3-3 THEORY, POLICY AND INSTITUTIONALISATION

An Approach to the New Regionalism Debate

The concepts such as clusters (Porter, 1990), localised learning systems (Lorenzen, 2001), regional innovation systems (Cooke, 1998) and learning regions (Florida, 1995) all seem to have played a role in the institutionalisation of regional policy learning that involves both research and policy communities (see Lagendijk and Cornford, 2000:216).

Analysts such as Castells and Hall (1994), Martin (2001) and MacLeod (2000) raise questions relating to “the inter-relations between academic critique, policy prescription, power networks, and the social construction of knowledge” (MacLeod, 2000:227-8).

For example, Lovering (1999), in a critical article on what he terms the ‘New Regionalism’, points to an intimate connection between the “construction of knowledge in the research communities” and “the policy agendas of powerful institutions” to the effect that “theory has been led by policy” (Lovering, 1999:393). It is considered in this thesis, however, that theory can be led by policy. Theory can be shaped by policy but it cannot be governed by policy. Theory needs to be robust enough to be led as well as to lead policy. In light of this, to examine the symbiotic relationships between theory, policy and institutional practices is important.²⁰

Careful investigation is needed with regard not only to the formation of the theory but also to the ways theoretical concepts are applied within the specific local

20 Rhys Jones (2001:284) points out that much conceptual and empirical research has focused on the

“methods through which regions located in various under-performing states may replicate the institutions, policies and strategies adopted within successful regions such as Silicon Valley in the US and Baden-Württemberg in Germany” (see also Lovering, 1999). Jones goes on to argue that academic researchers and policymakers often advocate the “deployment of a series of institutions and practices within given regions, so that they may foster the political and organisational infrastructure necessary for economic growth” (Jones, 2001:285).

socio-economic conditions in which individual institutions are embedded. For example, in terms of policy implementation, the challenges to the aforementioned innovation systems are multi-faceted, and particularly difficult in the case of lagging regions. ²¹

The principal difficulty of implementing policy strategies which aim to enhance collective regional learning can be found in the very ‘tacitness’ of the focus of such policies. Economic development practitioners, particularly those located in less prosperous regions, need to ensure the right policy conditions exist to build soft infrastructures such as conventions, trust-based interactions and civic cultures, which are inherently intricate and difficult to transplant. Developing new routines with respect to intangible assets or Storper’s ‘untraded interdependencies’, especially trust, informal know-how trading, reciprocity and so on, requires time, resources, and, among others,

“a collective vision of regional renewal” (Morgan, 1997: 497). The economic decline of several decades in LFRs will not be reversed overnight. Indeed, their remaining interregional inequality and social insecurity cannot be overemphasised.

Given the particular interest of this thesis, the following chapters focus on the way institutions have reacted to theories and policy based on theories. By doing so, it is possible to illustrate the strategic actions of agents within a strategically selective context which is shaped by policies but is constantly being transformed by these strategic actions of agents (see Chapter 2, p.30-1). Here the main conceptual framework, namely regional innovation systems, is discussed in relation to the role played by universities. In Appendix 3, two other theoretical concepts (the learning region and

21 Amin stresses the development problems in less-favoured regions (LFRs): “The culture of command, hierarchy and dependency that characterises so many LFRs has stifled the formation of a reflexive culture among the majority of its economic institutions, and consequently prevented the encouragement of rationalities geared towards learning and adaptation. To correct this failing, considerable policy attention needs to be paid to the nature of organisational and management cultures and actor rationalities which circulate within a region’s dominant institutions. Only too often, policy actions has sought to introduce new players and institutions in a region, without giving due regard to the dominant ‘mind set’ and its effects on innovation and adaptability” (Amin, 1998 cited in OECD, 2001a: 24).

cluster) are reviewed in order to reveal the way theories influence policies and agents’

strategic actions. Thus, the aim of this part is to illuminate the way theory and policies interact through such strategic actions within strategically selective contexts.

Paradox of Universities within Regional Innovation Systems

As mentioned in Chapter 1 (p.19), in the light of the roles played by universities and institutional networks at a ‘regional’ level, two key questions can be raised:

• What are the implications of the regionalisation of innovation systems to universities as knowledge institutions?; and

• Can universities as collective entities be considered as part of the innovation

system of their region?

Universities and other public organisations are seen to play a central role for some localised learning and innovation systems because they can carry out R&D and can function as a pool of locally developed knowledge (Lorenzen, 2001:177). Another reason why greater pressure is now put on universities to take the lead in regional economic development, apart from the one sees them as sources of potential knowledge commercialisation, is that they are among the few organisations in any given region with “legitimate authority to speak knowledgeably” on science, technology and innovation policy to support the regional development (Cooke, 2002:50).

There is some evidence that in ‘successful regions’, universities play a big role in facilitating innovation and learning processes (see Chapter 1, p.12).The roles played by universities in local development processes have been acknowledged by several geographical studies and by researchers in other areas (Peters, 1988; Saxenian, 1994;

SQW, 1988; 2000a; Varga, 2000). Recently, policy communities in many countries have come to view universities as the knowledge base at the heart of the

knowledge-based economy (OECD, 1996; DTI, 2001).

At a conceptual level, it is argued that higher education plays a key role in the processes of industrial innovation, and university-industry links and collaboration are crucial for the efficiency of that process (Schuetze, 2001). Universities are often seen as central parts of a regional innovation system (Cooke et al., 2000a: 18;Varga, 2000:141;

Schuetze, 1996a, b; see also Chapter 1, p.3). Nevertheless, it has been pointed out that the successes of regional technology policies promoting innovation from R&D at universities are surprisingly limited in many European regions with a few notable exceptions. As some authors point out, universities are seen to be difficult to co-ordinate as part of regional strategies (Lorenzen, 2001:177; Lagendijk and Rutten, 2003:217;

Waters and Lawton Smith, 2002:636).

Universities’ priorities in the relationships with their regions/localities and their stakeholders are quite complicated (Chatterton and Goddard, 2000:478).²² A university is embedded in many different types of ‘community’: some local, some global, some national, some overlapping and interacting, some barely recognising each other (Charles, 2003:13). For some universities, to become a regional institution of higher education has been associated with a negative image, seen as “a source of stigma” (Duke, 1999:23). On the other hand, regional partnership can be a route to international research standing (Duke, 2002: 34). Thus universities are difficult to co-ordinate as regional players, partly due to their status as “autonomous institutions with allegiance to multiple territories” rather than to specific regions as such (Waters and Lawton Smith, 2002:636).

22 Goddard et al. (1994) point out that there are different aspects of a university definition of its local communities, and that the university’s perception of what constitutes the local communities is influenced by a differentiated and contested set of relationships. Many universities have a “tiered” definition of their localities which to some extent corresponds to the tiered structure of local government (Charles, 2003:14).

In the UK, universities seem to distinguish their local area from the ‘region’ which is defined by central government (see Goddard et al., 1994).

It is important here to consider the geographical dimensions governing the university’s knowledge production in a wide structure. There are shifts in the models of territorial development. First, as mentioned already, there is a shift from a national technological framework towards a regional institutional model. The national innovation system literature (e.g. Freeman, 1992) acknowledges that universities catalyse technological advances. The debate since the late 1980s and 1990s has centred on the issues of arrangements for and settings of university-industry co-operation, and the factors enhancing and facilitating this co-operation that would enhance innovation.

These included science parks and ‘technopole’ developments (see Massey et al. 1992;

SQW, 1988; Castells and Hall, 1994). The focus has been primarily on the issues of the creation of high-technology firms and technology transfer from research to industry. In

this model, the university is seen as providing R&D and primarily scientific and technological knowledge, principally in the national innovation system.

As already discussed, a growing body of literature today suggests that there is something distinctive about innovation as a ‘localised’ process, as distinct from a national phenomenon, in which proximity, repeated transactions, routine practices, shared norms and identity combine to produce innovative outcomes. For firms, it is generally recognised that their competitive performance is influenced by the characteristics of their immediate environment. National and local government, as well as other agencies with an interest in economic development, are interested in creating local and regional environments that are attractive for innovation, and in sustaining and strengthening those that already exist. Many scholars emphasise the importance of

‘regionally embedded knowledge’ and the shared norms and values which allow effective organisational as well as individual learning (Maskell and Malmberg, 1999).

However, as already mentioned above, there is an ambiguity about the scales at which

innovation and learning really occur and the relationships between national, regional and sub-regional policy instruments (see above, p.74-5).

A growing number of public agencies concerned with local and regional development are looking to universities to play a key role, and more importantly, have financial resources at their disposal to encourage the “localisation of universities”

(Goddard, 1997, 24). ²³ The growing contribution to universities made by regional and city governments in some national systems has been recognised (Clark, 2001:14). It is argued that, for universities, with fewer public resources available for higher education, there will be a need to place a higher priority on being “responsive to their local and regional communities’ needs” and on being “useful to society” in order to receive public support (Shattock, 1997:27) and, become “a bridgehead to the global community”

(Shattock, 1999: na). For universities, academic entrepreneurship has become both “an organisational growth regime” and a “regional economic and social development strategy”(Etzkowitz, 2003:110).

There are internal drivers which determine the behaviour of universities. There are also external drivers which influence universities. For example, at a regional and local level, ‘industry-academia-government’ links are shaped by several factors as identified by Charles and Howells (1992).²⁴ For industry, local authorities and regional development agencies, universities are increasingly seen as local assets to be exploited

23 The issue of the regional role of higher educational institutions has been examined in several national policy contexts over time and across countries. Whilst the role of universities in regional development has long been recognised, it was not, however, explored systematically until the early 1990s. In the 1960s, many governments used universities as tools of regional development to promote regional convergence between core and peripheral areas. Thus, although regional issues have existed for universities since at least the1960s, an understanding of these was not broadly shared amongst many of the established universities. Since the mid-1990s, several authors have drawn attention to the issues specifically involving a university as ‘a regional actor’ (de Gaudemar, 1997; Chatterton and Goddard, 2000; Lynton, 1996).

24 These include the nature of local outside representation on the university’s governing bodies (e.g.

Senate, Council), the provision of incentives or mechanism funding from regional organisations, and the perceived role of institutions within a national system (Charles and Howells, 1992:93).

for the benefit for the regional economy. However, there are few theoretical and empirical underpinnings that have explored the formation of ‘triple helix’ links between academia, industry and government especially at the regional level as part of regional innovation systems.

These geographical processes affect the choice and strategies of universities.

The different roles and functions ascribed to a university at various geographical levels are becoming highly complex, and the university will need to share more effectively some of its key functions with other institutions in society (Meek, 2000:23). Davies (1998), in a report for the Association of European Universities, stresses the growing urgency for HEIs to take engagement with external partners seriously:

In order to respond better to the needs of different groups within society, universities must engage in a meaningful dialogue with stakeholders…Universities which do not commit themselves to open and mutually beneficial collaboration with other economic, social and cultural partners will find themselves academically as well as economically marginalized (Davies, 1998 quoted in Chatterton and Goddard, 2000:477).

Dialogue between the universities and their stakeholders depends upon adequate communication practices and networks. In such a context, how far universities are able to co-operate with other actors to cover a broad range of knowledge production depends on each university’s values and strategies, and on its ability to become a “network organisation” (Buesta, 2000:404).

This poses a new complex challenge for universities. The current regionalisation mentioned above (p 61-5) as the “territorialisation process” (Lawton Smith and de Bernardy 2001:7) seems to change the spatial boundaries of knowledge. There is a demand for the university to be both a regional and an international organisation in the

globalising knowledge economy whilst many of the legislative decisions for higher education institutions are made at national level. Generally speaking, a central concern for universities is where the funding comes from, and what activities should be supported from existing budgets. In the current political climate it appears that universities “can no longer have a territorially neutral philosophy” (Lawton Smith and de Bernardy 2001:6).

Universities need to be analysed within regional innovation systems, whilst the framework of these systems need to be re-constituted in relation to the universities’

diverse activities and the policies influencing institutional behaviour. At a theoretical level, universities can be allegedly integrated into regional innovation systems via the different mechanisms of academic knowledge transfers (Varga, 2000:141). In order to reveal how universities work within ‘regional’ innovation systems located within the MLG structure in the globalising knowledge economy, three schematic types of university-based innovation systems can be distinguished as useful categories (see, OECD, 2002):

• Relations involving multinational enterprises and world class universities;

• Relations between universities and high-technology small firms; and

• Relations developing in a regional context between firms/communities and the local universities.

However, universities fulfil a useful role in blurring the line between these different levels. They can regionalise world class and high technology small firm relationships and make that knowledge available to actors whose innovative locus is much more regional in character. This role has to be put in the wider context of the MLG structure in the global knowledge economy: e.g. internationalisation of university-industry relations developing through the subsidiaries of multinationals, and by

intergovernmental co-operation particularly through the European Community (Drilhon, 1993:97) as well as through the national distribution of R&D, regional knowledge transfer systems, and the strategies adopted by individual universities.

However, many of the studies are based on the experiences of a few successful high-tech regions such as Silicon Valley and Cambridge (see Chapter 1, p.12), and lack sensitivity to the circumstances of an individual locality. The ideal models of regional innovation systems and concepts such as that of the learning region (Florida, 1995;

Morgan, 1997) are tempered with ‘context-dependent factors’ relating to the geo-historical characteristics of regions, their knowledge infrastructures and knowledge transfer systems, as well as the strategies adopted by individual institutions within the region when the strategies are applied to individual localities through policy initiatives (Lawton Smith, 2000:72). ²⁵ It is also important to note that each university, or even each department, within a university has different missions and emphases with regard to the geographical levels of activities in different fields. Universities, on the whole, continue to be seen as collections of “quasi-autonomous individuals”, and they have difficulty in defining, let alone implementing, collective goals (Lynton, 1996:79).

Therefore, capturing universities as actors in regional innovation systems is a highly complex exercise.

As the following chapters reveal, this study shows that both universities and regions comprise a “complex spatially nested institutional arrangement” (Martin, 2001:204) in which knowledge is created, disseminated, applied and utilised. The question is whether there is a synergy between the different domains of institutional partnerships and networks, and how they form part of the complex web of institutional

25 Barriers to technology transfer at the local level can be explained as either “manifestations of failures in the system as a whole”, or “local difficulties” arising out of the characteristics of local firms and

institutions which Lawton Smith calls “information conditions” (Lawton Smith, 2000:72).

arrangements and strategies vertically as well as horizontally. This institutional landscape needs to be studied and analysed within a robust theoretical framework in relation to the formation and implementation of public policy.

These are the conceptual contexts where the topic of the thesis, the role of universities in regional development, needs to be located. The concepts of regional innovation systems, learning regions or clusters, which all have strong emphases on spatial proximity and innovation/learning processes, have an inherent limit in analysing the role of universities as actors with multi-spatial strategies and activities. Regions can be considered as innovation systems but the question of whether and to what extent knowledge transfer and learning occur at regional and other (national and global) levels remains empirical (see Leydesdorff et. al, 2002). Therefore the MLG framework including its inherent tensions proves to be useful.

Figure 3.1 summarises the theoretical arguments that link regionalisation, universities’ roles, and the competitive advantage of local/regional economies. The policy contexts related to this conceptual framework are examined in Chapters 4 and 5.

Universities in Multi-Level Governance Structures

In order to reveal how universities work within the ‘regional’ innovation systems, which exist within the MLG structure within the EU (see above, p.76), the diversity of activities and missions within higher education, as well as the policy instruments influencing various geographical levels of institutional activities have to be considered (see Chapter 4). This is possible by examining the strategic positioning of each institution in relation to other stakeholders both horizontally and vertically.

Whilst regional or local governments may have some influence over universities and public research institutions, the big budgets for investments like universities and scientific research are usually at national or trans-national (European) level (c.f. Drilhon, 1993: 96). National or transnational governments are good at setting frameworks for action but less so at making detailed strategy in contexts with significant geographical variation, which is supposedly the strength of sub-national governments. Thus co-ordination between national and sub-national governments is crucial. Therefore,

“joining up government actions” involving horizontal and vertical governmental relations (Cooke, 2002:8) will be necessary, including at trans-national level where appropriate.

It is important to specify the factors that stimulate regional institutional change in relation to both national and international factors and to understand the roles to be played by both private and public-sector organisations in this process (OECD, 2001a:

24). Policies are considered to be effective when integrating different aspects of the local environment such as entrepreneurship, infrastructure and training, when targeting existing local knowledge, and being selective in the number of sites activated in order to

24). Policies are considered to be effective when integrating different aspects of the local environment such as entrepreneurship, infrastructure and training, when targeting existing local knowledge, and being selective in the number of sites activated in order to