living standards in societies; that is, economic development and living standards are two interconnected phenomena. The factor that triggers these two phenomena is innovation.
Countries can grow for a certain period due to increased export rates or increased domestic demand. However, this growth’s long-term and sustainable nature depends on its innovation performance and its improvement in this performance.
The Social and Economic Dimensions of Innovation
Innovation is the main factor of continuous economic development and growth for the economy. It is the main element of social progress and prosperity for society and a crucial aspect of competitive advantage and power of companies. The contribution of innovation to social development is as significant as its economic contribution.
If we want to increase welfare and improve the living standards in a country or any society, we need to increase our competitiveness. Competition is known to be parallel with productivity, that is, the higher the productivity in a country, the higher the competitiveness, and the essential tool for productivity is innovation. For this reason, everything necessary for a livable society, from the economic growth of a country to its living standards, depends on innovation.
Innovation makes significant contributions to sustainable economic growth, social development and welfare, and the fundamental dynamics of competitiveness. The positive contributions of innovation activities to society and the economy can be listed as (Uzkurt, 2008, p.269):
• Increases observed in welfare in the social area, • Improvement in living standards, • Constant economic progress and growth, • Increase in employment rates, • Efficient and effective use of resources, • Increase in foreign trade, • Uncovering new resources, • Increase in regional development, • Leap in the number of patents, • An increase in entrepreneurship rates, • Efficient and effective use of energy resources, • Saving the economy from being foreign dependent
We can summarize the importance of innovation for companies as developing the ability to create the most added value with minimum input. We can list the benefits of innovation to companies as follows (Uzkurt 2010, p.30):
• A decrease in costs, • Providing competitive advantage, • Increasing the share rate in the market, • Increase in productivity, • Providing efficiency in the use of raw materials, • Increase in profitability, • Transforming the information into an economic phenomenon, • Increase in quality, • Expansion of the product mix and line, • Discovering new market environments, • Providing convenience in entering new markets, • Maximizing customer satisfaction, • Reducing the manufacturing times of the services and products and minimizing the waste given, • Providing flexibility in manufacturing, marketing, and supply, • Providing data sharing by improving the communication environment with suppliers, consumers, and intermediary institutions, • Improving working conditions.
Various factors can prevent innovation activities. There may be reasons for not starting innovation activities at all, or there may be factors that slow down innovation activities or damage expected results. These include economic reasons such as high costs and lack of demand, enterprise factors such as skilled personnel and lack of information, and legal factors such as regulations and tax rules.
The factors that hinder or may hinder innovation according to the Oslo Manual are listed in your book as cost factors (e.g., excessive perceived risk, high costs, insufficient capital), knowledge factors (e.g., inadequate innovation efforts, lack of qualified employees, technology deficiency, lack of information on markets, insufficient outsorcing), market factors (e.g., uncertain
demand for innovative goods and services), institutional factors (e.g., lack of infrastructure, the weakness of property rights) and other factors (e.g., Insufficient demand for innovative products).
The education system is of great importance in the construction of an economic system based on innovation. An education system that supports innovation and encourages individuals’ innovative efforts enables human resources training under companies, meets new entrepreneurs’ needs, and develops individuals’ entrepreneurial skills based on innovation.
National Innovation System
A system consists of specific sub-units and subsystems along with sections with certain relationships between them. Besides, the whole has a relationship between parts and the environment. In a narrow sense, the innovation system reflects the innovation model that combines R&D facilities of universities, public, and private sector institutions and organizations, and is defined as a triple helix approach. (Cooke et al., 2007, p.300).
The main idea of the innovation systems approach is that the overall innovation performance of an economy is based not only on specific organizations such as firms and research institutions but also on their interactions with each other and the government on knowledge generation and distribution.
The features of the innovation systems approach are emphasized in the unit. Learning processes take a central position in the systems approach, so the innovation system is a learning process. The innovation system refers to a holistic and interdisciplinary approach. It includes not only economic factors but also organizational, social, and political factors. The innovation system refers to interdependence and nonlinearity. This approach is based on the understanding that firms do not innovate in isolation, but need complex relationships characterized by reciprocity and feedback mechanisms. The innovation system emphasizes the central role of institutions. Innovation is determined not only by the system actors but also by the relationships between them. The innovation systems approach, conceptualizing the importance of institutions and learning processes as evolutionary systems, has significant effects on institutional strategies and public policies. Finally, learning and innovation are understood as the best outcome of an interaction. The most fundamental feature of the innovation systems approach is that it is “interactive.”
The innovation systems approach is of great importance for policymakers as it brings together the good practice elements required to promote innovation in a single framework. It provides a coherent analytical framework for improving the processes of creating, distributing, and using knowledge and how it affects productivity, competitiveness, and economic and social development. It is also essential how the actors of the innovation system
act locally, nationally, and internationally as well as their interaction.
The essential goal of the national innovation system is to ensure sustainable growth and development. For this purpose, it is necessary to create synergy by coordinating all efforts from the production of information that takes place individually or institutionally to the diffusion of innovations within a network. While the state prioritizes national innovation networks, universities, private sector organizations, and public and private R&D institutions are also vital in the innovation system approach.
Successful innovations can only be achieved by coordinating and communicating with all national actors, making the necessary legal regulations, and providing infrastructure and financial support. Thus, the critical point of the national innovation system process is information flow between individuals, companies, and institutions.
The prominent institutions and organizations that make up the national innovation system are (Özdemir, 2010, p.26) political and supervisory institutions, science system, business sector, supporting institutions that provide technical infrastructure, and public and private research institutions.
One of the most critical arguments in forming the foundation and the functioning of innovation systems is knowledge and learning. During the learning phase, previously unknown information is revealed, and these inferences are used to develop innovative ideas (Kitanovic, 2005, p.14-15). In this respect, learning is about accessing information and acquiring new knowledge, competencies, and skills. Individuals, businesses, regions, and national economies acquire and use the learning skill essential in productivity, which constitutes the learning economy. In this respect, learning is a process related to gaining new knowledge, competence, and abilities, rather than just accessing information.
Although the term know-how has been widely used to represent knowledge, it is but one component of the intellectual capital involved in designing, manufacturing, and using technological systems. There are at least two other components of knowledge. These are know-why and know-what. Know-how represents an understanding of the generative process that constitutes phenomena. Know-why represents an understanding of the principles underlying phenomena. Know-what expresses an appreciation of the kinds of phenomena worth pursuing (Gaurd, 1997, p.84). It is essential to distinguish between different types of knowledge and understand this difference well.
Addressing the stakeholders of the national innovation system is crucial. These stakeholders can be summarized as the state, businesses, universities and other research institutions, financing institutions, and public-university- industry cooperation.
Turkey’s National Innovation System
Turkey’s National innovation system elements are grouped into three primary levels. In this context, the Republic of the Presidency of Turkey, the Grand National Assembly of Turkey, and ministries are located on the top of the system.
The Ministry of Industry and Technology, established in 2011, is an important institution within Turkey’s national innovation system that supports the unity of industry and technology in the country. Institutions such as the Turkish Academy of Sciences (TÜBA), the Scientific and Technological Research Council of Turkey (TÜBİTAK), Small and Medium Enterprises Development Organization of Turkey (KOSGEB), and Turkish Patent and Trademark Office (Türkpatent) are affiliated with the Ministry of Industry and Technology and with their related institutions. In this context, the evaluation of science and industry together extends not only to the public but also to the fields of academia and business.
Under the ministries, there are affiliated, related, and associated institutions and agencies of the ministries. Some important institutions and organizations act as an interface between the system elements of this level, policy-making institutions, and organizations that directly carry out or support R&D and innovation activities. Institutions contribute to policy development, provide funds, and support R&D activities at this innovation system level. Examples of these institutions are TÜBİTAK, KOSGEB, Presidency of Defence Industries Under the Presidency of Turkey (SSB), Council of Higher Education (YÖK), Türkpatent, Turkish Standards Institution (TSE), development agencies, and development administrations.
At the lowest level of the system, some institutions act as interfaces among the companies that personally carry out R&D activities. We can show technology development zones, private sector R&D and design centers, technology transfer offices (TTOs), technology centers (TEKMER), and incubation centers as examples of institutions at this level.
The first critical stage in the development of science and technology policies in Turkey is the foundation of the State Planning Organization (SPO) and the approaches developed within the framework of the Five-Year Development Plans prepared under the leadership of this organization. The Five-Year Development Plans, which were started to be prepared in parallel with SPO’s establishment on September 30, 1960, have been a unique tool in revealing science and technology policies before 1980. The establishment of The Scientific and Technological Research Council of Turkey (TUBITAK) on July 24, 1963, represents another critical step in developing science and technology policy. TÜBİTAK has made significant contributions to forming a science policy regarding basic and applied research in this process.
The first comprehensive study of innovation policy was carried out in the early 1980s in Turkey. In this process, the “Turkish Science and Technology Policy: 1983-2003 Strategy Document,” published in October 1983, constituted an essential step regarding innovation policy design. For the first time, Turkey’s science and technology policies for the period 1983-2003 were set out in detail in this document. Another critical development in this period was the establishment of the Supreme Council for Science and Technology (SCST) on October 4, 1983, to carry out the national science policy.
The Supreme Council for Science and Technology announced two separate strategy documents, “Turkish Science Policy 1983-2003” and “Turkish Science and Technology Policy 1993-2003” in the 1980s. Although the general validity of the strategy documents is indisputable and brings some essential institutional and legal changes, they were not fully implemented for their purposes. We can relate this unsuccessful result to the inability to reveal the country’s vision in science and technology and adopt the proposed policies by all relevant sectors.
In the 2000s, there were three crucial strategy documents, the first two of which were announced by the Supreme Council of Science and Technology and the third by the Ministry of Industry and Technology. These three strategy documents are essential to understand the level of technology and innovation policy in Turkey. Therefore, these three policy documents are explained in detail in the chapter:
• Vision 2023: Science and Technology Strategies • National Science, Technology and Innovation Strategy (2011-2016) • Turkey’s 2023 Industry And Technology Strategy –National Technology Strong Industry
For instance, “Vision 2023: Science and Technology Strategies” is a project that aims to build a Science and Technology vision of Turkey and develop Science and Technology policies for a time horizon of 20 years. It involves four sub-projects as:
• Technology Foresight Project • National Technology Competence Inventory Project • Researcher Information System Project • TÜBİTAK National Research Infrastructure Information System Project
The technology foresight exercise plans to cover the assessment of the current status of Turkey in the field of science and technology, the assessment of the long-term scientific and technological developments in the world, identification of the strategic technologies required for the achievement of targets mentioned, and proposing policies that aim to develop and acquire strategic technologies. The remaining three sub-projects aim at collecting data on the existing science, technology, and innovation capacity of
the country in terms of R&D human resources, technology inventory, R&D infrastructure, and institutional and legal framework.
On December 15, 2010, the SCST approved the National Science, Technology, and Innovation (STI) Strategy (2011-2016) document in the 22nd meeting of the SCST. The National STI Strategy (2011-2016) was the fundamental strategy document comprising Turkey’s Science Technology and Innovation vision, priorities, and primary objectives. The vision of the National Science, Technology and Innovation Strategy (2011- 2016) is “to contribute to new knowledge and develop innovative technologies to improve the quality of life by transforming the former into products, processes, and services for the country’s benefit and humanity.”
Finally, the Industry and Technology Minister Mustafa Varank announced Turkey’s 2023 Industry and Technology Strategy (“Strategy Document”) on September 18, 2019. The Strategy Document has been prepared with the vision of “National Technology, Strong Industry” by targeting the year 2023 in which the 100th anniversary of the Republic will be celebrated. The Strategy Document consists of 5 main components which are high technology and innovation, digital transformation and industry movement, entrepreneurship, human capital, and infrastructure. The strategy, called “National Technology Move” by the ministry, has aimed to drive global competitiveness, economic and technological independence, value-added production, and critical technologies. These goals set within the strategy’s scope are expected to ensure Turkey’s overall development by triggering development in industry and technology, and all areas required for a holistic breakthrough.
National innovation systems are shaped by the institutional framework (law, law, regulation, etc.) and social capital (culture, tradition, language, etc.), triggered by the macroeconomic and political impact. Besides, the main actors are universities, R&D institutions, and industry. The efficiency of this system (providing the necessary coordination and infrastructure) affects the country’s performance. In this context, structures for improving the innovation ecosystem in Turkey are examined briefly in the final part of the chapter within the following headings:
• Universities • Technology development zone (Technopark) • Technology transfer offices (TTO) • Centers of excellence • Angel investors and venture capital organizations