S3P T&BD
Susana Elena-Pérez
Senior Consultant and Policy Analyst, EFIS Centre
Innovation diffusion is a broad concept, which includes the analysis of how new ideas, practices and innovation spread through a society. In so doing, it is essential to involve SMEs, the backbone of the EU economy, which are extremely difficult to engage and yet are critical to understand innovations needs and dynamics across territories
It can be defined as the process through which different organisations gather ideas from outside and use them to introduce an innovation (e.g. a new process of production, a new product itself or a new way of providing a service). Innovation diffusion comprises also the process of adoption of existing technologies (e.g. purchasing machinery developed elsewhere or signing a license agreement for an existing patent).
The analysis of innovation diffusion should be integrated within the Quadruple Helix Model of innovation which recognises four major actors in the innovation ecosystem: academia, government, industry, and civil society. As the figure below illustrates, the interactions between the four components are not unidirectional, but rather multi-layered, dynamic and bi-directional interactions (Schütz et al. 2019). In most cases, innovations and the production of new knowledge and technologies result from the interaction between innovation actors and with regional stakeholders (e.g. intermediaries, public authorities), with feedback mechanisms allowing a learning process.
The identification of desirable and productive forms of interaction among actors to boost innovation diffusion is very challenging and requires a deep understanding not only of the role of the different actors but also the role of the various intermediaries present in the ecosystem (clusters, universities, technology centres, business associations, etc.) as well as the innovation patterns in different industries, the specific bottlenecks in the territory and the policy instruments available.
Innovation diffusion is one of the seven fulfilment criteria for the enabling condition “Good governance of national or regional smart specialisation strategy”, which is in turn part of Article 174 of the Treaty on the Functioning of the European Union (TFEU). More precisely, the criterion asks European regions to run an “up-to-date analysis of challenges for innovation diffusion and digitalisation” and it is one of the main foci of the S3 in the 2021-2027 programming period
In a way, it underpins a successful implementation of smart specialisation strategies (S3). In other words, it is not possible to implement an S3 if the functioning of the regional innovation system is not clearly understood.
In this context, innovation diffusion is conceived as a highly complex and non-linear process that relates to: (1) regional and national framework conditions; (2) operational channels such as training and mobility, supply chains, collaborations; and (3) the presence and effectiveness of intermediary agencies. Therefore, it is closer to a proactive and deliberate process.
The focus of S3 is broadening and moving from a strong emphasis on R&D and innovation capacities towards implementation and diffusion issues in a wider societal context (Schwaag Serger at al., 2023).
In this scenario, there is a need to reshape the policy mix and to develop efficient policy instruments to support innovation diffusion able to generate structural transformation of the economy at regional and/or national level. In developing the policy mix, it is important to support the process of demand articulation for innovation by firms.
Moreover, understanding the bottlenecks to innovation diffusion and the role of intermediaries in penetrating the territory and reaching out to different types of firms is a critical step.
Given the breadth of the topic, the S3 Community of Practice (S3CoP) Working Group (WG) on Innovation diffusion, launched in June 2023, aims to discuss the most relevant implementation challenges on innovation diffusion across European regions, co-develop with the regions potential solutions (new approaches, policies, instruments, and coordination mechanisms) and propose actionable recommendations including examples, good practices, successful initiatives from various regions across the EU, covering a wide range of sectors and topics and adapted to regional specificities.
The main implementation challenges identified by the WG members are as below (see Figure 2).
Among the challenges identified, during the first year of activity, the WG has been working on two key challenges: a) weak or absent systemic approach to innovation diffusion and b) weak articulation of demand for innovation and innovation support services from business, notably SMEs.
These challenges are related to embedding and improving innovation diffusion as a central component of regional innovation ecosystems. This suggests the need for clear EU Smart Specialisation policy guidance to emphasise and consolidate the role of innovation diffusion, as a formalised element of the 2021-27 S3 enabling conditions. Working with a heterogeneous group of regions to explore the innovation diffusion theme has highlighted the importance of place-based, tailored approaches to how regions design and deliver innovation diffusion policies and practices.
There are many factors that influence the nature of innovation diffusion in different territories (e.g. innovation governance systems and the relative influence of national and regional policies; geographical characteristics; economic structure; and the specific design of S3 policies and practices).
Overall, innovation diffusion requires a more systematic approach in regional innovation ecosystems, building on and strengthening the guidance that exists in the 2021-27 S3 enabling conditions.
The core messages and learnings from exchanges within the WG are as follows:
Despite, the 2021-27 S3 enabling condition has established a strong baseline for making innovation diffusion a key element of the S3 policy mix, there is scope to deepen this guidance, not least by encouraging regions to adopt a more strategic approach to connecting innovation diffusion with both the S3 Entrepreneurial Discovery Process (EDO) and monitoring and evaluation processes.
The Innovation Diffusion WG is providing a strong impetus to help unlock the dynamics and challenges that underpin a truly place-based approach to ID. However, the mentioned issues merit deeper investigation in the forthcoming efforts of the WG.
The WG efforts so will go deeper in exploring solutions (such as reforms, upgraded policies and investments) seeking to optimise the flow of innovation-related knowledge flows within and across EU regions.
The next WG meeting will be held in Rimini as a side event of the annual S3 Conference.