Abstract
One of the trends in “growth strategies” in advanced countries since the beginning of the twenty-first century has been to emphasize innovations in areas where services and infrastructures are provided largely by the public sector. The Japanese “new growth strategy,” established in 2010, is a typical example, in which both “green innovation” and “life innovation” were at the core of the strategy. In line with this trend, Boyer (2004) argued that economic growth in advanced economies will be generated by human-related services rather than the production of durable goods, as in the postwar period. His argument was based on the consumption expenditure record in the United States, which showed the salient increase in expenditure on interpersonal services, in contrast with the almost unchanged expenditure on durable consumer goods. If his argument is correct, then the main locus of innovation in advanced countries will be human-related services. Because a large part of human-related services are provided by the public sector, innovation policies may require novel approaches, partly because diverse sociopolitical factors such as regulations, institutions, political processes, and even cultural norms affect innovations in human-related services. As we will see in this paper, the European Union, and particularly Northern European countries, has been quite active in implementing novel approaches to innovation policies.
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Notes
- 1.
Boyer (2004) termed this emerging growth model the “anthropogenetic model,” in which interpersonal service provision activities, such as healthcare and education, are the main sources of economic growth.
- 2.
In this paper, an innovation policy is defined as various policy measures that aim to enhance the innovative performance of economic entities such as firms, regions, and nations. Thus, as Lundvall and Borrás (2005) point out, an innovation policy is a broader concept than that of a science and technology policy. Moreover, other policy areas, such as labor market policies, can serve as innovation policies.
- 3.
On important roles of demand and user for innovation, see a detailed study by Von Hippel (1988).
- 4.
The basic idea here is that public procurement might be able to influence companies to develop products and services in certain directions by focusing its demand.
- 5.
According to Communication on the Lead Market Initiatives (Commission of the European Communities 2007), the European Commission decided on several lead market areas, including e-health, sustainable construction, protective textiles, bio-based products, and recycling and renewable energies. For more on the concept of a leading market, see Beise (2004).
- 6.
Based on the concepts of Hirschman (1970), it can be said that this legislation justifies public procurers using the voice and the exit option.
- 7.
It is possible to point out the vagueness of this concept, as noted by Edquist et al. (2009), when the Ministry of Education and Culture and the Ministry of Employment and the Economy in Finland asked them to critically assess the innovation policies. However, at the same time, they appreciated that the “broad-based” concept encompassed both technological and non-technological innovations and emphasized demand- and user-driven innovations.
- 8.
In fact, during the interviews with the author, policymakers repeatedly emphasized that the Finnish government tried to influence the policymaking processes in the European Commission. To quote from the interviews with Tekes and Sitra, “Finland has tried to make the European Commission adopt the demand-driven innovation policy as an important policy agenda” (Tekes: March 1, 2011), and “It is an important role (of Sitra) to lobby the European Commission to adopt the demand-driven policy” (Sitra: March 8, 2011).
- 9.
For instance, the point of view expressed by an interviewee at Sitra strongly suggests that the Finnish government tried to leverage the domestic market as a test bed for experimentations of innovative ideas: “As Finland is the pioneer of the demand- and user-driven innovation policies, we want to demonstrate here and then scale up in the EU market. Then, the EU will pay attention to the experiences here if we can experiment and learn from failures more quickly than other countries” (Interview March 8, 2011).
- 10.
Because the OSKE program finished in 2013, Culminatum closed in June 2013.
- 11.
This subsection is based mainly on the following interviews, each of which was for 90–120 minutes long: Tekes (March 5, 2013; May 27, 2013; and November 26, 2014), ARA (May 31, 2013, and November 25, 2014), Vaso (March 4, 2013), RAKLI (May 31, 2013, and November 27, 2014), and Hartela (June 4, 2013).
- 12.
The energy-efficient houses are called “passive houses,” which are highly isolated from the outside air and able to sustain a comfortable temperature and humidity while greatly reducing energy consumption. According to the new legislation of the Finnish government, all new houses built after 2016 should be passive houses.
- 13.
With regard to the ARA and its engagement in the Naantali project, see also ARA (2013), Asumisen Uudistaminen 2009–2012: Loppuraportti. ARA, Tengbom Eriksson Arkkitehdit Oy, and Gaia Consulting Oy.
- 14.
For details on the “procurement clinic” method, see RAKLI and Vaso (2011), Vaso/Soininen-hankintaklinikka: Tulosraportti 17.11.2011. See also a case study of ex staff of RAKLI, by Kuronen and Vaara (2012).
- 15.
In the context of outcome-based specifications, procurers present only the outcomes of the products or services that they are going to procure, and firms have to respond by finding concrete ways to meet all the outcomes, which means large rooms are left for firms to innovate. In contrast, in the cases of conventional public procurement, procurers specify the products and services in detail, leaving little room for firms to innovate.
- 16.
In this paper, evolution is understood as a generic principle that accounts for changes using the combination of mutation, retention, and selection. See Nelson and Winter (1982) and Hodgson and Knudsen (2010) for a detailed discussion on applying the Darwinian concept of evolution to social sciences.
- 17.
Here I adopt the definition by Pestoff (1998), who defines the third sector as the sector that intermediates other sectors, namely, market (private firms), state (public institutions), and community (households and families). It includes both private and public organizations, for-profit and nonprofit organizations, and formal and informal organizations.
- 18.
According to the OECD Social Expenditure Statistics, the average of the Nordic countries was ranked as the highest (26.9%) in terms of public social expenditure as a percentage of GDP in 2012. The averages of the OECD member countries and the European countries, excluding the Nordic countries, were 21.4% and 23.4%, respectively. These figures do not include the public expenditure for education, one of the most significant elements of welfare states.
- 19.
Salamon et al. (2004) summarized the result of their project, Johns Hopkins Comparative Nonprofit Sector Project, and compiled the Johns Hopkins Global Civil Society Index (JHU/GCSI) to enable international comparisons of third-sector organizations. According to this index, Nordic countries are ranked top, followed by the Anglo-Saxon countries, in terms of capacity, sustainability , and the impact of civil society organizations. However, authors such as Evers and Laville (2004) pointed out that the third-sector activities are underestimated in JHU/GCSI because it excludes several organizations, including cooperatives active in Europe. For the definition, history, and current situation of civil society organizations in Finland, see Harju (2006) and Seppo (2013).
- 20.
The public social expenditure as a percentage of GDP in 2012 in Japan (23.1%) was higher than the average of OECD member countries (21.4%). However, a larger part of the expenditure in Japan was for the elderly than in the OECD, including pensions and health services. This reflects the fact that social protection for the working age population has been provided mainly by employers as long-term employment and seniority wages. In addition, the public expenditure on all levels of education as a percentage of GDP in 2011 was 3.6% in Japan, significantly lower than the average of 5.3% in the OECD, 6.2% in Sweden , and 6.3% in Finland (OECD 2014).
- 21.
According to Yamada and Hirano (2012), one of the two pillars of the companyist règulation is “labor-management compromise ,” which ensures employment security in exchange for accepting unlimited duties. It should be emphasized that the secured employment served as a de facto social protection measure, replacing the public expenditure for social protection.
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Tokumaru, N. (2018). Transforming the Role of Public Policies for Innovation: The Role of Institutional Foundations in Finland as a Nordic State. In: Boyer, R., Uemura, H., Yamada, T., Song, L. (eds) Evolving Diversity and Interdependence of Capitalisms. Evolutionary Economics and Social Complexity Science, vol 11. Springer, Tokyo. https://doi.org/10.1007/978-4-431-55001-3_9
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