NATIONAL SYSTEMS OF INNOVATION (NSI) By Dr A.S.

Aslan FPPSM, UTM

National System of Innovation (NSI)

The NSI concept was introduced in the late 1980s (Freeman 1987:Dosi et al., 1988). According to Edquist (2005), Freeman was the first to use the term national systems of innovation in published form (Freeman, 1987). The present systems of innovation can be described within a number of parameters apart from national level including regional sectoral and technological depending on the chosen level of analysis (Balzat and Hanusch 2004).
Although national system of innovation is only one of several possible specification of the generic system innovation concept, its certainly remains one of the most relevant (Edquist 1997).

What is NSI?

All important economic, social, political, organisational, institutional and other factors that influence the development diffusion and use of Innovation (Edquist, 2005: 182).
SI is comprised of Constituents (Edquist, 2005: 182): 1) Components 2) Relations among the components

Main Components of SI

Organisations: Formal structures that are consciously created and have an explicit purpose. They are players or actors (Edquist, 2005: 188). Example; universities, firms, venture capital organizations, public agencies. Institutions: Sets of common habits, norms, routines, established practices, rules, or laws that regulate the relations and interactions between individuals, groups, and organizations (Edquist, 2005: 188). Example; patent laws (Intellectual Property), rules and norms influencing the relation between the universities and firms.

Definition of NSI among different authors

Authors Freeman (1987, 1988) Lundvall (1988, 1992) Nelson (1993) Definitions National systems of innovation refer to the network of institutions in public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies. National systems of innovation refer to the institutions, economic agents and relationships, which interact in the production, diffusion and use of new economic knowledge. National systems of innovation refer to the institutional set-up of a national economy emphasising the industrial structure and the organisation of the R&D system. National systems of innovation refer to national institutions, their incentive structures and their competencies that determine the rate and direction of technological learning. National systems of innovation refers to set of distinct institutions which jointly and individually contribute to the development and diffusion of new technologies and which provide the framework within which governments form and implement policies to influence the innovation process. National systems of innovation includes all important economic, social, political, organisational, institutional and other factors that influence the development, diffusion and use of innovation National systems of innovation refer to a complex set of relationships among actors producing, distributing and applying various kinds of knowledge.

Patel and Pavitt (1994) Metcalfe (1995)

Edquist (1997)

OECD (1997)

Activities in NSI

1. Provision of R&D, creating new knowledge, primarily in engineering, medicine and the natural sciences.

2. Competence building (provision of education and training, creation of human capital, production and reproduction of skills, individual learning) in the labour force to be used in innovation and R&D activities.
3. Formation of new product markets.

Activities in NSI (contd)

4. Articulation of quality requirements emanating from the demand side with regard to new products.

5. Creating and changing the organisations required for the development of new fields of innovation, for instance, enhancing entrepreneurship to create new firms and entrepreneurship to diversify existing firms, creating new research organisations, policy agencies, and so on.

Activities in NSI (contd)

6. Networking through markets and other mechanisms, including interactive learning among different organisations (potentially) involved in the innovation processes. This implies integrating new knowledge elements developed in different spheres of the SI and coming from outside with elements already available in the innovating firms.
7. Creating and changing institutions - for instance, intellectual property rights laws, tax laws, environment and safety regulations and R&D investment routines - that influence innovating organisations and innovation processes by providing incentives or obstacles to innovation.

Activities in NSI (contd)

8. Incubating activities - for instance, providing access to facilities, administrative support, and so on for new innovating efforts.

9. Financing of innovation processes and other activities that can facilitate the commercialisation of knowledge and its adoption.
10. Provision of consultancy services of relevance for innovation processes, for instance, technology transfer, commercial information, and legal advice.

Malaysian NSI?