DEVELOPMENT OF THE KNOWLEDGE ECONOMY IN REGIONS (THE KNOWLEDGE TRANSFER FROM UNIVERSITY)

UNIVERSITY OF ECONOMICS IN BRATISLAVA
FACULTY OF NATIONAL ECONOMY

BACHELOR THESIS

2008

Peter Chovaňák


UNIVERSITY OF ECONOMICS IN BRATISLAVA

FACULTY OF NATIONAL
ECONOMY

DEPARTMENT OF PUBLIC
ADMINISTRATION AND
REGIONAL DEVELOPMENT

BACHELOR THESIS
DEVELOPMENT OF THE KNOWLEDGE ECONOMY IN REGIONS
(THE KNOWLEDGE TRANSFER FROM UNIVERSITY)

Bratislava

Author:

Peter Chovaňák

Bachelor thesis consultant:

Ing. Štefan Rehák, PhD.

2008


DECLARATION
I, hereby declare that I have written this thesis alone and that I enclosed in reference all
relevant resources I have used while working on this thesis.

In Bratislava, 30.4. 2008

............................................
Peter Chovaňák


ACKNOWLEDGEMENTS
I would like to thank my consultant Ing. Štefan Rehák, PhD., for assisting me in writing this
bachelor thesis. I am grateful to his thoughtful comments and valuable suggestions which
were of great help in preparing the final version of the text.

In Bratislava, 30.4. 2008

............................................
Peter Chovaňák


Abstract
Name: Peter Chovaňák
Title: Development of the knowledge economy in regions (The Knowledge Transfer from
University)

Bachelor work
University of Economics in Bratislava
Faculty of National Economy
Department of public administration and regional development
Bachelor work consultant: Ing. Štefan Rehák, PhD.
Bratislava, 30.4.2008
Number of pages: 58

The Knowledge Economy is involved in many theoretical and practical approaches to
the functioning of economy in regions. Introducing such approaches and looking at their using
and functioning in reality is offered as a starting point for later application of thoughts from
them that should go towards regional development and that can in many ways lead to the
economic growth and development. We introduce the knowledge economy in general and
then explain its regional dimension. Our impact is on the university and its role in regional
development. We emphasize the importance of creating knowledge and its transfer from
university to industries and we describe several tools of such transfers. In the last part of the
work we give The University of Oxford as an example of successful using of knowledge
transfer that support development of the knowledge economy in its region. Our aim is not
giving new solutions that should support development of the knowledge economy in regions
but we want to identify those existing that can become very useful for further research and
development in regions or at university and that can people benefit from.

Key words: regional development, knowledge, knowledge transfer, university, The University
of Oxford


Table of Content
INTRODUCTION .............................................................................................................. 7
1

CONCEPT OF THE KNOWLEDGE ECONOMY ..................................................... 9
1.1 KNOWLEDGE AGE .................................................................................................... 9
1.2 KNOWLEDGE ECONOMY AS NEW ECONOMY ..................................................10
1.2.1

Learning organisations, networks and global competition .................................11

1.2.2

Flexible organisations .........................................................................................12

1.2.3

Policies to support knowledge .............................................................................12

1.3 REGIONS AND KNOWLEDGE DEVELOPMENT ..................................................13

2

1.3.1

The new regional comparative/competitive advantages .....................................13

1.3.2

New Models of Regional Development................................................................15

1.3.3

Globalisation versus Regions ..............................................................................22

REGIONAL DEVELOPMENT AND UNIVERSITY ................................................23
2.1 KNOWLEDGE TRANSFER AND UNIVERSITY .....................................................25
2.1.1

From Technology Transfer to Knowledge Transfer ............................................26

2.2 TYPOLOGY OF INDUSTRY-SCIENCE RELATIONS ............................................29
3

TRANSFER OF KNOWLEDGE AT THE UNIVERSITY OF OXFORD ...............38
3.1 REGION OF OXFORD – OXFORDSHIRE ................................................................38
3.2 FACTS ABOUT THE UNIVERSITY OF OXFORD ..................................................39
3.2.1

University of Oxford in county of Oxfordshire ....................................................41

3.3 WAYS OF THE KNOWLEDGE TRANSFER FROM THE UNIVERSITY OF
OXFORD………………. ..................................................................................................................42
3.3.1

ISIS Innovation Ltd ..............................................................................................42

3.3.2

Other ways of knowledge transfer from the University of Oxford ......................45

CONCLUSION .................................................................................................................49
REFERENCES ..................................................................................................................51

INTRODUCTION
The knowledge economy is becoming well known to many people. But sometimes the
way how it works is not understood sufficiently. If it is so, it is something like riding horse.
Somebody will seat us on the horse, we can ride and everything is right. Suddenly, there is a
problem. We want to stop or change the direction but we do not know how. It is almost
impossible without knowing how to do it. And when we imagine what we have to do, if we
would like to be professional riders... Development of the knowledge economy in regions is
based on the principles of the knowledge economy in general but it has got also some
specifics - spatial, infrastructural, geographical, and economic. There are also regional players
which have their own role. We are thinking primarily of university and its ability to become
the “catalyser” of development in region trough creating and transferring the knowledge.
The aim of our work is to explain theoretical and practical functioning of the
knowledge economy in regions. We would like to introduce the role of university in the
regional knowledge development. We look at the university as a place where the knowledge
originate from and as a place where knowledge can flow from and then can be utilize further.
Transfer of knowledge is central for this thesis. View of main principles and tools of the
knowledge transfer we consider important because it can help (economists, scientists, firms,
government etc.) to make decisions and concrete steps towards the regions’ development. The
development will take place in regions that will be built on the knowledge economy bases.
There will be flow of the knowledge and industry science relations will help to develop the
regions (meaning quantity and quality of the development as well).
The way how the thesis is compiled is based on working with many resources that
offer various views on the issue. Some authors of these resources already have done certain
kind of summarizing of thoughts that have proved good. We do not want to make up new
thoughts or theories. We try to explain those who are already in the world. We try to offer
them to reader as a challenge to study and act more according to them and to put them into
practice in his own region, university or firm.
To understand the regional dimension of the knowledge economy we introduce the
knowledge economy in general and then we try to apply its fundamentals on regions. The first

chapter speaks about the knowledge economy as new economy and there are introduced
possibilities of regional development in the context of the knowledge economy. We offer
7


several theories of such development for better understanding and knowing the problems that
they think out.
The second chapter is about university as an important player of the region and its
impacts on regional development. We describe different kind of industry science relations that
help to transfer knowledge from university.
There is showed how such industry science relations function at The University of
Oxford and how does they help to the development of the university and its region in the third
chapter.

8


1

CONCEPT OF THE KNOWLEDGE ECONOMY

1.1 KNOWLEDGE AGE
“We are living through a period of profound change and transformation of the shape of
society and its economic bases. The nature of production, trade, employment and work in the
coming decades will be very different from what it is today.” (FORFAS in HOUGHTON and
SHEEHAN, 2000, p.1)
“In an agricultural economy land is the key resource. In industrial economy
natural resources, such as coal and iron ore and labour are the main resources. A
knowledge economy is one in which knowledge is the key resource. One in which the
generating and using of knowledge have started to play the predominant part in the creation of

wealth. It is not just about pushing back the frontiers of knowledge; it is also about the more
effective use of all types of knowledge in all manner of economic activity. It is not a new idea
that knowledge plays an important role in the economy, nor is it a new fact. All economies,
however simple are based on knowledge, need to know how, for example, to farm, to mine
and to build; and this use of knowledge have been increasing since the Industrial Revolution.
But the degree of incorporation of knowledge and information into economic activity is now
so great that it is inducing quite profound structural and qualitative changes in the operation of
the economy and transforming the basis of competitive advantage. The rising knowledge
intensity of the world economy and our increasing ability to distribute that knowledge has
increased its value to all participants in the economic system.”(HOUGHTON and
SHEEHAN, 2000, p.1)
COATES and WARWICK (1999, p.11-14) identify four important influences which
are acting to increase the pace of change in economies throughout the world towards the more
knowledge based:
1. revolutionary changes in information and communications technology
2. more rapid scientific and technological advance
3. competition becoming more global
4. changes in income, tastes and lifestyle ( rising incomes tastes have led to
greater emphasis on quality and design, on convenience services and on
9


cultural and recreational activities, and a shift in attitudes to sustainable
development)

1.2 KNOWLEDGE ECONOMY AS NEW ECONOMY
Knowledge economy has some significant features, different from the industrial
economy

we

have

known

for

most

of the

last

200

years.“Knowledge

has

fundamentally different characteristics from ordinary commodities and these differences have
crucial implications for the way a knowledge economy must be organised” (STIGLITZ in
VAITILINGAM, 1997, p.5). Front costs associated with the production of traditional goods
such as a car or house may not necessarily be high, each item is still costly to produce. On the
other hand, front development costs (in the case of innovation, ideas and information) can be
high, but the reproduction and transmission costs are low.
“When traditional inputs are added to the stock of economic resources, the
economy grows according to traditional production function “recipes”.
For example, more labour can increase GDP by an amount that depends on
current labour productivity, or more steel can increase production of autos,
housing or tools by predictable amounts according to the current state of the

arts... While new knowledge will generally increase the economy's potential
output, the quantity and quality of its impact are not known in advance.
There is no production function, no input-output “recipe” that tells, even
approximately, the effect of a “unit” of knowledge on economic
performance“(OECD, 1996, p.30).
There should be drawn a basic difference between knowledge and information, as
well. Knowledge, in whatever field, empowers its possessors with the capacity for intellectual
or physical action. So what we mean by knowledge is fundamentally a matter of cognitive
capability. Information, on the other hand, takes the form of structured and formatted data that
remain passive and inert until they are used by people who need to interpret and process them.
The full meaning of this difference becomes clear when one looks into the conditions of the
reproduction of knowledge and information. While the cost of replicating information
amounts to no more than the price of making copies, reproducing knowledge is far more
expensive process because some, indeed many, cognitive capabilities are not easy to articulate
explicitly or to transfer to others (OECD, 2004, p.18). There are elements that therefore
remain “tacit”: “we know more than we can say” (POLONAY in OECD, 2004, p.18)
In spite of this fact information (information and communication technologies) lays
the foundations of the knowledge economy. Of course, we have to consider other elements of
10


the knowledge economy as well. Especially: science-based innovations, collaboration among
users (of information and users who are responsible for innovation), flexible and learning
organisations, global competition and production. We consider them to be the most important
elements for us because they will help us to understand better the approach to the knowledge
development we would like to introduce in this work. That is the reason for explaining them
more along with the policies that support the knowledge economy.

1.2.1 Learning organisations, networks and global competition
Scientific knowledge contributes to creating new or improving existing products,

services, processes and organisations. The knowledge economy increasingly relies on the
diffusion and use of knowledge, as well as its creation (OECD, 2004, p.43). Hence the
success of enterprises, and of national economies as a whole, will become more reliant upon
their effectiveness in gathering, absorbing and utilising knowledge, as well as in its creation.
Firms must become learning organisations that continuously adapt management, organisation
and skills to accommodate new technologies and catch new opportunities. Learning involves
both education and learning-by-doing, learning-by-using and learning-by-interacting.
Organisations will be increasingly joined in networks, where interactive learning is
offered to creators, producers and users and exchange of information drives innovation. It is
important to interchange information, ideas, knowledge among industry, government and
academia if they want to see the development of science and technology (HOUGHTON and
SHEEHAN, 2000, p.11). Firms find it increasingly necessary to work with other firms
and institutions in technology-based alliances, because of the rising cost (for developing
products etc.), increasing complexity and widening scope of technology. Many firms are
becoming

multi-technology corporations.

Despite

improved capability

for

global

communication, firms increasingly co-locate because it is the only effective way to share
‘tacit’ knowledge (CANTWELL in VAITILINGAM, 1997, p. 7).
A consequence of deregulation and advances in communication technologies has
been strengthening

world

competition,

and

the

emergence

of

a

new

form

of

global competition. Most firms with a dominant position no longer belong to just one
leading country. To compete with their rivals successfully, firms must compete head-to-head
in all markets (including their home market) now. In this new environment,
of competitiveness, success depends increasingly on the coordination of various and
11


specialised industrial, financial, technological, commercial, administrative and cultural skills
HOUGHTON and SHEEHAN, 2000, p.12) .

1.2.2 Flexible organisations
Knowledge economy calls for flexible organisations, that reduce waste and increase
the productivity of both labour and capital by integrating ‘thinking’ and ‘doing’ at all levels of
their operations. Flexible organisations define job responsibilities, call for multi-skilled
workers and use teamwork and job rotation (OMAN, 1996, p.19). Information and
communication technology investments are complementary with investment in human
resources and skills (SOETE in HOUGHTON and SHEEHAN, 2000, p.11). The skills that
are required from people are complementary with information and communication
technology.
There are possibilities for enhancing efficiency through inter-departmental cooperation in firms, the organisation of the work and co-operation across trades. In order to
utilise the company’s resources to the full, there needs to be optimum correlation between the
company’s ambitions, its managerial framework, the management, employee development,
reward structure, systems and business routines.

1.2.3 Policies to support knowledge
There is irreplaceable role of government, which can provide the conditions and
enabling infrastructures for changes in the economy towards the knowledge economy through
appropriate financial, competition, information and other policies. Policies need to be focused
on the development of human capital, the development and nurturing of an entrepreneurial
climate, and the promotion of broad access to skills and learning. There are many demands
especially on education system. What organisations need most from education systems is not
so much investment in the production of skilled but narrowly defined specialists, or a lot
of investment in vocational training; but much more investment in the production of
people with broad-based problem solving skills and with the social and interpersonal communication skills required for teamwork, along with the skills and attitudes
required for flexibility (OMAN, 1996, p.37).

12

1.3 REGIONS AND KNOWLEDGE DEVELOPMENT
There are a lot of thoughts to think about when we look at the knowledge economy
from the regional perspective as well. We can see many challenges that are coming with its
development. But firstly we should get know the principles of this economy. Of course the
principles that we have already mentioned above are also relevant for the knowledge economy
in general as well as for the regional knowledge economy. We are going to look closer just at
regional aspects of the knowledge economy.
In the knowledge economy the value of classic local advantages (nature resources) has
diminished and because of the changes in economy and society, the comparative advantage
relies on ability to mobilize and use the knowledge (REHÁK, 2006, p.58). It has significant
impact on the economic development itself. We speak about the new phase, where knowledge
is the essential resource and the most important process is learning. Regions have to become
“learning regions” (FLORIDA in REHÁK, 2006, p.59). Then it seems the final goal is to
support the access to knowledge in regions but it is not so. The final goal is to achieve the
economic growth and welfare. From the regional perspective the aim is the balanced region’s
development.

1.3.1 The new regional comparative/competitive advantages
There were the primary factors of location like the need for physical accessibility to
raw materials and other production inputs (large pools of labour, large markets) in the past.
Now the importance of these has diminished. A recent feature of economic development has
seen the move towards globalisation of the production process, which strengthens the
importance of locality. Increased mobility of commodities, production factors and information
has undermined traditional comparative advantages (MILLARD, 2002, p.4). We consider
these comparative advantages to be competitive as well.
In the context of regions in the knowledge economy, the new comparative advantages
MILLARD see in:
•

the quality and cost of labour, including skills, stability, flexibility and

adaptability

13


•

infrastructure, including transport, telecoms, the relative price and quality of
land, property and services, etc.

•

the organisational and entrepreneurial capacity of firms (e.g. local business
markets)

•

standard of living and incomes (e.g. local consumer markets)

•

out of region trading capacities and networks (e.g. wider business and
consumer markets)

•

the institutional capacity of the public and voluntary sector

•

(local/regional) regulations, legislation, taxes, incentives and grants

•

both natural and man-made environment and amenities

•

quality of life (cultural life, and lack of stress, congestion, crime, etc.)

•

high quality of personal services

•

physical location in the global economy in terms of time zone related to other
regions and steps in the value chain process

The establishment and nurture of creative environments, knowledge-rich and
entrepreneurial milieu, learning regions, etc., can be decisive for successful regional
development. According to MILLARD such creative environments are those with the greatest
number of combinatorial possibilities, and these are to be found in:
•

interaction between competent actors in a locality

•

networks in the locality (ICT and others)

•

strong links to other networks elsewhere

•

knowledge-rich environments

•

informational variety

•

a degree of instability and preparedness, and acceptance of risk taking
14


•

quality of human capital

•

opportunities for knowledge spill-over

•

entrepreneurial vitality

1.3.2 New Models of Regional Development
From the beginning of the new economy there have developed several approaches and
theories that explain regional development in this economy. Models of regional innovation are
in general called “Territorial innovation models”. We would like to show you some of the
main features of the most known territorial innovation models.
Firstly it is useful to understand what the innovation and innovation process is. The
first definition brought Schumpeter in 1934.
ƒ

Innovation is a“qualitative change” (not “any change“) that is linked with creation of
something new (not just the adoption of somebody else’s novelties).

ƒ

The innovation process includes invention, and successful implementation or market
launch (commercialization) (CHRISTENSEN, 2007, p.3).

There are two main innovation concepts that have developed in the regional economy.
1. Linear conception of the innovation process
Figure 1: Linear conception of the innovation process

Basic
research

Applied

Invention

Development/

research

prototype

Production

Marketing/
sales

Source: CHRISTENSEN, Jens. Innovation – concepts, processes and strategies [online]. Hillerød :
Copenhagen Business School, 2007 [2008-04-20]. p.10, Microsoft PowerPoint Presentation.
Available on: < />
In this model innovation is stimulated mainly through research and development
(MAIER and TÖDTLING, 1998, p.155). ROSENBERG (1994, p.139) thinks that “Everyone
knows that linear model of innovation is dead”.
2. Chain-link model of innovation
15


Figure 2: Chain-link model of innovation

Source: KLINE and ROSENBERG in CHRISTENSEN, Jens. Innovation – concepts, processes and
strategies [online]. Hillerød : Copenhagen Business School, 2007 [2008-04-20]. p.11, Microsfot
PowerPoint Presentation. Available on: < />
Innovation has not very often base in science or research. Innovation often comes from
customers, technology users, suppliers or co-operative partners. There is a lot of “feedback“links: important information flow from later phases to earlier phases and there exist
strong correlations in the whole process. Intensive relations with suppliers, contacts with
customers or co-operation can represent the right path to the technology news (MAIER and
TÖDTLING, 1998, p.154). All these features are important for “Chain-link model of

innovation“and just in such features we can see differences between the “Linear” and the
“Chain link model of innovation”.
Innovative milieu
The milieu concept was developed by French and Italian regional economists, who
formed the “Groupe de Recherche Européen sur les Milieux Innovateurs” (GREMI) in the
1980s for empirical research and case studies (RÖHL, 2000, p.2).
In this theory the firm is not an isolated innovative agent, but part of a milieu with an
innovative capacity. The relationships between firms and their environment are essential.
16


There are 3 important spaces for the firm - production; the market; and the support space.
Probably the most significant is the support space. It should create strategic relations between
the firm, its partners, suppliers and clients. Creating of such relations requires trust and
reciprocity links to reach cooperative atmosphere.
Theory of “Innovative milieu” stresses the concept of apprenticeship, which means
that the innovative capacity of the different members of the milieu depends on the capacity of
learning. Learning enables them to perceive changes in their environment and to help them to
adapt their behaviour accordingly (MOULAERT and SEKIA, 2003, p.291).
Industrial districts
The theory of the industrial district started to develop Bagnasco in 1977.
“The districts are geographically defined productive systems, characterized by a large
number of firms that are involved at various stages, and in various ways, in the production of
a homogeneous product. A significant feature of industrial districts is that a very high
proportion of firms within them are small. A characteristic of the industrial district is that it
should be conceived as a social and economic whole. In industrial districts, social institutions
are as important as economic“(DANSON and WHITTAM, 2005). This kind of organization is
hybrid because of combining competition and cooperation, formal and informal institutional
relations.
We can use “production flow” to understand these Industrial districts more:

“Every firm is responsible for one or more steps of the production flow, and is in turn
dependent on the performance of the other firms in the region. A firm that weaves textiles, for
example, relies on a “down-stream” firm to provide the fiber needed for weaving, and on an
“up-stream” firm to buy the textiles for further manufacturing into clothes or other
end/intermediary goods. In addition, this firm is interested to have firms on the horizontal
(even potential competitors) perform well, because these firms ensure the healthiness of the
vertical chain (the “down-stream” suppliers and the “up-stream” buyers) and often
complements its activities.
From this, it is easy to see why industrial districts are a viable alternative for
developing regions. A self-sufficient economic and social entity is dependent on the existence
of a set of firms and institutions, and on the linkages that are formed between those.
17


Obviously, it is easier, and more efficient, to create an industrial district rather than a
vertically integrated mega-plant within an underdeveloped region. The resources of the people
and entrepreneurs living in the area are more easily directed toward a set of SMEs (small and
medium sized enterprises), than toward a big company“(IONESCU, 2006).
New industrial spaces
It was the year 1988 when Storper and Scott launched the notion of new industrial
spaces. This approach takes the ideas from industrial districts, flexible production system,
social regulation and local community dynamics. The flexible production system is probably
the most significant from them. Production is characterized by a well developed ability both
to shift promptly from one process and/or product configuration to another, and to adjust
quantities of output rapidly up or down the short run without any strongly deleterious effects
on levels of efficiency.
The dynamics of entrepreneurial activity is linked just with social regulation of
processes inside the firm. Local labour markets and social reproduction of workers are
important as well (MOULAERT and SEKIA, 2003, p.292).
Clusters of innovation

The biggest influence on developing this theory has Saxenian and her work on Silicon
Valley (MOULAERT and SEKIA, 2003, p.293).
A grouping together of firms and institutions which can have vertical and horizontal
linkages. The geographical concentration of clusters is not as important as it is with industrial
districts, but clusters are more concentrated than networks. Their emphasis is on the
development of cooperation among firms, with the objective of achieving synergy (DANSON
and WHITTAM, 2005).
Clusters produce knowledge; join institutions and customers who are involved in the
production line that produces added value. Concept of clustering is about cooperation of firm
networks because it relates to many spreading and exchanging of knowledge.

18


Regional innovation system
This theory stresses collective learning that is linked with deep cooperative
relationships between members of the system. Innovation is not only a technological but also
a creative and an organizational process (MOULAERT and SEKIA, 2003, p.293).
The concept is usually understood as a set of interacting private and public interests,
formal institutions and other organizations that function according to organizational and
institutional arrangements and relationships conducive to the generation, use and
dissemination of knowledge (DOLOREUX and PARTO, p.3). This set of actors produce
pervasive and systemic effects that encourage firms within the region to develop specific
forms of capital that is derived from social relations, norms, values and interaction within the
community in order to reinforce regional innovative capability and competitiveness
(GERTLER in DOLOREUX and PARTO, p.3).
The learning region
Especially Cooke, Morgan, Asheim are people, who stood at the start of this approach.
Here ‘knowledge is the most important resource and learning the most important
process‘(MORGAN cites LUNDVALL, 1994 in MOULAERT and SEKIA, 2003, p.293).

There is view of the region as a system of ‘learning by interacting and by steering regulation.
Learning within agglomerations is based on traded (input–output relations) and untraded
inter- dependencies (labour markets, regional conventions, norms and values, public or semipublic institutions). Learning regions have the strong ability of learning to learn
(MOULAERT and SEKIA, 2003, p.294).
MORGAN in HASSINK (1997, p.525) calls learning regions the new generation of
regional policy, which, compared to traditional regional policy, focuses on infostructure
instead of infrastructure, on opening minds instead of opening roads and branch plants and
which devises policies with small and medium sized enterprises (SMEs) instead of just
policies for SMEs. Other characteristics of this concept are: bottom-up concept, transparent,
face-to-face relations, integrated solving of problems (crossing of policy fields) and
permanent organizational learning with feedback effects. This network is open to learning,
both to intraregionally and interregionally, and willing to unlearn. These characteristics of a
learning region, however, only describe the method of working and the attitude of regional
19


economic policy-makers. The concrete contents of the innovation policy need to vary
according to the economic profile and demand in individual regions.
The learning region can thus be defined as a regional innovation strategy in which a
broad set of innovation-related regional actors (politicians, policy-makers, chambers of
commerce, trade unions, higher education institutes, public research establishments and
companies) are strongly, but flexibly connected with each other, and who stick to a certain set
of ‘policy principles’ (OECD, 2001). The following ‘policy principles’, which are general in
scope, leaving regional policy-makers to adapt them to specific con- texts and demand for
innovation policies in the various regions, are a crucial part of a learning region strategy
(OECD, 2001; FURST, 2001):
•

carefully coordinating supply of and demand for skilled individuals

•

developing a framework for improving organizational learning, which is not
only focused on high-tech sectors, but on all sectors that have the potential to
develop high levels of innovative capacity

•

carefully identifying resources in the region that could impede economic
development (lock-ins)

•

positively responding to changes from outside, particularly where this involves
unlearning

•

developing mechanisms for coordinating both across departmental and
governance(regional, national, supranational) responsibilities

•

developing strategies to foster appropriate forms of social capital and tacit
knowledge that are positive to learning and innovation

•

continuously evaluating relationships between participation in individual
learning, innovation and labour market changes

•

developing an educational and research infrastructure for knowledge society

•

encouraging openness to impulses from outside

•

fostering redundancy and variety
20


•

ensuring the participation of large groups of society in devising and
implementing strategies.

From all of the above, we can see that features that are definitely significant in the
development of new regions are networks and governance.
At this point of our work we can have a look at main differences between the structure
of regions in the past (there was mass production in course) and now in the time of the
knowledge economy:
Table 1: From mass production to learning regions

Basis of competitiveness

Production system

Mass Production Region

Learning/Knowledge-creating
Region

Comparative advantage
based upon:

Sustainable advantage based
upon:

•

natural resources

•

knowledge creation

•

physical labour

•

continuous improvement

Mass production

Knowledge-based production

•

physical labour as source
of value

•

continuous creation

•

•

separation of innovation
and production

knowledge as source of
value

•

synthesis of innovation
and production

Manufacturing infrastructure

Arm’s length supplier
relations

Supplier systems as a source
of innovation

Human infrastructure

•

low skill low cost labour

•

knowledge workers

•

Taylorist work force

•

•

Taylorist education and
training

continuous improvement
of human resources

•

continuous education and
training

Physical and communication
infrastructure

Domestically oriented
physical infrastructure

Globally oriented physical
and communication
infrastructure

Industrial governance system

•

adversarial relationships

•

•

top-down control

mutually dependent
relationships

•

network organization

Policy system

Specific retail policies

Systems/infrastructure
orientation

Source: FLORIDA, R. Regional systems of innovation: experiences from USA. Pittsburgh, 1996. p. 51.

21


1.3.3 Globalisation versus Regions
Processes of economic restructuring have impacts that are sharply differentiated
between different places. Economic geographers, economists and other social scientist are
confident that neither all assets of knowledge economies nor knowledge itself are as mobile as
its codified expressions in publications and patents. Indeed, the more implicit “tacit” forms of
knowledge have a geographic dimension which can be positively influenced by policies and
framework conditions (REICHERT, 2006, p.8). There is an evidence of trends towards the
globalisation of economic processes (in terms of investment flows, the circulation of goods
and services and so forth), but the importance of place dimension in the knowledge economy
is rising. The development of region depends on its economic structure, political and social
relations, cultural manners etc. We can see that some places are more adaptable to the new
economic milieu than others (OECD, 2001, p.7).
It is worthy to remind that already Alfred Marshall observed, in his famous analysis of
agglomeration economies, that knowledge spill-over effects cause people to locate closely to
each other.

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2 REGIONAL DEVELOPMENT AND UNIVERSITY
According to CROWELL (p.218) “recent years have seen a rapid increase in number
of start-up companies resulting from university research. Interestingly, 75% of them locate
near the university. Data show that their ability to sustain themselves is affected by the
distance from the lab where the science was done; the closer they locate to the university, the
higher the chance of success. Again, this speaks to economic development potential. “
It is clear for the knowledge economy that it is not only about getting some knowledge
and skills but also about putting them into practice. That can happen through innovation
system, where university should act as:
1. educational component
2. research component
3. “implement“ of technology and knowledge transfer
The place, region where university operates, becomes the place where, thank to
university, the expenditures (consumption and demand for goods and services) increase. It is
the place where knowledge can flow from. University has impact on households, local firms
and local government. It has effect on human capital, education and nurture. There is not
always positive impact of the university. There can be higher costs associated with protecting
the environment, building infrastructure etc.” (REHÁK, 2006, p.72).
There are knowledge impacts such as changes in human capital, changes in the scope
of knowledge and attraction of locality for firms and households. These impacts can be
significant only if university is able to transfer knowledge to the milieu. That can happen by
(REHÁK, 2006, p. 72-73):
-

creating of local networks between university and industry workers
(collaboration in research, student trainee-ship, conferences…)

-

creating of business relations (licences, spin-off…)

-

university facilities (laboratories, library…)

It is a fact that knowledge transfers between universities and other economic actors are
highly personalized, and as a result, often highly localized, which underscores the significance
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of geographical proximity for the process of knowledge transfer. Proximity to the source of
the research is important in influencing the success with which knowledge generated in the
research laboratory is transferred to firms for commercial exploitation, or process innovations
are adopted and diffused across researchers and users. The proximity effect of knowledge
transfer provides a strong clue as to why universities are increasingly seen as an essential
element in the process of local and regional economic development, especially in knowledgeintensive industries, such as information and communications technology or biotechnology
(BRAMWELL and WOLFE, 2005, p.9) However, what is not yet clear is the actual process
by which, and degree to which, the proximity effect of university research on innovativeness
contributes to the process of regional economic growth and industrial cluster formation
(Wolfe 2005a in BRAMWELL and WOLFE, 2005, p.9).
In summary, “the role of universities in local economic development goes far beyond
the linear transfer of basic research into commercialisable products. Instead, universities
emerge as multi-faceted economic actors that are embedded in regions, and not only produce
codified and commodified knowledge and human capital, but also actively participate as
important institutional actors in both building and sustaining local networks and flows of
knowledge, and in linking them with global ones“(BRAMWELL and WOLFE, 2005, p. 910). “A large base of research and development is required but not sufficient. The university
must also address the business, workforce, and community issues. The university must be

aligned with regional interests and industry clusters across a broad spectrum, not just in terms
of technical knowledge“(PAYTAS 2004 in BRAMWELL and WOLFE, 2005, p.10 ).
Talking about university we emphasize its function in research. We have to know what
university can and what cannot bring to the region and what are the conditions to support
regional development by university research. Useful review of such conditions has prepared
REHAK (2004, p.290):

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Table 2: Myth and reality of university research impacts on regional economic
development that is based on knowledge

Myth

Results from Research

University research has impact on innovation YES BUT
• there should be certain mass of firm in
activity of firms in region.
region

Universities have impact on firm’s localization

•

there are remarkable differences between
industries

•

especially when university uses application
research

YES and NO
•

Universities

are

prominent

partners

innovation activities of firms

for Rather NO
• for most firms there are more important
partners like suppliers and clients
•

Some of the strong research universities do not
contribute in significant way to the innovation
development of region
Supporting of existing university, establishment
or shift of the university to the un-advanced
region is good way for developing the region

the biggest impact is on firms that have

separated research from ordinary operations

the share in innovation processes of firms is
not very high and is just for small group of
firms

YES
•

universities can be in knowledge advance of
firms

•

there can be low ability of firms to adopt

NOT CLEAR Results
•

there are examples when university has not
bring any contributions

•

there should be orientation on the support of
the whole system (transfer centers,
capital…)

•

it is especially the case of new types of
universities ( especially business universities
not old research universities)

Source: REHÁK, Štefan. Univerzita ako katalyzátor poznatkov v regiónoch. In Úloha regiónov v
poznatkovo založenej ekonomike. 2004. p.290.

2.1 KNOWLEDGE TRANSFER AND UNIVERSITY
The dissemination of knowledge acquired through research is one of main functions of
any research university. In recent years advanced economies have placed great emphasis on
transfer of new technologies and knowledge to the industrial sector. The main goals of these
25