Download Learning Regions as Development Coalitions: Partnership as

Learning Regions as Development Coalitions:
Partnership as Governance in European Workfare States?1
By
Professor Bjørn T. Asheim,
Centre for Technology, Innovation and Culture/
Department of Sociology and Human Geography,
Faculty of Social Sciences,
University of Oslo,
P.O. Box 1108 Blindern,
N-0317 Oslo, Norway; and
The STEP Group (Studies in technology,
innovation and economic policy),
Storgaten 1, N-0155 Oslo, Norway.
Published in Concepts and Transformation. International Journal of Action Research and
Organizational Renewal, 6, 73-101, 2001.
1
Earlier versions of the paper has been presented at the Regional Studies Association Conference on "Regional
Frontiers", European Universität Viadrina, Frankfurt (Oder), Germany, 20-23 September 1997, at the IGU
Commission on Geography and Public Administration Cambridge Conference, Cambridge, UK, 2-4 July 1998,
and at the Second European Urban and Regional Studies Conference on “Culture, place and space in
contemporary Europe”, University of Durham, UK, 17-20 September 1998.
Learning regions as development coalitions: Partnership as governance in European
workfare states?
Introduction
The understanding of post-Fordist societies as learning economies, in which learning
organisations such as learning firms and learning regions play a strategic role, has lately been
exposed to criticism. The critique has partly pointed at the structural limits to learning in a
capitalist global economy, and partly argued that firms in capitalist societies have always been
learning, referring especially to the role of innovation in inter-firm competition (Hudson
1999).
Lundvall argues that the concept of a learning economy can be used in two interconnected
ways; partly as a theoretical perspective on the economy, and partly as a reference to a
specific historical period in which knowledge and learning has attained an increasing
importance in the economy, and, thus, is requiring a new theoretical framework for it to be
analysed (Lundvall 1996). In this article it will be argued that the concept of a learning
economy describes a qualitative change in the development of capitalist economies. This
change is represented by the transition from Fordism to Post-Fordism. Thus, the crux of the
question of the degree of reality in the rethoric of learning economies and learning regions,
lies very much in the view of whether such a transition has really taken place or not. If one
argues along with Lundvall (1996), Jessop (1994), Piore and Sabel (1984) and many others, it
seems obvious that important structural changes are taking place, and the only theme for
discussion is the size and consequences of the changes, and the way these changes in the
economy effect the political and institutional set up.
This point is taken further by Jessop who links the developments in the global economy from
Fordism to Post-Fordism to a parallell restructuring of the state from “the Keynesian welfare
state appropriate to the Fordist mode of growth to a Schumpetarian workfare state more
suited in form and function to an emerging post-Fordism” (Jessop 1994, 251), and a
subsequently “hollowing out” of the nation state, which is a combined effect of a globalising
and de-regulated world economy, dominated by TNCs, and the reduced power of nation states
due to a transfer of authority to supranational organisations. These changes have led to a shift
in the regime of international trade relations from comparative advantage on the basis of
relative best access to endowments supplying cheap production factors (e.g. low input costs
of raw material and labour) to socially created competitive advantage, resting on ”making
more productive use of inputs, which requires continual innovation” (Porter 1998, 78)2. This
has on the sub-national, regional level resulted in a growing attention being paid to
perspectives and strategies that can secure the innovative capacity of regions in order to foster
a regional future of endogenous economic growth. The increased focus on learning regions in
the contemporary global economy as a strategy for regional development must, thus, be
understood in this double context of changes in the economy as well as of the state. Contrary
to the critics, it will be argued that the learning region has a large potential to offer both as a
theoretical and normative concept and as a practical metaphor for formulating regional policy.
2
According to Porter “in the new economics of competition, what matters most is not inputs and scale, but
productivity – and that is true in all industries” (Porter 1998, 85).
2
What is a “learning region”?
In his article presenting the “sympathetic” critique of the idea of a learning region, Hudson
(1999) does not explicitly define the concept. However, others have made such attempts.
Florida, in an article arguing for a central role of regions in “the new age of global,
knowledge-intensive capitalism” (Florida 1995, 527), defines learning regions as “collectors
and repositories of knowledge and ideas, ....(which).... provide an underlying environment or
infrastructure which facilities the flow of knowledge, ideas and learning” (Florida 1995, 528).
Hassink (1998) summerises several definitions of learning regions as “regional development
concepts in which the main actors are strongly, but flexibly connected with each other and in
which both interregional and intraregional learning is emphasised” (Hassink 1998, 6). The
Swedish National Institute for Working Life in a project together with The Swedish EU
Programme Office on “Stronger Partnership for Learning Regions” consider the perspective
of learning regions as a means to “initiate and provide the basis for co-operation between
enterprises in regions, local public bodies, organisations and other interest groups” (The
National Institute for Working Life 1997, 1).
All these definitions and elaborations of the concept of a learning region emphasise the role
played by regional based learning organisations. This underlines the important role of
innovation, understood as contextualised social processes of interactive learning, in a postFordist learning economy, which highlights the significance of building social capital in order
to foster co-operation as well as promoting the principle of broad participation in intra- and
inter-firm networks. The concept of a learning region could, then, precisely be used to
describe a region with an economy embedded in "institutional thickness", and characterised
by innovative activity based on localised, interactive learning, and co-operation promoted by
organisational innovations in order to exploit "the benefits of learning based competitiveness"
(Amin and Thrift 1995a, 11). This points at a broad understanding of a learning region as
representing the territorial and institutional embeddednesss of learning organisations and
interactive learning, which, however, could not be said to be similar to a regional innovation
system, and, consequently, be used synonymously (Hassink 1998), even if innovation
systems, especially in its broad definition (Lundvall 1992), must constitute a core element of
learning regions (Asheim and Pedersen 1999).
Learning regions should be looked upon as a policy framework or model for formulations of
long term partnership-based development strategies initiating learning-based processes of
innovation, change and improvement. In the promotion of such innovation supportive regions
the inter-linking of co-operative partnerships ranging from work organisations inside firms
via inter-firm networks to different actors of the community, understood as “regional
development coalitions”, will be of strategic importance. By the concept “development
coalition” is meant a bottom-up, horizontally based co-operation between different actors in a
local or regional setting, based on a socially broad mobilisation and participation of human
agency. (Ennals and Gustavsen 1999a). The attractiveness of the concept of learning regions
to planners and politicians is to be found in the fact that it at one and the same time promises
both economic growth and job generation as well as social cohesion. As such, learning
regions must be analysed as an answer and challenge to contemporary changes in the global
economy and the subsequently strategic policy reorientations of the nation state.
3
The building blocks of the concept of learning regions
The concept of “learning regions” has been used in at least three different contexts. The
concept was first introduced by economic geographers in 1995 (Florida 1995), when they
used it to emphasise the role played by co-operation and collective learning in regional
clusters and networks in order to promote the innovativeness and competitiveness of firms
and regions in the globalising learning economy (Asheim 1997). This approach was clearly
inspired by the rapid economic development in the “Third Italy”, which drew the attention
towards the importance of co-operation between SMEs in industrial districts and between
firms and local authorities at the regional level in achieving international competitiveness
(Asheim 1996).
The second approach expressing (more indirectly) the idea of learning regions originates from
the writings of new evolutionary and institutional economics on the knowledge and learning
based economy, arguing that "regional production systems, industrial districts and
technological districts are becoming increasingly important" (Lundvall 1992, 3), and from
Porter, who emphasises that "the process of clustering, and the interchange among industries
in the cluster, also works best when the industries involved are geographically concentrated"
(Porter 1990, 157). These ideas are more or less the same as the ones Perroux, another
Schumpetarian inspired regional economist, presented in the early 1950s. According to Perroux, the growth potential and competitiveness of growth poles can be intensified through
territorial agglomeration by exploiting localisation (external) economies (Haraldsen 1994,
Perroux 1970).
The third approach, which conceptualises learning regions as regionally based development
coalitions, has lately been applied by representatives of the socio-technical school of
organisational theory taking their knowledge of how to form intra- and inter-firm learning
organisations based on broad participation out of the firm context and using it to establish
learning organisations at the regional level (i.e. learning regions) (Ennals and Gustavsen
1999a).
This organised form of bringing the society inside the firm through learning organisations
based on broad participation, and supported by labour market legislation as well as a strong
tradition of co-operation between the labour market organisations, is in many aspects the
opposite way of achieving a fusion of the economy with the rest of society (Piore and Sabel
1984) than the industrial district model, in which the firm is contextualised through its
embeddedness in spatial structures of social relations. These contrasting models of
contextualising the firm also reflect the alternative interpretations of social capital, i.e. as
rooted in the “civicness” of communities (industrial district) or as formal organisations on the
system level of societies (development coalition). However, while the economic geograhic
and the evolutionary economics approaches are strong on the innovation dimension, the
action research approach of the socio-technical school has mainly focused on the
organisational principle of broad participation. Thus, it is an important task to merge these
approaches in order to obtain a coherent model or policy framework for formulations of
partnership-based development strategies in order to achieve economic growth, employment
generation as well as social cohesion.
4
a) Economic geographical studies of industrial districts in the Third Italy
The rapid economic development in the "Third Italy", based on territorial agglomerated
SME's in industrial districts (ID), has drawn an increased attention towards the importance of
co-operation between firms and between firms and local authorities in achieving international
competitiveness (Brusco 1990). Pyke (1994) underlines the close inter-firm co-operation and
networks as well as the existence of a supporting institutional infrastructure at the regional
level (e.g. centres of real services) as the main factors explaining the success of EmiliaRomagna in the "Third Italy". According to Dei Ottati, "this willingness to cooperate is
indispensable to the realization of innovation in the ID which, due to the division of labour
among firms, takes on the characteristics of a collective process. Thus, for the economic
dynamism of the district and for the competitiveness of its firms, they must be innovative but,
at the same time, these firms cannot be innovative in any other way than by cooperating
among themselves" (Dei Ottati 1994, 474).
The European experience of industrial districts has become a major point of reference in the
recent international debate on industrial policy promoting regional endogenous development.
Of significant importance is the understanding of industrial districts as a "social and
economic whole", where the success of the districts is as dependent on broader social and
institutional aspects as on economic factors in a narrow sense (Pyke and Sengenberger 1990).
Bellandi emphasises that the economies of the districts originate from the thick local texture
of interdependencies between the small firms and the local community (Bellandi 1989), and
Becattini maintains that "the firms become rooted in the territory, and this result cannot be
conceptualised independently of its historical development" (Becattini 1990, 40).
Thus, the major differentiating factors in play in the Third Italy are not the techno-economic
structures as such, but rather the importance of non-economic factors for the economic
performance of the regions. Brusco et al. (1996) maintain that the “experience in EmiliaRomagna has demonstrated that competitiveness on global markets is not a contradiction to
high labour cost, high incomes and a fair distribution of income; on the contrary, we would
claim that a fair income distribution is a necessary condition (although not sufficient) for
consensus, and consensus and participation are an indispensable prerequisite for economic
success” (Brusco et al. 1996, 35). Furthermore, the economic and social development of the
region has not simply been “the result of a “spontaneous” development but, rather, it has been
assisted by a process of institutional building aimed at the creation of an intermediate
governance structure capable of establishing a positive enabling environment for firm
development” (Bianchi 1996, 204).
b) Evolutionary economical theories of post-Fordist societies as ”learning economies”
Lundvall and Johnson use the concept of «learning economy» when referring to the contemporary post-Fordist economy dominated by the ICT-related (information, computer and
telecommunication) techno-economic paradigm in combination with flexible production methods and reflexive work organisations (i.e. learning organisations and functional flexible
workers) (Lundvall and Johnson 1994). In addition the learning economy is firmly based on
5
«innovation as a crucial means of competition» (Lundvall and Johnson 1994, 26). These
perspectives of the "learning economy" are based on the view that knowledge is the most
fundamental resource in a modern capitalist economy, and learning the most important
process (Lundvall 1992), thus making the learning capacity of an economy of strategic
importance to its innovativeness and competitiveness.
When reference is made to innovation as a crucial means of competition in the learning
economy it is not the previous hegemonic linear model of innovation of the Fordist era of
industrial organisation and production3, which is being thought of, but a new theoretical
understanding of innovation as basically a socially and territorially embedded, interactive
learning process, which, thus, cannot be understood independent of its institutional and
cultural contexts (Lundvall 1992).
This more sociological view on innovation implies a criticism of the traditional dominating
linear model of innovation, as the main strategy for national R&D policies, of being too
"research-based, sequential and technocratic" (Smith 1994, 2). The criticism implies another
and broader view of innovation as a social as well as a technical process, as a non-linear
process, and as a process of interactive learning between firms and their environment
(Lundvall 1992, Smith 1994). This alternative model could be referred to as a bottom-up
interactive innovation model (Asheim and Isaksen 1997). The interactive innovation model
puts emphasis on “the plurality of types of production systems and of innovation (science and
engineering is only relevant to some sectors), “small” processes of economic co-ordination,
informal practices as well as formal institutions, and incremental as well as large-scale
innovation and adjustment” (Storper and Scott 1995, 519).
Porter emphasises that the reproduction and development of competitive advantage requires
continual innovation, which in a learning economy is conceptualised as a localised interactive
learning process, promoted by clustering, networking and inter-firm co-operation. This new
and alternative conceptualisation of innovation as an interactive learning process means an
extension of the range of branches, firm-sizes and regions that can be viewed as innovative,
also to include traditional, non R&D-intensive brances, often constituted by SMEs and
located in peripheral regions. The basic critique of the linear model is precisely the equation
of innovative activities with R&D-intensity. The majority of SMEs are in branches which are
not R&D-intensive, but which could still be considered to be innovative (e.g. the importance
of design in making furniture manufactures competitive and moving them up the value-added
chain). One further, important implication of this view on innovation is that it makes the
distinction between high-tech and low-tech branches and sectors, which is a product of the
linear model, irrelevant, as it maintains that all branches and sectors can be innovative in this
broader sense. According to Porter, “the term high-tech, normally used to refer to fields such
as information technology and biotechnology, has distorted thinking about competition,
creating the misconception that only a handful of businesses compete in sophisticated ways.
In fact, there is no such thing as a low-tech industry. There are only low-tech companies –
that is, companies that fail to use world-class technology and practices to enhance
productivity and innovation” (Porter 1998, 85-86). Following Porter, this implies that it is
3
Fordism is here defined as "an allegedly hegemonic form of industrial organization" (Sayer 1992, 194), and not
simply as an assembly line-based organisational model.
6
possible in all branches and sectors to find productive and innovative firms enjoying
competitive advantages on the global markets. Thus, this theoretical perspective also broaden
the scope for a policy of strong competition for post-Fordist learning economies (Storper and
Walker 1989), i.e. competition building on innovation and differentiation strategies, in
contrast to weak competition based on price competition.
c) Organisational theoretical action research on learning organisations as ”development
coalitions”
Hudson in his criticism of the concept of learning regions questions the impact of the growth
of “new and enriching and empowering forms of work” as a result of the increased
importance of knowledge and learning (Hudson 1999, 60). Referring to what he sees as
“necessary and possible” in a capitalist economy he will not in general accept the tendency
towards a reduction in the relative significance of “the alienated and deskilled mass worker”
(Hudson 1999, 60). However, changes in work organisation away from such working
conditions have been underway since the 1940s and 50s starting with the studies by the sociotechnical school of organisational theory, which also is a forerunner for today’s research on
development coalitions. There has been a transformation of the organisation of the labour
process from a work organisation on the basis of Fordist and Taylorist principles of a strict
division between intellectual and manual work, building on the ideas of “scientific
management”, to a reflexive based work organisation in which central, skilled, functional
flexible workers are more important than un- or semiskilled, numerical flexible, peripheral
workers. In such a reflexive work organisation of functional flexible core workers it is easy to
understand the potential importance of intra- and inter-firm learning organisations based on
broad participation, in which interactive learning plays a strategic role. In their work,
Lundvall and Johnson argue that "the firm's capability to learn reflects the way it is organised.
The movement away from tall hierarchies with vertical flows of information towards more
flat organisations with horizontal flows of information is one aspect of the learning economy"
(Lundvall and Johnson 1994, 39).
This is in line with Scandinavian experiences,4 which have shown that flat and egalitarian
organisations have the best prerequisites of being flexible and learning organisations, and that
industrial relations characterised by strong involvement of functional flexible, central workers
is important in order to have a working "learning organisation". Such organisations will also
result in well functioning industrial relations, where all the employees (i.e. the (skilled)
workers as well as the managers) will have a certain degree of loyalty towards the firm.5 All
experience shows that "the process of continous improvement through interactive learning
and problem-solving, a process that was pioneered by Japanese firms, presupposes a workforce that feels actively committed to the firm" (Morgan 1997, 494). Brusco - with special
4
Referred to as, for example, "Kalmarism" in contrast to "Fordism", "Neo-Taylorism" and "Toyotism" in the
international academic literature (Leborgne and Lipietz 1992).
5 Leborgne and Lipietz (1992) disagrees in the possibilities of combining involvement and flexibility. They
argue that “collective involvement and flexibility are incompatible”, because “external rigidity of the labor
market (is) associated with negotiated involvement of the workers” (Leborgne and Lipietz 1992, 339). However,
partly the authors reduce flexibility to only be a question of numerical flexibility, and neglect the possibility of
functional flexibility, and partly, given the presence of functional flexible, central workers in the organisation,
there exists a potential trade-off between influence and loyalty.
7
referance to the industrial districts of Emilia-Romagna - points to the dominating model of
production in the districts "that was able to be efficient and thus competitive on world
markets, in which efficiency and the ability to innovate were achieved through high levels of
worker participation and were accompanied by working conditions that were acceptable"
(Brusco 1996, 149). In general, Porter points out that ”labor-management relationships are
particularly significant in many industries because they are so central to the ability of firms to
improve and innovate” (Porter 1990, 109).
Such co-operative tradition is embedded in specific cultural, social and political-institutional
factors. In Norway, egalitarian social structures are still a prominent part of the society
compared to most other (non-Nordic) developed nations. Thus, the contemporary Norwegian
society is characterised by a low level of conflict both in the society as such and in the
worklife, the educational level is high, the culture is rather homogenous, and equality
represents an ideal as well as a reality in most cases. The trade unions are representative and
very co-operative oriented, and the political situation is characterised by a high degree of
stability (Nylehn 1995).
Thus, it could be argued that the Norwegian society is characterised by a culture in which cooperation is both recognised and attributed value to, and that this can have positive
consequences for firms with respect to loyalty, flexibility and general positive attitudes
towards work at the micro level as well as to the social regulation of the labour market at the
macro level. However, it is important that co-operation is based on broad participation in
order to have a significant and lasting effect on innovativeness and competitiveness, i.e. all
workers in a firm have to be involved in the continuous improvement work within a learning
organisation aiming at increased productivity and quality specifically and contributing to
enterprise development in general (Nylehn 1995). The presence of social capital in the form
of a strong tradition of co-operation adds to the high level of human capital of the work force
in a synergetic way, and represents an international competitive advantage, not the least
beacuse it implies a next to immediate implementation of decisions, since they have been
taken in consensus oriented learning organisations based on broad participation.
A strong and broad involvement within an organisation will make it easier to use and diffuse
informal or "tacit", non-R&D based, knowledge, which in a "learning economy" has a more
central role to play in securing continuous innovation. Transactions with "tacit" knowledge
within and between networking organisations require trust, which is easier to establish and
reproduce in flat organisations than in hierarchical ones. In a study of successful intra-firm
reorganisation of SMEs in Baden-Württemberg Herrigel reports that one company "set out to
constitute "trusting" relations among all actors within the firm, regardless of role or position
in the organization, which were informed by mutual respect. It discouraged thinking in terms
of hierarchy and status and made all information about the company available to everyone
within it" (Herrigel 1996, 46). In organisations characterised by an authoritarian management
style the attitude of the employees will often be to keep "the relevant information to
themselves" (You and Wilkinson 1994, 270).
8
Agglomeration and localised learning
The perspective of "learning economies" and modern innovation theory emphasises that
learning is a localised, and not a placeless process (Lundvall and Johnson 1994, Storper
1995a). This view is supported by Porter, who argues that "competitive advantage is created
and sustained through a highly localised process. Differences in national economic structures,
values, cultures, institutions, and histories contribute profoundly to competitive success"
(Porter 1990, 19). Accordingly, Porter argues that "the building of a "home base" within a
nation, or within a region of a nation, represents the organizational foundation for global
competitive advantage" (Lazonick 1993, 2). In contrast to this, Reich in his book "The Work
of Nations" (1991) argues that "the globalization of industrial competition has led to a global
fragmentation of industry, thus making national industries and the national enterprises within
them less and less important entities in attaining and sustaining global competitive
advantage" (Lazonick 1993, 2). According to Reich, "the work of nations" is the result of
activities that take place in the national territory, and not of nationally-based companies
(Reich 1991, Storper 1995b).
However, Reich's analysis misses the historical and contemporary insights of the importance
of territory (i.e. location and agglomeration) specifically and non-economic factors (i.e.
institutions, social structures, traditions etc.) in general, or in Piore and Sabel's words, the
"fusion" of the economy with society (Piore and Sabel 1984), for the performance of an
economy.
The major impact of Porter's book "The Competitive Advantage of Nations" (1990) is
represented by a change in the understanding of the strategic factors which promote
innovation and economic growth. Porter's main argument is that these factors are a product of
localised learning processes, and that the importance of clusters is that they represent the
material basis for an innovation based economy, which represents "the key to the future
prosperity of a nation" (Lazonick 1993, 2). Porter's cluster is basically an economic concept
indicating that "a nation's successful industries are usually linked through vertical (buyer/supplier) or horizontal (common customers, technology etc.) relationships" (Porter 1990, 149).
However, in an article from 1998, Porter restricts his definition of cluster to only denote
”geographic concentrations of interconnected companies and institutions in a particular field”
(Porter 1998, 78).6
A dynamic, processual understanding of competitiveness clearly indicates that enterprises in
order to keep their position in the global market, must focus on developing their own core
competencies through transforming themselves into learning organisations. But internal restructuring alone cannot sustain the competitiveness of firms in the long run. As firms are
embedded in regional economies they are very much depended on a favourable economic
environment.The main argument for territorial agglomeration of economic activity in a
contemporary capitalist economy is that it provides the best context for an innovation based
6
In my view there is a need to operate with clusters in both conceptualisations, as it is a quite normal situation to
find (geographical) clusters of specialised branches being part of a national (economic) cluster of the same
branches.
9
learning economy.7 In a learning economy the competitive advantage of firms and regions is
based on innovations, and innovation processes are seen as social and territorial embedded,
interactive learning processes. According to Amin and Thrift, this forces a re-evaluation of
"the significance of territoriality in economic globalisation" (Amin and Thrift 1995a, 8).
Thus, a strong case is made today that regional agglomerations are growing in importance as
a mode of economic coordination in post-Fordist learning economies (Asheim and Isaksen
1997, Cooke 1994). In general, “geographical distance, accessibility, agglomeration and the
presence of externalities provide a powerful influence on knowledge flows, learning and
innovation and this interaction is often played out within a regional arena” (Howells 1996,
18). Close co-operation with suppliers, subcontractors, customers and support institutions in
the region will enhance the process of interactive learning and create an innovative milieu
favourable to innovation and constant improvement. The spatial proximity of interacting
firms is an important enabling factor in stimulating inter-firm "learning networks" involving
long-term commitment. Håkonsson claims that "the importance of proximity is particularly
noticeable in horizontal relationships, but it is not altogether absent in the case of vertical
relations" (Håkonsson 1992, 125). Thus, such co-operation can result in a largely improved
innovative capacity of firms within regional agglomerations. This influences the performance
of the firms and strengthens the competitive advantage of regions.
Generally, the innovative capacity at the regional level can be promoted through identifying
“the economic logic by which milieu fosters innovation” (Storper 1995a, 203). Specifically, it
is important to underline the need for “enterprise support systems, such as technology centres
or service centres, which can help keep networks of firms innovative” (Amin and Thrift
1995a, 12). Localised learning is not only based on tacit knowledge, as we shall argue that
contextual knowledge also is constituted by ”sticky”, codified knowledge. This refers to
disembodied knowledge and know-how which are not embodied in machinery, but are the
result of positive externalities of the innovation process, "which can occur independently of
changes in physical capital stock" (de Castro and Jensen-Butler 1993, 1) .... and to "untraded
interdependencies", i.e. "a structured set of technological externalities which can be a
collective asset of groups of firms/industries within countries/regions" (Dosi 1988, 226).8
Disembodied knowledge can be both tacit and codified. However, such knowledge is, as
pointed out by de Castro and Jensen-Butler, generally highly geographical immobile, and is
7
Porter (1998) underlines that “what happens inside companies is important, but clusters reveal that the
immediate business environment outside companies plays a vital role as well. This role of locations has been
long overlooked, despite striking evidence that innovation and competitive success in so many fields are
geographically concentrated” (Porter 1998, 78).
8
According to de Castro and Jensen-Butler "rapid disembodied technical progress requires [...] a high level of
individual technical capacity, collective technical culture and a well-developed institutional framework [...]
(which) [...] are highly immobile in geographical terms" (de Castro and Jensen-Butler 1993, 8). Dosi argues that
"untraded interdependencies" represent "context conditions" which generally are country- or region-specific, and
of fundamental importance to the innovative process (Dosi 1988). Storper emphasises the importance of regions
in underpinning "untraded interdependencies" between actors, generating region-specific material and nonmaterial assets in production allowing actors to promote technological and organisational change (Storper
1995c). Finally, Amin and Thrift precisely underline "the role of localised "untraded interdependencies" in securing learning and innovation advantage in inter-regional competition" (Amin and Thrift 1995a, 12).
10
often constituted by a combination of place-specific experience based, tacit knowledge and
competence, artisan skills and R&D-based knowledge (Asheim 1999). Thus, some codified
knowledge can be a product of localised rather than placeless learning. This implies, for
example, that the adaptability of this contextual form of codified knowledge is dependent
upon, and limited by artisan skills and tacit knowledge (Asheim and Cooke 1998). Lundvall
(1996) argues in a similar way when he maintains that “the increasing emergence of
knowledge-based networks of firms, research groups and experts may be regarded as an
expression of the growing importance of knowledge which is codified in local rather than
universal codes. The skills necessary to understand and use these codes will often be
developed only by those allowed to join the network and to take part in a process of
interactive learning” (Lundvall 1996, 10-11).
This points out that "whilst knowledge in the form of embodied technical progress can be
exported independently of social institutions, such knowledge in its disembodied form cannot
be absorbed independently of such institutions" (de Castro and Jensen-Butler 1993, 3). The
rationale behind endogenous development is precisely "to use this social organization to
generate innovation and economic development" (Lazonick and O'Sullivan 1995, 4). The
formation of learning regions understood as regional development coalitions represents a
strategy of promoting such innovation supportive regions through the creation of
organisations and institutions as public-private partnerships, for example, in accordance with
the network approach to regional innovation systems based on partnerships amongst large,
private firms, government, universities, intermediary agencies, research institutes and small
firms (Asheim and Cooke 1999).
This perspective emphasises the importance of organisational (social) and institutional
innovations to promote co-operation, primarily through the formation of dynamic flexible
learning organisations. Lundvall and Johnson underline that "the firms of the learning economy are to a large extent "learning organisations" (Lundvall and Johnson 1994, 26). A dynamic
flexible "learning organisation" can be defined as one that promotes the learning of all its
members and has the capacity of continuously transforming itself by rapidly adapting to
changing environments by adopting and developing innovations (Pedler et al. 1991,
Weinstein 1992). The hegemonic techno-economic paradigm of the post-Fordist "learning
economy" is to a very large extent (and more than previous techno-economic paradimgs)
dependent on organisational innovations to have its potential exploited, and the more
important organisational innovations are, the more important interactive learning can be
considered to be for the promotion of innovations in general as organisational innovations
enable the formation of learning organisations in post-Fordist societies. On the other hand it
can be argued that the application of the ICT techno-economic paradigm stimulates
organisational innovations, as the ICT technologies are very adaptable to all kinds of network
organisations, and, thus, supports the rise of the “network society” (Castells 1996).
The strategic role played by co-operation in a learning economy is underlined by the
understanding of interactive learning as a fundamental aspect of the process of innovation
(Asheim 1996). What this broader understanding of innovation as a social, non-linear and
interactive learning process means, is a change in the evaluation of the importance and role
played by socio-cultural and institutional structures in regional development from being
looked upon as mere reminiscences from pre-capitalist civil societies (although still
11
productive), to be viewed as necessary prerequisites for regions in order to be innovative and
competitive in a post-Fordist learning economy. Thus, if these observations are correct, this
represents new "forces" in the promotion of technological development in capitalist
economies, implying a modification of the overall importance of competition between
individual capitals. Of course, the fundamental forces in a capitalist mode of production
constituting the technological dynamism are still caused by the contradictions of the capitalcapital relationship. However, Lazonick argues, referring to Porter's empirical evidence
(Porter 1990), that "domestic cooperation rather than domestic competition is the key
determinant of global competitive advantage. For a domestic industry to attain and sustain
global competitive advantage requires continuous innovation, which in turn requires domestic
cooperation" (Lazonick 1993, 4). Cooke (1994) supports this view, emphasising that "the cooperative approach is not infrequently the only solution to intractable problems posed by
globalization, lean production or flexibilisation" (Cooke 1994, 32).
Using this perspective on networks, competitive advantage is achieved internally through
inter-firm co-operation and exploited externally through competition with firms of the
"outside" world. According to Harvard Business Review, "the new competition [...] is among
alliances of firms, not individual firms" (Rosenfeld 1996, 247; Gomes-Casseres 1994).
Lazonick argues that "to fight foreign rivals requires a suspension of rivalry in order to build
value-creating industrial and technological communities. Unless social organizations are put
in place that can engage in innovation, heightened domestic rivalry will lead to decline"
(Lazonick 1993, 8).
Non-economic factors in economic development: Trust and networking as social capital
As a consequence of the increased awareness and recognition of intra- and inter-firm cooperation and networking as important factors in promoting international competitiveness,
"the issue of (extended) trust has come to the fore" (Humphrey and Schmitz 1996, 23).
According to Lipparini and Lorenzoni "a high dose of trust serves as substitute for more formalised control systems" (Lipparini and Lorenzoni 1994, 18). In this context a critical
question is how it is possible to develop the necessary extended trust as the basis for interfirm co-operation and networking in order to sustain collective efficience, defined as "the
competitive advantage derived from local external economies of joint action" (Humphrey and
Schmitz 1996, 28). Through co-operation and networking the ambition is to create "strategic
advantages over competitors outside the network" (Lipparini and Lorenzoni 1994, 18).
However, to achieve this it is important that the networks are organised in accordance with
the principle of the "strength of weak ties" (Granovetter 1973). Grabher argues that "loose
coupling within networks affords for favourable conditions for interactive learning and
innovation. Networks open access to various sources of information and thus offer a
considerably broader learning interface than is the case with hierarchical firms" (Grabher
1993, 10).
Leborgne and Lipietz (1992) maintain that the more horizontal the ties between the partners
in the network are, the more efficient the network as a whole is. This is also emphasised by
Håkansson, who points out that "collaboration with customers leads in the first instance to the
step-by-step kind of changes (i.e. incremental innovations), while collaboration with partners
12
in the horizontal dimension is more likely to lead to leap-wise changes (i.e. radical
innovations)" (Håkansson 1992, 41). Generally Leborgne and Lipietz argue that "the
upgrading of the partner increases the efficiency of the whole network" (Leborgne and Lipietz
1992, 399).
This can be illustrated by an example from the "Third Italy", where a firm started to cooperate with its suppliers in developing new products (i.e. product innovations) in order to
institutionalise a continual organisational learning process. This co-operation played a central
role in shortening the product cycle, improving the product quality and increasing the
competitiveness of the firm (Bonaccorsi and Lipparini 1994). The firm redefined the relations
to its major suppliers based on the recognition that "a network based on long-term, trustbased alliances could not only provide flexibility, but also a framework for joint learning and
technological and managerial innovation. To be an integral partner in the development of the
total product, the supplier must operate in a state of constant learning, and this process is
greatly accelerated if carried out in an organizational environment that promotes it"
(Bonaccorsi and Lipparini 1994, 144).
Such enterprise development is based on what Lazonick and O’Sullivan (1996) call the
innovative enterprise. An innovative business enterprise does not take an achieved
competitive advantage as given, as it can be eliminated through imitation. Thus, it must be
continually reproduced through innovation. However, the innovation process has to be based
on collective learning inside the business enterprise or network of co-operating firms to give
the firm a possibility of developing their specific competitive advantage over competing
enterprises. In this way collective learning stands in contrast to individual learning, where the
improved skills are sold and purchased on the labour market at a given price (Lazonick and
O’Sullivan 1996, Storper 1997). According to Lazonick and O’Sullivan, innovation processes
in the advanced knowledge based society are characterized by such collective learning, which
depends on business enterprises creating social organisations (e.g. learning organisations and
networks) enabling collective learning to take place (Lazonick and O’Sullivan 1996).
Generally, Tödtling notes that "subcontracting relationships [...] have changed substantially:
they are no longer confined to the goal of cost savings only, but increasingly include aspects
of product quality and technology development and improvement. This implies more
selective and fewer but stronger relationships between firms since they cover not just
production but also quality control, joint research and development as well as information
exchange on and coordination of future planning" (Tödtling 1995, 14). Herrigel refers to
cases of successful adjustment and restructuring of SMEs in Baden Württemberg, where
"relations with suppliers [...] were intensified so that important providers were drawn directly
into the development process" (Herrigel 1996, 47).
Such a reorganisation of networking between firms can be described as a change from a
domination of vertical relations between principal firms and their subcontractors to horizontal
relations between principal firms and suppliers. Patchell refers to this as a transformation
from production systems to learning systems, which implies a transition from "a conventional
understanding of production systems as fixed flows of goods and services to dynamic systems
based on learning" (Patchell 1993, 797).
13
When talking about the importance of non-economic factors for the performance of an
economy we are, thus, referring to socio-cultural (i.e. institutional) as well as politicalinstitutional (i.e. organisational) factors, which incorporate historical and territorial
dimensions. In more recent writings within economic sociology the concept of social capital
has come into use. Social capital represents an extension of the “capital” concept from the
classical conomists use of physical capital (i.e. assets that generate income) and the neoclassical economics introduction of human capital, focusing on the importance of education
and training of the labour force, to capture the role social and cultural aspects in a broad sense
are playing in influencing economic performance by “encompassing the norms and networks
facilitating collective action for mutual benefit” (Woolcock 1998, 155). Social capital can
depend on the level of “civicness” in the civil society as well as on the degree of formal
organisation in the public sphere. According to Putnam, social capital means “features of
social organization, such as networks, norms, and trust, that facilitate action and cooperation
for mutual benefit” (Putnam 1993, 35-36). As such, social capital can be viewed as a
structural property of larger groups (Woolcock 1998), as it is a common value to several
people, and also represents a set of expectations, obligations, and social norms which govern
the behaviour of individuals in society (Greve 1999), or what in other contexts is called
“institutional thickness” (Amin and Thrift 1995b).
However, being aware of the fact that Europe is characterised by cultural diversity, and
knowing from empirical research that the existence of entrepreneurial as well as innovative
activity is not evenly spread out geographically, this indicates that not all cultural settings
represent social capital (i.e. the problems of applying the industrial district model in parts of
Southern Italy due to lack of trust and the dominance of strong ties). This points to the
importance of looking at social capital not only as something which has more or less
organically developed in specific geographical and historical settings, but as something that
could be developed through various forms of policy interventions. Examples of such
initiatives could be the establishment of centres of real services in the Third Italy, or the
network programmes of Denmark and Norway, which all are aimed at promoting and
stimulating the collective capacity for co-oparation and networking.
Lorenz has, in a study from the Lyon region in France, showed that trust and co-operation
among firms can be intentionally created through a "partnership" strategy, which is based on
establishing long term relations concerning the amount, price and quality of work between the
client firms and their subcontractors (Lorenz 1992). In a study from the US, Sabel also points
to the possibilities of creating trust by bringing in consultants in order to make groups of
firms capable of re-defining their collective interests so as to pave the way for what Sabel
calls "studied trust" (Sabel 1992). But at the same time he warns us that this "does not prove
that there is even one sure [...] way to actually extend trust when the actors believe it is in
their interest to do so" (Sabel 1992). In addition, it is questionable if the intentional creation
of trust between networking firms can be "embedded" in the same way as the original form of
"mutual knowlegde and trust" found in Marshallian industrial districts.
When it comes to the production of trust, agglomerations have two advantages. First,
manufacturers do not only have to rely on their own experience but can exploit the experience
of others. Secondly, agglomerations facilitate joint actions aiming at building up institutional
trust (Humphrey and Schmitz 1996). In contrast to regional economic theory, Marshall
14
attaches a more independent role to agglomeration economies. The "Marshallian" view of the
basic structures of industrial districts expresses the idea of "embeddedness" as a key
analytical concept in understanding the workings of the districts (Granovetter 1985). It is
precisely the embeddedness in broader socio-cultural factors, originating in pre-capitalist civil
societies, that represents the material basis for Marshall's view of agglomeration economies as
the specific territorial aspects of geographical agglomerated economic activity, which
concern the quality of the social milieu of industrial districts, and which only indirectly affect
the profits of firms. Among such factors, Marshall emphasises, in particular: the "mutual
knowledge and trust" that reduces transaction costs in the local production system; the
"industrial atmosphere" which facilitates the generation of skills (tacit knowledge) and
(social) qualifications required by the local industry; and the effect of both these aspects in
promoting (incremental) innovations and innovation diffusion among SMEs in industrial
districts (Asheim 1994). By defining agglomeration economies as social and territorial
embedded properties of an area, Marshall abandons "the pure logic of economic mechanisms
and introduces a sociological approach in his analysis" (Dimou 1994, 27). Harrison emphasises that this mode of theorising is fundamentally different from the one found in
conventional regional economics or in any other neoclassical-based agglomeration theory
(Harrison 1991).
A tentative answer to the problem of lack of extended trust in inter-firm networking may be
found in the informal social barrier of loyalty (Hirschman 1970, Asheim 1990). A local community, or a community of professionals, characterised by the egalitarian and collective
values of loyalty (not to be confused with solidaritiy) means higher barriers towards exit for
its members, thus ensuring that the actors within, for example, an industrial agglomeration
will continue to promote co-operation rather than competition for a longer period of time.
This increases the effectiveness of voice, which "depends on the discovery of new ways of
exerting influence and pressure towards recovery" (Hirschman 1970, 80). The discovery of
such new ways of achieving improvement "from within" will usually be the result of the
agency of either the most influential entrepreneurs or the professional, external experts
(Asheim 1992).
However, the importance of trust as a prerquisite to promote inter-firm co-opertion as a basis
for competitiveness is not a guarantee in itself for a sufficient degree of innovativeness in the
long run. Even so, factors such as trust among firms in the local cluster and loyalty among the
workforce can be of great significance in forming close and innovative inter-firm networks
with customers and suppliers/subcontracters as well as establishing flexible and learning
intra-firm organisations, which are of strategic importance in fostering competitive advantage
of firms and regions (i.e. Marshall’s agglomeration economies). On the other hand, as argued
by Lundvall (1996), “it will not be possible to preserve a reasonable degree of trust without a
minimum of social cohesion. As the social basis for learning is eroded, the rate of change will
slow down. This is one reason why the analysis of the learning economy cannot neglect the
social dimension and also why any policy strategy aiming at promoting the learning economy
must have a New New Deal as an integrated part” (Lundvall 1996, 17).
15
Conclusion: Partnership as governance in Schumpetarian workfare states?
What is the policy implications of the increased importance of co-operation in promoting
innovation with regard to forms of governance in societies, in which non-economic factors
play a significant role for their economic performance. According to Lundvall and Johnson
(1994), post-Fordist societies are characterised by such an economy, which they call a
learning economy. Jessop argues that “as the dominant techno-economic paradigm shifts from
Fordism to post-Fordism, the primary economic functions of states are redefined”
(Jessop1994, 262). He maintains that the post-Fordist changes in the organisation and
location of production also make “public-private partnerships and other forms of heterarchy
more relevant. ... This is seen in a turn from the “Keynesian welfare national state” to a more
complex, negotiated system oriented to institutional competitiveness, innovation, flexibility,
and “enterprise culture”. ... In the emerging Schumpetarian workfare regime, the market, the
national state, and the mixed economy have lost significance to inter-firm networks, publicprivate partnerships, and a multilateral and heterarchic “negotiated economy”” (Jessop 1998,
35).9
Seen from a regional perspective, where local states during the Fordist era “operated as
extensions of the central Keynesian welfare state” (Jessop1994, 271), we see today a
“reorganisation of the local state as new forms of local partnership emerge to guide and
promote the development of local resources. In this sense we can talk of a shift from local
government to local governance. Thus local unions, local chambers of commerce, local
venture capital, local education bodies, local research centres and local states may enter into
arrangements to regenerate the local economy” (Jessop 1994, 272). This is a precise
description of what we in this article, along with Ennals and Gustavsen (1999a), have called
regional development coalitions, and which we regard as being of strategic importance for the
formation of learning regions. Thus, from a Scandinavian point of view public-private
partnerships, as an example of de-statization of politics, does contain some potential
progressive elements of a policy of job-generating growth in Europe, and, could,
consequently, rather be said to represent a continuity of “modernizing” social-democratic
welfare states than the discontinuity of being a basic element of a Schumpetarian workfare
state (Amin and Thomas 1996, Hernes 1978, Jessop 1994). This would be in line with the
perspective of the recent Green Paper on “Partnership for a new organisation of work” from
the European Commission DG V (Ennals and Gustavsen 1999a and 1999b, Fricke 1999,
Totterdill 1999) as well as the overall popularity of the concept of learning regions among
policy makers and several international agencies and organisations (in addition to DG V),
such as the work of DG Regio of the European Commission on innovation policy and
regional developement (Landabaso, forthcoming), and OECD’s series of European
workshops on learning regions (e.g. Maskell and Törnqvist 1999). This is also in accordance
9
Porter (1998) argues that “leaders of business, government, and institutionss all have a stake – and a role to
play – in the new economics of competition. ... The lines between public and private investment blur.
Companies, no less than governments and universities, have a stake in education. Universities have a stake in the
competitiveness of local businesses” (Porter 1998, 90).
16
with the new institutionalist perspective on regional development (Amin 1999, Amin and
Thrift 1995b, Brulin 1998, Grabher 1993, Lundvall 1996).
Finally, contrary to addressing the structural limits to learning in a capitalist economy, the
focus should be on the new possibilities in a learning economy of creating context conditions
supporting a plus sum game generating endogenous regional development in some regions
without distorting the growth potentials of other regions (Lundvall 1996). Concerning the
structural limits to learning, these are - within a capitalist economy - basically caused by a
policy of weak competition. Thus, a policy of strong competition, building on innovation and
differentiation strategies in networks of large and small firms on the basis of interactive,
localised learning and continual innovation in industrial and territorial clusters, has
considerable potential for learning, as it provides the best material context for an innovation
based learning economy, and, as such, represents the most dynamic, long-term growth
oriented kind of capitalism which can achieve development in as well as of regions.
As mentioned earlier, the emphasis on interactive learning points to the importance of cooperation, which reminds us of the significance of non-economic factors, such as trust and
institutions, for the economic performance of regions and nations. Consequently, the question
of how trust can be fostered within firms, between firms in networks and by public-private
partnership at the regional level in order to promote increased co-operation as a source of
competitive advantage of regions, is very important from a policy perspective. According to
Lazonick, “history shows that the driving force of successful capitalist development is not the
perfection of the market mechanism but the building of organizational capabilities” (Lazonick
1991, 8). In general, according to Freeman and Perez (1986), it is important to remember that
the diffusion (exploitation/utilisation) of knowledge is not dependent on techno-economic
subsystems, but on the socio-institutional framework. Thus, in order to generate economic
growth and increased employment, as a basis for achieving social cohesion, focus must be on
the absorption capacity of socities, which points to the importance of non-economic factors
such as culture (social capital) and politics (e.g. educational policies securing a well educated
population through an equal, free of cost and proximate access to high quality educational
facilities) for economic performance, through improving the potentials for (regional) learning
in a society. However, a learning based strategy of endogenous regional development cannot
be applied accross the board, as the necessary requirements concerning socio-cultural and
socio-economic structures are to be found in relatively well-off regions, and the sufficient
techno-economic and political insitutional structures only in relatively developed countries.
In this context it is important not to have a pre-deterministic view of the development paths
of capitalist societies. Marx gave up the paradigm of necessity in his political-economical
works (Schanz 1985), implying that the "logic of capital" must be interpreted as tendencies,
which depend on contingently related conditions to be realised (Asheim and Haraldsen 1991).
Contemporary examples of economic development clearly show that the social democratic,
coordinated capitalist development in Norway and the Third Italy is rather different from, and
represent other "windows of opportunities" than, the neo-liberal, uncoordinated development
in Britain and USA (Soskice 1999). This points to the duality of agency and structure in
societal development, confirming that "men make their own history, but they do not make it
just as they please; they do not make it under circumstances chosen by themselves, but under
circumstances directly encountered, given and transmitted from the past" (Marx 1972, 10).
17
This has to be taken into account when evaluating the prospects of a strategy for the
formation of learning regions based on development coalitions in different regions, and the
possible, resulting "worlds of production" (Storper and Salais 1997).
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