International Conference on European Integration 2018 Ostrava, Czech Republic
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Smart Specialization Concept as a Way of Regional Innovation
Performance Boosting
Viktorie Klímová1, Vladimír Žítek2
Masaryk University1, 2
Faculty of Economics and Administration, Department of Regional Economics and
Administration, Research Institute for Innovation
Lipová 41a, Brno, 602 00
Czech Republic
e-mail: viktorie.klimova@econ.muni.cz1
, vladimir.zitek@econ.muni.cz2
Abstract
The concept of smart specialization represents a theoretical approach that suggests an
entrepreneurial process of discovery as a way to reveal the areas in which a country or region
does the best. In practice, this concept focuses on priorities of regional innovation policy. The
concept has been developed within the "Knowledge for Growth" Expert Group advising the
EU Commissioner for Research in the field of achieving of Lisbon Strategy goals. Based on
this concept, the initiative Research and Innovation Strategies for Smart Specialization RIS3
was launched. All countries and regions have to design their own RIS3 strategies if they want
to use the European Structural and Investment Funds to support innovation activities. The
paper analyses these key strategic documents for the 2014-20 programming period in Czech
regions. It deals with the visions of individual regions as well as the definition of key areas of
change and strategic objectives. The evaluation is focused on definitions of individual
concepts, particularly regional visions, the specification of areas of change and the reality of
the objectives set.
Keywords: European innovation policy, innovation, region, research and development, smart
specialization
JEL Classification: R11, O31, O38
1. Introduction
In developed countries, innovations represent a key factor for economic growth and socioeconomic
development. However, the innovation activity is spatially uneven and many
countries and regions are not able to exploit their innovation potential (Prokop et al., 2017).
This topic is strongly emphasized by institutional theories whose ideas have a significant
impact on public policy. In the last about 30 years, innovation policy has shifted increasingly
to the regional level (e.g. Hlaváček, 2017). Particularly, this is caused by two facts: The first
of them is that innovations are perceived as a territorial phenomenon. Innovations are often
the result of specific local conditions that cannot be quickly and cheaply copied or transferred
elsewhere. Thus, the regional environment has an important role as the background of the
innovation processes (Páger, 2015). The second one is the heterogeneity of the regions, which
makes it impossible to create a policy mix that is universally applicable in each region. Policy
tools have to be rather tailored to the specific conditions of a particular region. (Isaksen and
Nilsson, 2013)
The fundamental requirement for a regional innovation policy is that it has to be based on the
region's socio-economic environment and has to focus on the specific needs and problems of
International Conference on European Integration 2018 Ostrava, Czech Republic
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the region. This approach is often called "place-specificity" (e.g. Morgan, 2017). Creation of
regional innovation strategies is quite a new phenomenon in the Czech Republic and individual
regions differ in experience with it. Another problem can be the fact that regions have limited
financial resources for innovations directly governed by regional bodies and they often depend
on the sources from the European Union (Šipikal and Parízková, 2009).
The objectives of our article are to compare the application of the smart specialization concept
in the Czech regions with low knowledge and innovation potential and to evaluate the visions
and strategic objectives of their Research and Innovation Strategies for Smart Specialization
(RIS3) strategies with respect to the reality of their achievement. The Ústí, South Bohemian,
Hradec Králové and Vysočina Regions have been selected as the regions with low knowledge
and innovation potential.
2. Development of Smart Strategy Concept in the European Union
The European Union (EU) approved innovation policy as its political priority, because through
its implementation many problems can be solved (Lipková, 2012). In the context of adapting
public policy to specific regional conditions, the place-based approach is broadly discussed in
scientific literature as well as policy debates. Place-based policy is defined as a long-term
strategy oriented to the fight against unexploited potential and elimination of persistent social
exclusion at specific locations through external interventions and multi-level governance. The
core idea of the approach is that geographical context really matters. Another important feature
of this approach is the interventions based on the partnership among different government
levels and a combination of knowledge from local and external resources. A place-based
approach accents that there are different development paths and that it is necessary to pay
attention to details and the institutional context. (Barca et al., 2012) For policy purposes, this
approach has been further developed by Barca (2009) in his report for the European
Commission that dealt with the reform of the European Cohesion Policy. This report
emphasized that the reform of cohesion policy requires a strong political concept and a focus
on priorities. It recommended defining about 3 or 4 key priorities for which approximately
60% of resources will be allocated. Innovation was mentioned as the first priority.
While the place-based approach is focused on general public policy, the concept of
constructing regional advantage approach (CRA) concentrates more on innovation. This
concept stems from similar theoretical ideas. The CRA approach builds on theory
development: comparative advantage - competitive advantage - constructed advantage (Cooke,
2007). This concept builds on the theory of competitive advantage developed by M. Porter
(1998), but enriches it with the ideas of the concept of innovation systems (Asheim et al.,
2011), particularly knowledge base concept (Asheim and Coenen, 2009) and theory of related
variety (Boschma and Iammarino, 2009). Constructing regional advantage has to be based on
the unique capabilities of regional actors, not just research efforts. Each industry can be
innovative, the division of the industries into high-tech and low-tech is not relevant and the
regions should build their advantage on the development of the industries that have tradition
there. (Asheim et al., 2011) In the practical policy context, the CRA concept is used by the
expert group set up by the European Commission (DG Research) and led by professor
P. Cooke (European Commission, 2006).
Recently, the greatest attention of the political sphere has been put on the concept of smart
specialization, which also stems from the above-mentioned theoretical ideas. This concept
deals with the selection of regional innovation policy priorities, in particular (McCann and
Ortega-Argilés, 2013). The emergence of the concept is attributed to the expert group
Knowledge for Growth led by prof. Dominique Foray, that acted as an advisory body to
International Conference on European Integration 2018 Ostrava, Czech Republic
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Commissioner Janez Potočnik in the area of achieving the objectives of the Lisbon Strategy
(European Commission, 2010). The concept suggests entrepreneurial processes of discovery
to help identify where the region is doing best. In other words, it is about finding out the
research and innovation domains in which the region can excel. Subsequently, the region
should orient its specialization around these domains. (Foray et al., 2009) Innovation policy
should reinforce strategic technological diversification around key domains and, in particular,
build on "technology of general purpose" (sometimes called as key enabling technologies).
An important milestone of the regional innovation policy in Europe was the launch of the RIS3
initiative (Research and Innovation Strategy for Smart Specialization) in 2014, which was
inspired primarily by the smart specialization concept, but also by the CRA concept. This
initiative has a significant impact on the allocation of resources from the European Structural
and Investment Funds to research, development and innovation. In other words, if any EU
member state wants to get funds for this field, the ex-ante conditionality is to prepare its own
national RIS3 strategy and possibly its regional annexes. The national / regional RIS3
strategies represent an integrated and place-based approach to economic transformation that is
built on these 5 key characteristics: focus on national and regional priorities, based on strengths
in each country / region, support for practice-based innovation, involvement of stakeholders,
and monitoring and evaluation (European Commission, 2012).
3. RIS3 Strategies in Regions with Low Innovation Potential
In our paper, we have focused on four regions in the Czech Republic that have a low knowledge
and innovation potential in the long term. According to the analysis by Žítek and Klímová
(2016), the Ústí (ULR), South Bohemian (SBR), Hradec Králové (HKR) and Vysočina (VYS)
Regions belong to this group of regions. The analysis evaluates the period from 2006 to 2012,
and although some of these regions have made some improvements in some indicators, no
significant structural change has been detected. There has not been observed any larger
differences among the selected regions in terms of overall rating.
The analysed regions have the lowest R&D expenditures expressed as a percentage of GDP
(values between 0.45 and 1.24% in 2012). The Ústí Region and the Vysočina Region have
below-average share of employees with university degree in the total number of employees.
The Ústí and Hradec Králové Regions have a strongly below-average share of enterprises that
have introduced technology innovation (according to the survey on innovation activities, CSO
2014). These regions have a logic natural need to eliminate the mentioned shortcomings.
However, the extent to which the regions can be successful by 2020 remains a question.
3.1 Strategic Visions
The introductory point of the design part of RIS3 strategies is their strategic vision. Table 1
shows how the four regions defined their vision. Although we cannot expect more than general
ideas from the formulation of strategic visions, let us comment on some facts about the
practicability of achieving the vision. The statement "The Usti Region’s economy is growing"
is quite universal and the economic situation will depend on the general economic situation in
2020. It will show over time, whether the knowledge-intensive industries are developed in the
region. Nevertheless, we appreciate the intention to cooperate more intensively with Saxony
and this can be good opportunity for this region. A problematic is the question of cooperation
“with enhanced regional research” in the region without greater tradition of research. The
vision of the South Bohemian Region is limited to a statement of general conditions for the
implementation of the mentioned activities, and therefore can be considered realistic.
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However, this vision is not sufficiently concrete and ambitious. The Hradec Kralove Region
is in a different situation. Although it has the potential of qualified people, it does not achieve
good results in innovation enterprise and excellent research. The essence of the Vysočina
Region's vision is "systemic support". On the one hand, the Vysočina Region practically does
not have R&D capacities in the public sphere, on the other hand, there are many companies
with their own R&D activities. It is therefore a question how the policy makers will manage
to propose a stimulating support system that will be attractive to the relevant industries in the
region.
Table 1: Strategic Visions of the Selected Regions
Ústí Region
The Ústí Region’s economy is growing and creating job opportunities for educated people.
Traditional industries are upgrading, increasing their added value and looking for new directions for
development. There is an increase in the number of enterprises that actively use and exploit
knowledge and new technologies. This is reinforced by cooperation with enhanced regional research
as well as R&D centres in the Czech Republic and Saxony.
South Bohemian Region
The South Bohemian Region is attractive for living and work of talented people, offering attractive
conditions for business, investments and innovations, both in the traditional and the new industries
that use the knowledge base of the emerging local science and research sphere.
Hradec Králové Region
The Hradec Králové Region – A competitive region with developed innovation enterprise, excellent
research and qualified people.
Vysočina Region
The Vysočina Region will be ranked among the regions systematically supporting research,
development and innovations by 2020, through specialization on selected traditional as well as new
prospective industries with a significant growth potential.
Source: JČK (2014), KHK (2014), ÚLK (2014), VYS (2014)
3.2 Key Areas of Change and Specific Objectives
The crucial element of the implementation of the RIS3 strategy is the identification of the key
areas of change (KAC), strategic (SC) and specific objectives. Their structure is significantly
different in the analysed regions and to a certain extent illustrates the approach of regional
authorities to knowledge and innovation management. In general, the RIS3 strategy of the
Hradec Králové and Ústí Regions seems to be the most sophisticated.
3.2.1 Ústí Region
The Ústí Region considers human resources and technology transfer as a key focus of the RIS3
strategy. In particular, the former is an important barrier to the development of the region. The
strategic objectives within the first KAC are oriented to all levels of education. Popularization
of technical fields is primarily concerned to primary schools. The region expects to increase
interest in technical secondary schools that produce an insufficient number of graduates. It also
expects a close cooperation with businesses. In the case of university graduates it is stated that
the only public university in the region produces other type of graduates than those that are
demanded in the region. At the same time, graduates are not usually willing to do business
themselves. The region will therefore strive for changing the situation. For the second KAC,
the starting situation is more complicated for especially two reasons: a lack of information of
research organizations and enterprises about the needs and possibilities of the other part, and
companies in the region are often not innovative and do not need R&D results. The stated
objectives aim at overcoming barriers and support for research activities in the region.
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With regard to the indicators that determine the success of the RIS3 implementation (low R&D
expenditures expressed as a percentage of GDP, low share of enterprises with R&D as the
main activity, low share of enterprises that have introduced technical innovation), it is clear
that it will be difficult to achieve targets concentrated on R&D and technology transfer. The
region correctly perceives their importance and has to apply various measures to make progress
in these areas. On the contrary, some progress can be achieved in the area of human resources
through cooperation with businesses, as the strategy rightly supposes.
3.2.2 Hradec Králové Region
The Hradec Králové Region has developed its key areas of change into four domains. In
particular, the first three of them (the fourth is the implementation of RIS3) demonstrate the
rich experience of strategy makers: increase in innovation performance, excellent public
research and the development of human resources for R&D. These domains can certainly be
crucial for competitiveness increase. As regards innovation performance, which is very low in
the region, the strategy searches for a way of raising interest in doing business in general
through consultancy, education and popularization activities. At the same time, it tries to create
a system of support for R&D activities in enterprises, particularly to support their ability to
cooperate and network. In the case of the second KAC, like the Ústí Region, the Hradec
Králové Region also tries to declare its ambition to support R&D transfer. The suggested ways
are both promotion of applied research in public research organizations and an increase in the
motivation of companies to exploit the results of public R&D. In the field of human resources,
it is considered important to popularize science and technology already at primary schools,
and to increase the share and quality of graduates of vocational schools. Strong emphasis is
put on cooperation of enterprises and schools. According to the RIS3 strategy, it is necessary
to set up mechanisms for timely capture of talented students. Simultaneously, the need to
improve the quality of secondary schools and university teachers is explicitly mentioned.
The Hradec Králové Region is not only characterized by a low share of enterprises that have
introduced technology innovation but also a low degree of cooperation on innovation. The
research potential of the region is low too. Support for technology transfer will be similarly
difficult as in the case of the Ústí Region. Some of these steps can positively stimulate both
research organizations and businesses. The orientation on activities that support education
corresponding to the demand in the labour market can be perceived as a suitable approach.
3.2.3 South Bohemian Region
The South Bohemian Region has only set one strategic objective for each of the three key areas
of change. The strategic objectives are very similar to the KAC and do not actually develop
them. In the area of quality human resources, it is a priority to improve the quality of the
workforce so that it meets the requirements of the labour market. This is also related to the
need to increase interest in technical fields already at primary schools. At the same time, the
region considers it important to positively influence mobility of workforce. The region wants
to prevent the departure of qualified people from the region, but also to attract mainly
technically educated and researchers from other regions. The second key area is technological
transfer. The main problem is the lack of cooperation between academic institutions and the
business sphere. The solution is to introduce appropriate policy tools to increase the incentive
for enterprises to collaborate with R&D organizations and their willingness to engage in
industry platforms and cluster initiatives. The third area of change is the development of
enterprise, which means its support in various ways (support for start-ups, consultancy,
intellectual property rights protection, support for internationalization).
International Conference on European Integration 2018 Ostrava, Czech Republic
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The South Bohemian Region has the highest level of knowledge indicators among the analysed
regions: the highest number of students of natural sciences and engineering & technology, the
highest expenditures on R&D expressed as a percentage of GDP, and the highest share of
employees with university degree in the total number of employees. This fact increases the
chances of the region to succeed in implementing the RIS3 strategy, especially in the first two
key areas of change. The impact of measures to promote entrepreneurship depends on the
ability of the public administration to connect with businesses through a good communication
strategy.
3.2.4 Vysočina Region
The Vysočina Region has defined three key areas of change: higher innovation performance
of companies, accessible and skilled workforce and ICT infrastructure. The aim of the first
KAC is to increase the share of innovative enterprises and businesses with their own R&D.
This aim should be reached mainly through providing various types of business consultancy.
In the field of quality of workforce, the emphasis is put on increasing the interest in technical
fields (popularization) and increasing cooperation of schools (secondary schools and
universities) and enterprises (internships, professional practices, excursions, competitions).
The only goal in KAC ICT infrastructure is to cover “gray and white spots" of the region where
high-speed internet is not available. This is considered a barrier to enterprise development in
these parts of the region.
Evaluating the potential success of the RIS3 strategy in the Vysočina Region, it is worth
mentioning, in particular, that the share of enterprises with technology innovation in all
enterprises exceeds the average share of the Czech Republic. It also has a sufficient number of
students of technical and natural fields. In terms of achieving the specific goals, the building
of the ICT infrastructure appears to be the easiest one (if financial resources are available).
The question is whether its existence will automatically lead to an increase in entrepreneurial
activity.
4. Conclusion
The article dealt with application of the smart specialization concept in selected Czech regions
that have a low level of knowledge and innovation potential in a long-time period. We have
selected four regions, which are the Ústí, South Bohemian, Hradec Králové and Vysočina
Regions. Their common characteristic is mainly a low level of R&D activity, but also other
structural problems.
By analysing the key areas of change and strategic objectives of the RIS3 strategies, it was
found out that the regions mainly focus on improving the quality and availability of the
workforce in technical fields as well as on improvements in the technology transfer. The
ambitions of the individual regions are similar, but the prerequisites of their success are
different. For the regions with little tradition of research, it is certainly difficult to achieve a
qualitative change. The effectiveness of various measures in the education sphere or in the
field of business consultancy depends on a number of other aspects. The RIS3 strategies can
be an important positive incentive on the way to increasing the competitiveness of the regions.
The concept of smart specialization also recommends regions to focus their strategies on those
industries that have tradition and good prerequisites there. In the Czech Republic, seven
industries representing the areas of national specializations have been identified. Furthermore,
most of Czech regions have added special areas that are concentrated in their territory. Only
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two of the four analysed regions, the Ústí and Hradec Králové Regions, defined their own
areas of regional specialization.
We are aware of the fact that our research has some limitations. We focused on some basic
characteristics of the RIS3 strategies, but more detailed analysis is needed. Further research
should be aimed at two main topics. The first of them is the relation and harmony between
RIS3 strategies and the Initiative Industry 4.0 that was approved by the Government of the
Czech Republic in 2016. The second topic represents the efficiency of implemented policy
interventions and their real impact on innovation development and achieving strategy targets.
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