Businesses have a relatively large role to play in the
innovation system. Other key players are local, regional and federal governments,
private and public research organizations and the education system. In the most
developed countries in the world (Japan, the USA, the UK, France, and Germany,
etc), businesses are predominantly responsible for generating innovation. The
activities of the other actors in the system are aligned to what they are
doing. Market forces provide the necessary and sufficient incentives for
businesses to innovate because they stand to benefit the most. However,
businesses do not act alone. They are at their most efficient when they are
able to innovate in cooperation with other actors.
Domestic and foreign businesses are the dominant research
and development (R&D) players in China's innovation system even though it
is not as advanced as these economies. The business sector performs up to 2/3 of
total R&D, up from < 40% at the beginning of 1990. However, firms do not
yet form the backbone of the national innovation system. The rapid increases are
due to the conversion of some public research institutes into business
entities. This was done without creating the necessary conditions to enable
them to become innovation-oriented firms. However, as the innovation system
further develops and matures, the relative role played by government should
ideally decrease.
Innovation is an activity that is characterized by the
following three characteristics: 1. A long time horizon 2. High cost 3. Uncertainty.
Because of these three characteristics, private businesses may be reluctant to
invest in innovation. Economists characterize this situation as market failure. It is
often used as a justification for government intervention in a particular market.
It should only be a justification at the early stages of an innovation systems
development.
Research organizations, if they're public in nature, are
established by national governments to enhance the competitiveness of national
sectors. If they're private, they're established by trade bodies, by companies,
or by private citizens in order to achieve the same goal. National governments
often establish research organizations in sectors of agriculture, industry, and
services. The role of these organizations is to conduct R&D and to transfer
the results to potential users who then commercialize and market innovations
for lay people or specialized bodies. In some innovation systems, research
organizations play an important role in performing R&D alongside academia
and industry. In other systems, research organizations play a more peripheral
role. The role played depends on the relative role played by other innovation systems
actors.
The Chinese Academy of Science is a major research
organization in China which plays a relatively significant role. Increasingly, research
organizations are becoming compelled to commercialize their research in order
to justify the funding. This helps them generate new sources of income for
their activities and it demonstrates a relevance to social and economic
development and justifies the expenditure of public funds.
Research organizations play an especially important role in
the catch-up phase of an economy’s development, as the innovation system is developing
and strengthening. Research organizations tend to play a more important role as
compared to their role played in the most advanced innovation systems. They act
as facilitators and intermediaries in generating learning that firms and other actors
in the innovation system need to pursue in order to engage in technological
innovation. Strong linkages between research organizations and other actors can
improve innovation system performance. Such linkages are not limited to a
nation's own innovation system. They can be international in nature. Research
organizations in different countries can learn from one another in order to
enhance their own performance.
Universities are critical because they contribute to the
production of a learned work force. They also engage in advanced basic or
applied research. Their third mission is to engage in knowledge transfer, their
contribution to society. If we were to use a linear model of innovation, which
is widely used despite its shortcomings, universities are the most appropriate
institution for basic research. Theoretically, the norms of academic research
are different from industry. The goal is professional recognition and
advancement not profit making. In practice, of course, we see an overlap. Also,
there is a notion of academic freedom which allows researchers to engage or to
pursue any question of intellectual significance without outside interference.
University/industry linkages enhance innovation system performance and universities
themselves are becoming more entrepreneurial. They are starting to provide
incentives to faculty members to commercialize their research, bringing new
products and services to the market by themselves, bypassing industry.
from Coursera course, Science and Technology and Society in China. Week 3. by Naubahar Sharif, The Hong Kong University of Science and Technology
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