Innovation and regional development

Abstract

This paper is based on the knowledge gained from working with two industrial networks from the county of Østfold in Norway. There is a particular focus on the creation of networking arenas and on the development of these arenas for better co-operation between the companies in the network. Much of the empirical knowledge has been achieved by interviewing participants from the networks and by active participation in co-operation projects. The theme is innovation processes in industrial networks, with special attention on how it is possible to enhance the innovation capacity of the networks. We discuss innovation processes in industrial networks as a part of regional innovation systems, because innovation processes in industrial networks cannot be fully understood without understanding how this also relates to the surroundings. We discuss how good relationships, continuous change and strategies for knowledge creation are important factors for innovation in networks. This could be achieved by following the principles from co-generated learning processes (such as a search conference). The principles could be adapted and specially designed for each network in a way that increases the quality and efficiency of the co-operation processes.

Appendix

1.1 Mould making industry

Østfold county participated through the spatial development programme REGINN (Regional Innovation)—initiated by the Norwegian Research Council in 1996—as a part of their ambition to meet challenges connected to reduced competitive power in the industrial sector. The industrial structure in Østfold is based on some larger enterprises offering market opportunities to a wide range of SME in different categories. Gradually downsizing—and even closing down companies—due to global changes in the economy, represented an increasing need to carry out actions. Focus on the plastics and mould making industry, as a part of a bigger mechanical and engineering industry, was identified as a genuine cluster in this region.

The mould making companies were invited to participate in a development programme motivated by the knowledge and facts based on initial analysis that found a common experience of an accelerating competition from other countries. Specially, the mould making industry in Portugal, which was said to be very effective in both delivery time and costs, was “benchmarked”. An initial SWOT analysis was carried out in a workshop June 1999, gathering competitors, customers, knowledge institutions and consultants. Typical SME challenges as low profitability, high costs and low degree of specialization including both market, product and production processes force the companies to find ways out of the situation. The reason for their interest in participating in the programme was the fact that they gradually acknowledged the necessity to cooperate together and with external competencies and knowledge institutions.

The workshop resulted in a project proposal and was followed up by a rather detailed planning which described the ambitions, the goals and potentials if it succeeded. The economical potential was identified clearly and directly connected to necessary solutions: binding on strategic cooperation internal and external to ensure necessary resources to gain competitive force and delivery capacity, delivery precision and shortened delivery time to meet the customers need of “reduced time to market” in their product development processes.

Critical challenges in this project have been how to make sense for the different parties and how to obtain a clear vision (goals) and a driving force. Financing external competencies to ensure continuous project and process management over a period of time was experienced as critical, but the REGINN-programme offered a great deal of decentralized freedom of action and decisions in how to define activities and distribute resources. When the project started, the available knowledge and experience on how to deal with this type of challenge was quite limited. However, the project succeeded in both allocating and creating the knowledge during the process: concerning how to define the profitable areas of cooperation, how to reduce barriers of cooperation and how to deal with different cultures and ambitions in the single company.

For the first time in Østfold in newer history, the project succeeded in establishing a new company, Scandinavian Tooling Group. Nine competing companies signed in august 2002 based on a common created system of solutions taking care of the different needs in order to let the single companies exist but even cooperate together against the common external possibility: to expand the market through cooperation.

1.2 The industrial network at Øra, Fredrikstad

As the following listing shows, the network partners represent widely different branches. Company sizes range from some 300 employees on the high side to 10–15 on the low side. Their common denominator is that they are located within a radius of 4–500 m (all except Mills and Unger).

• Kronos Titan: titanium pigments

• Denofa: fish- and vegetable oils

• Frevar: municipal waste handling and energy production

• Kemira: chemicals

• Borg harbour: harbour facilities

• Gyproc: gypsum board

• Reichhold: polymers

• Unger: chemicals

• Mills: margarine and fruit juices

• Jotun: paints

• Masse Gjenbrukssenteret: handling of industrial waste

• Ødegaard Gjenvinning: handling of industrial waste

The Industrial ecology -network development has been organised as a project, where representatives from industry, local/regional government and Østfold Research Foundation (STØ) participate in a steering group. This group also functions as a local/regional LA 21 arena for discussion and exchange of information between important regional actors and a link to local/regional planning in the public sector.