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European Planning Studies

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Constructing Regional Advantage:

Towards State-of-the-Art Regional
Innovation System Policies in Europe?
a a b
Bjørn T. Asheim , Jerker Moodysson & Franz TÖdtling
CIRCLE (Centre for Innovation Research and Competence in the
Learning Economy), Lund University, Sweden
Institute for Regional Development and Environment, Vienna
University of Economics and Business, Austria

Available online: 02 Aug 2011

To cite this article: Bjørn T. Asheim, Jerker Moodysson & Franz TÖdtling (2011): Constructing
Regional Advantage: Towards State-of-the-Art Regional Innovation System Policies in Europe?,
European Planning Studies, 19:7, 1133-1139

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European Planning Studies Vol. 19, No. 7, July 2011


Constructing Regional Advantage:

Towards State-of-the-Art Regional
Innovation System Policies in Europe?
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CIRCLE (Centre for Innovation Research and Competence in the Learning Economy), Lund University,
Sweden, ∗∗ Institute for Regional Development and Environment, Vienna University of Economics and
Business, Austria

The core arguments of the constructed regional advantage (CRA) approach stem from the
work that started in Brussels in an expert group appointed by DG Research of the EU Com-
mission. In 2006, DG Research launched the final report on “Constructing Regional
Advantage” as the new way of taking on and combating new challenges and problems
of globalization for European regions (Asheim et al., 2006). CRA means turning compara-
tive advantage into competitive advantage through an explicit policy push promoting a
Chamberlinian monopolistic competition based on product differentiation creating
unique products, an assumption which was fundamental for Porter’s cluster approach
also. While building on the lessons from the dynamic principle of the theory of competi-
tive advantage (Porter, 1990, 1998) as well as of the innovation system approach
(Lundvall, 2008) emphasizing that competitiveness can be influenced by innovation pol-
icies and supporting regulatory and institutional frameworks, the constructed advantage
approach recognizes the important interplay between industrial and institutional dynamics
as well as calls for greater attention to multi-level governance. What is especially high-
lighted is the role of a proactive public– private partnership and impact of the public
sector and public policy support by acknowledging to a greater extent the importance of
institutional complementarities in knowledge economies. This approach represents an
improved understanding of key regional development challenges as well as a better antici-
pation and response to the problems by addressing system failures of lack of connectivity
in regional innovation systems (RIS).

Correspondence Address: Bjørn T. Asheim, CIRCLE (Centre for Innovation Research and Competence in the
Learning Economy), Lund University, Sweden. Email:

ISSN 0965-4313 Print/ISSN 1469-5944 Online/11/071133–7 # 2011 Taylor & Francis

DOI: 10.1080/09654313.2011.573127
1134 B. T. Asheim, J. Moodysson & F. Tödtling

Increasingly, there is a strong agreement that innovation is the key factor in promoting
competitiveness in a globalizing knowledge economy. Competition based on innovation
implies choosing the high road strategy, which is the only sustainable alternative for devel-
oped, high-cost regional and national economies as well as for the future of developing
economies. For a long time, such a strategy was thought of as being identical with promoting
high-tech, research and development (R&D)-intensive industries in accordance with the
linear view of innovation. More and more, the recognition has evolved that a broader and
more comprehensive view on innovation has to be applied to retain and develop competi-
tiveness in the heterogeneity of the European regions. This implies that regional advantage
has to be constructed more on the basis of the uniqueness of the capabilities of firms and
regions than solely on the basis of the R&D efforts (Asheim et al., 2006; Malmberg &
Maskell, 1999). This reflects recent research pointing to the complexity of modern products
and their innovation processes, which requires a differentiated knowledge base perspective
(i.e. distinguishing between analytical, synthetic and symbolic knowledge) to be fully
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accommodated (Asheim & Gertler, 2005; Asheim et al., 2007). Such a broad-based inno-
vation policy is in line with the innovation system perspective of defining innovation as
interactive learning combining a science, technology, innovation and a doing, using, inter-
acting mode of innovation (Lorenz & Lundvall, 2006).
The Commission originally wanted a focus on the implementation of the R&D-based
strategy based on the Lisbon and Barcelona declarations at a regional level. However, rec-
ognition was achieved that at a regional level—in particular—a “no size fits all” approach
had to be adopted due to the heterogeneity of the European regions (Tödtling & Trippl,
2005). Thus, a Porter perspective was adopted arguing that all industries can be innovative
and that the high-tech –low-tech distinction is not relevant at a sectoral level as a point of
departure for innovation policies as the R&D intensity is not the same as innovative
capacity and that knowledge is a broader concept than R&D, and secondly, that regions
and countries should base their competitive strategy on industries that they traditionally
have been doing well in, that is, building on their technological path dependency to
achieve positive lock-in effects. However, the CRA approach differs from Porter’s
cluster approach (a) in explaining how innovation comes about in a systematic way by
building on a RIS approach and (b) with respect to the role of the government/the
public sector. As regards the explanation of innovation, Porter argues that it is a result
of just “being there”, that is, co-located in a cluster where the four determinants of com-
petition are in place.1 Thus, Porter lacks a causal explanation as the one Perroux applies
using the notion of “key” or “motor” industries (Perroux, 1970). In contrast, the innovation
system approach represents both a selection environment and a milieu for variety creation.
The dynamics of the system is secured through long-term and systemic relationships
between industry and university, with a strategic role played by policy. The innovation
system approach represented a transition from a linear view on innovation to an interactive
view, which reflects a move from science and technology policies to an innovation policy,
placing innovation at the centre of economic development. The key role played by govern-
ment and policy push is clearly illustrated in Freeman’s first book on the operation of a
national innovation system using Japan and Ministry of International Trade and Industry’s
role in initiating and orchestrating/organizing university – industry co-operation as an
example (Freeman, 1987). Later, this is further underlined in the two countries most expli-
citly applying an innovation systems policy, that is, Finland and Sweden, where the
government/public sector is very present as a key actor in the innovation policy: in
Constructing Regional Advantage 1135

Finland, in the form of the “Science and Technology Policy Council” (now renamed as the
“Research and Innovation Council”, as a result of the implementation of a new broad-
based innovation policy), and in Sweden, as VINNOVA (Swedish Governmental
Agency for Innovation Systems). The CRA approach builds on this and emphasizes an
even stronger proactive role of government and public policies in initiating public –
private collaboration in the promotion of innovation and competitiveness.
Knowledge processes have become increasingly complex in the globalizing knowledge
economy. The binary argument of whether knowledge is codified or tacit becomes too sim-
plistic to accommodate this increased complexity and provide an adequate understanding
of knowledge creation, learning and innovation (Johnson et al., 2002). Thus, a need to go
beyond this simple dichotomy can be identified. One way of doing this is to make a dis-
tinction between “synthetic”, “analytical” and “symbolic” types of knowledge bases,
which partly transcends the tacit-codified dichotomy arguing that the two forms of knowl-
edge always co-exist but in different combinations and partly that all types of economic
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activities can be innovative but that the modes of innovation differ, thus transcending
the high-tech – low-tech dichotomy. As this threefold distinction refers to ideal types,2
most activities, in practice, comprise more than one knowledge base. However, one
knowledge base will represent the critical knowledge input, which the knowledge creation
and innovation processes cannot do without.
An analytical knowledge base refers to economic activities where scientific knowledge
based on formal models and codification is highly important. Examples are biotechnology
and nanotechnology. University – industry links and respective networks are important and
more frequent than in the other types of knowledge bases. Knowledge inputs and outputs
are in this type of knowledge base more often codified than in the other types. The work-
force, as a consequence, needs more often some research experience or university training.
Knowledge creation in the form of scientific discoveries and (generic) technological
inventions is more important than in the other knowledge types, and consequently, inno-
vations are science-driven. Partly, these inventions lead to patents and licencing activities.
Knowledge application is in the form of new products or processes, and there are more
radical innovations than in the other knowledge types. New firms and spin-off companies
are an important route of knowledge application, which are formed on the basis of radi-
cally new inventions or products.
A synthetic knowledge base refers to economic activities, where innovation takes place
mainly through the application or novel combinations of existing knowledge. Often, this
occurs in response to the need to solve specific problems coming up in the interaction with
customers and suppliers, and thus, innovations are user- and market-driven. Industry
examples include plant engineering, specialized advanced industrial machinery and ship-
building. University – industry links are relevant, but they are clearly more in the field of
applied R&D than in basic research. Tacit knowledge is more important than in the
analytical type, in particular, due to the fact that knowledge often results from experience
gained at the workplace and through learning by doing, using and interacting. Compared
with the analytical knowledge base, there is more concrete know-how, craft and practical
skills required, which is provided by technical universities, polytechnics or on-the-job
training. Overall, this leads to a rather incremental way of innovation, dominated by the
modification of existing products and processes.
Symbolic knowledge is related to the creation of meaning and desire as well as aesthetic
attributes of products, such as designs, images and symbols, and to its economic use. The
1136 B. T. Asheim, J. Moodysson & F. Tödtling

increasing significance of this type of knowledge is indicated by the dynamic development

of cultural production such as media (film-making, publishing and music), advertising,
design, brands and fashion. In cultural production, the input is aesthetic rather than cog-
nitive in quality. This demands rather specialized abilities in symbol interpretation and
creativity. This type of knowledge is often narrowly tied to a deep understanding of the
habits and norms and “everyday culture” of specific social groupings. Due to the cultural
embeddedness of interpretations, this type of knowledge base is characterized by a distinc-
tive tacit component and is usually highly context specific. The acquisition of essential
creative, imaginative and interpretive skills is less tied to formal qualifications and univer-
sity degrees than to practice in various stages of the creative process.
The differentiated knowledge base approach represents one of the dimensions in the
analytical framework of the CRA project. The other dimension focuses on the institutional
and organizational contexts of the RIS in various European regions, since knowledge and
innovation interactions of firms as well as policy needs differ not just between sectors and
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knowledge bases but also between types of RIS. A RIS is made up of the subsystems of
knowledge generation and knowledge exploitation, as well as of policy organizations
and actors situated in a regional socio-economic territory (Autio, 1998; Cooke et al.,
2004; Doloreux, 2002; Tödtling & Trippl, 2005). It is characterized by both “hard” (the
mix of firms and organizations) and “soft” institutions. The latter can be described as
the ensemble of innovation-relevant routines, habits and values in a particular region, a
setting also described as a particular “innovative milieu” (Camagni, 1991; Maillat,
1998) or “innovation culture” (Saxenian, 1994; Tödtling & Trippl, 2008). The regional
knowledge generation subsystem consists of public and private research laboratories, uni-
versities and colleges, technology transfer agencies, vocational training organizations, etc.
The regional exploitation subsystem is understood as the regional production structure
made up by firms, in particular, where these exhibit clustering tendencies. When these
two subsystems are involved in the processes of interactive learning and linked to
global, national and other regional systems, it is argued that a well-functioning RIS is
in place. But the extent to which firms interact or co-operate with other firms or
knowledge-creating and -diffusing organizations (e.g. universities) differs extensively
across various sectors and regions (Tödtling & Trippl, 2005). For the policy to address
regional innovation needs in an effective way, it is, therefore, important to specify not
just the relevant sectoral knowledge bases but also the institutional setting and the
networking characteristics.
We argue, therefore, that the degree of institutional thickness and networking within
the RIS and beyond matters. Metropolitan regions are generally regarded as centres of
innovation that benefit from scale and agglomeration economies (Tödtling & Trippl,
2009). There is usually a high density of knowledge organizations and support insti-
tutions as well as a high density and diversity of firms and clusters. There are arguments
that a broad sectoral diversification favours innovation (Feldman & Audretsch, 1999;
Jacobs, 1969). Boschma and Frenken (2011), however, have shown convincingly that
related variety, that is, knowledge transfers between different but related sectors rather
than diversification or a narrow specialization support innovation. Key mechanisms for
such knowledge transfers between related sectors are mobile labour, the setting up of
spin-offs and new firms, and knowledge links between firms and knowledge suppliers.
Not all metropolitan regions, however, can be regarded as networked centres of inno-
vation. Some of them suffer from the problem of fragmentation, that is, a lack of net-
Constructing Regional Advantage 1137

works and interactive learning. As a consequence, innovation performance may be lower

than expected. Less urbanized or peripheral regions, in comparison, are usually charac-
terized by weakly developed RIS subsystems such as a lack of dynamic firms and
knowledge-generating organizations. There is often a “thin” and less specialized struc-
ture of knowledge suppliers and educational institutions. Also, networks are rather
weakly developed, in particular, those to more specialized knowledge suppliers such
as universities and research institutes. As a consequence, innovation activities are
often at a lower level and of more incremental nature compared with those of a well-
developed “thick” RIS. Industrial regions, finally, often have a higher density of firms
and knowledge organizations than peripheral regions, but compared with metropolitan
regions, they show a higher degree of specialization in particular industries or clusters.
Knowledge organizations and educational institutions are often closely fitting the
needs of the dominating industries. There can be dense networks, but also a latent
danger of “lock-in”. Policy actors in some of these regions, in addition, try to enhance
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the competitiveness and innovativeness of regional industries by applying cluster pol-

icies, which usually tend to further emphasize regional networking between firms and
knowledge and educational institutions. Such types of regions can then be considered
as “networked” RIS (Cooke et al., 2004).
The contributions to this special issue cut across the two analytical dimensions (the
knowledge base distinction and the organizational/institutional context). Read as individ-
ual contributions, some of them deal explicitly with disentangling sectorial differences
and explaining sectorial variations in the patterns of knowledge sourcing, while some of
them are more inclined with explaining variations with regard to the preconditions for
innovation due to regionally contained contextual differences. If read as a package,
however, they also contribute to further developing, questioning and supporting the
main arguments of the CRA approach and to providing useful insights into the literature
on RIS. The articles by Plum and Hassink, Johnsen, and Martin and Moodysson draw on
industry case studies aiming at empirically testing and further developing some of the
central arguments on the organization and geography of knowledge sourcing put
forward in the literature on knowledge bases. While Johnsen and Martin and Moodysson
illustrate and elaborate on potential explanations to the localized, contextualized and non-
scientific nature of knowledge sourcing in symbolic industries, Plum and Hassink display
the non-localized and scientific nature of collaboration and knowledge sourcing in analyti-
cal industries. Also, the article by Broekel and Boschma pays attention mainly to knowl-
edge base characteristics when comparing the knowledge networks of two different
industries which are often thought of as being closely related. Their analysis, however,
indicates a low degree of relatedness between the aviation and space industries in the
Netherlands, clearly illustrating the added value of applying the knowledge base approach
as a complement to more traditional ways of dealing with sector categorizations. The
article by Gülcan et al. underscores this further, applying both a knowledge base and
types of RIS distinction when comparing two textile clusters in Turkey. Their analysis
reveals the different preconditions for innovation in a predominantly symbolic textile
and fashion cluster in metropolitan Istanbul and a predominantly synthetic textile and
bathrobe cluster in the peripheral region of Denizli. The articles by Tödtling et al. and
Blazek et al. pay more attention to comparing similar types of industry clusters character-
ized by different territorially contained institutional contexts. Tödtling et al. analyse the
different preconditions for innovation and knowledge sourcing of the Austrian information
1138 B. T. Asheim, J. Moodysson & F. Tödtling

and communication technology (ICT) sector located in the metropolitan region of Vienna
as opposed to the ICT cluster in the institutionally thinner region of Salzburg. Blazek et al.
present a study cutting across the knowledge base dimension as well as the regional dimen-
sion, comparing the predominantly synthetic ICT sector in the institutionally thin Ostrava
region with the predominantly analytical biotechnology sector in the metropolitan region
of Prague. While their results, in large, support the theoretically derived assumption of the
knowledge base approach, they also, in line with the findings reported by Tödtling et al.,
ascribe explanatory value to the more general characteristics of the respective RIS. Also,
the article by Sotarauta et al. comes to a similar conclusion, stressing the combination of
knowledge base and regional characteristics as an explanation to the distinct patterns of
knowledge sourcing and contributes to further developing the local buzz – global pipeline
dichotomy by arguing for an intermediate “national buzz and pipelines|i” dimension. The
research briefing by Chaminade takes this contextual argument even further, suggesting
that regional characteristics, drawing on the cases of Pune in India and Beijing in
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China, represent the more important factors in explaining different spatial configurations
of knowledge networks. Finally, the European briefing by Almeida et al. discusses the
challenges of implementing RIS in four follower regions in Spain and Portugal, arguing
that RIS can be considered a radical innovation as a policy tool for fostering innovation
and structural change.

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2. Ideal types are a mode of conceptual abstraction where the empirical input constituting the ideal types
exists in reality, while the ideal types as such do not exist.

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