AFRICALICS:

INNOVATION AND ENTREPRENEURSHIP

Margrethe Holm Andersen

Senior advisor, Dept. of Business & Management

Aalborg University

Enhancing Entrepreneurship, Innovation and Sustainability in Higher Education in Africa (EEISHEA)

Copenhagen University, 28th February 2019

My background

• Master in public administration (1988) and Ph.D (1992)

• 25 years of working experience in development cooperation; incl. 15 years in the

Danish Ministry of Foreign Affairs of which 7 years as Deputy Head, Evaluation

of Development Cooperation. Lived for more than five years in Tanzania.

• Currently Senior Advisor at Department of Business and Management at

Aalborg University (Globelics Secretariat 2013-2017; member of IKE and CRID)

• Main areas of work: research capacity development through AfricaLics

(www.africalics.org) plus research and PhD supervision in IREK – a Danida

funded research project on innovation and renewable electrification in Kenya

(see www.irekproject.net)

• Co-author of Globelics Thematic Review on Strengthening of Health Systems:

Rethinking the Role of Innovation (see www.globelics.org); new article 2019:

https://www.tandfonline.com/doi/full/10.1080/2157930X.2019.1567913).

• Chair of the Danida Fellowship Centre Board (www.dfcentre.com) and external

examiner at International Studies at Roskilde University Centre + at Center for

Africa Studies, Copenhagen University.

Agenda

• What’s AfricaLics and what do we do?

• AfricaLics: Why do we think innovation and entrepreneurship matters to Africa?

• How AfricaLics conceptualize, research and work with entrepreneurship and innovation

• Recap/take away points and some opportunities for you and your (PhD) students to engage with AfricaLics

What is AfricaLics?

• An African regional research network focussed on innovation and development studies research

• Part of Globelics: the Global network on the Economics of Learning, Innovation and Competence building Systems (www.globelics.org)

• AfricaLics was established in 2012 in Dar es Salaam; Scientific Board chaired by Bitrina Diyamett from STIPRO, Tanzania. Secretary General: Anna Kingiri based at African Centre for Technology Studies, Nairobi.

• Scholars and universities in and outside Africa support network activities by granting staff possibilities to teach for free at PhD academies; participate in Scientific Board meetings + through co-hosting AfricaLics events etc.

• Aalborg University currently hosting the AfricaLics Visiting Fellowship Programme and has supported building up the network since 2012

• Financial support from Swedish Sida for research capacity building activities, but develop and use low cost models (frugal approach)

• Today includes 500+ scholars and practitioners (primarily from Africa) involved in Innovation and Development studies research.

The AfricaLics vision

To see African countries developing and utilizing high quality research, conducted by African researchers, to enable more informed policy decisions to be made relating to the use of science, technology and innovation (STI) for economic and social development as well as efficient governance.

AfricaLics field of research

Research in this area asks how such innovations impact – positively or negatively – on economic and social development. So, some of the overarching questions addressed by this field of study are: • What type of innovative activity is most appropriate to ensure individuals,

households and communities benefit? Is there some innovation that should be promoted in certain areas of the economy or society in order to enhance economic and social development?

• How does innovation take place in countries that are resource poor as opposed to those that are resource rich?

• Is there a difference between what innovation looks like in the formal and informal sectors and what are the impacts of different types of innovation in these sectors?

• Who does innovation in different environments? How can marginalized groups be included in innovation processes?

• Are there particular combinations of actors that are more likely to produce innovation that is beneficial to economic and social development?

• What other enabling environment factors are important? Is the idea of having a form of enabling system – an innovation system – useful?

AfricaLics: building capabilities in innovation and

development research and action

• AfricaLics Conferences

• PhD academies

• Visiting fellowships (PhD and post-docs)

• Research projects and formation of hubs

• Teaching in Innovation and Development

• Influencing curriculum development at universities

• Influencing STI policies (African Innovation Summits; Science Forum in Africa; Transformation, Innovation and Policy Consortium)

• Key approach: – Focus of capacity building at both individual and institutional level using low cost models

– Networking at different scales and across disciplines and national borders (promoting inter and intractive learning)

More info at www.africalics.org

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Why entrepreneurship and innovation matters:

SDGs and the globalisation economy agenda

Fears that a large share of Africa’s population risks being left behind – and new possibilities:

– African industrial sector only around 10% (deindustrialisation) which weakens the

potential for long term sustained growth

– Africa’s growth has failed to use capital accumulation to grow manufacturing and improve human wellbeing

– Share of informal sector employment keeps growing; key sectors like agriculture displays continued problems of underemployment

– Youth population and unemployment is exploding – also for trained young people; part of global trends towards increasing inequalities

– Climate change raises grave concerns and need to think about the directionality of innovation, entrepreneurship and development

– Transition towards environmentally and socially sustainable societies is required

– 4IR poses new challenges, but maybe also new options e.g. through use of digital technologies, ‘servitization’ of unserved populations etc.

Locating futuristic African youth

Informal economy, innovation and entrepreneurship:

very relevant for Africa’s development

Regions 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 2005-10

Northern Africa 39.6 34.1 47.5 47.3 53.0

Sub-Saharan Africa 67.3 72.5 76.0 86.9 63.3 70.0

Western Africa 83.0 75.6

Central Africa 80.5

Eastern Africa 65.4

Southern Africa 62.7

Latin America 52.5 54.2 55.9 57.7

Southern and South

Eastern Asia 52.9 65.2 69.9 69.7

Western Asia 43.2

Transition countries 20.7 22.6

Source: Charmes (2012), updated with new countries

Employment in the informal economy as a percentage of non-agricultural employment

3D Systems – 3D Printing Imagine 3D Printer – Food Printing Drone Technologies

Square – Mobile payment

solutions

The world is changing – New technological revolution (4IR) – (confounded by megatrends for the 21st century – politics, climate change, energy, resource scarcity, mega-cities, open innovation – internet/connectivity etc) - capabilities to combine new or old knowledge is key (e.g. RE & digital platforms)

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Continental response: AUC setting the Pace through

STISA- 2024

How does AfricaLics respond to the challenges?

• by promoting research and research capacity development on innovation and development

• by influencing innovation policies and policy makers in Africa (e.g. African Innovation Summit meetings) and policies of international partners (various meetings in Africa and presentation in 2018 at Donor Harmonisation Group meeting in Copenhagen; STI Forum New York)

• by linking research activities to implementation of the Sustainable Development Goals as science, technology and innovation is key to fulfillment of many of these (e.g. Goal 9 on Industry, Innovation and Infrastructure; Goal 7 on renewable energy and Goal 17 on Partnerships)

How do we understand development?

1. Development is a learning process and learning is a

prerequisite for development

2. Learning is an emancipation process for people and

countries

3. To establish institutions and organisational forms that

support learning is key to development

4. Development is multi-dimensional – not just economic

5. Industrial and innovation policies should contribute to

inclusive and sustainable development efforts

Where do we come from? The knowledge base and heritage

Joseph Schumpeter (1883-1950) : Innovation as the driving force of

economic and social evolution

•Theory of Economic Development (1912/1934) •Business Cycles (1939) • Capitalism, Socalism and Democracy (1942)

Central works

Central mechanism: technological competition

Schumpeter’s supply side bias

• Schumpeter had focus on supply side – First defining the individual entrepreneur as the most

important driver of innovation – In Theory of Economic Development – often referred to as Schumpeter Mark I.

– Second defining the big oligopolist corporation and its R&D-department as the most important driver of innovation – often referred to as Schumpeter Mark II.

• Basically, Schumpeter assumed that users and consumers would accept and use new processes and products. He did not give them any active role and in general he neglected how the demand side affects innovation.

Schmookler’s challenge – on the importance of the demand side

• Through analysis of time series and cross-sectional patent data and historical case studies, Jacob Schmookler demonstrated that demand-pull influences were also important: the more intense the demand, the more creative groups and individuals were drawn to work on an unsolved problem and the more patentable inventions they generated (Schmookler 1966 and 1972)

Sappho-project 1972 was important in opening up for the insight that innovation is an interactive process (cf. Chesbrough on Open Innovation)

The Sappho-project was organised at Science Policy Research Unit at Sussex university by Freeman, Rothwell and others. On the basis of pair-wise analysis of successful and unsuccessful innovations it was shown that firms that introduced successful in innovation: 1. Interact more closely with customers, suppliers and

knowledge institutions (interorganisational interaction). 2. Are characterised by closer interaction across

departments within the firm (intraorganisational interaction).

The Mike project 1980-83: another crucial experience and paradigmatic case

A project by the Aalborg group on the socio-economic impact of micro-electronics. The Method: Studying the development, diffusion and use of technology in ‘industrial complexes’.

• Confirmed the importance of interactive learning involving users and producers.

• But also found that the ‘quality’ of the relationship was as important as the strength.

• Strong and close relationships may hamper innovation or give rise to ‘unsatisfactory innovation’. Problem of lock-in and weak user competences.

• Industrial complex as more than a cluster – cf. Military industrial complex or Financial Industrial complex with political power.

Innovation Systems Research • Initial work on innovation systems by Freeman (1987), Lundvall

(1992) and Nelson (1993) operated at the national level.

• Inspired work on – regional (Asheim and Gertler, 2004), – sectoral (Malerba, 2002, 2004) – technological (Carlsson and Stankiewitz 1995) and – corporate levels (Granstrand 2000).

Common for these contributions was that they deviated from the linear approach to technological progress and regarded innovations at micro, meso and macro level as a driving force behind growth. This work went beyond the narrow confines of product and process innovation, focusing on interactive learning and emphasized inter-dependence and non-linearity wherein institutions play the central role (Joseph 2006).

Different generations of innovation models

A system based approach: innovation systems thinking

• The innovation process is one where individuals or organisations interact engaging in information exchange, problem solving and mutual learning.

• In this process actors establish ‘relationships’ that may be seen as constituting ‘innovation systems’.

• The ideal innovation system fosters diversity and interaction.

• The ideal innovation policy breaks down barriers and build bridges between diverse actors

• Globalization brings options as well as challenges for national/regional and sectoral innovation systems

So: How do we understand innovation?

• Innovation is not just that which is ‘new to the world’ i.e. new commercialised inventions or products. It includes things that are ‘new to the context’

• This area of research is focused on innovation that impacts economic or social development of individuals, households, communities, nations or continents.

• Such research recognises that often innovation takes place often incrementally in firms and also in the informal sector – it isn’t about the sudden discovery of a new way of doing things, a new material or creation of a new technology.

• Innovation takes time and is the result of small changes in product design, the process of product innovation and the way businesses function. It is inherently contextual and dynamic.

Different types…

• … of innovation: product (intro’n of a good or service that is new/ improved), process (impl’n of a new/ improved production or delivery method) BUT also business model (value addition), paradigms (thinking shifts); positioning (marketing)

• … of technology (physical vs. social)

• … of innovation sources: user, producer/ manufacturer…. private firm, public sector organisations (universities as sites for innovation!) or communities… informal and formal

Social innovation AND social technology

• Social innovation 1. Social innovation when defined as new organisational and

networking approaches to enhance the operation of an organisation

2. The importance of ensuring innovation has a social focus (i.e. a focus on inclusion, equity, equality and social justice).

• Social technology – The first of these…. The right organizational and institutional mix of actors and actors

NOTE: social innovation concept dominant in business schools and means something similar but different from the AfricaLics/ Globelics understanding of it. This other understanding is allied often to terms such as ‘social business’ or ‘social entrepreneurship’ or the work of foundations and NGOs.

This builds much more on firm level issues and therefore often marries points 1 and 2 together.

Invention vs. innovation vs. entrepreneurship

• Fagerberg: – “Invention is the first occurrence of an idea for a new product or process, while

innovation is the first attempt to carry it out in practice.”

• Innovation requires an innovator – someone (person, firm, unit) who combines all inputs

• Innovator synonymous with concept of entrepreneur (Schumpeter) • BUT…

– “The discipline of entrepreneurship generally studies the why, when and how of opportunity creation, recognition and utilization for providing goods and services through the creation of new firms (start-ups) and within existing firms for both profit and non-profit purposes.” (Naudé et al, 2011; my emphasis)

– Its not just about a firm getting set up and breaking the magic ‘3 year barrier’ BUT remaining competitive… remaining innovative (difficult especially in developing country contexts)

– You can have an innovator who isn’t an entrepreneur (doesn’t quite get value capture) and you can an entrepreneur but not an innovator (builds a business but doesn’t continue to innovate)

• Innovation… is a process not a ‘state’. It needs to be a continuous activity within a firm or organisation AND its more than just new products or processes

Innovation, competition and knowledge

• Competition is an important driver of innovation – but the intensity of competition needs to be adjusted to the firms’ capacity to transform and supported by sound policies

• Commercialisation strongly linked to process of entrepreneurship e.g. in renewable energy in Kenya through the implementation of primarily three different business models: customer-centric design, bundling of products and services and micro-distributing (example: Mkopa).

• The innovation process is characterized by interactive learning among diverse agents – and innovation is not a linear process: feed back mechanisms (incl. feed-back from customers) are crucial for outcome!

• The innovation process begins with a new combination of existing knowledge and ends with new knowledge.

Understanding knowledge – both science-based and experience-based - and

learning among all actors (followers as well as leaders – users as well as

producers) is crucial for understanding innovation! (See e.g. Jensen et.al. 2007)

How we work with the nexus btw. development, innovation, entrepreneurship

• Reflected in the topics that AfricaLics scholars work with: a lot of work on firms and possibilities for developing their (innovative) capabilities; how to improve the institutional context for entrepreneurship etc.

• Some work on e.g. entrepreneurship in Nigerian universities and more generally the role of universities in knowledge production for innovation, entrepreneurship and development

• Specific work e.g. on renewable energy and capability building in this field (Kassahun, Odongo, Lema and others): how to generate capabilities for dissemination of e.g. solar and (small) wind energy in African countries – link to discussions on sustainable industrialisation

• AfricaLics focus on problem based learning in teaching I&D is another way to help make students more entrepreneurial and employable (they learn to deal with real life problems, not just to be good academic scholars)

• By studying ways in which low-income countries can optimize policies to reap the benefits of ongoing entrepreneurial activities in e.g. African countries

Upgrading depends on local and national characteristics

1. Guiliani, Pietrobelli and Rabelotti (2005) analyses upgrading in connection with local, national and global interaction in Latin America on the basis of no less than 40 case studies. The analysis confirms that in order to explain how integration in global value chains affect upgrading in the firm you need to take into account the characteristics of regional and national systems of innovation and especially the firm’s own effort to engage in capacity building.

2. In Xiaolan Fu, Carlo Pietrobelli and Luc Soete (2011) “the benefits of international technology diffusion can only be delivered with parallel indigenous innovation efforts and the presence of modern institutional and governance structures and conducive innovation systems.”

Therefore joining global value chains should not be presented as the ALTERNATIVE to national innovation, industrial and trade policy.

Does participation in Global Value Chains benefit the domestic economy?

According to analysis based upon OECD IO-data by Victor Kummritz (2014): • Benefits for the high and middle income economies – no significant

impact for low income countries • Main mechanism is that low priced import to high income countries

promotes productivity growth in high income countries • Weak or no positive impact through spill over of technology

(technological upgrading). Key implications: • Participation in global value chains CANNOT substitute for industrial

policy and for building strong national innovation system. • Learning from other countries or lead firms requires deliberate

efforts

Fostering a learning economy through public policy and institutional design

1. Non discrimination (gender, youth and ethnic minorities) 2. A stronger focus upon technical training, engineering and design 3. Industrial and trade policy - needs to promote industries with

learning potential through combining protection with exposure! 4. Policy learning should be stimulated (cf. Chinese example 1985-

2000 and Fred Gault lecture in Kigali, 2015) 5. A key issue is to build a strong national innovation system

supporting old sectors such as agriculture as well as new manufacturing sectors. And not least to ‘manage the openness’ of the system.

6. A new global regime for knowledge sharing and knowledge protection – compensation to LDC for brain-drain and access to knowledge sharing.

Key take away points about links btw. innovation and entrepreneurship

• Commercialisation of innovations found to be closely linked to the process of entrepreneurship

• Entrepreneurship does not exist in a vacuum – need to explore influence of the institutional environment and the broader context. Innovation systems approach at different levels and in different forms (NIS, SIS, TIS) provide a useful tool for this.

• To capture links to the global context, a combination of innovation systems approaches with an analysis of the Global Value Chains and how actors in these influence national, sectoral and local innovation systems in specific African countries can be helpful.

• Finally, the broader environmental and social impacts of innovation and entrepreneurship activities should be analysed to avoid excessive emphasis on technological change and economic growth – and ensure an environmentally and socially sustainable direction of structural change.

Recap: AfricaLics take on I&D

• Innovation and development have learning processes at their core and should focus on inclusion and sustainability issues to ensure effective structural change

• Innovation is determined by the number and type (nature) of relations between actors; knowledge types (both codified and tacit) and the knowledge flows in the innovation systems

• Contextual nature of innovation environments is key – African nations have specific issues to contend with (deindustrialisation, large informal sector, youth unemployment etc.)

• Need for more rigorous data on African situations and appropriate indicators that recognise the nuances to be able to promote innovation and development

• Structural change is a necessary condition for inclusive and sustainable development in Africa – Increased capacities in the field of I&D ( = what AfricaLics works to help develop) may help support processes leading to structural change.

AfricaLics opportunities • Training materials (available at www.africalics.org):

– MSc Master module on innovation and development building on Problem Based Learning

– An ideas paper on establishing a full Master programme in Innovation and Development – An ideas paper on establishing a PhD programme in Innovation and Development – Good practice guide on PhD supervision in innovation and development

• Training opportunities:

– AfricaLics Visiting PhD Fellowships programme developed in collaboration with Aalborg University: 15 PhD students have visited AAU since 2013

– Expecting next call for PhD VFP to go out in March 2019 – AfricaLics PhD academy 2020 to be held in Ethiopia (call will go out second half 2019) – New round of post-docs? Model seems to work, but new calls will be subject to funding

availability.

• AfricaLics Research Conference 2019: - Call for papers for the AfricaLics conference 2019 in Dar es Salam will go out early March: please consider to submit paper for the conference. Use opportunity to network and establish new joint research projects

Contact: secretariat@africalics.org or: mha@business.aau.dk

AfricaLics PhD visiting fellows in Aalborg, 2018

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Core literature on innovation

Key hand-books (most cited 1990-2009): • Nelson, R. (1993): National Innovation Systems: A Comparative Study

• Porter, M. (1990): The Competitive Advantage of Nations

• Lundvall, B.-Å. (1992): National Systems of Innovation

• Cohen, W. and D. Levinthal (1990): Absorptive capacity: A new perspective on learning and innovation

• Saxenian, A. (1994): Regional Advantage

Fagerberg, Jan (2013): Innovation – A New Guide (TIK Working Paper) provides a relatively up-dated overview on the development of innovation studies.

Some recommended readings on innovation in Africa

• Adam Szirma, Wim Naudé and Micheline Goodhuys (eds.): Entrepreneurship, Innovation, and Economic Development. UNU-WIDER studies in development economics. Oxford 2010

• Adebowale, B., Diyamett, B., Lema, R., & Oyelaran-Oyeyinka, B. (2014). Innovation research and economic development in Africa. African Journal of Science, Technology, Innovation and Development, 6(5), v-xi.

• AU (2014), On the Wings of Innovation: Science, Technology and Innovation in Africa, Addis Ababa: AU

• Adesida, Olugbenga, Geci Karuri-Sebina, and João Resende-Santos, eds. (2016): Innovation Africa: Emerging Hubs of Excellence. Emerald Group Publishing.

• Lundvall, B-Å., & Lema, R. (2014). Growth and structural change in Africa: development strategies for the learning economy. African Journal of Science, Technology, Innovation and Development,6(5), 455-466.

• Kramer-Mbula (2011), Approaches for Innovation System Development in different

development contexts, Working Paper, Bonn: GIZ.

Some recommended deadings (2)

• Iizuka, Michiko, Philippe Mawoko and Fred Gault (2015), Innovation for Development in Southern & Easter Africa: Challenges for Promoting ST&I Policy, Policy Brief No. 1, 2015, Maastricht, UNU-MERIT. www.merit.unu.edu/publications/briefs/

• Will Mutua and MbwanaAlliy (authors), edited by Nanjira Sambuli, with a Forward by Jasper Grosskurth, Published as an e-book September 3, 2012 by Afrinnivator.com (Technology, Innovation and Entrepreneurship in Africa), Nairobi, Kenya, pp. 145 (Kindle edition), pp. i-x,1- 239 (PDF edition). Innovative Africa: The New Face of Africa, Essays on the Rise of Africa’s Innovation Age.

• Work by e.g. Mammo Muchie; Abdelkader Djeflat; Rasigan; Dave Kaplan, Kaplinski, Hanlin, Joanna Chattaway, Kraemer-Mbula, Maureen Mackintosch, George Banda, Watu Wamae and many others….