From Competitiveness to Inclusiveness

Global challenges and possibility of emergence of ‘Asian Innovation System’ Abstract Poverty, mortality, health, education, equality, epidemic, and environment are more relevant to the present and future of innovation system (IS) than ever. These grand challenges are drivers to for innovation for inclusive development (DID) to be an alternative Instrument of Inclusion.

It can be considered as a new concept In science, technology. D Innovation for SIT policymakers and scholars and policy makers In Southeast Asia and other emerging economies. Furthermore, it can be seen as an extension of existing Asian Innovation System (IIS) that, up till now, mainly focus on competitiveness, economic growth and wealth creation. Two major institutions within the innovation system, namely universities and research councils (U-ARC) have been continuously facilitating economic-led innovation development through research and education, but these knowledge generating bodies engage with an Informal setting In an Indirect and restricted manner.As a result, an assessment of the current awareness within this U-Arcs linkage on DID through examining activities that are potentially related to this emerging setting is crucial and timely. This paper illustrates the preliminary finding from the Online-Delphi studies of the “Cross- national Survey on University and Research Council Roles on Southeast Asia Inclusive Development and Innovation” project that covers five countries, namely Indonesia, Malaysia, the Philippines, Thailand and Vietnam.It explores the possibility of proposing an Inclusive Innovation System (IS) concept that can potentially respond to lobar challenges and while being relevant to Southeast Asia context.

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According to the study, the majority of stakeholders are not familiar with DID although there have been ongoing different subsystems that resonate this particular stream. With a vast developmental stage of institutional set-up and similar grand challenges among the countries In focus, the IIS Is facing with an Increasing complexity through a social demand and Its conventional rigidity In order to expand Its horizon to cover the dimension of inclusiveness.Keywords: Innovation for inclusive development: search system; university; research council; informal sector; inclusive innovation system; Southeast Asia 1 . Introduction Poverty, infant mortality, health, epidemics, education, inequality, and environment are among the major challenges that the global economy is coping with.

These issues affect the developmental gap define as widening social and economic “exclusion” that negatively affects an Individual quality of life, equity, and social cohesion.Recently, innovation for inclusive development (DID) has gained momentum among key international development agencies like Organization for Economic Co-operation and Development (COED) and International Development Research Centre (DIRE) as a tool for the provision of opportunities and empowerment of underprivileged people in order to enhance their “Inclusiveness”. While, “inclusive development” is a strategy marginalia and vulnerable people and groups with the opportunity to contribute to the process and benefit from its outcomes, inclusiveness is still a vague concept.In this paper, we consider it as an approach or effort to include the people facing social exclusion where “social exclusion” is defined as lacking or being denied of access to sources, rights, goods, and services as well as having the inability to participate in the normal relationships and activities, available to the majority of people in a society, whether in economic, social, cultural or political arenas into a system generally provided for society at large in terms of ability to access and opportunities for participation and decision making (Chairman and Cigarillo, 2012). In this context, DID can be defined as “innovations that improve people’s lives by transforming knowledge into new or improved ways of doing things in a place where r (by people for whom) they have not been used before” (Adapted from DIRE, 2011). 3 With transforming knowledge being one of DID main elements, universities, research councils (ARC) or equivalent institutions such as research centers or institutes and their linkages are key as knowledge producers, intermediaries, brokers and founders that can direct research to impact and benefit vulnerable groups of people.The significant unit of analysis includes research councils and their linkages to universities in addition to the conventional triple-helix of university-industry- government research relations. In section 2, this paper elaborates on how social dimension has evolved and driven an emerging paradigm shift of innovation system from achieving economic prosperity to social prosperity.

Then, it explains 7 drivers behind the movements in section 3. The methodology used to assess the perception of IS-ARC on DID is shown in section 4.The preliminary results and findings from selected Southeast Asian universities and research councils’ perception on DID are illustrated in section 5. Finally, section 6 concludes that conventional innovation system has left people with economic and social disparity, and income inequality in OTOH developing and developed countries while there are movements and driving forces that challenge such system to shift in order to be more social-oriented and inclusive.Also these driving forces and their current perception on DID are challenges for universities and research councils to go beyond wealth creation and competition.

2. Social Dimension of Innovation System Economic slump, poverty, disparity and inequality have long been persistent global issues for decades. Various organizations from public and private sector have sought ways to address these issues and, although progress has been achieved, the problems remain.One consequence has been that, since the beginning of new Millennium, there has been an expansion of innovation system (IS) paradigm from only focusing on a competitiveness to embrace the inclusiveness. Social Cohesion Landfall (2002) discusses the need for social cohesion and points out that advanced IS derives from a demand to create prosperity in an effective and collaborative manner. This learning economy and social cohesiveness concept, or Labor version of IS, was later extended by merging development studies ideology to accommodate the institutional set-up in developing and other catching-up economies.The social emission within a conventional innovation system can be seen as a success ingredient of Danish innovation system with its combination of wealth creation with be seen as a handicap, Landfall emphasizes that interaction and trust are critical factors of successful innovations in those countries. With that mindset, innovative firms engage more with other firms and employees take more active part in processes of technical and organizational change.

“Innovations are new combinations and they come out of diversity.Innovation involves the creation of new knowledge. At the same time most innovations are new combinations of old insights. They come out of an interaction where people with different talents, interests, insights and experience get together in open communication willing to share their knowledge with others. Innovation processes that neglect the needs of users are inefficient. Science based innovations that are not supported by experience based learning are not successful. Therefore innovations are best seen as outcomes of ‘collective entrepreneurship’.It means that generalized trust among people meeting at the market place and participatory democracy in working life contribute to innovation.

“5 Thus this reflects social cohesion is an indispensable element among key actors in the innovation system that drives the economy as a whole without leaving anyone behind. Social entrepreneurs and enterprises Some of the emerging key players in this social-oriented IS include social entrepreneurs and social enterprises (Chairman, 2011). This social innovation system (SIS) argues that there are not only business firm that actively engage on an innovation process, but also entrepreneurs and enterprises that adopt social- business model into the center of their economic activities.

The paper illustrates on how newcomers enter into a well-established IS and bridge formal and informal innovation dimensions for further analysis (See FIGURE 1). FIGURE 1 Source: Chairman (201 1), adapted from Malaria, F. 2002) Sector systems of innovation and production, Research policy 31 , 247-264 Chairman (2011)7 introduces the rise of new key players contributing to social-oriented innovations involving social enterprise and social entrepreneurship. The concept of social enterprise represents a paradigm shift from the conventional capitalism to a friendlier with global community and society. The main goal of the concept is to adjust the mainstream capitalism seeking minimization of profit which causes selfishness and intense competition to foster collaboration and social support while achieving optimization of profit.

Supporting social economy and social enterprise is a systemic operation emphasizing the flow of knowledge and cooperation between relevant institutions and individuals to create dynamics and positive impacts driving social transformation through existing and emerging economic activities. Figure 1 depicts the diagram of social innovation system (SIS) consisting of 3 levels of social nits: 1) Sector of social enterprise, 2) Social enterprise and 3) Social entrepreneur/ innovator that interact with each other within social economy, whose existence relies on a flow of social innovation.Main role and activity of these social units is to produce social innovation in a form of product, process or service innovation which eventually becomes innovation for public services through shared perception, advocacy, law or regulation, activities and integration as well as knowledge, learning process and technology between stakeholders and networks in order to drive social urn, emphasizes the need for conventional innovation system to shift in order to facilitate new types of stakeholders and actors in the social-oriented economy.Inclusive System of Innovation The Globulins embraced inclusiveness on its thematic report on “Learning, Innovation and Inclusive Development” with the concept widely used among international organizations such as the World Bank and the United Nations as well as increasingly appearing in documents produced by donor organizations such as DIRE (Canada), Said (Sweden), Diana (Denmark) and Nordic (Norway). Recently, Globulins Thematic port introduced inclusiveness involved in innovation, development as well as innovation system.

Globulins perceives “inclusive systems of innovation” in two different frameworks Monsoons and Andersen, 2012): 1) A positive analysis framework looks at specific components of systems of innovation such as the nature of the institutions regulating the interaction between innovations; the manner in which innovation activities use tacit knowledge and their location within communities, regions and cities; and their business-oriented specialization pattern, I. E. He products and services, the competences and capabilities. ) A normative framework focuses on how to make the system more inclusive by involving two different elements: producing more inclusive innovation for betterment of the bottom of the pyramid and enhancing inclusiveness on performance for all sorts of innovation. In this sense, it is aligned with Landfall’s work that emphasizes the importance of social cohesion among workforces in a learning economy like Denmark.Ideally we don’t want to leave behind those with fewer opportunities to learn. The same goes for the social classes, ethnic groups and regions that have been left behind and remain excluded from contributing to economic growth and from its fruit Monsoons and Andersen, 2012).

Thus, we could see three separate evolutions of social dimension in innovation system: social cohesion, social entrepreneurship and inclusive systems of innovation. Next section we discuss what could possibly be the drivers to such movements. 3.Global challenges as Drivers for Change for Innovation System There are 7 main driving forces behind a shift of IS paradigm that we discussed above with a special reference to the Southeast Asia, namely 1) regional economic and social disparity 2) Rene growth and economy 3) climate change 4) changing consumption behavior 5) informality 6) new poverty and 7) social networking. These drivers can be seen as an evolving factor that critically impacts and challenges the existing paradigm of IS which has a little say on social and human development.Economic and Social Disparity in Southeast Asia: An Innovation System Dilemma After the new Millennium, Southeast Asia has enjoyed economic growth and improved living quality, which can be seen from a constant increase in the GAP and Human Development Index (Had)9. Yet that still leaves countries in the region with relatively unimpressive Gin- coefficient’s (See Table 1). According to ILL (2010), the below figures mean these countries have high inequality of income distribution (Gin: high inequality – 35 and extreme inequality – 50) with the poorest 20 percent of the population receiving only 6.

Per cent of the country’s total income while the richest 10 per cent enjoy 26. 1 per that the per capita income is $10,000 and the Gin-coefficient is 0. 35, the richest 10 per cent of the population would receive average income of $26,114 per year, but the rarest 20 per cent would have an annual income of only $3,450.

11 Inequality also affects the poor in terms of the loss in potential human development measured as the loss in the Inequality-adjusted Human Development Index (Idol)12 relative to the HID.UNDO and HYDRO (2013) using HID data yields robust findings of an inverse relationship between inequality and subsequent improvement in human development, driven mostly by inequality in health and education rather than in income. The analysis showed the effects of multidimensional inequality on the HID and each of its components (health, education and income) due to four explanatory rabbles: overall inequality in human development, inequality in life expectancy, inequality in educational attainment and inequality in income per capita.

From this data, we can conclude that inequality holds back human development and retards social development. 3 Jacobs et al. (1999) suggests that the level of people’s education, intensity of their aspiration and energies, quality of their attitudes and values, skills and information comes into play whether it is the development of the individual, family, community, nation or the whole world. 14 These evidences show hat not everyone in Southeast Asia enjoys the benefits of economic-oriented innovation system and that the vulnerable are also prevented from developing their potential to the fullest given the less opportunities they have caused by inequality.

TABLE 1 GAP, Income Gin-coefficient and Human Development Index in SEAN countries GAP (current US Billions Income Gin-coefficient Human Development Index (Had)c Inequality-adjusted Human Development Index (DID)c 2000 2012 2000-2010 Overall Loss (%) Thailand 122. 73 365. 56 40. 0 0. 625 0. 690 0. 543 21 . 3 81 .

03 250. 27 43. 0 0. 610 0. 654 0. 524 19. 9 Vietnam 31. 17 141 .

67 35. 6 0. 534 0. 617 0.

531 14 Malaysia 93. 79 303. 53 0.

712 0. 769 n/a Indonesia 165. 02 878.

04 34. 0 0. 540 0. 629 0. 514 18. 3 Cambodia 3.

65 14. 06 37. 9 0. 402 25. Brunet 6. 00 16.

95 0. 830 Ala 1. 73 9.

30 36. 7 0. 453 0. 409 24.

7 Manner 0. 382 0. 498 Singapore 95. 92 274. 70 0.

826 0. 895 Notes: oral Bank (data. Workloads. Org); bat refer to the most recent year available during the period specified, Human Development Report 2013; Schuman Development Report 2013 Green Growth and Economy With the impacts from natural disasters seen around the world, many economies eve been forced to find ways that secure their growth with sustainability while not jeopardizing the future of their resources and environment.The idea of green economy has been introduced as one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. In its simplest expression, a green economy is low-carbon, resource efficient and socially inclusive.

It means that, apart from the need to protect the environment, such economy must provide equity and inclusiveness by maintaining, enhancing, and rebuilding natural capital as a critical economic asset and as a resource of public benefits, especially for poor people whose livelihoods and security depend on nature (UNEVEN, 2011). 5 A non-inclusive approach would not be sustainable as external interests have gained resources at the expense of local people’s access to the environmental assets they need for their living. 16 However, the cost of going green may be high as it comes at a premium price compared to the non-green products and that presents people with barriers to fully benefit from it. Inclusion. We could say that a conventional innovation system has been driven by his to go beyond economic prosperity and focus more on people’s well-being and happiness.

Climate change shift global supply chain Climate change not only has economies inclined to a more sustainable approach for the sake of present and future generations, it also causes disruptions to global supply chain. According to PAW’S (2013), climate change will have a multiplier effect on supply chain risk as it amplifies or alters existing risks. For example, in 2010, Russia suffered a severe heat wave, resulting in economic losses estimated to be IIS$1 ban as drought and wildfires destroyed crops, particularly wheat.The knock-on effect was export restriction on wheat in Russia, which contributed to global price increases. 17 Major climate threat to global supply chains has also been identified by new research from the Carbon Disclosure Project and Accentuate (2013) as 70 per cent of companies believe that climate change has the potential to affect their revenue significantly, a risk which is intensified by a chasm between the sustainable business practices of multinational corporations and their suppliers. 8 Thus the traditional innovation system has been challenged by business-not-as-usual situations and needs to adapt ewe approaches to be able to manage those risks with effectiveness. In order to cope with such supply change disruption triggered by climate change risks, PAW’S (2013) has suggested three principles: 1) recognizing that the risks cannot be viewed in isolation due to their interconnectivity 2) ensuring that the appropriate risk management procedures are in place including scenario planning and 3) developing global collaborative strategies to deal with heightened international resource scarcity.Sophisticated Consumption Behavior While supply side has been affected by risks and disruptions, the demand side has plopped more awareness that results in changing consumption behaviors.

As a result of impacts from global warming, consumers are modifying their behavior to reduce their environmental footprint, for example by increasing energy and water efficiency, recycling, and avoiding brands with poor green reputations. This pattern has continued despite the global financial crisis and subsequent economic downturn (Boston Consulting Group, 2009). 9 In many cases, consumers are willing to pay a premium for green products, thus opening up green opportunities for business (Minute Oxygen Report, 2010). 0 In response to the new patterns of purchasing behaviors, many consumer products companies are implementing more efficient technology and resource management practices in their operations and supply chains, and some are developing products that enable consumers to reduce their carbon impact (BBS, 2011). 1 Rising of informality through new institutionalizing of market For decades, a general perception on key characteristics of informal economy was that of an economy that utilizes simple technology, is limited in capital, has no fixed business location, exists with quasi-legality or lack of registration, and employs title record keeping.

It also has a high proportion of unrecognized and unprotected people with volatile and low income situation that could not easily be moved into “a formal economy,” yet they still mobile themselves into “an informal economy. They actively engage in a highly flexible and loosely structured economy as “informal entrepreneurs” and have learned their business lessons from the success and failure the informal sector. Partly, this is because of the increasing complexity in business transactions, interdependency and the changing role from being only business of the or and criminal to an alternative social safety net when the global economy goes wrong. Many catching-up economies have tried to formalize this sector for some time.Particularly, some governments in Southeast Asia are increasingly adding more measures and regulations to the informal economy in order to integrate taxable activities into a gross domestic product (GAP) calculation.

22 In the informal economy, not only enterprises engage with business-oriented innovation process but also entrepreneurs and individuals. Thus it has introduced new types of players that the traditional innovation system has never encountered before.Poverty and middle class transformation in advanced countries Switzerland, Sweden, I-J, Netherlands and the United Stated are ranked top 5 in the Global Innovation Index 2013 rankings. 23 Yet income inequality has been rising in almost every developed country over the last 30 years.

24 The level of income inequality stretches much higher in the U. S. Than in the other developed countries of Europe and North America – it is not only high but rising. The new World of Work Report 2013 by ILL places the U. S. Gin coefficient at 47.

7, almost halfway towards the end where the richest gets everything and the rarest gets nothing.By comparison, the levels of inequality in the other 25 developed countries studied all fall in a band between 20 and 35. The report concludes that the middle class in the U.

S. And around the world is suffering from long-term unemployment, weakening Job quality, and workers dropping out of the labor market. The 2008-2009 global recessions have made the situation even further worsened. 25 This implies that the conventional innovation system has not been able to lessen a gap of prolonged income inequality in developed nations and also causes butterfly effects to developing countries.Social networking as new enabling technology for user and producer innovation management (Sixth gene) Social networking has become a new, promising tool that powers productivity and innovation process beyond closed or open innovation. According to Wired (2013), social media sites such as Backbone, Linked and Twitter are by now so ingrained in our personal lives that it is only a matter of time before they become part of our work lives in a larger extent. When it comes to adoption, the terms “social business” and “enterprise social networking” can help re-align the way one think about social tools used in the workplace. McKinney Global Institute (MGM’) (2012) reported that companies that use social media internally can reduce the time employees spend searching for company information as much as 35 percent and it also finds that twice as much potential value lies in using social tools to enhance communications, knowledge sharing, and collaboration within and across enterprises.

Magi’s estimates suggest that by fully implementing social technologies, companies have an opportunity to raise the productivity of interaction workers – high-skill knowledge workers, including managers and professionals – by 20-25 per cent. Social tools could become the sixth generation of innovation models. As the fifth generation innovation process is a response to the continuing high levels of risk and uncertainty in innovation, Nests (2007) indicates that new technologies could herald a new generation innovation process, because they are driven by enhanced opportunities to the firm, and optimize not only the creation and diffusion of new products and services, and the processes by which they are produced and delivered, but also the most effective strategies for delivering value. 8 These major challenges monstrance that conventional, wealth and competitiveness-oriented innovation systems have left people, especially the poor with daunting barriers preventing them from gaining the benefits of such growth and realize their potential due to economic and social disparity as well as income inequality. This is a gap where a more social- oriented, inclusive innovation system could have vital roles to play to address the issues.Meanwhile, forces like green economy, climate change, shifting consumption behavior, social networking, and informality have had the system faced with emerging and evolving issues and actors it is not accustomed to. Thus it is important for innovation system to adjust and adapt in order to be able to cope with these new challenges in a proper and effective manner. 4.

Methodology The online study using questionnaire was utilized in 5 countries: Indonesia, Malaysia, Philippines, Thailand and Vietnam to assess perception of IS-ARC personnel at executive, administrative and research and teaching level on developmental issues, inclusive development, innovation, and then innovation for inclusive development. It also explores the existing linkages between U-ARC that may facilitate research work ND other activities with the informal sector and identifies incentives that are significant for strengthening U-ARC and community interaction as illustrated in Figure 2.The potential respondents were identified by nodes in those countries as experts in 7 research areas: 1) Food security, 2) Energy security, 3) Water security, 4) Biotechnology, 5) Healthcare, 6) Biodiversity and 7) Information and Communication Technology for Development (CCITT) which are considered important for livelihoods and well-being of the vulnerable people.The initial sample size at this stage is 118. FIGURE 2 Inclusive development and U-ARC linkage 5.

Preliminary results and findings (As of 14 August 2013) The questionnaire composes of 5 sections: A) Inclusive development B) Innovation C) U-ARC linkage D) Incentives and E) Regional research coordination. This analysis covers only the first 4 sections as the last section belongs to another project.Innovation for Inclusive development On the perception of experts regarding inclusive development, innovation and ID, we asked targeted respondents on the most important issues for new research and development that universities and/or research councils should give priority under he current situation and in the next 3-5 years, the most relevant issues for inclusive development, the most important characteristic of innovation, the most important characteristic of innovation for inclusive development and the key social groups that should benefit most from DID.The respondents considered basic needs as the most important issue for current developmental research works which reflect issues on poverty reduction, environment and ecosystem, and livelihoods. This is in line with their perception on innovation and DID to first and foremost improve people’s well-