dr. Loek F.M. Nieuwenhuis (in cooperation with dr. Ineke Lokman & Patricia Gielen)
Stoas, Department for Research on Education and Employment, Wageningen, the Netherlands
Summary of Paper Presented at the European Conference on Educational Research, Lahti, Finland 22 - 25 September 1999
Innovation is important for the competitiveness of enterprises and industrial sectors. Innovation is a complex process based on interactive network learning and trial and error processes on the shop floor. For small and medium enterprises, this innovative process should be facilitated by out-of-company institutes. Both sectoral and regional organisations for support of innovation and transfer of new knowledge and technology should play a role.
This contribution is targeted at the role of vocational education and training (VET) in the innovative process of early- and late-adopting enterprises. A major precondition is, that the VET-system is able to cope effectively with the challenge of responsiveness: flexible responses to new skill requirements, both in initial education and in the course supply for workers. Responsive VET can be a strong instrument in the dissemination of R&D results towards small and medium enterprises. VET-colleges are challenged to function as pivot actors in regional, innovative learning networks of enterprises.
Innovation is important for the competitiveness of enterprises and industrial sectors. The main line of thoughts stems from evolutionary economics, in which the dynamic aspects of economic development are central (see Dosi & Nelson, 1994). Schumpeter (in Kleinknecht, 1994) formulates during the interbellum the process of creative destruction, in which enterprises with old-fashioned products are expelled by enterprises with new products (competition on substitution and not on prises: see Jacobs, 1996). Innovation and technology development is the main tool to survive this dynamic process.
Protection of old enterprises hinders the process of creative destruction, which should lead to under-investment in innovation. According to Kleinknecht investments in R&D lead to increasing export and job growth on enterprise level. Innovative enterprises are more resistant to economic crises.
National and European policy makers believe in massive investments in technical-oriented research programmes as a major impulse for innovation in industrial sectors. The production of new knowledge and technology is the prime target of these programmes, which are built on a firm trust in the usefulness of the results of research efforts for companies and service organisations. On the other hand, the results of science and technology development are not easily implemented in the primary production processes of companies. Especially small and medium enterprises meet problems adopting new knowledge or even finding it. To facilitate the implementation of R&D results, sectoral and regional innovation centres were invented in the Netherlands during the eighties. Even such centres don't reach the majority of companies. To understand these paradoxical observations, the knowledge transfer process has been studied in more detail. Recent studies on innovation (see Coehoorn, 1995; Engel, 1995; Röling 1992) show that linear models for knowledge transfer should be replaced by interactive models for innovative processes, in which trial-and-error processes on the shop floor are interrelated with existing knowledge bases and the research infrastructure.
Verkaik (1997) defines innovation as the development of new products and processes which can be made valuable and applicable in short term. Innovation differs from technology development and fundamental research, both on the time horizon as on the economic-cultural context. Innovation, technology development and research are three different kinds of knowledge generation, relating to each other as Living-Apart-Together: sometimes they interact strongly, sometimes they are loosely linked.
Dosi (1988) describes the micro-economic processes of innovation. Data on R&D and patenting only show a glimp of innovative activities: innovation is often learning-by-doing. According to Dosi, four types of innovative processes can be discerned:
- formal R&D;
- informal knowledge diffusion through journals, organizations, mobility and observation;
- learning-by-doing and -using in problem solving behaviour;
- purchasing knowledge through machinery and tools.
Innovation is problem solving according to Dosi: ill-defined technical problems have to be solved through creative learning, based on formal and tacit knowledge. Tacit knowledge is important in relation to the appropriability of innovations: the comparative advantage is depending on it. Innovations are cumulative; they are built on former activities and in-company knowledge, what hinders the imitation of innovation by competitors.
Innovation is not a random process, but based on historically rooted mainroads depending on technological paradigms: innovative products are built on older technologies and products (a main reason for that is consumers demands). Innovation is predictable via zones of near development. Technological paradigms are characterized by specific learning strategies, which leads to reduction of uncertainty.
Company internal knowledge and routines lead to a prevalence for internal innovation. Even in the case of purchasing new tools, internal capacity is needed to implement the new knowledge. Innovative companies are biult on their won core-compentence (Hamel & Prahalad, 1992). The embeddedness of innovations within this core-competence and internal learning processes is the best protection against imitation.
Competitiveness, innovativeness and internal craftmanship are fundamental elements of a healthy company. Maintenance of this fundament asks for knowledge management. Detecting and using of external knowledge sources and the organization of internal learning processes is a central aspect of modern management. Oerlemans (1997) states innovation as an embedded process (within a knowledge context) in wich the exchange of learning and technical sources is elementary, especially for SMEs. Economic networks are basic to transform heterogeneous knowledge sources into useful neue combinationen.
Problem solving and innovation through trial-and-error processes can be seen as informal learning processes, in which social networks play an important role. Workers learn by sharing knowledge in the working team and employers learn by creating networks of colleagues and advisors. The relation between innovation and competencies is not univocal. A reciprocal relation is postulated: the skill level within enterprises is prerequisite for innovative activities; at the other hand innovation will lead to obsoletion of skills, which causes a need for reskilling and training. In recent literature on occupational competencies it is stated that learning skills are more important than job specific skills.
2 Knowledge context and knowledge sources
Companys innovation is an embedded process. Companies are not solo players in the knowledge and technology field. According to Oerlemans (1997), companies are embedded in various knowledge spaces. Innovation is an embedded process; knowledge and technology are exchanged within networks of collaborative companies and institutions. The innovative process can be characterized as the combining of exixiting knowledge into new combinatory knowledge. To organise this combinatory process, companies need to collaborate with other companies and knowledge institutes. This is especially the case for small and medium sized companies, because they do not possess large internal knowledge sources. For effective innovation, small and medium sized companies have to use external knowledge sources. Industrial networks are necessary for the transformation of knowledge into new innovative combinations and products.
The external knowledge context is complex for SMEs. The entrepreneur or the employer, with his/her skilled employees, is involved in problem solving and innovative processes. In first instance, he looks for internal solutions. But very soon external sources will be used too. At the one hand, professional journals, financial advisors, suppliers and customers will bring in new knowledge deliberately or accidentally, whereas at the other hand companies will look for new knowledge sources continuously. So an interactive exchange of knowledge will develop around internal company processes. The enterprise is embedded within an expanding knowledge space. The knowledge space surrounding companies is multidimensional: at least three dimensions can be discerned: the product chain, the professional sector and the socio-economic region.
- With the product chain dimension the relevance of user-producer and producer-buyer relations is pointed at. Learning and innovation are taking place through the exchange of product requirements and quality information systems.
- With the craft-bound dimension the exchange of knowledge between competing companies is pointed at. In many cases common interests exist, pushing competitors in collaborative innovative activities.
- On the spatial dimension knowledge exchange is seen as a process between companies in the same (sometimes virtual) region. Direct contact via observation, discussion and shop floor visits is an important feature of knowledge exchange. Also the supply of skilled labour is spatially bound.
2.1 Chain knowledge or knowledge chains?
Enterprises exist within product chains. They need raw materials, tools and machinery to be able to produce their products and services, which in their turn should be tuned to specific needs and requirements of their customers. Chain management is an important new field of business management, targeted at inter-company relations: product-accountability, quality information exchange, logistics for transportation and stock keeping are major subjects in this field. Knowledge development and collaborative innovation should be part of chain management: sources for innovative activities are not always located within the producing enterprise: according to Von Hippel (1988), the source of innovation is located within the supplier-producer-user chain, depending on the expected benefits: production chains are important units for analysing innovation processes.
Caused by the tacit aspects of innovation, the partial appropriability of new technologies and the cumulative character of innovation, enterprises are developing differently. By succesful introduction of new products, innovative companies are able to define the economic rules for their competitors. Innovation leads to comparative advantages. Imitation and diffusion lead to convergency. Depending on market figures, enterprises seek for collaborative innovation. Within supplier-dominated chains, collaboration is easier to realize. Innovation is important for competetiveness; measurement of effects can only be done ex-post.
2.2 The sectoral dimension
Industrial sectors have their own possibilities to scaffold innovative activities within SME's. According to Finegold (1991) industrial sectors should look for ways to facilitate cooperation between enterprises and common activities to enhance investments in training and innovation. Prisoners' dilemma's are setting up low skill traps: individual enterprises will decrease their investments in human resources if they are endangered by poaching behaviour of their competitors. So, industrial sectors have to look for policies which will scaffold cooperative behaviour in training and innovation; trade unions can play a facilitating role.
Based on cooperation between companies, sectors should be able to build sector-bound infrastructures for technology transfer and training policies. In order to scaffold these sectoral policies systems are needed for the monitoring of future technology developments; the results of monitoring activities can be translated into transfer supporting measures and skill requirement forecasts.
Sectoral challenges to facilitate innovation and learning processes are: establishing preconditions for collaboration between competitive enterprises in the field of training and innovation; building future oriented monitoring systems for technology development; building support systems for company bound innovation and training; defining of key competencies for skilled workers and entrepreneurs; creating sectoral ownership for vocational education and training systems.
2.3 The regional dimension
Morgan (1997) stresses the importance of the network paradigm in understanding regional development strategies. He emphasises the importance of creating learning regions, analogous to the concept of learning organisations, as building up collective learning capacities between geographically related enterprises and regional infrastructural provisions. Strong industrial districts seem to be characterized by learning interrelations between enterprises. Italian industrial districts are characterized by mono-productivity: each district is famous for a single set of products. Learning and exchange of expertise is essential to keep the quality of this set at a guaranteed level. Other emerging regions are characterized by chain relations: exchange of innovation and information is related to purchasing and selling activities. These kind of learning networks are strong because of their hedging impact on economic activities.
In underdeveloped regions these kind of learning networks are non-existing, because of a lack of economic activities and a low availability of infrastructure. The challenge for regional or local authorities is to establish labour market policies which lead to high level learning potentials and emerge networks of starting entrepreneurs as a part of their economic policy. Innovative VET-provisions could lead to improve the innovative capacity within regional economies (see Morgan, 1997) and by that give an impulse to regional economic development. Less developed regions are characterised by less developed educational provisions (see EC report on competitiveness and cohesion in the regions) so one of the challenges is to improve these provisions. To reach that target, regional VET-provisions should act pro-active in strong alliances with other knowledge provisions like innovation centres and sectoral knowledge centres. This is one of the targets of the regional development programme of EC DG XIII. EC policies, for example the European business and Innovation centres, targeted on the interrelation between SME's and higher education, can scaffold these developmental programmes.
Regional challenges to enhance industrial innovation and learning processes are: building learning networks of enterprises; offering facilitative infrastructure for technology transfer; educating a high skilled labour force. Meeting these challenges is one of the preconditions for stimulating regional economic development. Regional and national governments have restricted options to facilitate knowledge networks: establishing intermediate organisations, enhancing fundamental research and deveolpment and maintaining vocational education and training are mentioned as governmental instruments in this respect (see OECD, 1997).
2.4 VET as part of the knowledge context
Vocational education and training is present the most on the regional dimension. The supply of a well skilled labour force is the main task for VET-institutions. Whereas mobility of the labour force is regionally bound, the impact of VET is regional. For building competitive regional economies, VET is a major player as is shown by Rosenfeld (1998) on a recent OECD-conference. Next to the supply and maintenance of a skilled labour force, a new task area is pointet at for technical colleges: brokering of (new) knowledge towards the local economy. This implies regional strategies for economic development, of which VET should be an integral part.
Also on the sectoral dimension VET is present as an important actor. Occupational identity is an important instrument to hedging economic activities of the professional group. The vocational courses and qualifications play an important role in this hedging process (see De Bruyn and Nieuwenhuis, 1994). At the other hand, the legitimizing and development of technical and vocational courses is often based on skill definitions from the professional group. Trade unions and employer organisations play their roles in the defining of vocational courses in German and Dutch apprenticeship systems and in the formulation of national vocational qualification standards in the UK system. VET is delivering and developing occupational standards, interacting with the professional sectors. Employers and skilled workers use their professional institutions for maintenance and upgrading of their skills. Innovative shifts in occupational requirements often stem from developments within the educational system. So also on the sectoral dimension VET has powerful potentials for facilitating innovation within SMEs.
The production chain is a rather new perspective to analysing innovative processes and related skill developments. Joint innovative activities often are based on chain linked relations between enterprises, but skill developments are not related yet to chain developments. However, whereas production chains have large potential for new economic and innovative perspectives, this is an interesting new area for developing VET strategies.
To enhance knowledge transfer processes, vocational education, training and extension should play four important roles (see also Rosenberg, 1998):
- education and training of new employees and employers will scaffold the knowledge base in companies,
- the supply of up-to-date information and training facilities will update the knowledge and skills of the workforce
- facilitation of technology adaptation
- the organisation of active networks of enterprises to facilitate interactive learning processes.
Training institutes should take up the challenge of the knowledge transfer process by ensuring a high degree of responsiveness to the results of science and technology development. Regional training colleges, supported by sectoral innovation centres, have the opportunity to become a pivot in the learning networks of small and medium enterprises, by implementing innovative knowledge from the R&D infrastructure into their course supply. Central in the model are intermediate structures established by industrial sectors to enhance communication between R&D and VET-systems. These intermediate structures are depending on sectoral features (economic cohesion, cooperation between companies, relevance of human capital), innovative processes (interactive vs. linear; market or science oriented), and on features of the sectoral training and innovation system (school/company based; job or domain oriented; based on collective agreements).
VET is standing on the crossroad of regional and sectoral policy perspectives: labour markets are regional defined; the supply and demand of employment is spatially bound because of mobility limits. Craftsmanship at the other hand is highly sectoral bound, because of the intertwining between occupational domains and economic activities. Educational policies in VET are more or less connected to sectoral policies, depending national VET-systems and socio-economic constraints. VET-institutions have to build both sectoral and regional networks to operate effectively in supplying a well qualified labour force, prepared for life long learning and innovative employment.
3 Casestudies on new qualifying strategies
The former paragraphs offer analytical instruments to investigate new developments in qualifying strategies for economic innovation within regions and industrial sectors. In the following paragraph some empirical evidence of the usefulness of these tools will be shown. The empirical base of this contribution is established in former case studies, which have been undertaken in several Dutch industrial sectors with a large proportion of SME's (Grooters & Nieuwenhuis, 1996; Lokman & Nieuwenhuis, 1998; Gielen & Nieuwenhuis, 1998). The intermediate knowledge infrastructure in several industrial sectors is studied and comparative analyses are made of the role of vocational education and training in facilitating innovations in enterprises.
Based on these cases a sectoral/regional innovation model has been built, in which four actors play a major role: SME's, R&D-infrastructure, sectoral innovation agents and VET-institutes.
- small and medium enterprises have to be innovative to improve their competitiveness; they use knowledge from different sources but they also produce new knowledge as a result of their innovative activities;
- institutes for research and development produce lots and tons of new knowledge, but they meet problems in disseminating that knowledge towards SME's;
- in several industrial sectors innovation centres have been established targeted on the translation of innovative knowledge towards the sector-bound enterprises. Social partners play an important role in the funding of these centres;
- regional innovation centres play a facilitative role in disseminating innovative knowledge. VET provisions have the opportunity to play their role in regional networks through educating youngsters, training of workers and organising learning networks of enterprises.
In the presentation these aspects of regional/sectoral knowledge contexts will be illustrated from different angles. These cases are taken from a Dutch context: a European perspective will be added through a Leonardo survey and analysis project called Spidervet: VET-colleges as spiders in regional knowledge networks. Spidervet is now in the stage of data-analysing and should deliver a final report in april 2000.
- Sectoral hedging in installation engineering
- Chain relations in the bakery sector
- Knowledge systems for greenhouse farmers
- A linear approach in environmental technology
- Regional networking within the metal working industry
- School management strategies within regional networks
4 Summarizing conclusions
This contribution is targeted at the role of vocational education and training (VET) in the innovative processes of early and late adopting enterprises. The increasingly high pace of innovative processes urges VET to develop new strategies to deliver and to maintain skilled craftsmanship for the regional labour market. The traditional target for initial, regular course delivery should be combined with new targets and strategies for adult courses and innovation facilitating activities. Organisations for VET cannot act anymore as stand alone institutions, but should develop network oriented strategies. VET colleges should define their own specific role within learning SME networks and they should look for strategic alliances with other knowledge institutions in their regional context.
Facilitating innovative processes within regional economies should be part of the core competence of VET institutions. Enterprises innovate, embedded within regional, sectoral and chain-bound networks. Enterprise innovation is an interactive process of problem solving and combining of pieces of knowledge and technology into new combinations. Strong companies create unique, company-specific knowledge based on internal tacit knowledge spirals and smart use of external knowledge sources.
These external sources are found within the production chains, in which companies are involved: suppliers of tools and materials and innovation-demanding customers. Also the industrial sector, companies are belonging to, is an important source of knowledge and technology, depending on the cooperative power within those sectors. The third source of knowledge, we have discerned, is the spatial context in which companies have to survive: the local community of enterprises, knowledge institutes and labour market organisations are major resources, especially for small and medium enterprises.
Enterprises have to survive in this three-dimensional knowledge context. For their internal innovative processes they have to use smartly the existing knowledge sources in relevant communities of economic practice.
Knowledge development fundamentally is a social process. Companies should develop towards reflective communities based on high skilled work. Traditional workplaces should be transformed into learning communities. Vocational education and training traditionally is organised compatible with traditional workplaces, leading to ineffective learning processes. Innovative work processes need new forms of vocational education: constructivistic learning theories offer challenging new instructional perspectives.
To facilitate innovative processes, knowledge institutions, like VET colleges, should be able to deliver information on new technologies just in time. These institutions should organise their own knowledge networks to be able responding this chaotic knowledge demand. Besides the delivery of new skilled workers, VET colleges have to develop new competencies to serve the regional economy: adult training to maintain the skill levels within enterprises at the one hand and scaffolding of regional innovative networks at the other hand. Several case studies have been presented to investigate new strategies of VET institutions within regional-sectoral arrangements of knowledge networks. Analysing these case studies should offer new ways for VET to enhance regional economic development.
In the case of installation engineering we see an industrial sector, organising a sectoral infrastructure to enhance innovation and hedging of economic activities at enterprise level. Regional VET institutions get information on these innovative activities, to ensure course delivery at local level. In this model VET colleges have to react on innovations and to organise local networks of late adopting installation enterprises.
In the case of innovation in the bakery sector, we see a chain-bound model: suppliers of raw materials form the source of innovations: new recipes should keep craft bakery attractive for customers and new machineries should keep the craft attractive for workers. Along with these innovations, the supplying industry also delivers course materials. The national bakery centre tries to play a coordinating role.
In the greenhouse farming the pivot actor in innovative processes is the entrepreneur-farmer. The innovative farmer is organising his knowledge context actively, through contacts with collegue-farmers, research institutes and other players within the agricultural knowledge infrastructure. In the Netherlands agriculture is a high-tech innovative industry. Educational institutes do not play a major role in most parts of the Dutch agricultural sector.
In the case of a linear approach to disseminate new energy saving technology, the supplying knowledge institutes show a rather naive model of technology adoption. The analysis shows that a two stage model for technology diffusion is more appropriate: knowledge diffusion towards (regional) intermediate knowledge institutes, which should organise on their part learning networks in their region. VET colleges have the opportunity to play such an intermediate role.
The regional case in the metal industry shows a college taking its innovative role seriously: in a well organised innovative region this VET college is restricting its role on delivery and maintenance of a skilled labour force and on playing a networking and brokering role for further knowledge demands of enterprises. In this particular case this is a reasonable strategy, because of the presence of well equipped innovation institutes in the region. In less organised regions, VET colleges could take a more prominent role in the regional innovative processes.
The last case study shows that school management of agricultural VET colleges are aware of the urgency of new innovative strategies for their institute. The implementation of new strategies is still in its infancy. New professionalism and qualifications of teachers is a major prerequisite for this institutional development. It is doubtful if this prerequisite is fulfilled in most VET colleges.
The case studies show that industrial innovation is an economic driven process in which the role of VET is marginal. Although the traditional delivery of vocational courses is still the prime target of VET colleges, it is no longer an adequate response on the increasingly changing skill demands. According to Rosenfeld (1998) at least four categories of activities should be developed by vocational colleges to support technology diffusion and innovation:
- education as gateway to the workplace; the delivery of initial vocational education and training, based on new instructional designs as cognitive apprenticeships; this cluster also includes attention for disadvantaged youth and for adequate recruitment for technical vacancies;
- adaptation of the work force to new technology through upgrading skills and retraining. This includes the formation of training networks and reskilling of displaced workers;
- acceleration of the deployment of new technologies through establishing an intermediate role in several formes;
- establishing of networks of learning companies and learning communities.
To be able to operate in such a strategic way, VET colleges should have clear goals and strategic vision embedded in their strategic management. Rosenfeld (1998) argues that the most entrepreneural and innovative colleges are characterised at least by 1) an economic development mission statement, 2) a focus on their region, including cluster specialisation, 3) being a repository of know-how for SMEs, which is easy to enter for individual entrepreneurs, 4) being capable to relate technology adaptation to skill requirements, offering suitable training courses when companies are involved in technology investments; 5) exhibition of flexibility and adaptability (responsiveness) in their training supply; 6) facilitating interaction and common learning activities among people in different organisations.
VET colleges should become learning organisations to develop these organisational skills. National and regional governments should encourage and facilitate colleges in that direction. Colleges should become spiders in regional learning networks, with open information connections towards the local economic community at the one hand and towards sectoral knowledge sources at the other hand. Within this network strategy, colleges should be aware of their own core compentencies and form alliances with complementary knowledge institutes. Specialisation on regional industrial clusters can strengthen the pivotal position of the colleges. Expanding their role from initial vocational education and training into facilitating regional and sectoral innovation and technology adaptation, VET colleges have the potential to become one of the most important knowledge institutes for local and regional economic development.
This document was added to the Education-line database on 19 October 1999