Study on national innovation capacity and international connection.

Author:Chang, Shu-Hao

National innovation capacity is dependant on a country's political and economic systems. However, after years of study, no one has been able to clearly define the mechanisms that directly influence national innovation activities. What is the effect of international activities on national innovation? Until recently, only few researches related to this question have been conducted. Research has focused on the relationships between national innovation capacity, national competitiveness (Chang & Shih, 2004; Krammer, 2009; Sartorius, 2006; Solleiro & Castanon, 2005) and industrial economy (Intarakumnerd, Chairatana, & Tangchitpiboon, 2002) and has agreed that a positive correlation exists between national innovation capacity and competitiveness.

National innovation capacity influences overall national development and progress (Hekkert & Negro, 2009; Solleiro & Castanon, 2005). In the past, research has suggested that national innovation capacity is related to technology, society, human capital and governmental governance of countries (Commission of the European Communities, 2003; Fagerberg & Srholec, 2008; Furman, Porter, & Stern, 2002; Kayal, 2008). However, from the perspective of politics, a focus on the economy and social activities of a country is too narrow. In the 21st century, technology has advanced, transportation has become convenient, and countries frequently interact with each other. Thus, it is necessary to measure the formation and effect of national innovation capacity on international activities, exchanges and internationalization perspectives.

Countries acquire international connections differently. For instance, the innovative performance of Japan typically relies on reverse-engineering import, authorization and foreign consultants; Finland prefers establishing relationships with foreign research universities and Israel depends on scientists and highly-skilled immigrants (Gandal, Hanson, & Slaughter, 2004). Besides international activities and exchange, the mechanisms and governance of a country also influence the formation of national innovation capacity (Bartels, Voss, Lederer, & Bachtrog, 2012; Chang & Shih, 2004; Ibata-Arens, 2008). Past studies (Fagerberg & Srholec, 2008; Lin, Shen, & Chou, 2010; Solleiro & Castanon, 2005) have suggested that in dynamic environments, liberation and a stable policy system influence national innovation capability.

This study explores national innovation capacity from the perspective of international connections and national mechanisms, and acquires international connection indicators using database characteristics to measure the relationship between international connections and national innovation capacity as a reference for the government.


National innovation capacity

National innovation systems can be defined as the set that influences innovation, including networks to which public and private institutions are connected. The activities of, and interactions between, institutions can trigger, guide, modify and diffuse new technology. Therefore, there is a certain degree of interaction and connection between sub-systems and national innovation capacity, which should be observed from a systematic perspective (Zeng, Xie, & Tam, 2010). Rather than a single closed system, national innovation systems should be open and provide dynamic feedback (Niosi & Bellon, 1994).

National innovation capacity refers to a composite dynamic system that can be broadly defined as a nation's capacity to maintain innovation. Past studies have suggested that national innovation capacity is influenced by human resources, knowledge creation, knowledge delivery and application, and the financing of innovation (Commission of the European Communities, 2003). According to Fagerberg and Srholec (2008), national innovation capacity consists of both technological and social capacities. Radosevic (2004) suggests that a nation's innovation capacity is influenced by absorptive capacity, diffusion and linkages, demand and R&D supply. Kayal (2008) proposes six fields in discussing national innovation systems: Science and technology policies, innovation strategies, technical manpower support services, technical support services, financial resource flow and international cooperation.

Although past research has widely discussed factors involved in national innovation capacity (Bartels et al., 2012; Chen, Hu, & Yang, 2011; Faber & Hesen, 2004; Furman et al., 2002), the relationship between international connections and national innovation capacity is seldom discussed. The focus of this study, then, is the effect of international connections on national innovation systems and national innovation capacity.

Nelson (2002) and Malerba (2005) suggest that in order to match the dynamics, the effect of external connection mechanisms and networks on national innovation systems should be considered. Given the current trend of global regional integration and multilateral connections, the concept of a national innovation system should not be limited to a specific border or territory. Thus, this study focuses on the effect of international connections on national innovation capacity, and explores the effect of investment incentives on national mechanism and of governmental incentives on the motivation of foreign and national investment. Attractiveness policies for innovation should be conceptualized as a combination of innovation policy and inward investment promotion (OECD, 2011). This study also probes into international connections and national policy mechanisms.

International connections

Niosi and Bellon (1994) argue that global interactions and international technical alliances directly affect both regional and national innovation systems. Furthermore, they suggest that, in the era of globalization, open innovation grows rapidly and actors look for potential partners with which to construct and develop global innovation networks. One of the most important characteristics of open national innovation systems is the diffusion of international knowledge. Chang and Chen (2004) observe that national innovation systems, from the perspective of knowledge management, include: Knowledge connections, knowledge transfers and system boundaries. They found that in the era of globalization, studies and conceptual development of national innovation systems are based on the idea of independent and closed systems. Thus, constructing an open system is a challenge in the development of national innovation systems. This study suggests that international interdependence guides the development of national innovation capacity. Using knowledge pipelines, countries are able to interact with each other and intentionally deliver knowledge through systematic connections. Based on the above, the main strategies in the development of an open national innovation system are transcendence from specific borders, connection with external actors and the diffusion and exchange of knowledge. As suggested by Gassmann and Enkel (2004), at a national level, the most significant difference between open innovation systems and traditional innovation systems is the emphasis on the flow of internal and external knowledge, acquisition of accumulation and knowledge cooperation with external actors.

As discussed above, international connections enhance the output of innovation (Niosi & Bellon, 1994; Taylor, 2009). Gassmann and Enkel (2004) suggest that with an open innovation paradigm, acquisition of external knowledge, export of internal knowledge and knowledge cooperation accelerate innovation. According to Fey and Birkinshaw (2005), acquisition of external knowledge is the most important predictor in terms of increasing innovation output, such as R&D performance. Kang and Kang (2009) indicate that in open innovation, the acquisition of external knowledge drives technical innovation. The methods used here include transferring messages from informal networks, personnel turnover and technical acquisition. Based on the above, this study refers to Niosi and Bellon (1994) and adopts the open innovation paradigm of Gassmann and Enkel (2004), according to which international connections accelerate the development of innovation output. Thus, this study proposes H1 below:

H1: International connections have a positive effect on national innovation capacity.

National policy mechanism: Investment incentives

The term 'mechanism' here refers to the structure, function and interrelationship between a piece of machinery and an organism. It also refers to the internal structure of a complex system, and the relationships between the regularity of its operations. Ibata-Arens (2008) notes that the 'push' mechanism of the national innovation system come about as a result of policy stimuli, while Kim and Dahlman (1992) argue that governments should invest in innovation-related studies and services in order to attract investment and innovation. Fagerberg and Srholec (2008) propose that more attention should be...

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