Origins of Regional Innovation Systems Thinking and Recent Advances from Analysis of ‘Green Innovation’

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    Ekonomiaz N.o 70, 1.er cuatrimestre, 2009

    Origins of Regional Innovation Systems

    Thinking and Recent Advances fromAnalysis of Green Innovation

    Schumpeters dynamic evolutionary economic model is weakened by his lack of geographical perspective.By introducing Jane Jacobs economics of diversity to the little Schumpeter did write on spatial matters,we gain insight into one of the probably numerous sources of cluster emergence. In passing, we alsoobserve the outlines of a Neo-Schumpeterian theory of regional evolution. This is achieved in the process

    of examination of the emergence of green clusters. These are focused upon the production of new formsof non-fossil fuel energy that contribute to the lessening of overall greenhouse gas (GHG) emissions fromhuman economic activity. They reveal a curious feature of economic evolution the clue to which lies in theelement of geographically proximate convergence that characterises green innovation. As to be revealedfirst in the cases of northern and southern California, the type of Clean Technology or Cleantech (alsoGreenTech) industry emerging there in clustered form evolves from convergence in agro-food, ICT andbiotechnology. Testing these findings in two other cases to be presented Jutland and Wales we seesomething comparable having occurred. This is despite selecting Wales as an intuitively difficult testof the insight. In each case Schumpeters purest form of innovation regional innovation by meansof railroadizationseems to have been something of an evolutionary trigger from which successiveinnovations are still path dependent. Thus Californias Cleantech emerges from ICT, biotechnology andnanotechnology, but also agro-food railroadization, while Jutlands wind and solar thermal clusters arefound in Denmarks agricultural equipment and marine engineering regions and Wales photovoltaics and

    biofuels in its mining equipment and agro-food histories. Brief reference is made to the case of Norway,where green innovation is clustered according to large corporate interests, themselves having passedthrough in-house related variety episodes.

    Los clusters verdes, se centran en la produccin de nuevas formas de energa de combustibles nofsiles que contribuyen a disminuir el conjunto de emisiones de gases de efecto invernadero que pro-duce la actividad humana. La formacin de estos grupos revela una curiosa caracterstica de la evolu-cin econmica: analizaremos la convergencia geogrfica que caracteriza a la innovacin verde. Enprimer lugar analizaremos los casos del sur y norte de California, donde el tipo de industria denominadatecnologa limpia o cleantech (tambin GreenTech), que est apareciendo all en forma de clsteres, sedesarrolla a partir de la convergencia de las industrias agroalimentaria, TIC y biotecnologa. En otrosdos casos, Jutlandia y Gales, veremos que ocurre algo similar. En cada caso, la forma ms pura de in-novacin de Schumpeter la innovacin regional, gracias a la ferrocarrilizacin parece haber sido

    el desencadenante evolutivo del que todava siguen partiendo sucesivas innovaciones. La tecnologalimpia de California emerge de las tecnologas de la informacin y comunicacin (TIC), biotecnologa ynanotecnologa, pero tambin de la ferrocarrilizacin agroalimentaria.

    Kluster berdeak erregai ez-fosil izeneko energia-forma berrien ekoizpenean oinarritzen dira, hau da,giza jarduerak eragiten dituen berotegi-efektuko gasen igorpen-multzoa beheratzen laguntzen dutenenergia-forma berrietan. Talde horiek eratzeak, bide batez, bilakaera ekonomikoaren ezaugarri bitxi baterakusten du: berrikuntza berdea itxuratzen duen konbergentzia geografikoa aztertuko dugu. Lehe-nik eta behin, Ipar eta Hego Kaliforniako kasuak aztertuko ditugu, non teknologia garbia eta cleantech(GreenTech ere bai) deitutako industria mota, eta han kluster moduan agertzen ari dena, nekazaritzakoelikagaien industrien, IKTen eta bioteknologiaren konbergentziaren bidez garatu baita. Beste bi kasutan,Jutlandia eta Gales, antzeko zerbait gertatzen ari dela ikusiko dugu. Dena dela, Schumpeter-en berrikun-tza-modu garbiena eskualde-berrikuntza, burdinbidegintzari esker lortzen dena, izan bide da bila-

    kaeraren txinparta, eta hortik abiatzen dira oraindik ere ondorengo berrikuntzak. Kaliforniako teknologiagarbia, gainera, informazioaren eta komunikazioaren teknologietatik (IKT), bioteknologiatik eta nanotek-nologiatik abiatzen da, baina bai eta nekazaritzako elikagaien burdinbidegintzatik ere.

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    Ekonomiaz N.o 70, 1.er cuatrimestre, 2009

    Philip CookeCentre for Advanced Studies, Cardiff University

    & School of Development Studies, University of lborg

    INDEX

    1. Introduction2. The knowledge Economy: What is it?3. Regional Innovation Systems: Integrating Regional Networks and Regional Innovation

    Policy4. Recent Advances in RIS Research5. Bioenergy from Crops in Wales6. Related Varity by Other Means: Cleantech in Norway7. Conclusions and Theoretical ImplicationsReferences

    Keywords: innovation; region; system; green innovation; clusters; evolution; neo-Schumpeterian

    JEL classification: A14, O33, R11, R58

    1. INTRODUCTION

    As is wel l-known, for those interestedin evolutionary economic geography,Schumpeter left almost no regional or spatialanalysis of economic phenomena. From theevolutionary economic geography and policyviewpoints, this is clearly disappointing. Histwo brief allusions are highly time-spacespecifi c. The fi rst concerns Schumpetersfifth form of innovation, which he designatedrailroadization the phenomenon by whichUS agricultural lands were opened up tomarkets by infrastructural investments,not only in railroads but farms, grain silosand even agricultural manuals that therailroad companies of the western USAhad printed so that pioneers accessingcheap land on the plains would know howto farm that land. This regional evolution of

    land and markets was, rightly, consideredan externalised organizational innovation

    as compared with the in ternal ised

    organizational innovation of a corporationadopting new management methods thatgave it an, albeit temporary, competitiveedge (Schumpeter, 1975). The secondallusion is even briefer where Schumpetermentions innovation such as the departmentstore only being feasible in the large city dueto the level of demand required to sustainsuch an innovation. Hence the city is seen

    as having some economic specifi city fromits scale attributes, but Schumpeter saysnothing about the dynamics of the entailedprocesses (Andersen, 1994; Andersen,2007).

    However, this paper suggests thatbemoaning Schumpeterian neglect of thespatial dimension may be misplaced. Hiscategory of innovation by railroadization

    helps understanding of regional innovationin which clusters mutate through a

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    Jacobian (after Jane Jacobs, 1969) relatedvariety operating at regional level in placeslike California, North Jutland (Denmark) andWales (UK). Regional innovation throughcluster mutation is illuminated by the interestof this paper in green innovation, which ispronounced in those regions. These arethe only regions to have been examinedfrom a green innovation perspectivethus far to this authors knowledge1. Apossible reason for the illuminative aspectof taking a green perspective is thatgreen innovation (such as the burgeoningCleantech industry) displays a high degreeof innovation convergence across fi elds likeinformation and communication technology(ICT), nanotechnology, biotechnology,agro-food, health, environment, energy,production and materials management,and waste treatment. Thus innovationoccurs laterally among distinctive parts ofwhat may be described as an innovationplatform. Other regions for which Jacobian

    clustering is probably true are those of theThird Italy, which has been studied fromthis perspective by Boschma (2005) alsofrom an evolutionary economic geographyviewpoint. He found that apparently differentindustrial districts displayed related varietyin their engineering competences andassociated high lateral absorptive capacitytowards innovations emanating from

    neighbouring industries and clusters. Noclaim is made here for the ubiquity of thisprocess, on the contrary Jacobian clusterregions are probably not in the majority. Butwhere they exist they can be propulsive inrelation to national economies or aspects

    1 Subsequently, Israels cleantech clusters wereexamined and found to be similarly convergent with

    agro-food, ICT and biotechnology. A new one at BeerSheva in the Negev actually coincides with the recentcompletion of the railway connection from Tel Aviv tothat desert location (Cooke 2008c)

    of them. To that extent they make acontribution to understanding of regionaland national unequal development betweenwealth and poverty, the issue that hasanimated economics since Adam Smith.

    Having held out the promise of a Neo-Schumpeterian theory of regional evolution,that aspiration has to be severely qualifi ed.For a more truly evolutionary theory ofspatial dynamics we have to turn to themid-twentieth century inheritors of Veblensconcept of cumulative causation. A variantof the biblical Matthew principle of tothose that have, more shall be given thisprofoundly disequil ibrium perspectivecontains the missing dynamic elementby virtue of Myrdals (1957) elaborationupon the various backwash and spreadeffects associated with regional evolution.Spread effects, on occasions, caused thedynamic element to seek to accommodategrowth beyond its original boundaries.

    Backwash effects sucked back temporarygains made by competing locations to thelarger, predominating accumulating entity,such as a strong city or regional economy.Observations of static relationships inthe spatial evolution of the knowledgeeconomy have led to the preliminarypostulation of a knowledge capabilitiestheory of regional evolution based on

    the distinctive distribution of two keycomponents of the knowledge economylabour market (Cooke, 2007). Foremost hereare, fi rst, the knowledge intensive businessservices (KIBS) such as fi nance, research,media, software and so on. While second,high technology manufacturing is a mainstayof the knowledge economy in computerand communications hardware, aerospace

    and biotechnology inter al ia . Empiricalobservation of the static picture for theEU strongly suggested an urban-regional

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    split between the locations of these. Theformer predominate particularly in primatecities (such as the major fi nancial centre,sometimes, but not always, combiningcapital city administrative functions); thelatter predominate in specialised satellitetowns, often with appropriate knowledgecentres like national research institutes oruniversities centred in them. This theory, inbrief, is consistent with Myrdal-Hirschman2theses about cumulative causation andmetropolitan regional concentration ofknowledge economy activities (Cooke,2002). But as noted, the static picturemerely hinted at the dynamism explicit inthe idea of cumulative causation, whichremained to be tested. The first suchcontemporary test was accomplished byaccess to and analysis of special runs ofIsraeli data in a dynamic perspective (Cooke& Schwartz, 2008). This paper relies onthose fi ndings and then explores innovation

    2 The Myrdal-Hirschman theory of economicdevelopment has been influential in the emergenceof new economic geography (e.g. Krugman, 1995).

    Anticipating the latters solution to the neoclassicallocation theory impasse by positing increasingreturns to scale rather than the rubric of constantreturns thus demonstrating the growth of cities tobe a function of spatial monopoly, Myrdal (1957)proposed spatial development to be characterised bycumulative causation with asociated spread andbackwash effects. This implies increasing returns

    to scale (through backwash) and developmentalspread to other nearby areas. Hirschmans (1958)elaboration on this was that spread would be drivenby the innovative capacity of competing technologyusers. Under knowledge economy conditions wehypothesise that, over relatively short time periods,primate cities grow through increasing returns (toknowledge) and satellites of leading technologyinnovators spread nearby. Our preliminary staticpictures of EU NUTS 2 regions are consistent withthis, while our dynamic picture of spatial divergencein Israel 1995-2002 (Cooke & Schwartz, 2008) isconsistent with Myrdal-Hirschman rather than

    Krugman (2000), who himself admits his two-locationscompeting models are misleadingly simplistic. In thisrespect, it can be argued, evolutionary economicgeography trumps new economic geography.

    outside primate cities where knowledge-intensive business services (KIBS) thriveto explore innovation at some distancefrom big cities altogether. NeverthelessMyrdal-Hirschman models postulateinnovation as capable of occurring therebecause such cities tend not to localisehigh technology manufacturing (HTM).

    To that we would add that they do nottend to have functional regional innovationsystems and they are often the homeof specialised rather than related varietyclusters. The next sections take theseinsights and exemplify this by reference tosome cumulative causation peculiarities ofinnovative industry regions. Those selecteddisplay innovative convergence amonghigh technology sectors to contribute tocleaner manufacturing, food and energyproduction the so-called Cleantechsectors, respectively (Cooke, 2008b).

    2. THE KNOWLEDGE ECONOMY:WHAT IS IT?

    It is important to say straightforwardlythat the deployment ofknowledge ineconomic affairs is not a new thing. Makinga fire is clearly a knowledgeable and, inthe deep past, powerful, knowledge-basedskill, as the Prometheus myth testifies.

    Hunting, farming, smelting copper, bronzeand iron, later steel are knowledge-basedactivities. In turn these knowledges becamethe basis for science and its applicationin early industrial technology. From coalmining grew coal tar production, theorigin of the German dyestuffs industrywhose aniline products led to branchinginto pharmacology, the (re-) discovery by

    the Bayer Corporation of Aspirin and thebirth of modern pharmaceuticals. Thisindustry is now shifting from its synthetic

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    chemistry origins into post-genomics andother variants of molecular biology andthe science-based biotechnologies of thefuture.

    Thus the underlying idea of a knowledgeeconomy refers to specific assets thatconsist in knowledge how to, who toand what to deploy to create value. It isan active economic practice rather thana passive information space, upon whichit nevertheless depends, but in waysthat express value through the scarcityof knowledgeable expertise. ManuelCastells (1996) speaks of the knowledgeeconomy being one in which productivityderives from the interaction of knowledgeupon knowledge rather than upon rawmaterials. Nonetheless, it is wrong todismiss tradit ional or old economyeconomic activity as not belonging to theknowledge economy, as for example theOECD does. It places the food industry

    in the low technology category, althoughSmith (2000) shows it to be heavily scientifi cknowledge using more than producing.Nevertheless, while functional foodsoccupy probably a smaller segment of totalfood sales than the competing organicfood they are both intensive utilisers ofbiotechnology. Surprisingly perhaps, non-genetically modified knowledge is used

    in organic breeding via DNA or molecularmarkers that speed-up the breedingprocess for plants and animals. Thus wemay also usefully speak of pure andapplied knowledge economy activity;the first captured in genomics, softwareand, for example, futures or derivativestrading in fi nancial services, or conceptualart. The second is in many other sectors

    that conduct or use R&D even though it isapplied to, for example, food production,fashion design, or fi re insurance.

    This allows the following policy inferenceto be drawn from the application ofMyrdal-Hirschman models: it is unlikelythat regions aspiring to evolve upwardlyin economic accomplishment wil l beable to do so if they concentrate ondeveloping a full portfolio of KIBS sincethese are more attracted to large, evenprimate, cities. That is not to say thatsome KIBS are not needed, perhapsconsultancy, management accounting,venture capital (attracted by universityspinouts, incubators etc.), software and,above all, research both private and public.

    These latter may occasionally involve fairlymundane economic activity support forsectors such as agro-food, nowadaysinnovating in such areas as functionalfood (food biotechnology), organic food(utilising biotechnology for enhanced cropand animal breeding utilising molecularmarkers) and of course renewable energyfrom biofuels. In other words KIBS can

    be important specialised supports inknowledge economy regions with HTMand medium-tech manufacturing (MTM)requir ing also high-qual ity precisionproduction that is difficult to outsourceglobally. Jena, for example, with itsuniversities, polytechnic, research institutesand specialist opto-electronic corporationsand spinouts has the current appearance of

    a relatively small-scale innovation system atsub-regional level. It has some similaritieswith some of the induced local innovationsystems promoted in Sweden by the stateinnovation systems development agency

    VINNOVA through its Vinnvxt programme.This is an exemplif ication of regionalinnovation systems thinking translated fromthe academic arena into the policy fi eld.

    The idea of regional innovation systemscame from integrating a growing literatureon networks of innovation at regional level

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    with another on innovation policies atregional level, as follows.

    3. REGIONAL INNOVATION SYSTEMS:

    INTEGRATING REGIONALNETWORKS AND REGIONAL

    INNOVATION POLICY

    The enthusiasm for studying networksarose in a context of manifest decline inthe co-ordinating capabilities of states andmarkets regarding leading edge researchand innovation, which subsequent data

    (e.g. Chesbrough, 2003) shows set infrom approximately 1991. But if the centralstate had become as debilitated as manylarge private corporations were to becomeregarding the lack of productivity from theirlarge budgetary allocations to research anddevelopment (R&D), the regional stateseemed from empirical reportage of the kinddiscussed above to be on the rise. I was

    fortunate to observe the beginnings of suchregional innovation policy elaboration in aleading industrial regeneration region, theBasque Country, whose currently excellenteconomic indicators are testimony to thefar-sightedness of those 1980s regionalpolicy makers. I conducted researchin other Spanish regions like Valencia tonotice the importance for different modes

    of regional innovation policy elaboration tofit distinctive economic and governancecharacteristics of very distinctive economicand cultural region specifi cities.

    In the 1988-91 per iod when weresearched the Basque Country RIS,there were many fewer innovative firmsthan now exist, but the governanceframework was comparable to a few

    other EU regions although we realised theBasque government had relatively powerfulministries, assisted by an innovation agency

    SPRI. But above all, the six EITE (nowTecnalia) sectorally-focused technologicalcentres and further six funded by thethree provincial governments (Cooke etal., 1991) pointed to a rich innovationinfrastructure. Here three key things werevisible: fi rst, how a de-industrialising regiondepended upon possessing intermediaryagencies with innovation and industryexpertise, independent of government(though part-funded by so-called genericproject-funding disbursed by the Basquegovernment) and of the then new andnot signifi cantly research active universitysector. These would project Basqueindustry into a new future different fromthe disappeared heritage of steel-makingand shipbuilding. Second how systemic interms of networking connectivity the wholeand particularly some parts of the regionaleconomy were, notably the Mondragonorganisation, amongst the most innovativenetworks observable anywhere at the time.

    Third, how networks could sometimes takethe form of industrial districts or innovativeclusters which, although composed ofmicro-firms and small-to-medium ones,could nevertheless exert global reach.

    A parallel strand of research had evolved,which focused on regional innovation policy(e.g. Antonelli & Momigliano, 1981; Cooke,

    1985). Thus the connecting concept ofRegional Innovation Systems evolved fromthis even earlier thinking about regionalinnovation policy, in relation to regionalinnovation networks (the systems view ofplanning intruding again). This happenedin two publications, the more widely-citedone being less theoretically and empiricallyrich than the almost totally uncited one. The

    difference between Cooke (1992) and (1993)lies in the absence of any bibliographicalinfluence from the innovation systems

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    literature in the 1992 paper, which thus haspurer lineaments to economic geography.Contrariwise, the 1993 paper which showsthe author had by then read Lundvalls(1988) contribution on innovation as aninteractive process to Dosi et al (1988) andwas also infl uenced by Johansson (1991)and Grabher (1991) in probably the firstproper book on regional development froma network regions perspective (Bergman,Maier & Tdtling, 1991).

    It seemed necessary to place thesedistinctive network and policy concepts

    in relation to each other in a layered model.So, the innovation policy dimension evolvedconceptually into the idea of a sub-systemsupporting with knowledge and resourcesthe innovative firms in their networks.

    These formed a superst ructural sub-system dealing with actual innovation nearmarket. As we have seen, they had beenspoken of as carrying out networking with

    each other, not only laterally in alliances orpartnerships and vertically in sometimespartly localised supply chains but alsowith the innovation policy and knowledgegeneration sub-system (Meyer-Krahmer,1985; Cooke, Alaez & Etxebarria, 1991;Malecki, 1991; Rothwell & Dodgson1991). So these also had sub-systemcharacteristics related to the governance of

    innovation support. Each sub-system wasalso seen to interact with global, nationaland other regional innovation actors, andeven through technological or sectoralsystems of innovation. Open systemsruled.

    Over the years the RIS framework hasbeen analysed in terms of many differentvarieties of innovation relating to localised,

    networked and hierarchical innovationgovernance systems. Third Italy, Baden-Wuerttemberg and French innovative

    regions exemplified each, respectively.Correspondingly, the exploitation sub-system of firms, in the main, could bedominated by large firms or oligopolies- even foreign ones as with the Asiantransplants to Wales in the 1980s and1990s. Other regions, like Catalonia hada mix of large (SEAT) and SME districttype innovation relations, while other placesmight have innovation regimes in which onlysmall, entrepreneurial fi rms predominated,as in places with observable industrialdistricts, not only Third Italy but also somenewer technology clusters. Later still,these, more entrepreneurial SME systems,living by venture capital and exploitation ofpublic research from universities, could bedifferentiated further as entrepreneurial(ERIS), market-led systems, comparedwith those, especially in Europe, wherethey were more institutional (IRIS) wherestate support was pronounced andentrepreneurship was less advanced

    (Cooke, 2004).

    4. RECENT ADVANCES IN RISRESEARCH

    One of the most interesting researchareas opened up in RIS research in therecent past concerns, once again,

    the insights of Jane Jacobs (1969) andcan be referred to as addressing thechallenging issue of cluster emergence.In particular by examining the emergenceof a number of green clusters ona regional canvas, we see emphasis ingreen innovation upon technologicalconvergence among diverse industries.

    These include biotechnology, information

    technology and nanotechnology (but notlimited to these high-tech activities) andamong them we also see a process of

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    cluster species mutation. Of particularfascination here is that some regionshave the capability relatively rapidly tomutate many Jacobian clusters so-called because although different theydisplay evolutionary characteristics ofrelated variety (Boschma, 2005). A cleardefi nition is called for here to denote thisnew concept. The key is the evolutionaryconcept of variety, whereby some newcombinations of entrepreneurial andinnovative opportunity might presentthemselves in geographically proximatespace. This would arise from the mixtureof knowledge spillovers and rather highabsorptive capacity among neighbouringeconomic activities.

    Hence (Jacobian) variety is both acontext and an evolutionary fuel forcluster emergence as long as there is nottoo much cognitive dissonance or distancebetween neighbouring economic activities.

    Hence Jacobian clusters emerge from newcombinations of knowledge cross-fertilisingamong, for example, high technologyactivities like biotechnology and informationtechnology that may be foundations for anew clean technology cluster that adoptsand adapts elements from both. But, forexample, new combinations from agro-food and automotive industries that are

    historically not that close in technical termsmay also arise if the new combinationbeing sought is biodiesel or bioethanol.

    This is because adjustments in breedingof plants may have to be made if negativeeffects on engine performance cannotbe made by the automotive side of theequation. Hence related variety is not fi xedto sectoral relatedness but embodies also

    particular and contextuated technologicalconvergences. In that respect it is muchharder to predict cross-fertilization in the

    latter than the former case. But anyway,Jacobian variety rests not within butamong the clusters according to this lineof reasoning. Moreover it is likely to occurin the relative geographical proximity ofregions. In what follows, empirical evidenceis provided of regional evolution throughinnovation of differing intensities mutatingthrough processes of knowledge searchand selection that happen to give rise tosuccessive clustering phenomena inregional platforms of related economicvariety.

    Jacobian Clusters

    One such region is Northern Californiawhose ICT, Biotechnology and Clean

    Technology clusters overlap in proximityto San Francisco but also near variousagro-food clusters like wine in the Napa,

    Sonoma and Russian River valleys andvarieties of horticulture in the San Joaquinand Sacramento river valleys (see Fig 1).But notice, Fig. 1 also shows SouthernCalifornia having prominent Jacobian

    The content of Fig. 1 is drawn entirelyfrom secondary evidence supplied by thenumerous studies of clusters in Californiaas published in Porter (1998); Scott (2006);

    Saxenian (1994); Cooke (2007); Guthman(2005), Simard & West (2003). North Jutlandin Denmark is another such region, asapparently is Wales in UK, as we shall see.North Jutlands economy is the global centreof the wind turbine production industrywhose profile and evolutionary trajectorywas a key beneficiary from the outset ofvarieties of innovation. As will be shown,

    this recently discovered cluster has allthe required characteristics to warrant thecluster designation, conjoining university

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    research at, for example, lborg and rhusUniversities, the Danish TechnologicalInstitute (DTI) also at rhus, and both spinoutfirms and larger, indigenously establishedfi rms that are involved in green innovation.Denmarks cluster has no geographical

    specificity of the kind Porter (1998) wasrather more sensitive towards. He referredthere to a cluster as:

    a geographically proximate group ofinterconnected companies and associatedinstitutions in a particular field, linked bycommonalties and complementarities

    With regard to such clusters the mostimportant analytical task is to establish the

    extent of interconnections, commonalitiesand complementarities since this is whatdistinguishes a localised.

    Figure 1

    Californias Jacobian Clusters

    Source: Made by the author from Porter (1998), Scott (2006), Saxenian (1994), Cooke (2007),Guthman (2005), Simard & West (2003).

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    Figure 2

    The North Central Jutland Wind Turbine Cluster

    Siemens

    Vestas

    Suzlon

    Gamesa

    Siemens

    Manufacturer

    Alborg

    Randers

    Components

    LM Glasfiber

    Arhus

    Fiberline

    BSB9

    BSB M

    DOT J&U

    Reichhold

    Vest-Fiber

    Materials

    S S

    SS

    S

    S

    S

    S

    L

    L

    L

    L

    L

    L

    A

    U

    A

    U

    D

    T

    I

    Services

    Logistics

    Source: Danish Wind Industry Association Statistics.

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    Cluster, its specialisation or differentiationand its potential for exploiting knowledgespillovers for competitive advantage. Inthe research to be reported below, theDanish Wind Energy Association database

    was accessed and the details mappedby location and categorised accordingto point in the supply chain. Thus final

    assemblers were differentiated from majormodule suppliers (e.g. fibre-glass blademanufacturers) and general componentssuppliers from them and services andlogistics suppliers. Some fifty of the seventy

    members were found to be located ingeographic proximity in Jutland, mostly inthe more northerly part.

    Figure 3

    North Jutlands Solar Thermal Energy Cluster

    Source: Composed from ESTIF Data.

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    Of cons iderab le interest here isDenmarks political commitment since1970 to wind energy and what researchreveals to be the North Jutland regionswind-turbine cluster has to be addressed.On this, Andersen et al (2006) point tothe wind energy industry having passedthrough an early phase characterisedby numerous small and medium-sizedenterprises (SMEs) producing domestically-scaled wind power for individual farmsand householders. But latterly, especiallysince the government subsidy to domesticconsumers was removed in 2000, exportshave risen, the scale of equipment hasincreased tenfold and sea power fromlarge-scale offshore wind farms has cometo predominate. As wind turbines have onlysome ten years life expectancy, most earlywind turbines in rural Denmark will soondisappear if they have not already doneso. So the current industry structure islarge Danish (Vestas) or foreign (Siemens,

    Gamesa, Suzlon) producers and a supplyplatform of SMEs. There may be less localsourcing of key equipment like gearboxesthan in the early days when North Jutlandshipbuilding fi rms could adapt to meet thenascent wind energy demand. However,the scale and adaptability of Germanheavy engineering in cranes and relatedequipment means they now supply the

    Danish wind energy input market. Servicesand special logistics firms, the lattercapable of transporting the now typicallymassive fibreglass turbine blades alsoexist in proximity as do a great manycomponents suppliers (Fig. 2).

    Stoerring (2007) agrees with thisevolutionary profi le pointing out that scale

    was also partly induced in the early 1980sby huge demand for wind turbines from theUS and more particularly California.

    Then, in the late 1980s this marketcollapsed because Californias stateadministration removed its subsidy regimeand the Reagan administration cut alternativeenergy research budgets. At this time manyUS turbines malfunctioned badly and eventhe superior Danish 3-blade design wasprone to breakdowns. Thereafter, the industryrecovered as demand in European and Asianmarkets rose. Nowadays (Fig. 2) around halfglobal production capacity is accounted forby Danish firms like world leader Vestas WindSystems of Randers, near rhus (acquirer ofDanish firms NEG-Micon; Nordtank; WindWorld) and Siemens (Bonus) at Brande and

    lborg. Gamesa Wind Engineering, Spainslargest producer of turbines is at Silkeborg.Jutland. Suzlon, Indias leader is located at

    rhus. LM Glasfiber of Lunderskov nearrhus in Jutland is the leading supplier offibre glass wind turbine blades. The othermembers of the North Jutland clusterare in Fig. 2. Of the Danish Wind Industry

    Associations 70 members, 50 are in Jutland,mostly north-central Jutland. More is said onthe etymology of this green cluster evolutionin the final section of this paper. Universities(AV) join DTI (see Table1) as a knowledgegeneration sub-system of the RIS.

    As noted earlier, overlapping thissubstantial and globally leading wind turbine

    technology cluster is the main Danish solarthermal energy cluster (Fig. 3). This is smallerin scope but consists of largely indigenousfirms and their suppliers. These involve firmsin two types of supply chain as follows:

    Solar Collectors

    Glazed (Roofs)

    (Flat Plate Collectors)

    Glass Heat absorbent copper/

    aluminium

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    Coatings, paint

    Pipes welded to absorber plate

    Vacuum Collectors

    Parallel glass tubes

    Absorber

    Transfer pipes

    Vacuum is insulator

    Unglazed (Swimming Pools) Longtubes

    Synthetic absorbent material

    Hydraulics in pool fi ltration system

    Heat storage & back-up heating Plumbing & Installation

    Finally, exemplifying North JutlandsJacobian cluster prof i le it is worthconsidering Figs. 4 and 5, the first ofwhich reveals established cluster evolutionin the shape of the NorCom wireless

    communications cluster at lborg andthe possibly emergent and overlappingbiomedical technology cluster in closeproximity (Stoerring, 2007). Here, the long-established wireless telecommunicationscluster (Stoerring & Dalum, 2007) hasgiven rise to possible cluster mutation byinteraction with the healthcare activitiesassociated with clinical trials and testingof biomedical equipment. Many of theseactivities are closely associated withscience and technology commercialisationthrough academic entrepreneurship at

    lborg University. In Fig. 5 are shown themost prominent (though many have yetto be fully researched) of North JutlandsJacobian clusters which are characterisedas emergent clusters or established ones bytheir related variety characteristics in relationto each other. This may be understood asfollows in Table 1. In this graphic may be

    Figure 4

    Jacobian Cluster Emergence in North Jutland

    Biotechnology

    Electronics/IT

    Informatics

    Telecommunication

    Clinical / Hospital

    Biomedical

    Technology

    Source: Made by the author.

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    seen the stylised history of a signifi cant partof the Jutland economys evolution since

    it was radically transformed by nineteenthcentury railroadization as proposed bySchumpeter (1975). This process createdcertain path dependences or developmentaltrajectories. This kind of analysis is ratherimportant and useful in explaining theontology of such regional economies andtheir clusterization. Recall, for Schumpeterrailroadization was the purest, most radical

    kind of innovation based upon the creativedestruction of a preceding state of nature (orat least non-farming economy). The massive

    entrepreneurial event of railroadizationcreates evolutionary trajectories that act as

    constrained opportunity sets for regionalevolution. Activities displaying relatedvariety to the originating entrepreneurialevent comprise the selected

    Trajectories as in Table 1. These mayfoster varying intensities of innovationfrom disruptive (after Christensen, 1997)which cheapens (e.g. mobile telephony) an

    existing but specialised, uncommoditisedtechnology (e.g. ship-to-shore radio)to incrementa l innovat ions around

    Figure 5

    North Jutlands Jacobian Clusters & Related Variety

    Clean Tech

    Biotechnology

    Wireless

    Agro-Food (Organ.)Agro-Food (Conv.)

    Furniture

    Fashion

    Engineering (Fish)

    Engineering (Pipes)

    Source: Made by the author.

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    mobile telephony (fi rst, second, third etc.generation mobile telephony).

    There is insuff icient space to off era satisfying explanation for the Jacobiancluster mutat ion process in NorthJutland but Kristensen (1992) underlinesrailroadization as a key process where

    Jutland as a whole was opened up on asmaller scale but with similar inspiration tothat of the Frontier West in the nineteenthcentury USA. With this came two keymovements. The fi rst was the farmers co-operative movement where farmers suppliedtheir own production and household needs,including banks. The second movementwas the craft schools, established in over

    350 centres, followed by the still fl ourishingDanish Technological Institutes from 1907.

    Together these made a form of social or

    collective entrepreneurship possible. Thatis, infrastructure, education, technicalsupport, fi nance and markets. Hence socialcapital remains an important dimension ofthe SME-based collective entrepreneurshipof North Jutland. It makes technologicalbranching by means of related variety

    evolution possible. Finally, this is assistedby the existence of a RIS infrastructure oftechnological institutes, technical and craftschools and universities, which sustainsentrepreneurship and localised knowledgetransfer.

    5. BIOENERGY FROM CROPS IN WALES

    One of the most surprising, perhaps, butunquestionably innovative developments inthe bioenergy fi eld has occurred in recent

    Table 1

    Jacobian Cluster Path Dependences

    Technology Path Dependence

    Clean technology Agricultural and Marine Engineering (e.g.wind turbine bladesreplicate plough and propeller design)

    Biotechnology Wireless ICT and Medical Technology

    Wireless telephony Ship-to-shore Marine Technology

    Agro-food Railroadization of undeveloped land in Jutland (conventional,intensive)

    Organic Food Reaction against conventional intensive food production inJutland (mostly dairy)

    Furniture Railroadization, craft schools and the local forestry tradition

    Fashion clothing Womens craft schools skilling farmers wives

    Fish equipment andPipework engineering

    Fishing and marine engineering

    Source: Made by the author.

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    years in Wales. Descriptively speaking itinvolves patented knowledge derived bythe Institute for Grassland & EnvironmentalResearch (IGER) based at Aberystwythin rural, central Wales. This UK BiologicalResearch Council-funded research institutehas, for seventy years to 2007 been theUKs main, specialist grassland researchinstitute. It was tasked from the outset withimproving the quality of fodder for cattleand sheep feedstock, which is mainlygrass. By the early 1980s research, whichinvolved not simply breeding richer grassesbut understanding the rumen of theseruminative animals, had revealed that a limitto quality on these mountain-bred animalsoccurred because the enzymes that brokedown fodder into protein were actuallyconsuming a significant portion of thenutritional value of the fodder consumed bythe animal. Following many years of lengthyfi eld trials and laboratory research, cross-breeding the basic rye-grass commonly

    utilised for cattle and sheep fodder withbreeds possessing enhanced sugar contentproduced optimal results. The enzymestook some of the enhanced sugar content,transforming it directly into energy but left asubstantial portion for the animal suffi cientfor the amount, nutritional value and fl avourof the animal to be signifi cantly enhanced.

    This came to the market at a time when

    consumer demand for leaner meat of thetype raised in mountainous areas rosesignifi cantly and continuous improvementto the original AberDartstrain of rye-grass,marketed by Germinal Holdings, over theintervening years led to it reaching 50% ofthe UK market. It further secured the statusof Welsh Black beef and Welsh lamb aspremium products and enabled signifi cant

    improvements to occur in comparableupland cattle breeds such as Aberdeen

    Angus.

    In 2003, it was realised that IGER had,in the form of these SugarGrasses, anindigenous product to add to its burgeoningportfolio of biofuels. Tests had shown thatSugarGrass had twice the calorific valueof sugar cane, the source of much ofthe worlds biofuel. IGER thus evolved asecond string to its grassland expertiseby developing a renewables researchdivision. One of the biofuel feedstocks inwhich it became supreme early on was thegrowing and processing of Miscanthus,more popularly known as Elephant Grass,an African tall grass that grows on marginalland. Accordingly it doesnt compete forland with food crops, one of the criticismsof the US and Europes bolt for biofuels.

    This has seen the ears and cobs of wheatand corn being turned into ethanol becauseof easy availability and major subsidy,causing up to 40% increases in the priceof such cereals, and grief in developingcountry food markets.

    Tellingly, IGER is widely perceived as ina global class of its own in these specifi cbioenergy sub-fi elds, the offi cial view beingthat maybe University of California, Berkeley,may become competitive now they havereceived a $500 million endowment for aClimate Change research institute fromBritish Petroleum (BP). Apart from the

    University of Illinois, also mentioned as apossible future competitor, but only thosetwo IGER has a current lead on bothof them. But in any case, SugarGrass isalso twice as calorific as Miscanthusand SugarGrass is thus favoured as thetechnology with the best long-termprospect to replace oil. And IGER has thepatent for SugarGrass, currently earning

    royalties of 100,000 per year from sales ofseed varieties for fodder. But as the worldawakens to the relatively simple processes

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    of biorefi ning the product, these are likely togrow substantially.

    So much so that agreement has beenreached with Welsh Government officialsabout the promise of funds to help build anexperimental biorefi nery. Thinking had goneas far as to speculate that when oil ceasesto be refined at the huge Milford Havenrefi neries in neighbouring Pembrokeshire,the pool of talent and infrastructural sunk

    costs would make them ideal candidatesfor becoming SugarGrass (and Miscanthus)biorefi neries. These would continue to meet

    a huge share of the UKs future energy. Butit is not simply a spinout-venture capital

    model that is in mind. Possibly because aspin-out model doesnt yet work as well asa commercialisation outsourcing model inthis nascent fi eld. For example, MolecularNature, the key spin-out of IGER, burntupits venture capital. But because of the valueof its patent for biofuels potential as well asits fodder market, it was acquired by spin-in company Summit.Moreover, true to the

    traditions of co-operation among Welshmountain farmers, IGER promotes a newvision of mixed farming whereby groups of

    Figure 6

    Solar energy equipment manufactures in Wales

    Royce Renewables

    PJB Systems

    VE Heating

    Bright Light Solar

    LlaniSolar

    Sunset Solar Solar Housing

    Sundance Renewables

    SB Alternative Energy Thermonax McaulSolar

    G24iICP Solar

    Solarfit

    SolarfitEco Energy Systems

    InterSolar

    Sharp Solar, Dulas; PV Systems;

    Corus Colours, ICP Solar Inntec

    Solar, ICE

    PHOTOVOLTAICS CLUSTER

    Source: Made by the author.

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    farmers grow Miscanthus on their poorestsoil, devote some fi elds for SugarGrass fuelcropping and raise quality Welsh Lamb orWelsh Black Beef on their best SugarGrassland. Photovoltaics produce solar thermalenergy as in North Jutland. In Wales, thishas been studied by authors (Hendry etal., 2001) comparing the broader opto-electronics cluster, which also specialises infi bre-optic cabling, with those such as thatassociated with Carl Zeiss in Jena, easternGermany. However, in relation to thispresent discussion about green clusters, itis the photovoltaics capability that comes tothe fore. Fig. 6 reveals the presence of sub-divisions of multinationals such as Japaneseelectronics corporation Sharp whose SharpSolar subsidiary is based at St. Asaphalongside Corus Colours, a subsidiary ofCorus, the UK-Dutch steel manufacturer,acquired in 2007 by Indian giant Tata Steel.Utilising polymer science and surfacetreatments Corus Colours has innovated

    radically a Solar Paint product capable ofgenerating solar energy, especially fromprefabricated steel buildings. Other fi rms inthe photovoltaics cluster at St. Asaph areindigenous, such as Cardiff headquarteredmicroprocessor firm IQE and greenengineering fi rm Dulas, headquartered inmid-Wales.

    Hence, in conclusion, we see thatnumerous indications of clustering amongsmall firms, but also some large firms,along with an applied and basic researchinfrastructure characterises importantlocations of green clusters mainly, in thisanalysis, focused upon the production ofnon-fossil fuel energy that contributes tothe moderation of global warming. A key

    feature to be discussed in the concludingsection of this paper is that in some casesthere is an element of cluster species

    multiplication which, from an evolutionaryeconomic geography perspective canreadily be hypothesised. As shown in Fig.1, the California Cleantech clusters are tobe found in juxtaposition to the ICT andbiotechnology, food and wine clusters of theSan Francisco region of northern Californiaand the wireless telecom and biotechnologyclusters of San Diego in southern California.Indeed, so-called Cleantech is widelyseen as arising from the combination ofbiotechnology (including biopolymers andbiofuels), ICT (sensors) and Nanotechnology(catalysts and fi ltration membranes).However, while agro-food is also one ofCalifornias key industries, agro-food pathdependence seems even more pronouncedin the cases of Jutland and Wales, as wehave seen, while in yet another case forestryis important to Swedens biofuels cluster inrnskldsvik (Cooke, 2007).

    6. RELATED VARITY BY OTHERMEANS: CLEANTECH IN NORWAY

    The Norwegian model of developinggreen innovation usually involves largeorganizations evolving towards greeninnovation from intra-corporate relatedvariety. Perhaps Norways greatest strengthin green energy is Carbon Capture and

    Storage (CCS). In 2007 the Norwegiangovernment and Statoil made an agreementto establish a full-scale CO2 capture andstorage project at Mongstad (near Bergen,Hordaland). To limit technical and fi nancialrisks the project will progress in two stages.

    The first stage covers the MongstadCO2 capture testing facility which willbe operational at the same time as the

    cogeneration plant starts operation in 2010.The testing facility/pilot plant will have thecapacity to capture at least 100,000 tonnes

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    of CO2 per year. The second stage involves.full-scale capturing of approximately 1.5million tonnes of CO2 per year and will be inplace by the end of 2014.

    The technology development phaseof the project is currently progressingaccording to the project execution plan.

    The main objective for the pilot is to developmore cost-effective technology for CO2capture for a wider international application,i.e. to develop, test, verify and demonstratetechnology that would allow constructionof full scale CO2 capture plants with

    reduced costs and reduced technical andfi nancial risks. A technology company willbe set up to construct and operate thecapture pilot, CO2 Test Centre Mongstad.

    The government is currently in the processof invit ing companies to part ic ipatein the technology company. The invitedcompanies are potential users of CO2technologies and the aim is to establish a

    group of participants in May 2007. Severaltechnological solutions will be tested inparallel in the project. This approach shouldensure that technological developmentsin Norway could have broad internationalrelevance. With the Mongstad CCS projectwe move from the research/small scalephase to actual construction of a full scaleCO2 capture facility.

    Another larger fi rm with a leading positionin Norways solar energy industry is REC.

    This fi rm is the largest silicon foundry forphotovoltaics in the world. The companyhas three divisions: fi rst, REC is the worldslargest dedicated producer of siliconmaterials for photovoltaic applications andholds all rights to its proprietary productiontechnology. Solar grade silicon produced by

    REC can be used in the production of bothmono and multicrystalline wafers, as wellas wafers based on ribbon technologies.

    REC is also the worlds largest producerof monosilane gas, which in addition tobeing used internally by REC to make solargrade silicon, can be used by others inall types of thin-film silicon applications.REC is also the worlds largest producerof multicrystalline wafers, with a history ofrapid business expansion and introductionof leading product ion managementtechniques to increase productivity. RECcombines high quality manufacturingequipment with proprietary technologies toachieve high productivity. Third, REC Solarscell and module facilities are among themost automated plants in Europe, and RECis currently developing new technology tostrengthen its competitiveness and ensurefuture growth. The facilities are focused onfew products and customers, allowing alean approach to production. RECs mainproduction centres are at Sandvika andPorsgrunn in southern Norway (near Oslo)and Narvik and Glomfjord in the north. In

    each case a signifi cant number of specialistsuppliers are located nearby.

    7. CONCLUSIONS & THEORETICALIMPLICATIONS

    By virtue of an examination of theemergence of green clusters, often involving

    the production of new forms of non-fossilfuel energy aimed at lessening of overallGHG emissions derived from humaneconomic activity, a curious feature ofeconomic evolution has been revealed. Theclue lies in the element of convergence thatcharacterises green innovation. As hintedat in the cases of northern and southernCalifornia, not studied in detail here but

    examined elsewhere (Cooke, 2007), thetype of Cleantech industry emerging inthe clustered form described by Burtis et

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    al., (2004; 2006) evolves from agro-food,ICT and biotechnology. In North Jutlandwe see something comparable havingoccurred. Thus the wind turbine and solarthermal clusters are found in the moreagricultural and marine engineering regionsof Denmark. In writing the history of theformer industry, Karne & Jrgensen (1996)and Jrgensen & Karne (1995) note howthe Danish design of wind turbines defeatedthe main global competitor from where asignifi cant renewable technology demandalso arose simultaneously from the 1970s,namely California. As noted, Danish windturbine blade design was infl uenced by theagricultural engineering industry, notably thedesign of modern ploughing equipment. Inthe experimental innovation phase whensome thirty firms engaged in the designof prototype turbine blades, knowledgespillovers from the design of propellers bymarine engineers in the Jutland shipbuildingindustry were also absorbed. This resulted

    in a three blade solution and the idea thatthe greater efficiency in the operation ofsuch blades came from pointing them intothe wind. Californias aeronautics tradition,by the 1970s predominantly relying on jetpropulsion, led to the recovery of historicknowledge of propeller-driven aeroplanes.

    This suggested a two-blade solutionpointing downwind. The Danish solution

    proved far superior to the Californian in thistechnological contest.

    Hence in these multi-cluster locations,it is clear that a good deal of technologicalconvergence is possible and probablynecessary. But, interestingly, comparabletechnological assets do not necessarilyproduce optimum solutions from such

    Schumpeterian new combinat ions.Nevertheless, it is clear that in some regionscluster forms can evolve quite readily from

    other cluster forms, the cluster speciesmultiplication giving the region more of acluster platform characteristic to itsindustrial organization. On further inspection,both California and Jutland prove to havespawned many clusters. In the former case,wine clusters overlap the horticultural zones,Hollywoods fi lm cluster is well-known andPorter (1998) also profi les other, sometimeshighly specialised clusters such as the alloygolf club cluster at Carlsbad in the southernCalifornian desert. Further inspection ofthe cluster history of Jutland reveals thedetailed cases of Salling (furniture) andIkast (clothing), the even more closelystudied NorCom wireless telephony clusterat lborg (Stoerring & Dalum, 2007), theemergent BioMedico cluster also at lborg,and as yet unexamined cluster candidatesin insulated pipework near lborg, andfish processing equipment near Skagen,at Jutlands northern tip. At Barritskov,east Jutland is the estate that sustains the

    rstiderne Organic Food Network, a co-operative retail network that delivers 30,000boxes per week of organic food throughoutDenmark. It could also be argued that thereis a high degree of knowledge transferfrom varieties of agricultural productionto bioenergy production in Wales leadingto possibly nascent cluster-formation,but also from glass technology to fibre

    optic cables and then photovoltaics by adifferent route into renewable energy in amulti-functional opto-electronics cluster.Species multiplication or mutation of thiskind would be perfectly consistent with anunderlying theory of evolutionary economicgeography, especially that part referringto the opportunities for innovation andgrowth arising where there isrelated variety

    among industries. Absorptive capacity foradaptation to new combinations based oneasily understood knowledge spillovers

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    Origins of Regional Innovation Systems Thinking and Recent Advances from Analysis of Green Innovation

    threw the evolution of this kind of industryorganization into clearer perspectivebecause it focuses on a horizontal andconvergent technology platform conceptrather than a more traditional industrialeconomics perspective that emphasisesvertical structures like sectors or clusters.Finally, regarding cluster emergence withina Regional Innovation Systems context theresearch reported showed the importanceof social capital, which even in Californiamay be considered strong, as the work ofSaxenian (1994) on Silicon Valley showed,as an evolutionary driver of certain kinds ofregional innovation system. Indeed, whetheras bonding or more institiutional bridgingsocial capital it is the key element of thehidden power of networks, both social andinstitutional, that has always been at theheart of the RIS approach to evolutionaryscience. Finally, it could be seen that theevolutionary processes described werecapable of hosting differing intensities of

    innovative bursts. Railroadization itself

    was said by Schumpeter to be the mostradical kind. Divergent, possibly disruptive,innovations like the semiconductor inCalifornia, mobile telephony infrastructure inN. Jutland cheapened and democratisedkey technologies based upon newknowledge combinations. That othertypes of cluster-emergence can evolve, asaround larger corporate interests in Norway,is beyond dispute and a different clusterbiography from the dominant mutationmodel discusssed in this paper must becomposed. In the main cases discussedhere, incremental, narrowly path dependentinnovation can evolve among cluster fi rms inproximity. History also shows there may bepunctuated evolution with the more radicalinnovations around biotechnology fromcancer-defeating therapeutics to fodder-based biofuels as knowledge evolves andbroader economy regimes, notably thatassociated with the chemicalisation of fossilfuels, approach exhaustion and make way

    for a potentially cleaner bioeconomy regime.

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