Transcript TRAINING SEMINAR CRAFTING SUCCESSFUL INTERNATIONAL

POLICIES
KNOWLEDGE-INTENSIVE
COLLABORATIVE NETWORKS
Nicholas S. Vonortas
Center for International Science and Technology Policy
& Department of Economics
The George Washington University
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
PART I
INTRODUCING
BUSINESS PARTNERSHIPS:
Definitions - Rationale
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
INTRODUCING
STRATEGIC BUSINESS PARTNERSHIPS
• During the past 3 decades, collaborative strategies in
international business have gained popularity.
• Particularly in high technology industries, leading firms
have increasingly used joint ventures, joint R&D,
technology exchange agreements, direct minority
investments, and sourcing relationships.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
INTRODUCING
STRATEGIC BUSINESS PARTNERSHIPS
• All these inter-firm relationships are short of complete
merger, but deeper than arm’s-length market exchanges.
• Such relationships involve mutual dependence and shared
decision-making between two or more independent firms.
When R&D is a focus of the partnership, universities and
other research institutes may also participate.
• They are characterized here as strategic business
partnerships (or alliances).
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
INTRODUCING
STRATEGIC BUSINESS PARTNERSHIPS
• Several databases tracking strategic partnerships show
that the rate of formation of such partnerships has
accelerated dramatically since the late 1970s.
• This dramatic increase reflects non-equity agreements
by and large. In contrast, equity based partnerships
have kept a fairly low profile.
• Current conditions in the global economy make these
alliances advantageous, perhaps necessary, for firm
competitiveness in many industries.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
INTERNATIONAL
STRATEGIC BUSINESS PARTNERSHIPS
Three major and inter-related factors have been driving the surge of
international partnering.
– Globalization
• Multinational companies have relentlessly pushed into new
geographical and product markets.
– Technological Change
• The pace of technological advance has accelerated, partly as a result
of increasing competition through globalization.
– The notion of “core competency”
• Increasing international competition and rapid technological advance
have robbed firms of their ability to be self-sufficient in everything
they do. The idea now is, do internally what you do best and
outsource the rest through partnerships
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
DEFINITION: JOINT VENTURES
• In the mid-1980s, OECD defined joint ventures as activities “…in
which the operations of two or more firms are partially, but not totally,
functionally integrated in order to carry out activities in one or more of
the following areas:
• buying or selling operations;
• natural resource exploration, development and/or production
operations;
• research and development operations;
• engineering and construction operations”
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
DEFINITION: JOINT VENTURES
•
In general, the motives for setting up a joint venture were understood to
include:
• using complementary technology or research techniques;
• raising capital;
• spreading the risks associated with establishing an enterprise in a new
product or geographical area;
• achieving economies of scale;
• overcoming entry barriers to domestic and international markets; and,
• acquiring market power.”
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
HISTORY OF JOINT VENTURES
• Up until the late 1970s, inter-firm cooperation was
dominated by equity partnerships
• There were few exceptions, involving research consortia
organized under government auspices in industrialized
countries such as the Engineering Research Associations in
Japan and several research consortia organized in the
United States in the 1970s to tackle energy problems
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
HISTORY OF JOINT VENTURES
• Two important changes have taken place since the early
1980s in terms of inter-firm cooperation:
– First, the extent of cooperation has increased very much
resulting in big numbers of national and international
partnerships
– Second, the organizational structure of cooperation has
changed dramatically, reflecting the increasing
importance of organizational flexibility. Non-equity
partnerships are currently dominating the landscape
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
HISTORY OF JOINT VENTURES
• Consequently, the joint venture definition shown previously (requiring
the establishment of a new entity separate from the parents) proved too
rigid to be able to accommodate the rapidly growing variety of
institutional mechanisms to transfer organizational and technological
knowledge
• The need for a better definition was met with a broader concept: the
concept of a strategic partnership (alliance)
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
DEFINITION:
STRATEGIC BUSINESS PARTNERSHIPS
• A strategic alliance (partnership) was defined by David
Teece as a web of agreements whereby two or more
partners share the commitment to reach a common goal by
pooling their resources together and coordinating their
activities.
• A strategic partnership denotes some degree of strategic
and operational coordination and may include things such
as joint research and development (R&D), technology
exchanges, exclusionary market and manufacturing rights,
and co-marketing agreements. Partnerships may, or may
not, involve equity investments.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
PRIVATE SECTOR
INCENTIVES TO PARTNER
•
•
•
•
Access product and financial markets;
Share costs of large investments such as as R&D;
Share risk, reduce uncertainty;
Access complementary resources and skills of partners, such as
finance, complementary technologies;
• Benefit from research synergies;
• Accelerate return on investments through more rapid diffusion of
assets;
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
PRIVATE SECTOR
INCENTIVES TO PARTNER
• Deploy resources efficiently to create economies of scale,
specialisation and/or rationalisation;
• Increase strategic flexibility through the creation and optimal
exploitation of new investment options;
• Unbundle the firm’s portfolio of intangible assets, and selectively
transfer components of this portfolio;
• Co-opt competition;
• Attain legal and political advantages in host countries.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
PRIVATE SECTOR
INCENTIVES TO PARTNER
• More broadly, partnerships have such virtues as flexibility, speed,
informality, and economy.
• They can be put together in little time and be folded up just as quickly.
• They can involve little paperwork. In comparison to market
internalisation through mergers and acquisitions, a close analogy of
partnerships would be “love affairs instead of marriages”.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
STRATEGIC TRADE-OFF OF
COLLABORATION
Regardless of the strategic goal, collaboration with another
firm always implies a trade-off between:
• greater access - to markets, finance, other resources,
capabilities; and
• lesser control - of strategic decision making, day to day
management, technological and other kinds of knowledge.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
PART II
POLICY FOR
RESEARCH PARTNERSHIPS
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Intervention Rationale
• The basic justification for government action was
market failure.
• In R&D partnerships, the arguments initially
revolved around the inability and unwillingness of
the private sector to undertake research that is
risky and imperfectly appropriable.
• Hence the call for supporting collaborative precompetitive research.
This of course agreed with the political constraints
of the Commission.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Intervention Rationale
• Later the justification expanded to arguments for
systemic failure.
• Some issues were said to be bigger than any
individual organization - or small groups of
organizations - to tackle. An example is the
transition into new generations of technology.
• Such arguments have underlined the ideas of
European Technology Platforms and their
programmatic implementation into Joint
Technology Initiatives in FP7.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Policy for RPs
• S&T is one area with relatively little to show in terms of
harmonization and cohesion between the policies of EU
member states.
• The NIS of EU member states remain rather dissimilar due
to historical, cultural, and other factors related to the
development stage and consequent needs and capabilities.
• The STEP-TO-RJVs project demonstrated the same
phenomenon in one specific area of S&T policy –
cooperation in R&D. Such diversity is increasingly viewed
as a strength of the European system.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Policy for RPs
• Still, the ERA concept presupposes a certain degree of
cohesiveness and basic goal harmonization across member
states.
• One way the Commission has tried to narrow the gaps
(e.g., national R&D funding) and address the discrepancies
(e.g., areas of focus and specific policy tools) has been the
establishment of the Framework programme.
• Among others, the 6th FWP and the current 7th FWP
envisioned a genuine partnership between the EU and its
member states and with other European scientific
cooperation organizations.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Policy for RPs
• The project “S&T Policies Towards RJVs” was launched
in the late 1990s with teams representing France, Greece,
Ireland, Italy, Spain, Sweden and the United Kingdom.
That is an amalgam of three kinds of member states,
including large R&D-spending states, developed smaller
states, and cohesion states.
• As a necessary first step was to summarize the S&T
policies related to RJVs of these countries plus Japan and
the US. In addition, partners also reviewed competition
policies and IPR policies that affect RJVs.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Policy for RPs
• The support of international consortia has been the main
funding mechanism of FWPs since inception.
• Awareness and support of cooperative R&D has also
increased at the national level:
Cohesion states without an extensive tradition of
sophisticated industrial and S&T policies have made
significant steps in that direction.
Most of the rest seem genuinely trying to do more than
before.
The UK sometimes appeared to consider FWP programmes
as substitutes of its own, but continued to promote
collaboration and networks in various, largely nonmonetary ways.
The Center for International Science
Nicholas S. Vonortas
and Technology Policy
The George Washington University
Policies for RPs
Extensive differences between member states were reported:
• Policy approaches have ranged from complete indifference
to the issue until recently (Ireland), to lukewarm policies
(Greece, Italy), to decreasing attention (UK), to established
network systems (Sweden), to highly determined
programmes to support collaborative R&D (France,
Spain).
• The level and type of support have varied widely as have
the specific policies and programmes, their technological
focus, and the numbers and kinds of participating
economic agents.
Amidst this variation, the European Commission’s policies
have played a boosting and cohesive role.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Policies for RPs
The policies of Japan and of the US have also been quite
different from those in Europe reflecting, at least in part,
the general S&T outlook in these countries:
• In Japan, the emphasis on cooperative R&D continues.
Government sponsored RJVs, however, seem to have made
the transition since the 1980s from primarily mechanisms
assisting whole sectors to catch up with world practice to
mechanisms creating a richer and more effective
technological superstructure for a high group of high
technology sectors.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Policies for RPs
• In retrospect, the US can be argued to have followed a
rational approach to accommodating rising levels of R&D
cooperation. It first changed its institutional structure and
relevant legal system. It then moved forward to put in
place specific programmes to actively promote cooperative
R&D.
• The EU approach appears to have been the reverse of the
US approach, but no less rational in the face of the specific
situation of the region.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Several landmark policy initiatives between the early
1980s and the mid-1990s paved the way to a new policy
approach to innovation and the emerging economy:
Domestic Policy Review of Industrial Innovation – 1978
Stevenson-Wydler Technology Innovation Act – 1980
Bayh-Dole University and Small Business Patent Act – 1980
Research and Experimentation (R&E) Tax Credits – 1981
Small Business Innovation Development Act – 1982
Merger Guidelines – 1982
Eleventh Circuit Court of Appeals for IP – 1982
President’s Commission on Industrial Competitiveness – 1983
Engineering Research Centers; Industry-University Cooperative
Research Centers – 1983
National Cooperative Research Act – 1984
Federal Technology Transfer Act – 1986
Omnibus Trade and Competitiveness Act – 1988
National Cooperative Research and Production Act – 1993
The Center for International Science
Nicholas S. Vonortas
CENTER FOR INTERNATIONAL
SCIENCE
and Technology
PolicyAND TECHNOLOGY POLICY
e aWs ha isnhgi tnogn t U
o n iU
TTh he eG G
e oerogregW
v enrisvi et yr s i t y
Policy for RPs
• Confronted with a large collection of significantly variable
national S&T policies, the Commission first moved to put
in place its own supra-national programmes for
cooperative R&D before trying to harmonize policies
across member states.
• Harmonization and cohesion continue but the process has
been a slow one.
• Almost 30 years later, the 6th and 7th FWP and ERA try to
bridge the national S&T programmes and form a coherent
whole.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Basic Lessons
• EU policies have become a force well reckoned by
member state governments. EU policies have very much
influenced policies at the national level and, in certain
cases, shaped them to the extent of straightforward
translation (cohesion countries).
• Policy-decision makers across countries have placed
important value on cooperative R&D but there is extensive
variability in policy approaches.
• The ERA is supposed to be the cohesive force that
recognizes and accepts variability.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
PART III
PARTNERSHIPS & NETWORKING
IN S&T FOR DEVELOPMENT
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Partnerships for Development
The proliferation of partnerships during the past couple of
decades has raised expectations of accelerated growth
through faster access to markets and technologies and
greater learning possibilities.
There is evidence that inter-firm partnerships can be an
extremely useful tool to assist developing country firms
(and poorer regions) in their efforts to catch up.
Partnerships can accordingly assist countries speed up the
process of establishing competitive indigenous industries.
Partnerships can also play a major role in mobilizing the
necessary resources and technological expertise to upgrade
lagging infrastructure.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Partnerships for Development
The evidence is, however, still concentrated in certain
geographical areas and sectors. This has been interpreted to
imply that the expectations of widespread catch-up
opportunities through partnerships have not yet
materialized.
However, intensive international inter-firm collaboration is a
relatively new phenomenon where, with few exceptions,
developing countries have made their presence felt only
very recently. In other words, it is simply too early to tell.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Partnerships for Development
It is also possible that analysts have tried to extrapolate too
much too fast from the experience of developed countries,
in the process missing important flags.
The available empirical information has overwhelmingly been
on formal partnerships. In contrast, we have a lot of
anecdotal but little systematic information on informal
partnerships.
Available anecdotal evidence strongly indicates that informal
partnering probably accounts for apparently the largest
share of partnering activity in industry. It involves firms
and all other kinds of organizations, but it involves
especially SMEs in proximate geographical areas.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Partnerships for Development
We have developed various terms to capture aspects of more
informal modes of interaction. We talk about clusters. We
talk about districts. We also talk about networks.
Each term means something different, but they also share
considerable ground: the willingness and ability to interact
closely with the surrounding environment, with peers, with
buyers and suppliers – by and large on an informal basis.
An expanding literature has, in the past few years, tried to
amass evidence of such interaction and of policies that
promote it in developed and developing countries
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Partnerships for Development
Formal and informal partnering should be seen as a
continuum.
Then, the question is not anymore whether partnering helps
developing country/region firms to grow competitive. The
question rather becomes which kind of partnering may be
more appropriate – or more prevalent – at different stages
of development and in different sectors.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Partnerships for Development
Formal partnerships require strategy formulation and partner
contribution, whether in financial resources, intangible
assets, market familiarity, market access, etc. Frequently,
the required level of strategy sophistication and resource
commitment is considerable.
It is, thus, quite possible that these requirements raise the bar
too high for the mass of (mainly small and
unsophisticated) firms in the majority of developing
countries. Hence, it could be argued, the relatively slow
trickling down of partnering to the majority of developing
countries.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Partnerships for Development
Still, this leaves many other interactions for these agents to
pursue. It seems quite probable that informal partnering
through networks and clusters is a way for many relatively
disadvantaged developing country firms to become
stronger, more competitive, and to meet the minimum
capability prerequisites in order to graduate to formal
partnerships.
Governments may be wise to try addressing most developing
country SME problems related to size and competitive
position through networks (often more vertical, supplierbuyer relationships) and clusters (regional, more
horizontal, agglomerations).
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
PART IV
COLLABORATE TO COLLUDE?
Multimarket and Multiproject Contact
in R&D
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Collaborate
Policy for Industrial R&D Cooperation since 1980s
 Competitiveness Challenge & Market Failures
 National Cooperative Research Act (1984)
 Research Joint Venture (RJV)
“Organizations or contractual agreements involving
at least two entities with the primary purpose to
engage in R&D.”
Alleged Advantages
Potential Drawbacks
 Restore private incentives
 Acquire complementary
resources
 Exploit economies of scope
 Create new investment
‘options’
 Restrict parallel approaches
 Moral Hazard
 Lessen competition
 Decrease social surplus
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Collaborate
New RJV Announcements between 1985 - 1999
Total = 796
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Collude
Multi-Market Contact Arguments
Research Joint Ventures (RJVs)
Multi-Project Contacts (MPC)
Multi-Market Contacts (MMC)
AntiCompetitive Behavior
Nicholas S. Vonortas
Collusion
Lower
Consumer Surplus
The Center for International Science
and Technology Policy
The George Washington University
Question
Is Multi-Project Contact through RJVs
a Cause of Concern?
YES
NO
MPC & MMC
Safeguards against anti-competitive behavior
 Multi-Project Contact
 Multi-Market Contact
Nicholas S. Vonortas
 Foreign Participation
 Technological & Market
Uncertainty
 “Porous Constellation”
The Center for International Science
and Technology Policy
The George Washington University
Data
NCRA RJVs (1985 – 1999)
 Registered with DOJ & FTC
 under NCRA (1984) & NCRPA (1993)
Database Structure
PROJECT Table
MEMBERSHIP Table
ENTITY Table
* ProjectID
* Project Name
* Project Initiation Date
* Project Purposes
* Technical Area
* Industrial Area
* ProjectID
* EntityID
* Membership Name
* Participating Date
* Membership Status
* EntityID
* Entity Name
* Type
* Country
* Primary Industry
Various Data Sources at Entity Level
* Organizational Type
* Origin of Country
* Business Lines (SIC)
* Number of Employees
* Etc.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Data
Cooperative Activities of All Identified Entities
No. of Memberships
1
Memberships Entities % (Entities)
2,801
2,801
65.75
2
3
4
5
1,382
798
504
410
691
266
126
82
16.22
6.24
2.96
1.92
6 to 10
11 to 20
21 to 50
more than 50
1,099
1,270
1,260
1,933
142
89
40
23
3.33
2.09
0.94
0.54
4,260
100
Total Identified Memberships
Total Memberships
Total Identified Entities
Nicholas S. Vonortas
50%
11,457
14,019
The Center for International Science
and Technology Policy
The George Washington University
2/3
7%
Multi-Project Contacts in NCRA RJVs: AT&T
Oracle
(7372)
Honeywell
(3728)
11
Kodak
(3861)
CDS
(7372)
11
11
Southwestern
(4813)
Sprint
(4813)
IBM
(7370)
11
11
41
DEC
(3570)
33
HP
(3570)
SAIC
(8700)
32
29
Nortel
(3661)
Motorola
(3663)
26
28
25
Fujitsu
(7373)
11
23
GM
(3711)
22
Novell
(7372)
22
TI
(3674)
21
Lucent
(3661)
21
Siemens
(3600)
21
Sun
(3571)
21
Verizon
(4813)
20
NEC
(3661)
18
Hitachi
(3570)
18
Tandem
(3571)
17
Apple
(3571)
Nokia
(3663)
12
Mitsubishi
(6719)
12
GE
(3600)
11
SBC
(4813)
11
Tohomson-CSF
(3812)
Microsoft
(7372)
Racal
(6719)
12
12
AT&T
(4813)
12
Xerox
(3577)
13
Toshiba
(3570)
13
NSC
(3674)
13
13
MCI WorldCom
(4813)
13
Lockheed Martin
(3760)
17
13
13
Harris
(3663)
DuPont
(2820)
14
Unisys
(7373)
Nicholas S. Vonortas
14
14
14
14
Rockwell
(3620)
Philips
(6719)
OKI
(6719)
Ericsson
(3663)
16
15
Alcatel
(3661)
Groupe Bull
(6719)
17
NTT
(4813)
17
17
Intel
(3674)
Boeing
(3721)
BT
(4813)
The Center for International Science
and Technology Policy
The George Washington University
MPC & MMC in NCRA RJVs
Collaborating firms
Firm1
SIC1 Firm2
BP Amoco
2911 Exxon Mobil
BP Amoco
2911 Chevron
Chevron
2911 Exxon Mobil
Exxon Mobil
2911 Texaco
BP Amoco
2911 Texaco
Chevron
2911 Texaco
AR
2911 BP Amoco
Ford
3711 GM
BP Amoco
2911 DuPont
AR
2911 Exxon Mobil
AR
2911 Chevron
BP Amoco
2911 Shell
Exxon Mobil
2911 Shell
DaimlerChrysler 3711 GM
DuPont
2820 Exxon Mobil
AT&T
4813 IBM
DaimlerChrysler 3711 Ford
Chevron
2911 Shell
HP
3570 IBM
BP Amoco
2911 Phillips
Chevron
2911 DuPont
DEC
3570 IBM
Exxon Mobil
2911 Phillips
AR
2911 Texaco
DEC
3570 HP
AT&T
4813 DEC
Nicholas S. Vonortas
SIC2
2911
2911
2911
2911
2911
2911
2911
3711
2820
2911
2911
1311
1311
3711
2911
7370
3711
1311
7370
2911
2820
7370
2911
2911
3570
3570
MPC MMC
86
81
77
66
62
59
50
49
48
46
45
45
44
43
43
41
41
40
39
38
37
37
37
35
34
33
4
5
5
4
5
5
2
5
2
2
2
6
4
5
2
2
4
5
4
6
2
0
4
2
1
0
DuPont
AT&T
GM
BP Amoco
Shell
AT&T
Chevron
IBM
AT&T
BP Amoco
Exxon Mobil
IBM
Phillips
AR
Fujitsu
Texaco
AT&T
Chevron
Fujitsu
AT&T
Chevron
DEC
DuPont
Exxon Mobil
GM
GM
IBM
2820 Texaco
4813 HP
3711 IBM
2911 USX-Marathon
1311 Texaco
4813 SAIC
2911 Phillips
7370 Motorola
4813 Nortel
2911 UNOCAL
2911 UNOCAL
7370 Nortel
2911 Texaco
2911 DuPont
7373 IBM
2911 UNOCAL
4813 Motorola
2911 UNOCAL
7373 HP
4813 Fujitsu
2911 USX-Marathon
3570 GM
2820 Shell
2911 USX-Marathon
3711 HP
3711 TI
7370 TI
Total
2911
3570
7370
2911
2911
8700
2911
3663
3661
1311
1311
3661
2911
2820
7370
1311
3663
1311
3570
7373
2911
3711
1311
2911
3570
3674
3674
33
32
32
30
30
29
29
29
28
28
28
28
28
27
27
27
26
26
26
25
25
25
25
25
25
25
25
1,999
The Center for International Science
and Technology Policy
The George Washington University
1
1
3
2
5
0
4
2
1
4
6
1
5
1
6
6
1
4
4
2
2
0
3
2
1
1
4
160
Foreign Participation
Identified Entities by Country
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Technological & Market Uncertainty
Primary Technical Areas of RJVs
Biotechnology
Computer Hardware2%
Factory Automation 3%
4%
Photonics
4%
Test & Measurement
4%
MedicalsPharmaceuticals
Defense
2% N/A 1%
0%
2%
Telecommunications
18%
Transportation
9%
Manufacturing Equip.
5%
Chemicals
6%
Advanced Materials
9%
Subassemblies &
Components
6%
Computer Software
8%
Nicholas S. Vonortas
Energy
9%
Environmental
9%
The Center for International Science
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“Porous Constellation”
RJV Membership Changes
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
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Collaborate to Collude?
Mixed Evidence
 Multi-Project Contact
 Multi-Market Contact
 Foreign Participation
 Technological & Market
Uncertainty
 “Porous Constellation”
Policy Implications
 Alert to enhanced possibility of market concentration
 Focus on intersection of MMC & MPC
 Counterbalance between
- Advantages of Collaboration in Industrial R&D and
- Danger of Anti-Competitive Behavior
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
PART V
USING SOCIAL NETWORKS
TO EVALUATE
R&D PROGRAMS
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
PRIOR RESULTS ON IST-RTD
NETWORKS
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Prior Results
European IST RTD Networks
The network of research collaborations has:
• A self-organizing structure, dominated by
“hubs”, which are also key nodes in National
research networks
• A scale-free architecture at the thematic levels
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Prior Results
European IST RTD Networks
European research is characterized by “small world”
connectivity
Strong tendency of scientists to cluster around national
communities
Strong tendency to cluster with research disciplines and
within industrial sectors
The funding structure has a strong influence on research
co-operations
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Prior Results
European IST RTD Networks
As a result of the new Integrated Projects and Networks of
Excellence:
• The density of links is higher
• The share of participants in the principal component is higher
• The average path length is lower
• Large firms and research institutes are more dominant as gatekeepers of collaboration
• Small companies are “crowded out” relative to FP5
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Prior Results
European IST RTD Networks
The IST RTD network as a whole has “small world”
characteristics - but this is not true for each and every
one of its programmes
FP6 more likely than other research collaboration
frameworks to:
• Connect universities and industry
• Connect different research themes
• Include new Member States
• Include key patent-holders
• Include SMEs
The Center for International Science
Nicholas S. Vonortas
and Technology Policy
The George Washington University
THIS STUDY ON IST-RTD
NETWORKS
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Towards an ERA for IST:
Overall Objectives
Develop and apply a quantitative analytical framework
for the assessment of the characteristics and
performance of networks supported by IST RTD in
FP5 and FP6.
Analyze knowledge and partnership networks in
selected IST RTD domains, concentrating on network
nature, topology, time evolution and effectiveness.
Supplement quantitative information with some
qualitative information, and inter-organizational
networks with inter-personal networks
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Towards an ERA for IST:
Evaluation Questions
•
How do the characteristics of the IST-RTD
partnership and knowledge networks compare with
the characteristics of the global partnership and
knowledge networks of IST-RTD companies and
with the characteristics of the related global
networks?
•
How well are the companies participating in IST
RTD programs positioned in the global partnership
and knowledge networks?
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Towards an ERA for IST:
•
Evaluation Questions
How effective are IST-RTD networks as
mechanisms for transmitting knowledge?
•
Are the Integrated Projects (IPs) and the
Networks of Excellence (NoEs) creating
leading “knowledge hubs”?
•
What makes these “knowledge hubs”
effective?
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Towards an ERA for IST:
Evaluation Questions
• To what extent does the prominent network status of
certain IST RTD companies of clusters match the EU
technological leadership in certain areas?
• Are the global networks of selected “hub” companies
with extensive ICT supply chains represented in the
FP6 IST RTD?
• Are the perceived national IST “knowledge hubs”
well integrated into the FP6 network?
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
IST-RTD
Framework Programme 6
Selection of
IST
technology
domains
Patent
examiners
Matching of IPC
codes with
technological
domains
Matching of SIC
codes with
technological
domains
PARTNERSHIP
NETWORK Ia
EP-CESPRI
patents/citations
KNOWLEDGE
NETWORKS
(Ib, IIb, IIIb)
Nicholas S. Vonortas
Field
experts
INNET
alliances
PARTNERSHIP
NETWORKS
(IIa, IIIa)
The Center for International Science
and Technology Policy
The George Washington University
Towards an ERA for IST:
Network Types
• IST-RTD partnership network
• IST-RTD knowledge network
• Global partnership network of IST-RTD project participants
• Global knowledge network of IST-RTD project participants
• Global partnership network akin to the E technology units
• Global knowledge network akin to the E technology units
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Towards an ERA for IST:
Examined Programs
FP 5
Key Actions
FP6
Thematic Areas
1. System and services for the citizen
1. Applied IST research
addressing major societal
and economic challenges
2. New method of wok and electronic
commerce
2. Communication,
computing
and software technologies
4. Essential technologies and
infrastructures
3. Components and
micro-systems
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
TA 1-2-3 FP6
Projects
Not Selected
115
27,3
Selected
307
72,7
Not selected
27%
Selected
73%
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
TA 1-2-3 FP6
Participants
Not selected
1340
21,8
Selected
4814
78,2
Not selected
22%
Selected
78%
Center
for InternationalinScience
Participants: counted once for every project they The
have
participated
Nicholas S. Vonortas
and Technology Policy
The George Washington University
TA 1-2-3 FP6
By instrument
(projects)
0,5
0,4
0,3
Not Selected
0,2
Selected
0,1
0
CA
CA: Coordination Action
IP: Integrated Project
NoE: Network of Excellence
Nicholas S. Vonortas
IP
NoE
SSA
STREP
SSA: Specific Support Project
STREP: Specific Targeted Research Project
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and Technology Policy
The George Washington University
TA 1-2-3 FP6
Organization Type
0,35
0,3
0,25
0,2
Not Selected
0,15
Selected
0,1
0,05
0
HE
HE: Higher Education
IND: industry
Nicholas S. Vonortas
IND
OTH
REC
REC: Research
OTH: Other
The Center for International Science
and Technology Policy
The George Washington University
TA 1-2-3 FP6
SMEs and Large Enterprises
Not Selected
Large Company
SME
Selected
Large Company
SME
1032
21.15
260
21.17
3846
78.85
968
78.83
0,8
0,7
0,6
0,5
0,4
0,3
0,2
0,1
0
Not Selected
Selected
SME
Nicholas S. Vonortas
Large
Company
The Center for International Science
and Technology Policy
The George Washington University
Indicative Analysis: 3 subjects
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Subject 1: Identifying HUBs and
their relative roles
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Hub definition
• An organization is a hub in a specific
network if it has many links and/or if it
connects the otherwise unconnected parts of
the network
The above translates into high degree
centrality and/or high betweeness centrality
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
STYLIZED 3A PARTNERSHIP
NETWORK
This is a stylized
model of Network
3a (Alliances)
Give intuition
behind the concept
of a Partnership Hub
A Hub is defined as a
node exhibiting high
value of betweenness
and degree
The node labelled “HUB 3a” is the designated Hub for this
The Center for International Science
network.
Nicholas S. Vonortas
and Technology Policy
The George Washington University
STYLIZED 3A PARTNERSHIP
NETWORK
Yellow nodes
indicate
organizations
participanting in
Framework
Programme.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
STYLIZED 1A PARTNERSHIP
NETWORK
This is a stylized
model of Network
1a (FP
Participants)
The blue node is
the 3a network
relevant Hub
The yellow node represents the relevant Hub in the stylized 1a
The Center for International Science
partnership
network
Nicholas S. Vonortas
and Technology Policy
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Links Between 1a Hubs and 3a Hubs
Blue nodes are the
3a network Hubs
Yellow nodes
represent the
1a network Hubs
1a Hubs are strongly
inter-connected and
they are also connected
with 3a Hubs
3a Hubs are NOT hubs in network 1a, BUT are gateways that
connect FP organizations to the global
network
The Center for International Science
Nicholas S. Vonortas
and Technology Policy
The George Washington University
1A FP6 (TA1) PARTNERSHIP
NETWORK
Blue nodes are the
3a network Hubs
Red nodes are other
3a network
participants within
distance 1 from 3a
Hubs
Yellow nodes
represent 1a
network Hubs
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
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1A FP6 (TA1) PARTNERSHIP
NETWORK (no IP)
This is the TA1
Network without the
links related to IP
The network is
substantially different,
with many isolated
nodes and diminished
complexity
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Subject 2: Effectiveness of
KNOWLEDGE HUBs
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
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Effectiveness of Knowledge
Hubs
Hubs as knowledge depositories
• Number of Patents
• Number of Citations Received
• Number of Highly Cited Patents
Hubs at the cross-road of information and
ideas
• Degree Centrality
• Betweeness Centrality
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Effectiveness of Knowledge Hubs:
Hypothetical Example
KH IIIa
degree IIIb
KH Ia
OTHER Ia
0,12
0,1
0,08
0,06
highly cited
patent
0,04
betweenness
IIIb
0,02
0
patent
Nicholas S. Vonortas
The Center forcitation/patent
International Science
and Technology Policy
The George Washington University
Effectiveness of Knowledge Hubs:
Hypothetical Example
• closely matches that of global KHs in terms of three variables
(number of patents, network centralities);
• lags seriously behind in terms of the remaining two variables
that approximate the quality and the importance of their patent
portfolios;
the FP KHs seem to perform better in diffusing knowledge
through their centrality roles in the networks than in creating
powerful and influential portfolios of new ideas.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
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Subject 3: Leadership
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
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Leadership
Two different definitions of Leadership:
• Technology Leadership: the role played by each
organisation in the innovative process
• Market leadership: the share of revenues in ICT
among EU25
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Technology Leadership
Technology leadership is defined in terms of two
concepts:
• Niche overlap concerns the crowdedness of the
technological area explored by organisations. Its
measure is based on similarity of technological
antecedents (i.e. co-citation).
• Prestige deriving from the direct technological ties
between actors (i.e. direct patent citations)
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Technology Leadership
Four different kinds of actors:
• Technology Leaders: a key source of knowledge
spillovers for many other organizations in the industry.
Their research activity is focused on the exploitation of
opportunities in relatively mature and therefore highly
crowded fields
• Technology Brokers: sources of knowledge in
relatively new and unexplored fields
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
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Technology Leadership
• Technology Followers: they do not contribute
significant spillovers to other organizations and engage
into relatively mature and crowded technological
subfields
• Isolate Organisations: they do not receive direct
citations from many other organizations and are
exploring relatively untapped technological subfields.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Technology Leadership:
Hypothetical Example
0.1
0.08
Technology leaders
0.06
0.04
Prestige
0.02
0
0
1
2
3
4
5
6
7
8
9
10
-0.02
-0.04
EU-Non FP
EU-FP KH
EU-FP Non KH
Global KH
Average prestige
Average alfa
-0.06
Technology isolates
-0.08
-0.1
Nicholas S. Vonortas
Crowding
The Center for International Science
and Technology Policy
The George Washington University
Technology Leadership:
Hypothetical Example
This analysis might suggest:
• The number of identified leaders and brokers that
participate in the Framework Programme
• The number (and identity) of those who not only
participate but they can also be characterized as
Partnership HUBs in the Framework Programme.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
PART VI
NETWORKS OF INNOVATION IN
INFORMATION SOCIETY:
DEVEKOPMENT AND
DEPLOYMENT IN EUROPE
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Objectives
The core objectives of the evaluation study were:
• To assess the effectiveness of network collaboration
and knowledge transfers between RTD, innovation
and deployment activities related to IST;
• To suggest ways of strengthening the links between
IST-RTD, innovation and deployment at the EU
and regional levels
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Evaluation Questions (1)
1. Do IST-RTD networks play an important role in creating new, innovative ICT
products/processes and how?
2. What are the network characteristics of the organizations that are effective
innovators?
3. Do IST-RTD networks influence ICT deployment? Do they speed up the
diffusion process? Do they affect the geographical distribution of
deployment? Do they have a structuring effect on ICT take-up in specific
geographical areas?
4. Do IST deployment networks (eTen, eContent) play an important role in
deploying new, innovative ICT products/processes and how?
5. How do IST-RTD and IST deployment networks complement each other?
Where are the strong and the weak links? Is there a significant overlap between
the two kinds of networks? Are there common nodes, common hubs?
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Evaluation Questions (2)
6. Are there opportunities for greater linkages between IST-RTD and IST
deployment networks and how could they increase the impact of current and future
innovation and deployment activities?
7. What are the best institutional contexts to promote ICT take-up through
innovation networks?
8. Do national/regional IST networks supported by EU structural funds play an
important role in introducing and in deploying new, innovative ICT
products/processes and how?
9. How do the above networks (supported by structural funds) compare with
networks supported only with national/regional funds in terms of both innovation
and deployment?
…these questions cannot be answered through network analysis alone, they can be answered by
understanding the value of the network to the participants
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Analytical Steps
The methodology involved the following steps:
•
Select a thematic area of IST research and deployment: “Applied IST
research addressing major societal and economic challenges”;
•
Investigate innovation and deployment activities at the EU level in the
selected thematic area and define network topology at the European level
through network and data analysis;
•
Select regions and undertake quantitative and qualitative analysis of
deployment in selected regions;
•
Conduct interviews with key organizations;
•
Analyse patterns and relationships of networks;
•
Derive lessons learned and policy recommendations.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Data Analysis for Selected Regions
Quantitative analysis: data on the characteristics of research
and deployment projects (EU, national, regional). Main
analytical objectives:
1.
Analyze IST networks in terms of position and role of regional
organizations
2.
Analyze RTD networks and innovation
3.
Analyze RTD networks and deployment
Qualitative analysis: 66 interviews with actors in
deployment networks at the regional level.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Data and Networks Construction
IST RESEARCH
Project
IST DEPLOYMENT
Project
Description
European network
formed by organizations
participating in FP6 IST
projects
European network
formed by organizations
participating in eTen and
eContent projects
Data source
Internal EC Database
(not publicly available)
Internal EC Database
(not publicly available)
Participants
Projects
Participants per
project
Organisations
Projects per
organisation
4198
249
2008
287
17
7
2417
1634
1.7
1.2
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Question 2: What are the Network Characteristics?
Network Structure
number of nodes
(organisations)
number of edges (links)
network density
size largest component
average degree
average distance
max distance
clustering coefficient
IST RESEARCH
Network
IST DEPLOYMENT
Network
2417
1634
61686
0.020
2373 (98.18%)
51.04
2.5
5
0.0377
7422
0.006
1153 (70.56%)
9.08
5.08
11
0.1292
Both networks are highly connected and display Small World properties:
low average distance and high clustering coefficient as compared to a
random network.The Center for International Science
Nicholas S. Vonortas
and Technology Policy
The George Washington University
Question 2: What are the Network Characteristics?
Network hubs
60
50
40
30
20
10
0
HE
REC
Research Network HUB
IND
OTH
Deployment Network HUB
As compared to the Research network, in the Deployment network:
• Other organizations (e.g. City Council) play a role
• Private companies have a more important role
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Question 2: What are the Network Characteristics?
Gatekeepers: Bridging Research and Deployment Networks
Research
Network
Deployment
Network
Organisations Participating
in Both Networks
working as Gatekeepers
Bridging Links
• There are 277 gatekeeper organizations
• 1/3 of the links in each of the two networks
bridging
The Centerare
for International
Science links
Nicholas S. Vonortas
and Technology Policy
The George Washington University
Gatekeepers by organisational
type
OTH
14%
HE
32%
REC
31%
IND
23%
SMEs seem to play a relevant role: 45 gatekeepers are SMEs (16.7% of the total).
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Lessons Learned
• IST RTD networks have an integrating effect across sectors
• Networks create opportunity for knowledge sharing about new
product, processes, and markets
• The research networks are denser and more interconnected
than the deployment networks
• Key institutions-Gatekeepers-integrate these two networks
• Knowledge flows bilaterally within the network, but the
information shared by different nodes reflects their
institutional role
• The EU requirement for geographic integration bring smaller
institutions together with large multinationals in ways that
would not happen otherwise
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Policy Recommendations
• Continue efforts to strengthen ERA. Research networks could
involve more organizations that are critical local players in
deployment. The latter are often different than the research
intensive organizations.
• Supplement the concept of ERA with a concept that extends to
deployment, and to the linkages between research and
deployment, following the higher emphasis on innovation and
demand side effects in Europe today.
• Develop a local/regional deployment strategy as part of IST-RTD
projects, when program objectives include dissemination and
application, since the deployment efforts, capabilities and skills
are to a significant extent different than those relating to research.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University
Policy Recommendations (2)
• Understand better the organizations that link knowledge “hubs”
with local economies. FP knowledge “hubs” are often international
universities and research institutes, traditionally weak in local
economies of Europe. Programs will depend on other, often smaller
players from the local private sector to deploy. The linkages
between the two types of players are of critical importance.
• Create an on-line information center/directory of regional
deployment assistance to help improve access to information.
• Streamline the application process to regional/national/European
activities for small business and research institutes.
• Create virtual technology transfer centers that focus on creating
feedback loops at the local level.
Nicholas S. Vonortas
The Center for International Science
and Technology Policy
The George Washington University