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Comparative analysis of public policies for innovation in the aerospace industries in Brazil and Canada

Comparative analysis of public policies for innovation in the aerospace industries in Brazil and Canada

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Published by f_armellini
Paper presented and published in the proceedings of the 22nd International IAMOT conference.

Abstract: The aerospace industry is a high-technology segment characterized by strong governmental support, high relevance of issues related to secrecy and intellectual property protection and competition at the global level. Within this scenario, this paper investigates the subsidies and incentives for technological product and process (TPP) innovation in the aerospace industry within two different realities: in the Province of Quebec, in Canada, and in the State of São Paulo, in Brazil. This paper is part of a collaborative research on innovation in the aerospace segment, between Escola Politécnica da Universidade de São Paulo, in Brazil and École Polytechnique de Montréal, in Canada. The particular goal behind this paper is to analyse in what manner and how effectively the government is supporting innovation in the segment in both realities. First, the paper briefly presents the legal framework for innovation in Brazil and in Canada, highlighting all aspects concerning TPP innovation in the aerospace segment. Then, the paper presents the main governmental programs to support TPP innovation in the segment, including the respective state and provincial programs, and critically compares them. Next, using data collected from a survey, the paper investigates how companies are using these programs and how important they are to their respective innovation performance. This survey consists of an in-depth study comprising 53 aerospace companies in both countries based on a questionnaire and company interviews, providing detailed information about the development of innovative products and processes between the years 2007 and 2011. Among the findings, this paper shows that companies in Quebec use more governmental support in comparison to Brazilian companies. In general, programs derived from innovation policies in Brazil are still not broadly adopted by aerospace firms, mostly due to three reasons: (1) the novelty of such programs, (2) some restrictions in these programs that prevent companies from being eligible to the benefits, and (3) organizational deficiencies in the companies that hinder access to such programs. In Quebec, where these support programs are more mature and established than in Brazil, they already show some positive influences in the organization of firms, which constitutes a competitive advantage over their global competitors.
Paper presented and published in the proceedings of the 22nd International IAMOT conference.

Abstract: The aerospace industry is a high-technology segment characterized by strong governmental support, high relevance of issues related to secrecy and intellectual property protection and competition at the global level. Within this scenario, this paper investigates the subsidies and incentives for technological product and process (TPP) innovation in the aerospace industry within two different realities: in the Province of Quebec, in Canada, and in the State of São Paulo, in Brazil. This paper is part of a collaborative research on innovation in the aerospace segment, between Escola Politécnica da Universidade de São Paulo, in Brazil and École Polytechnique de Montréal, in Canada. The particular goal behind this paper is to analyse in what manner and how effectively the government is supporting innovation in the segment in both realities. First, the paper briefly presents the legal framework for innovation in Brazil and in Canada, highlighting all aspects concerning TPP innovation in the aerospace segment. Then, the paper presents the main governmental programs to support TPP innovation in the segment, including the respective state and provincial programs, and critically compares them. Next, using data collected from a survey, the paper investigates how companies are using these programs and how important they are to their respective innovation performance. This survey consists of an in-depth study comprising 53 aerospace companies in both countries based on a questionnaire and company interviews, providing detailed information about the development of innovative products and processes between the years 2007 and 2011. Among the findings, this paper shows that companies in Quebec use more governmental support in comparison to Brazilian companies. In general, programs derived from innovation policies in Brazil are still not broadly adopted by aerospace firms, mostly due to three reasons: (1) the novelty of such programs, (2) some restrictions in these programs that prevent companies from being eligible to the benefits, and (3) organizational deficiencies in the companies that hinder access to such programs. In Quebec, where these support programs are more mature and established than in Brazil, they already show some positive influences in the organization of firms, which constitutes a competitive advantage over their global competitors.

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Published by: f_armellini on Jul 11, 2013
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COMPARATIVE ANALYSIS OF PUBLIC POLICIES FOR INNOVATION IN THEAEROSPACE INDUSTRIES IN BRAZIL AND CANADAAbstract:
The aerospace industry is a high-technology segment characterized by strong governmentalsupport, high relevance of issues related to secrecy and intellectual property protection andcompetition at the global level. Within this scenario, this paper investigates the subsidies andincentives for technological product and process (TPP) innovation in the aerospace industrywithin two different realities: in the Province of Quebec, in Canada, and in the State of SãoPaulo, in Brazil. This paper is part of a collaborative research on innovation in the aerospacesegment, between Escola Politécnica da Universidade de São Paulo, in Brazil and ÉcolePolytechnique de Montréal, in Canada. The particular goal behind this paper is to analyse inwhat manner and how effectively the government is supporting innovation in the segment in bothrealities. First, the paper briefly presents the legal framework for innovation in Brazil and inCanada, highlighting all aspects concerning TPP innovation in the aerospace segment. Then, the paper presents the main governmental programs to support TPP innovation in the segment,including the respective state and provincial programs, and critically compares them. Next, usingdata collected from a survey, the paper investigates how companies are using these programs andhow important they are to their respective innovation performance. This survey consists of an in-depth study comprising 53 aerospace companies in both countries based on a questionnaire andcompany interviews, providing detailed information about the development of innovative products and processes between the years 2007 and 2011. Among the findings, this paper showsthat companies in Quebec use more governmental support in comparison to Brazilian companies.In general, programs derived from innovation policies in Brazil are still not broadly adopted byaerospace firms, mostly due to three reasons: (1) the novelty of such programs, (2) somerestrictions in these programs that prevent companies from being eligible to the benefits, and (3)organizational deficiencies in the companies that hinder access to such programs. In Quebec,where these support programs are more mature and established than in Brazil, they already showsome positive influences in the organization of firms, which constitutes a competitive advantageover their global competitors.
Keywords:
innovation management, aerospace industry, Brazil, Canada, public policies.
 
 
1.
 
Introduction
Public authorities from all over the world recognize that innovation is paramount to continued prosperity. Although recognizing its economical importance for society as a whole, thegovernment cannot have total control over the innovation performed in-house, since innovationis fundamentally a market phenomenon, whose main locus are private-for-profit companies.Therefore, what the government can and actually do is to create a favorable environment for innovation by means of public policies that serve as catalysts, which stimulate the successfulaccomplishment of innovations on the behalf of the companies located in their territories. Such policies are a fundamental part of what the specialized literature call
i
nnovation systems”
(seefor instance METCALFE, 1995), or 
“National Systems
 
of Innovation” (NSI)
when the locus of analysis is a country.This paper aims at performing a critical analysis and comparison between the NSI of twodifferent countries (Brazil and Canada), supporting the aerospace industry in the clusters of Quebec and São Paulo.According to the OECD (1997: p.7),
“the national innovation systems approach stresses that the
flows of technology and information 
among people, enterprises and institutions are key to the
innovative process”
(highlight is from the original). Therefore, more important than studying the policies themselves, it is relevant to verify the interaction between the agents and, morespecifically to the issue of public policies, whether companies are making good use of such benefits, and that they are effectively enhancing their innovative performance through them. Inthis sense, after introducing the reader to the main policies and innovation programs applicableto aerospace industry in the state of São Paulo, in Brazil and in the province of Quebec, inCanada, this paper verifies how companies perceive and benefit from such policies. To thateffect, we use data collected from an innovation survey applied simultaneously in Brazil andCanada in 2011. A critical comparison between the incentives for innovation in both clustersfollows.The paper is organized in the following fashion. Section 2 presents some generalities about public policies for innovation and makes a brief introduction of the main policies applicable for the aerospace industry in Brazil (subsection 3.1) and in Canada (subsection 3.2). Section 3 givessome background information about the research from which this paper is issued, as well asabout the innovation survey previously mentioned. Section 4 compares these policies using someof the data collected in the survey in order to perform a critical analysis of such policies. Finally,section 5 draws some conclusions and recommendations from the analysis.
 
 
2.
 
Public policies for innovation
In order to build the argument to justify the importance of government intervention in theeconomy of innovation, one must have in mind that, in the process of allocating scarce resources,economic agents (e.g. firms) tend to prioritize the provision of such resources to more advancedstages of the technological innovation process, due to their risk perception: mature technologiesusually offer more tangible perspectives and lower-term return over investment thantechnologies in early stages of development, that is, lower Technology Readiness Levels (TRL),
 borrowing NASA’s standard for the
technology classification (MANKINS, 1995). Furthermore,economic activities within more structured and better known businesses and technologies, inwhich the agent has a history of performance, are also likely to be prioritized for resourcesallocation (CHRISTENSEN, 1997).These two factors (risk perception and history) therefore cause companies to delay or underestimate the necessity of investment in R,D&I activities, even though the agent oftenacknowledges the importance of these activities in the medium and long term. Thus, one canconclude that the promotion of technological innovation, although fundamental for the socio-economic development, is not prioritized by the economic agents responsible for innovation.Government measurement towards innovation, such as funding, financing, sector funds, taxincentives, aim at enhancing the competitive edge of agents that they cannot guarantee bythemselves (BOSCHMA, 2004). In short, according to this principle, the government can andshould create mechanisms to promote innovation within its territory. Such instruments shouldforesee the needs of the various spheres of scientific and technological development of a regionor nation, serving as a catalyst to economic development.There is a number of different ways in which the government can support innovation within itsterritory. According to Edquist (2001: p. 220), innovation policy is a
“public action that 
influences technical change and other kinds of innova
tions”
, which includes
elements of R&D policy, technology policy, infrastructure policy, regional policy and education policy
.
Analysing Edquist’s (2001) definition, one denotes that it is inclusive of many political actions
that, although fundamental for the innovation performance in a territory, are not directly aimed atit. One example is the promotion of high-quality education at all levels: the effects on that over innovation performance is actually a spillover, it is not the original goal intended by the policy.

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