Defing the VET Policy Instruments for Developing the National Innovation System of Fuel Cell Technologies

Chi-Yo Huang
Department of Industrial Education National Taiwan Normal University, Taipei, Taiwan cyhuang66@ntnu.edu.tw
AbstractFuel cells have emerged as one of the possible solutions for resolving the severe pollutions and petroleum consumptions by traditional vehicles. During the past decades, national governments worked aggressively toward the fuel cell innovations by national innovation systems (NISs). Albeit the universities play an important role in the NIS and the vocational education and training (VET) usually serve as an important subsystem, very few scholars tried to discuss how the VET system can be configured through the VET policy instruments so that the NIS can be enabled. Thus, the authors aim to configure the VET policy portfolio by defining a hybrid multiple criteria decision making (MCDM) framework aiming at resolving this problem. Components of the NIS as well as VET policy tools which are suitable for developing the VET system and enabling the NIS were first derived from literature review as criteria and alternatives. Then, a hybrid MADM (Multiple Attribute Decision Making) framework consisting of the modified Delphi method, the DEMATEL and the ANP will be introduced for deriving appropriate VET policy tools for developing the VET system and enable the NIS of the fuel cell technologies. Experts from Taiwanese research and academic institutes were invited for providing opinions for defining the VET policy instruments. Mandates, capacity building and system change were recognized by the experts as the most important VET policy tools for enabling the NIS of the fuel cell technologies from the aspects of firms R&D organizations, research institutes and research association. Keywordsfuel cell; Vocational Education and Training (VET); National Innovation System (NIS), MCDM (Multiple Criteria Decision Making, MCDM); DEMATEL; Analytic Network Process (ANP).

Chi-Cheng Chang
Department of Industrial Technology Education National Taiwan Normal University, Taipei, Taiwan samchang@ntnu.edu.tw Innovation is the engine for national technological development [3] while technological change is widely recognized as a key driver of economic development [4]. However, due to the public nature of the knowledge that underpins innovation, the uncertainty that often plagues the process of innovation, the needs for certain kinds of complementary assets, the nature of certain technologies, and plain politics [5], it is generally accepted that governments play a key role in innovation, and especially the development of radical innovation like the fuel cell technologies [1]. Although, the role of government in technology development differs between countries, most have some form of the national system of innovation [1, 6]. The most important nation-specific frame conditions for any sectoral S&T policies are the national institutional conditions for technological innovations. This institutional infrastructure is often referred to as a "National Innovation System (NIS)". This term is defined as: "the network of institutions in the public and private sectors whose activities and interactions initiate, modify and diffuse new technologies" [7]. Since the studies by Freeman, several other studies on NIS have been published [8-10]. All of these studies tried to understand regional innovative capabilities in relation to the various institutions that were present in the nations under study [11, 12]. A well-developed NIS, the system including wellestablished institutes and organizations including industry, government, university and research institutes as well as the strong linkages between them may enhance the creation, diffusion and application of a nations knowledge, and thus, the enhancement of a nations innovation capability. In the past decades, national governments have pursued planning in various NIS to pursue nations continuous growth. The vocational education and training (VET) system is the most important sub educational systems of an NIS and can affect a nations innovation productivity by providing sufficient high quality technical human resources. However, provision of VET is subject to several market failures: capital-market imperfections, risk arising from variability of future values of skills, mismatch of costs and returns owing to worker mobility, and general positive externalities of human capital. Thus, governments intervention in the development of the VET system is rational. Meanwhile, very little research proposed appropriate quantitative VET policy instrument definition methodologies. Furthermore, how to develop a nations NISs of emerging industries like the fuel cell industry is the one of the most critical problems governments, policy makers and

I.

INTRODUCTION

Fuel cells, electrochemical devices that produce electricity through clean chemical reactions rather than environmentally detrimental processes like combustion [1], have emerged as one of the possible solutions for resolving the severe pollutions and petroleum consumptions by traditional vehicles. Fuel cells complement heat engines and reduce the ubiquitous dependence on fossil fuels and thus have significant environmental and national security implications [2]. During the past decades, national governments worked aggressively toward the innovation of fuel cells by national innovation systems.

978-1-61284-714-6/11/$26.00 2011 IEEE

researchers are facing. Thus, how the VET policy portfolio should be defined to assist the development of NISs of the emerging fuel cell industry has become the most important issue for developing the VET system. Therefore, to continue the first authors former research in policy portfolio configuration and reconfiguration [13], the objectives of this project is to develop a hybrid multiple criteria decision making (MCDM) framework to allow for configuring VET policy portfolios for developing NISs of emerging industries. To accomplish this, the Modified Delphi method, DEMATEL (Decision Making Trial and Evaluation Laboratory), Analytic Network Process (ANP), Grey Relation Analysis (GRA), and Cluster analysis are all used to build an analytic structural framework to derive the nations vocational education and training (VET) policy instruments for developing emerging industries, reduce the over-complicated VET policy instruments to the most significant VET policy instruments, and then map the most significant VET policy instruments to implement the NIS of emerging industries. Experts from the Taiwanese academic and research institute will be invited to provide opinions for the questionnaires being developed based on the hybrid MCDM framework. Empirical studies on Taiwans emerging industries illustrate the derivation of the VET policy portfolios for developing NISs of Taiwans fuel cell industry. These analytic results, which are the most important VET policy instruments, will be necessary to develop Taiwans fuel cell industry. The remainder of the paper is organized as follows. In Section 2, the literature regarding to the NIS and VET policy instruments will be reviewed. In Section 3, the hybrid MCDM methods based research framework will be introduced to construct the decision framework. Then in Section 4, experts will be invited to configure the VET policy portfolios. Discussions will be presented in Section 5. Section 6 will conclude the whole article with observations, conclusions and recommendations for further study. II. NIS AND VET POLICY INSTRUMENTS A well-developed NIS enhances the creation, diffusion and application of a nations knowledge, and thus, innovation. However, how a VET system should be configured to fulfill the needs of NISs of emerging industries have not been discussed much by past researches. In the following Section, the concepts being related to the NIS, the relationships between the VET and the development of the NIS, and finally, the VET policy instruments will be reviewed as a basis for this research. A. NIS Innovation systems can be defined in many ways focusing either on their functional or on their territorial aspects [14-17]. However, they all involve the creation, diffusion and use of knowledge. Since the mid-1980s, Freeman [18, 19], Lundvall [8] and Nelson [9], among others, have developed the concept of the National System of Innovation (NSI) in order to study the interrelations between technological development and the institutional embeddedness of innovative organizations [17]. As Lundvall [8] illustrated, there is a broad definition that encompasses all interrelated institutional actors that generate, diffuse and exploit innovations. There is also a narrow definition that includes the organizations and institutions

involved in searching and exploring, e.g. R&D departments, technical institutes and universities [12]. Lundvall [20] mentioned that rather than defining the system as constituted by organizations, it should be defined by specifying different functions. According to Edquist [21], ten major activities/functions/factors influencing innovation are (1) research and development, (2) competence building, (3) formation of new product, (4) articulation of user needs, (5) creation and change of, (6) networking around knowledge, (7) creating and changing institutions, (8) incubating activities, (9) financing innovation and (10) consultancy services. B. VET and Enhancement of NIS The European Training Foundation (ETF) and the European Centre for the Development of Vocational Training defined VET to be education and training that aim to equip people with skills and competences that can be used in the labor market [22]. Ferrier, Trood and Whittingham [23] suggests that innovation is likely to lead to increased needs for: (1) Technology-related skills; (2) management skills; and (3) operative/Technical skills. If new and changed skill needs are to be met, access to appropriate education and training is essential. Thus, to enhance NIS by VET, Moodie [24] suggested that in addition to providing services to innovative firms and industries, vocational education institutes should consider taking these strategies: (1) emphasize on innovation; (2) develop a distinctive role in the national innovation system; (3) act locally and learn globally; (4) form multiple partnerships; (5) establish a national network of the vocational education innovation institutes and (6) act in the long term. C. VET Policy and Instruments The concept of market failure has been the key to the development of VET policy of countries at the national level over the last decades [25]. The provision of VET is subject to several market failures: (1) capital-market imperfections (credit constraints), (2) risk arising from variability of future values of skills, (3) mismatch of costs and returns owing to worker mobility, (4) general positive externalities of human capital [26], (5) imperfect information, (6) time preference, shorttermism and risk aversion, and (7) externalities, labour market imperfections and the poaching of skilled workers [25]. The market failures are also the major reasons for Governments intervene in vocational education. Due to the rationality of governments intervention in VET development, Greehalgh [26] summarized possible vocational educational policy instruments including public subsidy and information, workers-finance and training opportunity, property right improvement, etc. Leney also proposed that (1) mandates, (2) inducements, (3) capacity building, (4) systems changing, (5) hortation and deliberative change are possible VET policy instruments [22]. Despite conceptual advances and illustrative case studies, there are no straightforward answers to the questions: what elements should a VET policy include, and how should such policies be implemented? An example of defining a VET system with a qualitative approach includes the VET system development for Austria by Ferrier et al. [23]. However, traditional qualitative approaches could be subjective and misleading. By the way, the VET system development proposal

by Ferrier et al. [23] focused on fulfilling skills needs for Austrias emerging industries only. The important NIS linkages between the VET systems and the industries as well as research institutes were not mentioned. Moreover, the vague correlations between policy tools as well as NIS components as well as linkages, and the lack of priorities of the policy tools deducted from the analysis procedure could cause governments to waste education resources, merely because either low or nopriority policy instruments are executed. III. ANALYTIC FRAMEWORK AND METHODS FOR RECONFIGURING AN INNOVATION POLICY PORTFOLIO The analytical process for expanding a nations innovation capabilities is initiated by collecting the IIRs being needed to develop the national innovation capabilities as well as objectives to be achieved after a nations enhancing IIRs using the Delphi method. Since any goals to be derived by the Delphi may impact each other, the structure of the MCDM problem will be derived using the DEMATEL. The weights of every goal are based on the structure derived by using the ANP. Finally, the innovation competence expansion process will be based on a multiple objective programming approach based on the concept of minimum spanning tree by introducing innovation competences being derived by Delphi and weights corresponding to each objective being derived by ANP in the former stages. A. The DEMATEL Method The DEMATEL method was developed by the Battelle Geneva Institute: (1) to analyze complex world problems dealing mainly with interactive man-model techniques; and (2) to evaluate qualitative and factor-linked aspects of societal problems [27]. To apply the DEMATEL method smoothly, the authors refined the definitions by Hori and Shimizu [28], Chiu et al. [29], Huang et al. [30] and produced the essential definitions indicated below. Definition 1: The pair-wise comparison scale may be designated as eleven levels, where the scores 0,1,2,,10 represent the range from no influence to very high influence. Definition 2: The initial direct relation/influence matrix A = [aij ]nn , i, j {1, 2,..., n} is obtained by pair-wise comparisons, in terms of influences and directions between the objectives, in which aij is denoted as the degree to which the ith objective affects the j objective. Definition 3: The normalized direct relation/influence matrix N can be obtained through following equations in which all principal diagonal elements are equal to zero: N = zA where
z = (max
1 i n
th

(i, j) element tij of matrix T denotes the direct and indirect

influences of factor i on factor j . Definition 5: The row and column sums are separately denoted as r and c within the total-relation matrix T through T = [tij ], i, j {1, 2,..., n} ,
n n r = [ ri ]n1 = tij and c = [c j ]n1 = tij . Here, the j =1 i =1 1n n1 r and c vectors denote the sums of the rows and columns, respectively. Definition 6: Suppose ri denotes the row sum of

the ith row of matrix T . Then, ri is the sum of the influences dispatching from factor i to the other factors, both directly and indirectly. Suppose that c j denotes the column sum of the j th column of matrix T . Then, c j is the sum of the influences that factor i is receiving from the other factors. Furthermore, when i = j (i.e., the sum of the row sum and the column sum ( ri + c j ) represents the index representing the strength of the influence, both dispatching and receiving), ( ri + c j ) is the degree of the central role that factor i plays in the problem. If ( ri - c j ) is positive, then factor i primarily is dispatching influence upon the other factors; and if ( ri - c j ) is negative, then factor i primarily is receiving influence from other factors [31]. B. The ANP Method The ANP method, a multi criteria theory of measurement developed by Saaty [32], provides a general framework to deal with decisions without making assumptions about the independence of higher-level elements from lower level elements and about the independence of the elements within a level as in a hierarchy [32]. In this section, concepts of the ANP are summarized based on Saatys earlier works [32, 33]. A component of a decision network which was derived by the DEMATEL method in Section 3.1 will be denoted by Ch , h = 1,2,, m, and assume that it has nh elements, which we denote by eh1 , eh2 ,, ehm . The influences of a given set of elements in a component on any element in the decision system are represented by a ratio scale priority vector derived from paired comparisons of the comparative importance of one criterion and another criterion with respect to the interests or preferences of the decision makers. This relative importance value can be determined using a scale of 19 to represent equal importance to extreme importance [32]. The influence of elements in the network on other elements in that network can be represented in the supermatrix as Wij = [ wij ], i {1,2,..., m} , j {1,2,..., m} . A typical entry
Wij = [ winx jny ] , nx {1,2,..., ni } , ny {1, 2,..., n j } in the

a ) j =1 ij

. In this case, N
k

is called the

normalized matrix. Since lim N k = [0]nn . Definition 4: Then, the total relationship matrix T can be obtained using T = N + N 2 + ... + N k = N ( I - N )-1 , where I stands for the identity matrix. Here, k and T is a total influencerelated matrix; N is a direct influence matrix and N = [ xij ]nn ; lim ( N 2 + + N k ) stands for a indirect
k

supermatrix, is called a block of the supermatrix in the following form where each column of W ij is a principal eigenvector of the influence of the elements (objective) in the ith component of the network on an element (objective) in the

influence matrix and 0 xij < 1 . So, lim N k = [0]nn . The

k

j th component. Some of its entries may be zero corresponding to those elements (objective) that have no influence. After forming the supermatrix, the weighted supermatrix is derived by transforming all columns sum to unity exactly. This step is very much similar to the concept of the Markov chain in terms of ensuring that the sum of these probabilities of all states equals 1. Next, the weighted supermatrix is raised to limiting powers, such as lim W to get the global priority

A.

vector or called weights [34]. In addition, if the supermatrix has the effect of cyclicity, the limiting supermatrix is not the only one. There are two or more limiting supermatrices in this situation, and the Cesaro sum would need to be calculated to get the priority. The weights of the k th objective being derived by using the above ANP processes, namely k , k {1, 2,..., n} , will be used as the weight for the k th objective in the following Section 3.3. C. Grey Relational Analysis GRA is used to determine the relationship between two sequences of stochastic data in a Grey system. The procedure bears some similarity to pattern recognition technology. One sequence of data is called the reference pattern or reference sequence, and the correlation between the other sequence and the reference sequence is to be identified [35-38]. To apply the GRA, the authors refined the definitions by Huang et al. [30] and produced the essential definitions indicated below. Deng also proposed a mathematical equation for the grey relation coefficient, as follows: ( x0 (k ), xi (k )) =

An Introduction to the Fuel Cell Technology Fuel cells are electrochemical devices, which basically consist of a positive and negative electrode separated by an electrolyte and produce electricity through clean chemical reactions rather than environmentally detrimental processes like combustion [1]. Fuel cells convert the chemical energy of a gaseous fuel directly into electricity and are widely regarded as a potential alternative stationary and mobile source [2]. They complement heat engines and reduce the ubiquitous dependence on fossil fuels and thus have significant environmental and national security implications [2]. The whole energy conversion process is similar to that of a battery, except that it will continue to generate electricity as long as there is a hydrogen and oxygen supply [1]. According to Brown [39], the fuel cell technology offers many advantages including (1) high conversion efficiency, (2) versatility of output, (3) easy maintenance, and (4) non-polluting. B. Governmental Efforts for Developing the Fuel Cell Technologies To promote fuel cell systems also the fuel cell EVs, governments worldwide have aggressively launched several hydrogen-associated projects to establish infrastructures, enhance fuel cell technologies, legislate policies, etc. [40] Although, the role of government in technology development differs between countries, most have some form of the national system of innovation [1,6]. For examples, European Fuel Cells and Hydrogen Joint Technology Initiative (JTI) focuses on hydrogen technology development. The U.S. government created a Hydrogen, Fuel Cell & Infrastructure Technologies Program in 2004 for building hydrogen infrastructures, legislating regulations, associated education, EV technologies. Japanese government held a Japan Hydrogen & Full Cell Demonstration Project (JHFC) in 2002 for EV promotion and hydrogen technology development [40].

(min min ( x0 (k ) xi (k )) + max max ( x0 (k ) xi (k )) )

i k i k

( ( x0 (k ) xi (k )) + max max ( x0 (k ) xi (k )) )1 where is the distinguished coefficient ( [0,1] ). Generally, we pick =0.5. When the grey relational coefficient is conducted with respect to innovation policies, we then can derive the grade of the grey relation ( x0 , xi ) between the reference alternative
i k

( x0 , xi ) =

n k =1

k ( x0 (k ), xi (k )).

where k is the number of IIRs, k expresses the weight of the

k th criterion, and ( x0 , xi ) represents the grade of grey

relation in xi (the k th strategy) correspondence to x0 . In this study, we make the order of the innovation mechanisms following the grade of grey relation. IV. DEFINING THE VET POLICY PORTFOLIO FOR DEVELOPING THS NIS OF THE FUEL CELL INDUSTRY In the following Section, the concept of the fuel cell technology will first be briefed as a basis for the VET policy portfolio definitions. A configuration of the VET policy portfolio follows based on the opinions of three experts from Taiwanese academic or research institutes.

C. Configuring the VET Policy Portfolio for Enabling the NIS of the Fuel Cell Technologies Based on the literature review results, the innovation system components and linkages between the components were first be derived from Freeman [41] and Schilling [42]. Then, VET policy instruments were derived based on the educational policy instruments being proposed by McDonnell and Elmore [43]. According to Schilling [42], innovation can arise from many different sources including individuals, universities, government laboratories and incubators, private nonprofit organizations, firms as well as networks of innovators that leverage knowledge and other resources from multiple sources. In general, sources of innovation as composing a complex system wherein any particular innovation may emerge primarily from one or more components of the system or the linkages between them. Based on Schillings definitions, the components of the NIS as well as linkages between the components are summarized below as the basis of this research [42]: (1) firms R&D organizations ( nc1 ), (2) science parks ( nc2 ), (3) Incubators ( nc3 ), (4) Technical universities ( nc4 ), (5) Research institutes ( nc5 ), (6) Financial institutes ( nc6 ).

Furthermore, based on Shillings summarization [42] of an earlier work by Freeman [41], linkages between components in a NIS include technology clusters ( nc7 ), joint ventures ( nc8 ), licensing agreements ( nc9 ), research associations( nc10 ), government-sponsored joint research programs ( nc11 ). McDonnell and Elmore proposed five educational policy instruments [43] as alternative policy instruments or mechanisms which translate substantive policy goals into concrete actions [44]. Those five instruments include mandates ( i1 ), inducement ( i2 ), capacity building ( i3 ), system changing ( i4 ) and persuasion ( i5 ). By introducing the proposed hybrid MCDM framework being proposed, the decision framework can first be derived based on three experts opinions from Taiwanese commercial banks. The network of relation map (Fig. 1) can be derived by using the total relationship matrix T being derived by the DEMATEL at first. The weights versus each component of the NIS can be derived by using the ANP (TABLE I).
1.121 1.177 1.166 1.085 1.217 1.182 1.130 1.153 1.259 1.117 1.273 1.135 1.231 1.133 1.271 1.233 1.201 1.196 1.300 1.189 1.215 1.191 1.090 1.096 1.235 1.162 1.152 1.133 1.263 1.170 1.113 1.073 1.085 0.908 1.128 1.051 1.029 1.004 1.131 1.061 1.229 1.178 1.183 1.097 1.122 1.170 1.124 1.113 1.256 1.163 1.165 1.137 1.105 1.016 1.149 1.023 1.086 1.089 1.176 1.093 1.103 1.077 1.060 0.967 1.080 1.063 0.942 1.024 1.120 1.035 1.130 1.090 1.086 0.963 1.106 1.089 1.054 0.957 1.154 1.046
5

should define policies for encouraging technical universities and colleges emphasizing on the education of alternative energies. Meanwhile, investments in the development of the intellectual and human resources for fuel cells will be very helpful. Finally, how the current VET system can be changed is worth discussing in future researches.
TABLE II. Grey Grades versus Each Policy Instrument
NC PI i1 i2 i3 i4 i5 nc 1 0.342 0.185 0.267 0.342 0.115 nc 2 0.000 0.000 0.000 0.000 0.000 nc 3 0.000 0.000 0.000 0.000 0.000 nc 4 0.000 0.000 0.000 0.000 0.000 nc 5 0.329 0.210 0.329 0.329 0.178 nc 7 0.000 0.000 0.000 0.000 0.000 nc 8 0.000 0.000 0.000 0.000 0.000 nc 9 0.000 0.000 0.000 0.000 0.000 nc 10 0.257 0.210 0.329 0.210 0.101 nc 11 0.000 0.000 0.000 0.000 0.000 Grey Grades 0.671 0.396 0.596 0.671 0.293

T=

1.253 1.195 1.199 1.105 1.246 1.179 1.148 1.157 1.167 1.164

1.116 1.082 1.101 1.027 1.151 1.094 1.059 1.046 1.168 0.983

4 8 9 11

10

1 2

The financial institutes were recognized as unimportant in the very beginning of the modified Delphi process though they are recognized as important in NIS literature. For the NIS components being recognized by the experts as important but neglected and weighted as 0, i.e., Technical universities ( nc4 ), joint venture ( nc8 ), licensing agreement ( nc9 ) and Government-sponsored joint research programs ( nc11 ), the components indeed influence the development of the fuel cell technologies. However, being analyzed by the DEMATEL, the components are important but not influential. The results may due to the background of experts who are familiar with the embryonic phase of the fuel cells. In the introduction stage of the product life cycles, financial institutes which can provide loans for fuel cell commercialization may not be essential. Meanwhile, unless the dominant design emerged, joint ventures and license agreements may not play an important role. Finally, before the product life cycle really enters the growth stage, technicians may not really play an important role in fuel cell development and commercialization. Thus, the results worth further investigations by inviting industry experts who really own experiences in fuel cell commercialization. VI. CONCLUSIONS Fuel cells have emerged as one of the possible solutions for resolving the severe pollutions and petroleum consumptions by traditional vehicles. During the past decades, national governments worked aggressively toward the fuel cell innovations by national innovation systems (NISs). However, how the VET systems can be configured by policy instrument definitions so that the NIS can be enabled was seldom addressed. In this paper, a hybrid MCDM framework was proposed to resolve this issue. Based on opinions by academic and industry experts, mandates, capacity building and system change were recognized by the experts as the most important VET policy tools for enabling the NIS of the fuel cell technologies from the aspects of firms R&D organizations, research institutes and research association. ACKNOWLEDGMENT The authors gratefully acknowledge the support of Taiwan National Science Council through grant number NSC 97-2511-S-003-039-MY2 and NSC 98-2511-S-003-068-MY2.

Figure 1. The NRM TABLE 1. Weights versus Each Criteria

Component Weight nc 1 nc 2 nc 3 nc 4 nc 5 nc 6 N.A. nc 7 nc 8 nc 9 nc 10 nc 11

0.342 0.031 0.032 0.000 0.329

0.000 0.000 0.000 0.329 0.000

Remark: N.A. means not applicable.

Finally, based on the experts evaluations on the VET policy tools, grey grades versus each tool can be derived as follows in TABLE II. The VET policy tools 1, 3 and 4 are the most suitable one for developing the NIS of the fuel cell technologies. V. DISCUSSION In this research, mandates ( i1 ), capacity building ( i3 ) and system change ( i4 ) were recognized by the experts as the most important VET policy tools for enabling the NIS of the fuel cell technologies from the aspects of firms R&D organizations ( nc1 ), research institutes ( nc5 ) and research association ( nc10 ). Based on the empirical study results, the Government

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