Science and Technology Metrics for Innovative Regions

Prepared for CICEP by Global CONNECT and Mary Walshok, University of California, San Diego

Asheim, B.J. and M.S. Gertler. “The Geography of Innovation: Regional Innovation Systems” in The Oxford Handbook of Innovation, J. Fagerberg, D.C. Mowery, and R.R. Nelson, editors, 2005, Oxford University Press: Oxford.

The authors of this book chapter explore issues around why knowledge-intensive economic activity tends to be geographically concentrated, and increasingly so. They find that geographic proximity enables tacit knowledge flows, particularly in areas where the knowledge is complex. They also describe several types of regional innovation systems and how they are influenced by a framework of national institutions. Lastly, they examine the relationship between local and global knowledge flows and conclude that firms in knowledge-intensive industries must maintain connections external to their home region in order to remain informed of cutting-edge developments that may affect their industry.

Audretsch, D.B. and A.R. Thurik. “What’s New about the New Economy? Sources of Growth in the Managed and Entrepreneurial Economies” Industrial and Corporate Change, 2001, 10(1): p. 267-315.

Globalization, which has come about through advances in telecommunications and computers, combined with the availability of low-cost, high-skilled labor in Asia and Central/Eastern Europe, has resulted in a shift from the oligopolistic managed economy of the previous post-war decades to a knowledge-based entrepreneurial economy driven by many small and medium-sized firms. Despite the ability to move information rapidly across the globe, knowledge – particularly tacit knowledge important to innovation – tends to be concentrated in localized networks embedded in innovative clusters.

Auerswald, P., et al. “Placing Innovation: A GIS Approach to Identifying Emergent Technological Activity” in Project on Understanding Regional Innovative Capacity, 2007, National Institute for Standards and Technology.

This report offers a new approach to measuring emergent regional technology innovation capacity by utilizing GIS tools to map the concentration of 26 indicators. Indicators were grouped according their relevance to innovation infrastructure, social capital, creativity and culture, and economic context and public policy. The core finding of the report is that while levels of innovation activity are highly concentrated in a few regions, when looking at rates of change, science-based innovation is occurring in many regions across the United States that are less known for innovation.

Britt, R. “Universities Report Continued Decline in Real Federal S&E R&D Funding in FY2007” 2008, National Science Foundation.

In FY 2007, federally funded academic R&D expenditures rose by 1.1% in current dollars. When adjusted for inflation, this represents a 1.6% decline from FY 2006. This follows a 0.2% decline from FY 2005. This is the first time a two-year decline has been reported since NSF began tracking such expenditures in 1972. In terms of overall S&E funding (from all sources), university R&D expenditures for FY 2007 were $49.4 billion. When adjusted for inflation, this represents a 0.8% increase from the prior year.

Castilla, E.J., et al. “Social Networks in Silicon Valley” in The Silicon Valley Edge, A Habitat for Innovation and Entrepreneurship, C.M. Lee, et al., editors, 2000, Stanford University Press: Palo Alto, CA: p. 218-247.

The authors examine the critical roles social networks play in the development of Silicon Valley’s high technology economy. These networks facilitate labor mobility, knowledge flows, the identification of resources (e.g. financing, intellectual property, business support services), and linkages between universities and the private sector. In short, these networks allow for pre- and post-transactional trust-based relationships to form, often in the form of a myriad of “weak ties.” Boundary-spanning institutions, such as university-based industrial affiliate programs and research centers are mechanisms that support the growth of these networks.

Coccia, M. “Spatial Mobility of Knowledge Transfer and Absorptive Capacity: Analysis and Measurement of the Impact Within the Geoeconomic Space” Journal of Technology Transfer, 2008, 33(1): p. 105-122.

This report examines the impact of geographic proximity on knowledge transfer flows between research institutes and small companies in Italy. It finds that there are a higher number of interactions between knowledge creators and users if they are geographically close to one another. This translates into knowledge having a higher economic impact the closer it is to the source of knowledge.

Cortright, J. and H. Mayer. “High Tech Specialization: A Comparison of High Technology Centers” in The Brookings Institution Survey Series, 2001, Brookings Institution.

This report examines 14 high technology metropolitan regions in the United States and finds that the regions tend to specialize in a few products or technology, as observed in employment concentrations, patent activity, and venture capital flows. The authors suggest that economic development strategies should be based on a region’s inherent strengths and capabilities. It is nearly impossible to build a high tech cluster “from scratch” without some kind of foundation.

Cross, R. and A. Parker. The Hidden Power of Social Networks: Understanding How Work Really Gets Done in Organizations, 2004, Cambridge, MA: Harvard Business School Press.

Although this book focuses on social networks in large multidisciplinary organizations such as their IBM sponsor, the methodology and insights also apply to social networks active in regions. It offers approaches to analysis of social networks useful to promote collaboration by bridging disconnects between subgroups, identifying key players who may be bottlenecks to knowledge flow, and identifying untapped expertise. Appendices offer sample surveys and tools for promoting network connectivity and strengthening ties.

Daft, R.L. Organization Theory and Design, 2006: South-Western College Pub.

One of the most frequently referenced texts on organizational management, this book presents theory and present day examples on how companies can adapt to rapidly changing market conditions. Topics include structural design, managing information flow, organizational culture, innovation, decision making, and building external relationships.

Feldman, M.P. “Location and Innovation: The New Economic Geography of Innovation, Spillover and Agglomeration” in The Oxford Handbook of Economic Geography, G.L. Clark, M.P. Feldman, and M.S. Gertler, editors, 2000, Oxford University Press: Oxford, p. 373-394.

This paper reviews recent empirical studies of the role location plays in innovation. It finds that knowledge spillovers that lead to new economic activity do tend to be geographically bounded. Patent citation data does reinforce this, although the effects decay over time and are industry dependent. Human capital, notably the presence of “star” scientists also may influence startup creation and industry growth. Additionally, the type of knowledge (tacit versus explicit) and the type of firm (startup versus mature) may also influence knowledge transfer within a region. The paper concludes that evidence suggests that the degree to which location matters depends upon the type of activity, the stage of company development, and the composition of complementary activity within a location.

Florida, R. Rise of the Creative Class, 2002, New York, NY: Basic Books.

Florida examines the role of creativity in our increasingly knowledge-based economy and finds that a large set of Americans, 38 million – or more than 30% of the workforce – make up what he calls the Creative Class. The Creative Class is comprised of perse range of backgrounds and occupations, including artists, scientists, writers, engineers, entertainers, and others who create new ideas and new innovations. These inpiduals also tend to agglomerate with others who are like-minded, reinforcing the clustering effects found in places such as the Silicon Valley and New York.

Florida, R. “The World is Spiky” Atlantic Monthly, 2005, 296(3): p. 48-51.

Contrary to Thomas Friedman’s claim that advances in communications technology enable innovation to occur anywhere in the world, Florida presents several maps showing that economic and innovative activity is highly concentrated in a few regions. These high-performing regions attract clusters of creative people and companies in part due to amenities, but also because of the productivity advantages, economies of scale, and knowledge spillovers they receive for being in a dense environment. Florida concludes by warning that the gap between the “have” and “have not” regions is growing, risking discontent that could inhibit innovative progress. Managing the disparity will be a major challenge in the coming decades.

Florida, R. Who’s Your City: How the Creative Economy is Making Where You Live the Most Important Decision of Your Life, 2008, New York, NY: Basic Books.

Despite the flattening effects of globalization, Florida’s book describes the growth of a handful of mega-regions through clustering effects while other regions lag behind. He notes that different cities have different personalities based upon the types of people that live there, and then goes on to rank them according to metrics such as economic output, average income, number of star scientists, levels of personal satisfaction, age distribution, and other demographics. He then presents a method for determining which city may be best to locate to depending on the inpidual’s personality, stage in life, and goals.

Fowler, J.H. and N.A. Christakis. “Dynamic Spread of Happiness in a Large Social Network: Longitudinal Analysis Over 20 years in the Framingham Heart Study” BMJ, 2008, 337: p. a2338.

An individual’s happiness depends, in part, on whether others in the individual’s social network are happy. Those in the core of the social network tend to be happier than those on the periphery, and happiness is “contagious” up to three degrees of separation between individuals.

Gittleman, M. “Does Geography Matter for Science-Based Firms? Epistemic Communities and the Geography of Research and Patenting in Biotechnology” Organization Science, 2007, 18(4): p. 724-741.

An analysis of scientific journal publications and patenting by biotechnology firms found that the geographically clustered teams of researchers are more likely to publish papers that are subsequently cited in the authoring firms’ patents, whereas teams that are globally dispersed produce papers that are more highly cited in the scientific literature, but less cited in the authoring firms’ patents. This indicates a linkage between geographic proximity and commercial innovation.

Grandi, A. and R. Grimaldi. “Exploring the Networking Characteristics of New Venture Founding Teams” Small Business Economics, 2003, 21(4): p. 329-341.

This paper examines aspects of the formal and informal networks founders of academic spin-off companies establish and interact with. The character and frequency of the interactions can affect the performance of the spin-off company. The authors note that improvement of linkages between external agents and universities may foster opportunities for spin-offs by creating a network of key relations, from which entrepreneurs can gain access to new information and resources.

Hargadon, A.B. “Brokering Knowledge: Linking Learning and Innovation” Research in Organizational Behavior, 2002, 24: p. 41-85.

Innovation can be facilitated by knowledge brokers – inpiduals or firms with perse experiences who bridge multiple domains by taking knowledge from one context, possibly combining with other types of knowledge, and applying it in a new context. Organizations that do not innovate are locked into a certain type of learning behavior that prevents them from being aware of the new uses of knowledge they already possess. Knowledge brokers have an advantage in that they bring in an outside perspective and are not bound by locked-in thinking. Hargadon notes that for new ventures to succeed, entrepreneurs must also build new ties around the opportunity in order to exploit the differential advantages of the innovation. From these new ties, a community may emerge, providing a positive feedback loop in terms of legitimacy and social capital.

Johansson, M., M. Jacob, and T. Hellstrom. “The Strength of Strong Ties: University Spin-offs and the Significance of Historical Relations” Journal of Technology Transfer, 2005, 30(3): p. 271-286.

University spin-offs are often dependent on a small network of strong ties (usually with the home department of the university from which the technology or company founders come from) with high degrees of trust and informality. Strong ties can be difficult to maintain over time. Wider networks of weak ties (which may develop into strong ties later) may be better. Mutual interests, informality, and bidirectionality of knowledge flows build the necessary trust that underpins the relationship.

Lee, C.M., et al., editors. The Silicon Valley Edge, A Habitat for Innovation and Entrepreneurship, 2000, Stanford University Press: Palo Alto, CA.

The contributors to this edited volume describe the success of Silicon Valley’s economy as due to its distinctive collection of people, firms, and institutions dedicated to the region’s particular industrial activities. The Valley’s focus on the intersection of innovation and entrepreneurship is evidenced by the many specialized institutions and inpiduals dedicated to helping startups bring new products to market. These include universities and research centers, specialist suppliers, and local services – from chip designers to software writers; from angel investors and venture capitalists to commercial banks; from patent and venture lawyers to marketers, headhunters, accountants, and more. These people, firms, and institutions are linked by the accumulation of shared conversations, projects, and deals that, over time, have yielded a treasure trove of rich and productive relationships. Their interactions are marked by collaboration, competition, and mutual feedback, which facilitate the critical flow of knowledge and ideas, people, and capital.

Lee, C.W.B. and M.L. Walshok. “Road Map for Collaboration: Describing St. Louis, MO’s Federally Funded Research and Innovation Assets through RaDiUS” 2006, Washington University’s Skandalaris Center for Entrepreneurial Studies.

This report presents findings from a detailed analysis of federal R&D funding to the St. Louis, Missouri region. It found that there were significant strengths in the life sciences (genomics, infomatics, and disease management), ag-biotech (plant biology and associated sciences), and aerospace. Despite these strengths, the report noted several challenges associated with commercializing the outputs of this research. For instance, the region fell far short of the amount of SBIR/STTR funding it could potentially receive, most of the aerospace R&D funding may have limited commercial opportunities, and the attempts to brand the region as a center for plant sciences obscures its greater strengths in genomics and health sciences.

Lee, C.W.B. and M.L. Walshok. “Road Map for Collaboration: Identifying University of Missouri at Columbia’s Federally Funded Research and Innovation Assets through RaDiUS” 2006.

This report presents a comprehensive analysis of federal R&D funding to the University of Missouri at Columbia during the 11-year period of 1993 to 2003. It finds that the university does have world-class strengths in health and disease management, health informatics, and agricultural research. The report also finds that these strengths have not translated into regional economic development opportunities, with a notable indicator being the very low number of SBIR/STTR funding recipients and the lack of health informatics firms.

Lee, C.W.B. and M.L. Walshok. “Road Map for Collaboration: Identifying University of Missouri at Rolla’s Research and Innovation Assets through RaDiUS” 2006, Washington University’s Skandalaris Center for Entrepreneurial Studies.

This report presents a comprehensive analysis of federal R&D funding to the University of Missouri at Rolla during the 11-year period of 1993 to 2003. In comparison with other universities and research centers examined (Washington University, the Danforth Center, and the University of Missouri at Columbia), Rolla’s research capacity manifests in the engineering sciences and may be a source of innovation and entrepreneurship. However, despite a high number of SBIR/STTR recipients, there have been no “home run” success stories. The report concludes with questions aimed at what role the university should play in facilitating successful commercialization and possibilities for complementing the life and health sciences strengths of other parts of the state.

Lee, C.W.B., M.L. Walshok, and H. Stern. “Greater Philadelphia’s High Tech Workforce Training Capacity: A Survey of Philadelphia’s Continuing Education Programs for Biotech and IT Industry Clusters” 2003, New Economy Strategies, Innovation Philadelphia, and Greater Philadelphia First.

This report analyzes how well the continuing education system in the Philadelphia region is integrated with its biotechnology and IT industries. The report finds that while education providers are producing a significant amount of degree and certificate holders in absolute terms, the percentage with degrees in S&T fields is lower than that found in San Diego. The report also finds that the region’s research universities are noticeably absent in providing continuing education for post-baccalaureate S&T workers. Whether this is due to a lack of demand by companies or students, or by a lack of response by the education providers, the answer is unclear. The report concludes by recommending a dialogue between education providers, civic leaders, and the private sector how best to address this issue.

Nicolaou, N. and S. Birley. “Social Networks in Organizational Emergence: The University Spinout Phenomenon” Management Science, 2003, 49(12): p. 1702-25.

This paper analyzes the influence social networks play in the creation of university spin-off companies. These networks benefit entrepreneurs by providing them better opportunities to identify market niches, access to information and resources, market information cues that can influence timing, and referrals that lead to recommendations and evaluations. The authors suggest that a facilitative network structure (e.g. university-organized networking events, technology showcases, etc.) better enables academics to become more involved in the technology transfer process.

Popp, D., T. Juhl, and D.K.N. Johnson. “Time in Purgatory: Determinants of the Grant Lag for U.S. Patent Applications” 2003, National Bureau of Economic Research.

This report examines the recent increases in the amount of time it takes between patent application and the granting of the patent (patent pendency). The authors find that pendency varies by technology groups and the type of assignee. For instance the average lag time for miscellaneous patents was 25.2 months and 44.6 months for biotechnology patents. In terms of assignee types, patents from hospitals, labs, and universities took longer than those submitted by other assignees. This may be due to those patents being for more complicated technologies and have a greater number of claims.

Powell, W.W. and S. Grodal. “Networks of Innovators” in The Oxford Handbook of Innovation, J. Fagerberg, D.C. Mowery, and R.R. Nelson, editors, 2000, Oxford University Press: Oxford. p. 56-85.

This chapter examines the increasing role interorganizational networks play in the innovation process, and presents a typology of four kinds of networks characterized by their degree of formality (from informal to contractual) and openness (highly fluid to closed membership). How tacit or explicit knowledge is affects how well knowledge transfer takes place within the different networks. Also examined is the issue of whether strong or weak ties better support innovation. The authors feel that different ties provide for different needs – strong for high degrees of trust and the exchange of tacit knowledge; weak for transferring novel, explicit information.

Saxenian, A. Regional Advantage: Culture and Competition in Silicon Valley and Route 128, 1996: Harvard University Press.

Silicon Valley’s boundary spanning social structures and institutions provided a framework for mutual learning and adjustment. This is reinforced by geographic proximity. Informal conversations aid information exchange, and trust is built through consistent delivery of good information. Networks enable labor mobility between firms (aids knowledge transfer), provide access to financing (venture capital funding fuels startup company growth), and offer referrals to service providers (intellectual property attorneys, accountants, etc.) who have additional contacts.

Saxenian, A. “Networks of Immigrant Entrepreneurs” in The Silicon Valley Edge, A Habitat for Innovation and Entrepreneurship, C.M. Lee, et al., editors, 2000, Stanford University Press: p. 248-275.

Saxenian describes the role of immigrant entrepreneur networks in the growth of Silicon Valley’s high technology economy. Over time, informal social networks developed into boundary-spanning professional associations that provided members with access to information, resources, and support structures. Examples are given of Chinese and Indian professional associations and how they simultaneously support ties at a regional level and with regions in the home country.

Switzer, B.R., M.L. Walshok, and C.W.B. Lee. “Greater Philadelphia’s Research Capacity and Future Dynamism” 2003, New Economy Strategies, Innovation Philadelphia, and Greater Philadelphia First.

This report presents detailed analyses of federal R&D funding for each of the eleven counties that comprise the Greater Philadelphia region. With more than $15 billion in R&D funding from 1991 to 2001, the region is one of the largest recipients in the United States. The two largest R&D performers were Boeing and the University of Pennsylvania. Despite the strengths in aerospace and the life sciences, there remain several challenges. Much of the aerospace work is mission oriented, as opposed to basic in character, which may limit its dual use commercial opportunities. In life sciences R&D funding, the University of Pennsylvania was among the top three universities in the country. However, the university is located in a heavily urbanized area, whereas many of the life science companies in the region are located in the suburbs. This leaves the research somewhat geographically disconnected from those who could commercialize the outputs. The report suggested additional work to characterize the region’s research strengths at a more granular level both within the university and the private sector. It also recommends several models to better link academia with the private sector.

U.S. Census Bureau. North American Industry Classification System, 2007.

The North American Industry Classification System (NAICS) is the standard used by federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.

Walshok, M.L. Knowledge Without Boundaries: What America’s Research Universities Can Do For the Economy, the Workplace, and the Community, 1995, San Francisco, CA: Jossey-Bass Publishers.

Walshok’s book examines the role of the research university in a postmodern society in which its work, and the knowledge it creates, is often criticized as irrelevant to the immediate needs of the public. The first part of the book examines how to define and integrate the various competing demands from knowledge of the public and the traditional role of the university. In the second part of the book, several case studies from leading universities are used to illustrate ways in which institutional mechanisms and organizational structures are employed to meet the various needs of the public, including economic development, nurturing civic engagement, and enhancing human capital. The final chapter suggests a reconceptialization of the role of the research university around multiple activities supporting knowledge rather than around the functions of research, teaching, and public service.

Zucker, L.G., M.R. Darby, and J. Armstrong. “Geographically Localized Knowledge: Spillovers or Markets?” Economic Inquiry, 1998, 36(1): p. 65-86.

This paper found a strong linkage between regions with universities that had high quality, innovative “star” scientists and the growth of biotechnology clusters in those regions during the 1980s. As noted in the paper “Intellectual human capital tended to flourish around great universities, but the existence of outstanding scientists measured in terms of research productivity played a key role over, above, and separate from the presence of those universities and government research funding to them” (p. 302).