Policy Reader: Section Three Annotated Bibliography Policy Reader Chapter 7: Science Policy and Technology Policy Metcalfe, J. S. (1997) ‘Chapter Seven – Science Policy and Technology Policy’ in Suneja, V. (ed. ) Policy Issues for Business: a Reader Sage/The Open University, London Metcalfe, J. S. (1997) ‘Science Policy and Technology Policy in a Competitive Economy’ International Journal of Social Economics Vol. 24 Nos. 7/8/9 pp. 723-740 Overview Metcalf considers science and technology as required disciplines informing innovation policy. He advocates a combination of industry and academia to generate knowledge and technology support systems with policy providing process guidelines.
Creativity is considered central to innovation, seen as a complex process. Issues surrounding knowledge diffusion and intellectual property rights discussed. Policy should align research (academia) and funds (industry) within a broad innovation policy. Organisational use of technology seen as means of improving social and economic conditions within the country. Costing of R&D is discussed, highlighting problems for organisational accounting, including long term focus and lack of outcome predictability. Annotation Several of Metcalf’s definitive assumptions need questioning. All developments are apparently driven and/or funded by industry, which does not allow for academic knowledge providing new insights from which innovation can stem.
New technology is considered the basis of innovation, when existing technology can be used in different, innovative ways. Technology is assessed according to its economic value, ignoring the need for knowledge generation to enable technology creation. The distinction between science as academic and technology as practical is arbitrary and questionable. Innovation is seen as linear and cumulative, ignoring leaps in ideas and creativity generating new technologies. (196 words) Policy Reader Chapter 8: National Systems of Innovation Freeman, C.
(1995) ‘Chapter Eight – National Systems of Innovation’ in Suneja, V. (ed. ) Policy Issues for Business: a Reader Sage/The Open University, London Freeman, C. (1995) ‘The “National System of Innovation” in Historical Perspective’ Cambridge Journal of Economics Vol. 19 No. 1 pp. 5-24 Overview Freeman provides historical context for the importance of local/national innovation systems, beginning with List’s interdependencies of resources and industry, science and education. List advocated state involvement for long-term policies relating to industry and the economy as national innovation systems. In-house R&D functions produced growth in research but highlighted the need for rapid knowledge diffusion for progress and the importance of qualitative and quantitative factors.
Globalisation introduced nation variations leading to diverse outcomes and a global position built on local success. National innovation systems should involve policies for local innovation and diffusion and includes organisation and management changes. Annotation Freeman’s views, including the different histories, ignore the political effect on economics, giving different meaning to long-term. Long-term is relative and context-specific, not a national or global standard. The process of innovation development is portrayed as logical and linear, which is unlikely.
Using the past is no guide to a future which is already substantially different to 1995. Mention of economic geography links to Krugman’s ideas of free trade and developed and developing nations. No consideration is given to the social impacts of the dichotomy, nor the issue of potential exploitation of the developing by the developed. (194 words) Policy Reader Chapter 9: The Competitive Advantage of Nations Porter, M. E. (1990) ‘Chapter Nine – The Competitive Advantage of Nations’ in Suneja, V.
(ed. ) Policy Issues for Business: a Reader Sage/The Open University, London Porter, M. E. (1990) ‘The Competitive Advantage of Nations’ Harvard Business Review March/April pp. 73-93 Overview Porter suggests that innovation drives national competitiveness and industries should involve strong rivalry, powerful suppliers and demanding customers. He links innovation and change, then proposes his diamond of competitive advantage comprising factor conditions, supporting industries, demand conditions and firms structure, strategy and rivalry. He introduces absolute and comparative advantage which requires national specialisation. Government role involves no intervention in currency markets, deregulation, no mergers or managed trade, quality control, sustained (private) investment and factor creation.
Industries are advised to globalise, compete strongly at home, improve their diamond and selective alliances. Leadership, a key element, is mentioned briefly at the end. Annotation The article, ostensibly about innovation, actually promotes Porter’s free market/trade ideology. The diamond is presented as a “one size fits all” solution but requires several contradictory conditions. There is an assumption any developed nation model works everywhere else. The article subtly criticises Japan, out-producing the US at the time. Nations specialising is inherently risky, as if the market moves on, nations face economic ruin.
His example of increasing world Americanisation excludes other potential global influences. All nations apparently have a comparative advantage somewhere. Porter ignores the potential consequences of his contradictory government roles. Potential for exploitation of developing nations ignored. (200 words) Policy Reader Chapter 10: Imperfect Markets and Fallible Governments: The Role of the State in Industrial Development Lall, S. (1997) ‘Chapter Ten – Imperfect Markets and Fallible Governments: The Role of the State in Industrial Development’ in Suneja, V.
(ed. ) Policy Issues for Business: a Reader Sage/The Open University, London Lall, S. (1997) ‘Imperfect Markets and Fallible Governments: The Role of the State in Industrial Development’ in Nayyar, D. (ed. ) Trade and Industrialisation: Themes in Economics Oxford University Press, India Overview Lall contends there is a need for specific government interventions and policy. He evaluates the neoclassical economics approach and its implications for developing nations, including the imposition of structural adjustment programmes by developed nations and/or their representatives where supposed free market benefits do not materialise. He argues against specific assumptions made about competition, as markets are not perfect, requiring state intervention in some instances.
He highlights the incompatibility of resources/capabilities with the neoclassical view, and the inherent assumptions of a “one size fits all” approach. He identifies externalities as requiring state review, and imported technology as “imposed” by the West. Annotation Lall’s contribution is the only one from a developing nation perspective. He states policy is not “in fashion” in 1997, prompting consideration of what might have happened if it had been. He shows that the Western view of other economies is partial, demonstrating a view that “only the West can do things the right way”.
When developed nations provide technology, significant knowledge remains in the host nation. For Lall, this is the reality of the developing nations, with a consideration of the possibility that the West is exploiting them – something that could not be considered by the other writers here. (200 words) Science, Technology and Innovation Policy and the Impacts on Business Organisations Introduction This brief essay provides an analytical overview of the ideas relating to science, technology and innovation policy as presented by Metcalf, Freeman, Porter and Lall in the policy reader, highlighting similarities and differences between their viewpoints, and problems arising from them.
It concludes with a view as to how useful these studies, undertaken in the 1990s, are to the current national approach to science, technology and innovation. Same Ideas, Different Conclusions Is Policy Necessary? Lall (1997, p. 144) states that “industrial policy is not in favour. .. today”, implying that many economists considered policy unnecessary. Certainly, many argue for a reduced state role in national and international trade.
Metcalfe (1997) believes that the state should provide the how of innovation, bringing together the funds from industry and the research from academia. Freeman (1995) tends to support this view, suggesting that government provides a framework covering knowledge diffusion and local innovation. Porter (1990), however, does not believe in any policy that might constrict the movement of goods and services: his role for government is essentially to provide business with the freedom to do what it wants while spending money on factor creation.
This might go some way to explaining why education today is seen as preparation for work, rather than learning and preparing for life. Thus the collective view is that policy is needed, but it has a specific place and limited influence, based on circumstances and ideology. What Should Business Aim To Achieve? The objectives for business when considering science, technology and innovation are different depending on who you read. Metcalf (1997) believes businesses should be driving innovation through funding of academic study. Freeman (1995) focuses on in-house development of innovation, with functional integration providing a greater access to creativity and progress.
Porter’s (1990) focus is on organisations implementing his diamond and improving that through industry competitiveness (reflecting his Five Forces (1980) model, as does much of his diamond), but quite how this improves innovation is not made clear. Lall (1997) supports the resources and capabilities approach to strategy (see Teece et al, 1997, for further information of how resources and capabilities work in a rapidly changing technological environment). His view is that firms aim to gain “competence and efficiency” (Lall, 1997, p. 145) rather than competitive advantage.
It would appear that innovation should be used to create new products and services using either in-house or externally-sourced research, or driven by the implementation of a four-factor model or the development of resources and capabilities to generate competence and efficiency. A diverse view which would not help someone in business decide where their priorities should be. What Role Does Government Have – If Any? Although the role of policy has been considered already, there are other ways that government can influence organisations.
For Metcalf’s (1997) approach, government would need to invest in the development of academic research facilities, including the researchers, requiring an investment in the higher education sector. Supporting in-house R&D efforts might involve government providing tax incentives for such facilities to be located in the UK or perhaps allow R&D expenditure to be capitalised or set-off against profits in a more advantageous way than usual. Freeman’s (1995) view might also require control of technology imports in some way, as well as financial incentives for undertaking specific activities to align the interests of industry with those of the economy.
Porter (1990) sees government as a guard, keeping influences away from the organisational effort to generate competitive advantage at home and abroad. Rather than policy, this would involve legislation in the areas of regulation and competition, to remove the former and counter the latter. Like Metcalf, Porter’s approach would require investment in factor creation – perhaps new facilities or, again, investment in higher education to improve the skills of the workforce, creating the potential for new ideas.
For Lall (1997), government intervention only happens in specific circumstances, when the market has failed or underperformed in specific areas. Thus, similar to both Metcalf and Porter, an investment in skills development is acceptable. Like Freeman, Lall would approve of investment in technology and, by extension, technical support. However, unlike Porter, Lall supports investment to make finance available. Porter would argue that this is government intervention that is ultimately self-defeating (Porter, 1990, p. 129). Government has some specific roles to play, but not everyone agrees on what they should be. How Does Ideology Affect The Argument? It is difficult to ignore the underlying ideologies displayed by the four chapters being analysed, as they fundamentally shape the basis for the arguments advanced, and have potential consequences that may not be obvious.
The views of Metcalf (1997), Freeman (1995) and Porter (1990) put the economy and industry at the centre of proceedings, suggesting that associated factors such as society are not important as there will be benefits if the appropriate strategies are followed.
Freeman’s (1995, p. 107) reference to both economics and geographers brings the ideas of Krugman to mind, with his ideas of competitiveness of locations (see Krugman 1991) and indicates a preference for free trade theories. This is an area where Porter (1990) would agree with both Krugman and Freeman. But Lall (1997) would disagree with all of them and would do so from the position of having conducted research in a developing nation (India) and observing the effects of the interventions of developed countries and multinational corporations.
It would never occur to, for example, Porter to consider that the involvement of developed nations in the development of the developing nations might be perceived as exploitation, rather than assistance. For him the interventions of organisations like the Word Bank and the International Monetary Fund provide such countries with the best approach to increasing prosperity. Lall would point to the need for developing nations to develop in their own time and their own way, based on their capabilities, which might justify developing nations using protectionism for their developing industries until such time as global competition would not result in instant decimation of the growing industry (Lall, 1997, pp. 168-170). Conclusion Different nations have different histories and different ways of approaching similar tasks.
The four writings considered here are very much a product of their time, but provide some insights into global trading and the impact of science, technology and innovation on different nations’ successes. Given the economic crisis of 2007, it is interesting to speculate whether it would have happened had the “unfashionable area” of policy been fashionable in 1997 and free market and free trade economics been in retreat.
Any organisation reviewing these ideas might be able to learn about what they should not do, as much as what they should do, to be successful in our global economy. Word Count: 1,120 words References Freeman, C. (1995) ‘Chapter Eight – National Systems of Innovation’ in Suneja, V. (ed. ) Policy Issues for Business: a Reader Sage/The Open University, London Krugman, P. (1991) ‘Increasing Returns and Economic Geography’ Journal of Political Economy Vol. 99 No. 3 pp. 483-499 Lall, S. (1997) ‘Chapter Ten – Imperfect Markets and Fallible Governments: The Role of the State in Industrial Development’ in Suneja, V.
(ed. ) Policy Issues for Business: a Reader Sage/The Open University, London Metcalfe, J. S. (1997) ‘Chapter Seven – Science Policy and Technology Policy’ in Suneja, V. (ed. ) Policy Issues for Business: a Reader Sage/The Open University, London Porter, M. E. (1990) ‘Chapter Nine – The Competitive Advantage of Nations’ in Suneja, V. (ed. ) Policy Issues for Business: a Reader Sage/The Open University, London Porter, M. E. (1980) ‘How Competitive Forces Shape Strategy” The McKinsey Quarterley Spring pp. 34-50 Teece, D.
J., Pisano, G. and Shuen, A. (1997) “Chapter Nine – Dynamic Capabilities and Strategic Management’ in Mazzucato, M. (ed) Strategy for Business: A Reader Sage/The Open University, London