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Leadership in Enabling and Industrial

Technologies
Fostering an Entrepreneurial Mindset through Innovation
Policy


by Hosea Saputro HANDOYO (34186)

A dissertation submitted in partial fulfilment of
the requirements for the degree of

Master of Public Policy
2014
Willy Brandt School of Public Policy
University of Erfurt



Dissertation Supervisor: Prof. Dr. Edgar Aragn
Second Reader: Dr. Steffen Wetzstein


Erfurt, July 25, 2014

Hosea Handoyo | www.hshandoyo.net
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Ego hoc Deo familia et amicis







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ABSTRACT
With the future growth of the global economy depending on innovation, this dissertation
is set out to examine the application of innovation and technology clusters in achieving
industrial leadership. By examining Regional Innovation System of Thuringia, the study
elucidates the process by which innovation can strengthen regional competitiveness and
the constraints it has. Two research strategies are used: a quantitative data analysis of
the region and a series of interviews with the innovation stakeholders. This also includes
a deeper investigation of the Ilmenau region. Data has been collected from archives,
newspapers, reports, and academic publications.
This dissertation challenges the argument that innovation depends primarily on
government policies rather than on the most innovative and commercially-active
stakeholders. While existing literatures on innovation assume all technology sectors are
similar, the investigation also highlights the specific approaches of technology clusters.
Drawing from the interviews and case studies, this study reveals the significance of
social capital, such as personal relationship and trust-building in innovation processes.
Thus, the results reinforce the importance of collaboration in innovation policy-making
and the need of interdisciplinary approaches in understanding innovation by integrating
politics and psychology with economics. It offers policy recommendations for the
Thuringian innovation stakeholders for improving the current Regional Innovation
System and Cluster approach within the EU framework of Leadership in Enabling and
Industrial Technologies.

Keywords: Regional Innovation System, Cluster, Regional Development,
Competitiveness
Word count: 19.226 (main body)



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KURZFASSUNG
Innovation ist der kritische Faktor fr das zuknftige Wachstum der Weltwirtschaft. Die
vorliegende Arbeit ist daher darauf ausgerichtet die Verwendung von Innovations- und
Technologie-Clustern zur Erreichung von Marktfhrerschaft (im Industriebereich) zu
untersuchen. Durch die Untersuchung regionaler Innovationssysteme in Thringen wird
jener Prozess durchleuchtet, im Zuge dessen Innovation die regionale
Wettbewerbsfhigkeit steigern kann. Auerdem werden vorliegende
Rahmenbedingungen und hemmende Faktoren betrachtet. Hierfr werden zwei
Forschungsstrategien angewandt: Zunchst wird eine quantitative Analyse der Region
durchgefhrt um dann durch eine Reihe von Interviews mit Interessensvertretern aus
dem Bereich Innovation erweitert zu werden. Weiterhin ist eine tiefere Analyse der
Region rund um Ilmenau enthalten. Verwendete Daten stammen aus Archiven,
Zeitungen, Berichten und akademischen Publikationen.
Die vorliegende Arbeit stellt die Argumentation infrage, dass Innovation hauptschlich
von Regierungsentscheidungen abhngt. Stattdessen wird der Einfluss von innovativen,
regional aktiven Wirtschaftsakteuren betont. Whrend vorhandene Literatur oft davon
ausgeht, dass smtliche Technologiebereiche sich hnlich sind, legt die vorliegende
Untersuchung einen Fokus auf spezifische Anforderungen fr die Entwicklung
unterschiedlicher Technologie-Cluster. Unter Einbeziehung der durchgefhrten
Interviews und Fallstudien wird weiterhin die Bedeutung von Sozialkapital (z.B.
persnliche Beziehungen, den Aufbau von Vertrauen) fr Innovationsprozesse
herausgestellt. Darauf aufbauend bekrftigen die Ergebnisse die Wichtigkeit von
Kollaboration beim Erstellen von ffentlichen Innovationsstrategien und den Bedarf fr
interdisziplinre Anstze, die ein Verstndnis von Innovation durch die Integration von
Politik, Psychologie und konomie vereinfachen. Die Arbeit gibt schlussendlich
Empfehlungen fr Thringer Interessensvertreter im Bereich Innovation, die dazu dienen
sollen den Ansatz fr lokale Innovation und den Aufbau von Clustern unter dem EU-
Rahmenprogramm "Leadership in Enabling and Industrial Technologies" zu verbessern.

Stichwort: Regionales Innovationssystem, Cluster, regionale Entwicklung,
Wettbewerbsfhigkeit
Wortanzahl: 19.226


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SAMENVATTING
De toekomstige groei van de wereldeconomie is afhankelijk van innovatie. Dit
proefschrift onderzoekt de toepassing van geclusterde innovatie en technologie in het
verkrijgen van industrieel leiderschap. Door het Regionaal Innovatiesysteem van
Thringen te onderzoeken blijkt hieruit dat innovatie processen het regionale
concurrentievermogen en zijn beperkingen kan versterken. Twee onderzoeksmethoden
zijn hiervoor gebruikt: een kwantitatieve analyse van de regio en een reeks interviews
met belanghebbende vernieuwers. Dit bevat tevens een dieper onderzoek naar de regio
Ilmenau. De data zijn verzameld uit archieven, kranten, verslagen en wetenschappelijke
publicaties.
Dit proefschrift vecht het argument aan dat innovatie in de eerste plaats afhankelijk is
van overheidsbeleid meer dan van innovatieve en commercieel actieve
belanghebbenden. Terwijl de bestaande literatuur met betrekking tot innovatie aanneemt
dat alle technologische sectoren vergelijkbaar zijn, benadrukt het onderzoek ook de
specifieke benaderingen die nodig zijn voor verschillende technologische clusters. De
interviews en casus studies in dit onderzoek tonen het belang aan van sociaal
vermogen, zoals persoonlijke relaties en het opbouwen van vertrouwen bij
innovatieprocessen. Samenvattend, de resultaten versterken het belang van
samenwerking in het innovatiebeleid en de noodzaak van een interdisciplinaire aanpak
bij het begrijpen van innovatie in het integreren van economie met politiek en
psychologie. Het biedt ook een beleidsaanbeveling voor de partijen die betrokken zijn bij
de Thringer innovatie voor het verbeteren van de huidige aanpak Regional Innovation
System en Cluster binnen het EU-kader van "Leiderschap in ontsluitende en industrile
technologien

Trefwoord: regionaal innovatiesysteem, cluster, de regionale ontwikkeling,
concurrentievermogen
Woorden tellen: 19.226


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ABSTRAK
Dengan pertumbuhan masa depan ekonomi global bergantung pada inovasi, skirpsi ini
bertujuan untuk menelaah penerapan inovasi dan kluster teknologi dalam mencapai
kepemimpinan industri. Dengan memeriksa Sistem Inovasi Regional Thuringia, studi ini
memaparkan proses dimana inovasi dapat memperkuat daya saing regional dan
kendala yang dihadapi. Dua strategi penelitian yang digunakan adalah analisis data
kuantitatif daerah dan serangkaian wawancara dengan para pemangku kepentingan
inovasi. Hal ini juga diperkuat dengan penyelidikan lebih dalam di wilayah Ilmenau. Data
telah dikumpulkan dari arsip, surat kabar, laporan, dan publikasi akademik.
Skripsi ini menilik kembali argumen bahwa inovasi terutama tergantung pada kebijakan
pemerintah. Sejatinya, inovasi bergantung ada pemangku kepentingan yang paling
inovatif dan komersial. Sementara itu, literatur yang ada mengenai inovasi menganggap
semua sektor teknologi serupa, skripsi ini juga menyoroti pendekatan khusus yang
dibutuhkan berdasarkan sektor-sektor teknologi yang berbeda. Studi ini menunjukkan
pentingnya modal sosial, seperti hubungan pribadi dan kepercayaan dalam proses
inovasi. Dengan demikian, pembuatan kebijakan inovasi dan diperlukan pendekatan
interdisipliner dengan mengintegrasikan politik dan psikologi dengan ekonomi. Skripsi ini
diakhiri dengan menawarkan rekomendasi kebijakan untuk para pemangku kepentingan
inovasi dengan stakeholder Thuringian dalam meningkatkan arus Sistem Inovasi
Daerah dan Cluster pendekatan dalam kerangka Uni Eropa "Leadership in Enabling and
Industrial Technologies".

Kata kunci: sistem inovasi regional, kluster, pembangunan daerah, daya saing
Jumlah kata: 19.226


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ACKNOWLEDGEMENT
No duty is more urgent than that of returning thanks
Aurelius Ambrosius (337-397)

When my grandparents

asked me to pursue higher education, I asked them how far I


should study, and they said, as high as the heavens! It is clear that climbing the stairs
to the heavens is not a work of solitary achievements. I am completely at loss when it
comes to acknowledging people who have helped me in completing this study.
First of all, I wish to express my gratitude to my academic supervisors; Dr. Edgar Aragn
for sharing his knowledge, experience, and the probing questions during regular
meetings. Also, to Prof. Florian Hoffmann for the encouraging support without which I
would have not completed this journey and this includes the Dr. Steffen Wetzstein for
his support and inspiring comments. This also includes encouragements from the
Indonesia State Ministry of Research and Technology, past-minister Mr. Koesmayanto
Kadiman and Mrs. Lies Widjayanti who have introduced me to public policy and
innovation system. My deepest gratitude is also due to members of Willy Brandt School
and all the MPP family.
The research project has tremendous supports from all the experts and practitioners
whom I have interviewed and discussed with. I would also like to convey my thanks to
University of Erfurt, Thuringia Ministry of Economics, and TU Ilmenau. I thank Prof. Dr. -
Ing. Gnther Schfer, Dr. Drte Gerhardt, and Sven Mller who helped opening the door
to TU Ilmenau and the companies in Ilmenau. I am also grateful for the constructive
inputs from Dr. Sandy Neish, Dr. Deborah Spencer, MBA., Dr. Patrick McCarthy, Dr.
Kevin Parker, and Dr. Fred van Eenennaam.
In this occasion, I would also thank many people who have played great deal in during
the past several years in shaping my life through the completion of this perplexing
journey with their mentoring supports, especially Bob Foster, Johnson Sinaga, Michael
Putrawenas, Nico

and Marie Mandersloot, Daisy Prasetya, and Ton Ammerlaan.


On personal level, I would like to express my deepest gratitude to my beloved families;
for their understanding, support, and endless love through the duration of my studies.
While from my social life, I can never thank these people enough for being the
shoulders to cry on and ears that will listen and tirelessly reminding me to have a more

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balanced life in the past 2 years in Erfurt: Robert A Jonker, Thomas Weise, Tobias
Schnau, Martin Ostermann, Cindy Carina Affandi, Nonni Athari, and Jens Busse. Then
to some of my friend with whom I have a load of meaningful discussions and
collaborations, Ulrike Wollenhaupt-Schmidt, Tineke Tiebosch, Theresa Hermann, Maria
Sheviakova, Adriana Henriquez, Lukas Richter, Nastia Sabatkovskaya, Audrey Clarissa,
and to Maria Ehrich and her family.
I also wish to thank people from my Doppelkopf group: Daniel Bormke, Sascha Uthe,
Karsten Schnfeld, Dr. Christian Scheibenhof, Ingo Schnemann, and Saskia Hippe for
demonstrating what friends are for. I also cannot leave this without mentioning the
distinguished delegates of Erfurt Model United Nations, both orga and delegates in
2013 and 2014, particularly Florian Emmerich, Florian Hader, Nora Henscke, Peter
Tscherny, and Sarah Duryea who have shown great friendships and professionalisms.
Despite my effort to properly acknowledge everyone involves in this journey, I
apologize to those I forgot to mention here. I can only assure you that it was
unintentional.

Oremus pro invicem,

Hosea Handoyo



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TABLE OF CONTENTS
ABSTRACT (English) .................................................................................................... ii
KURZFASSUNG (German) .......................................................................................... iii
SAMENVATTING (Dutch) ............................................................................................. iv
ABSTRAK (Indonesian) ................................................................................................ v
ACKNOWLEDGEMENT ................................................................................................ vi
TABLE OF CONTENTS .............................................................................................. viii
LIST OF TABLES ......................................................................................................... xi
LIST OF FIGURES ....................................................................................................... xii
LIST OF ABBREVIATIONS ........................................................................................ xiii

Chapter 1 Introduction ............................................................................................ 1
1.1 Global Context .................................................................................................. 1
1.2 Regional Context .............................................................................................. 2
1.3 Aim ................................................................................................................... 4
1.4 Theoretical Framework ..................................................................................... 4
1.5 Methodology ..................................................................................................... 5
Case Study: Thuringia and Ilmenau University of Technology ........................... 6
1.6 Personal Motivation .......................................................................................... 6
1.7 Structure of Thesis ............................................................................................ 7

Chapter 2 Theoretical Framework .......................................................................... 8
2.1 What is technology innovation? ......................................................................... 8
2.2 Technology Level Readiness (TLR) .................................................................. 9
2.3 How does innovation play a role in Industrial Leaderships? ............................ 11
2.4 OECD Innovation System Approach ............................................................... 12
2.5 National Innovation Systems ........................................................................... 14
2.6 Regional Innovation System ............................................................................ 17
2.7 Cluster, Innovation, and Entrepreneurship ...................................................... 18
2.8 N-Helix Model ................................................................................................. 19
2.8.1 Triple Helix Innovation Model ...................................................................... 21
2.8.2 Quintuple Helix ............................................................................................ 22
2.9 Summary ........................................................................................................ 23


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Chapter 3 Methodology ......................................................................................... 25
3.1 Timeline, Funding, and Language ................................................................... 25
3.2 Conceptual framework of innovation and industrial leadership ........................ 25
3.3 Primary Data Collection: in-depth interviews and discussions ......................... 27
3.4 Secondary Data Collection .............................................................................. 30
3.5 Challenges and Limitations ............................................................................. 30

Chapter 4 Innovation in Thuringia: Moving Forward and Unlocking its Potentials 31
4.1 Cluster Approach in Thuringia ......................................................................... 31
4.2 Evaluation of Cluster Approach ....................................................................... 34
4.3 Regional Innovation System in Thuringia ........................................................ 35
4.4 Innovation Stakeholders: Quintuple Helix in Thuringia .................................... 39
4.4.1 Government ............................................................................................ 39
4.4.2 Academia ................................................................................................ 42
4.4.3 Business .................................................................................................. 42
4.4.4 Civil Societies .......................................................................................... 44
4.4.5 Media ...................................................................................................... 45

Chapter 5 Innovation in Thuringia under Microscope ......................................... 46
5.1 TU Ilmenau ..................................................................................................... 46
5.2 Fostering Entrepeneurship in TU Ilmenau: Auftakt ......................................... 48
5.3 Assessing Regional Innovation System in Thuringia ....................................... 49

Chapter 6 Where Theory Meets Practice .............................................................. 53
6.1 Can Cluster Approach and Regional Innovation System stimulate innovation
and achieve industrial leadership? .................................................................. 53
6.2 Where does leadership in enabling and industrial technologies reside? .......... 54
6.3 What is the most important factor to sustain LEIT? ......................................... 55
6.4 What are the best indicators for achieving LEIT? ............................................ 58
6.5 Impact and its Possible Implementation in Developing Countries .................... 60
6.6 Outlook and Future Research ......................................................................... 61

Conclusion .................................................................................................................. 62




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Chapter 7 Policy Recommendations .................................................................... 66
I. Thuringian Ministry of Economics, Labor, and Technology ............................. 67
II. Thuringian Ministry of Education, Science, and Culture ................................. 67
III. Technology University Ilmenau ....................................................................... 68
IV. Small and Medium Enterprises (and Start-ups) in Knowledge Enabling
Technologies .................................................................................................. 68
V. European Commission DG Research and Enterprise...................................... 68

REFERENCES ............................................................................................................. 69

ANNEX 1 Overview of Different Technologies ........................................................ 80
ANNEX 2 Location of Thuringia in Germany ........................................................... 81
ANNEX 3 Location of major innovation cities in Thuringia .................................... 82
ANNEX 4 Geographical Situation of Ilmenau .......................................................... 83
ANNEX 5 OECD Systemic Approach Publications ................................................. 84
ANNEX 6 OECD National Innovation Systems ........................................................ 85
ANNEX 7 Guiding Questions for Interview .............................................................. 86
ANNEX 8 INTERVIEWS AND SELECTED QUOTES ................................................ 88
ANNEX 9 Overview of ThEx ................................................................................... 100
ANNEX 10 Locations of Commercial Research Institutes in Thuringia ................. 101

Declaration (Erklrung) ............................................................................................ 102


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LIST OF TABLES
Table 1 General Profile and Economic Performance of Thuringia .............................. 3
Table 2 Different National Innovation System (NIS) definitions by the primary
principal investigators of NIS ................................................................................. 14
Table 3 List of experts/scholars in innovation and industrial leadership ................... 26
Table 4 List of experts/scholars in innovation and industrial leadership ................... 29
Table 5 Overview of Thuringian Clusters ................................................................. 33
Table 6 Contribution of Knowledge Enabling Technology to Thuringia's Economy... 37
Table 7 Quintuple Helix Stakeholders in Thuringian Innovation System ................... 40
Table 8 R&D Excellence in Thuringia ....................................................................... 43
Table 9 Commercial Research Institutes in Thuringia .............................................. 45
Table 10 Research Funding in TU Ilmenau ................................................................ 47
Table 11 Regional Distribution of Entrepreneurial Activity in Thuringia ...................... 48
Table 12 Assets and Liabilities of Innovation in Thuringia .......................................... 50


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LIST OF FIGURES
Figure 1 Technology Level Readiness (TLR) Scheme .......................................... 10
Figure 2 TLR and Industrial Leaderships............................................................... 12
Figure 3 Innovation in Statist Model ....................................................................... 13
Figure 4 National Innovation System Schematic Representative .......................... 15
Figure 5 Learning Regions and Learning Flows in Regional Innovation Systems .. 16
Figure 6 Regional Innovation Systems in Europe .................................................. 17
Figure 7 Porter's Diamond for Cluster Analysis (Porter, 1990) ............................... 19
Figure 8 Technological Entrepreneurship and its Complexities .............................. 20
Figure 9 Schematic representation of Triple Helix ................................................. 21
Figure 10 Schematic Representation of Quintuple Helix .......................................... 23
Figure 11 Flow chart of the methodology used in this study .................................... 28
Figure 12 Structure of Thuringia Cluster Management (TMWAT, 2012) .................. 33
Figure 13 Diamond Model: Government Role in Upgrading Cluster in Thuringia ..... 36
Figure 14 Diamond Model: Private Sectors Influences on Cluster Upgrading .......... 36
Figure 15 RIS 3 Strategies (modified from TMWAT (2014, p. 7)) ............................. 38
Figure 16 Pillars of RIS3 to achieve its Vision ......................................................... 39
Figure 17 Innovation Process in the Head ............................................................... 57
Figure 18 Processes of Innovation .......................................................................... 57




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LIST OF ABBREVIATIONS
BMBF Federal Ministry of Education and Research (Bundesministerium
fr Bildung und Forschung)
BMWi Federal Ministry of Economics and Energy (Bundesminiterium
fr Wirtschafts und Energie)
BRD Federal Republic of Germany (Bundesrepublik Deutschland)
DDR German Democratic Republic (Deutsche Demokratische
Republik)
DevCo Development and Cooperation
DFG German Research Foundation (Deutsche
Forschungsgemeinschaft)
DG Director General
e.V. Registered Association (eingetragener Verein)
EC European Commission
EP European Parliament
EU European Union
EUR Euro ()
EXIST University-Based Business Start-Ups (Existengrndungen aus
der Wissenschaft)
FDI Foreign Direct Investment
FH University of Applied Sciences (Fachhochschule)
FI Fraunhofer Institute
FTVT Thuringian Research and Technology Association (Forschungs-
und Technologieverbund Thringen e.V.)
GDP Gross Domestic Products
GIZ German Federal Enterprise for International Cooperation
(Deutsche Gesellschaft fr Internationale Zusammenarbeit)
GmbH Company with Limited Liability (Gesellschaft mit beschrnkter
Haftung)
GNP Gross National Products
GVA Gross Value Added
H2020 Horizon 2020
HEI Higher Education Institution
HGN Higher Education Start-ups Network (Hochschul Grnder
Netzwerk)
ICT Information and Communication Technology
IHK Chamber of Commerce ( Industrie- und Handelskammer)
IP Intellectual Properties
IPO Initial Public Offering
KET Knowledge Enabling Technology
KTP Knowledge Transfer Process
LEED Local Economic and Employment Development
LEG State Development Corporation of Thuringia
(Landesentwicklungsgesselschafts Thringen)
LEIT Leadership in Enabling and Industrial Technologies
MPI Max Planck Institute

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NIS National Innovation System
OECD
Organization for Economic Co-operation and Development
PO Patent Office
R&D Research and Development
RI Research Institutes
RIS Regional Innovation System
RIS3 Regional Research and Innovation Strategy for Intelligent
Specialisation of Thuringia (Regionale Forschungs- und
Innovationsstrategie fr intelligente Spezialisierung fr
Thringen)
SME Small and Medium Enterprises
STIFT Foundation of Technology, Inovation, and Research (Stiftung fr
Technologie, Innovation und Forschung Thringen)
SWOT Strength, Weakness, Opportunities, and Threat
TAB Development Bank of Thuringia (Thuringer Aufbau Bank)
TH Thuringian Higher Education (Thringer Hochschule)
TH Thuringia (Thringen)
TH Technical College (Technische Hochschule)
ThAFF Thuringian Agency for Skilled Personnel Marketing (Thringer
Agentur Fr Fachkrftegewinnung)
ThCM Thuringia Cluster Management (Thringer Cluster Management)
ThEx Thuringian Center for Start-ups and Entrepreneurship (Thringer
Zentrum fr Existenzgrndungen und Unternehmertum)
ThBAN Thuringia Business Angel Network
ThrING Thuringian Network of Innovative Start-ups ( Thringer Netzwerk
fr Innovative Grndungen)
TMBWK Thuringian Ministry of Education, Science, and Culture
(Thringer Ministerium fr Bildung, Wissenschaft, und Kultur)
TMWAT Thuringian Ministry of Economics, Labor, and Technology
(Thringer Ministerium fr Wirtschaft, Arbeit, und Technologie)
TT Technology Transfer
TTD Technology Transfer and Development
TTO Technology Transfer Office
TU Technical University/University of Technology (Technische
Universitt)
TUI Technical University of Ilmenau
UNIDO United Nations
USD United States Dollar ($)
VC Venture Capital
WB World Bank
WIN Growth, Innovation, Resources (Wachstum, Innovation,
Nachhaltigkeit)
WIR Business, Innovation, and Resources (Wirtschaft, Innovation,
Ressourcen)

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Chapter 1 Introduction
This chapter provides the overview of the thesis and presents the reasoning behind the
study. Started by outlining the global and regional relevance, this study attempts to
clarify differing viewpoints on the context of innovation policy with its own limitations.
This chapter is closed by disclosing the structure and logic of the thesis.

1.1 Global Context
The shape and potential of worldwide industries in the next 5-10 years are yet unknown.
Technological advances are rapidly growing and technological innovations are becoming
the key priorities of emerging economies to shift to knowledge economy. Europe
identifies Knowledge Enabling Technologies (KET) as the future key competences of
Europe. KET is a set of technologies which complement and improve the current
technologies. For example, nanoelectronics allow computer chips to be much smaller
and more powerful. This helps to improve the current quality computer industry and
medical devices. Thus, these industrial sectors could be the leaders in their industrial
sector. Becoming the global player and the best technology is also known as achieving
Leadership in Enabling and Industrial Technologies or LEIT (European Commission,
2013b).
European Union has suggested that LEIT is one of the answers to global economic
crises and increase Europes regional competitiveness in knowledge economy (EC
Decision C (2013) 8631). KETs comprise six strategic technologies: nanotechnologies,
micro- and nano-electronics - including semiconductors, photonics, advanced materials,
biotechnologies, and advanced manufacturing systems with Information and
Communication Technologies (ICTs) (See annex 1 for explanation of different
technologies). These technologies cannot stand alone to give added-values but they
have to be combined together. Hence, KETs are knowledge- and capital intensive with
high potentials to address the current and future general public challenges (EC Comm.
(2009) 512).
Industrial leadership depends on fostering innovative knowledge production from basic
and applied research from higher education institutions (HEIs). Boosting KETs is not
enough on funding scientific research but also transforming HEIs into entrepreneurial
ones with strong technology transfer activities. Hence, I propose that Leadership in
Enabling and Industrial Technologies can only be achieved if government has a strong

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commitment in the implementation of Regional Innovation System and Cluster
Approach. Thus, the key stakeholder in driving innovation should be government.
Europes competitive advantage has been challenged by intense competition both from
private sectors and incentives from many emerging economies. With the economic
crises and market distortion, Europe is not always able to match and attract investments
in innovation of KETs. As a response, European Commission introduced its recent EU
Framework for Research and Innovation Horizon 2020 with funding mounting up to 80
billion for 2014-2020
1
. Unlike typical research funding programs, Horizon 2020 focuses
not just on scientific excellence in KETs, but also on industrial leadership, and potentials
to strengthen current industrial leadership and stimulate open innovations in local,
regional, national, and international levels (EC Comm. (2012) 341). Thus, it brings
science from lab bench, to board room, and to the market through entrepreneurship and
the growth of SMEs in Europe.

1.2 Regional Context
Thuringia, as one of the Federal States of Germany, is unique on its position (see Annex
2 and 3 for the maps). As part of a strong German economy, it is still considered newly
developing state labelled as part of New States from East German2. The State itself
has undergone major restructuration following the German reunification with The West
States under Federal Republic of Germany3 which resulted in many company closures
due to efficiency with much better equipped West German companies (TMWAT, 2011,
pp. 3, 6). Currently, the economic growth is about 3.1% with 40 industry operations for
every 100.0000 inhabitants which means that the economic prospect is high (see Table
1.1 for more details). In comparison with other industrial States, Thuringia is doing better
than Bavaria or Saxony (TMWAT, 2013b, p. 1).


1
Horizon 2020 is the financial instrument implementing the Innovation Union, a Europe 2020
flagship initiative aimed at securing Europe's global competitiveness. Further information please
visit http://ec.europa.eu/programmes/horizon2020/
2
After German Reunification Die Wende, five new states were re-established
Brandenburg, Mecklenburg-Vorpommern, Saxony, Saxony-Anhalt and Thuringia.
3
Also known as Bundesrepublik Deutschland (BRD)

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Table 1 General Profile and Economic Performance of Thuringia
2012 Values
Area 16.172km
2

Population 2.229.000
Population density 138 people/km
Working population 1.015.800
GDP nominal 49,9 Mio. EUR
GDP per employed person 48.773 EUR
GDP per inhabitant 22.252 EUR
Gross Value Added 44,7 Mio. EUR
Exports 31,5 %
(Source: Thuringia Statistics Office, retrieved on 1 July 2014)
Now, its economy depends on manufacturing industry as the main growth engine. Since
the unification and economic reconstruction in ex- East German regions, Thuringian
manufacture has quadrupled its added value and made Thuringia as one of the highest
economic performance compared to the average of the new German States with an
export volume of 31.5% (German average export volume: 46.1%, new German States
average: 34.1%) (Germany Trade & Invest, 2014). United Kingdom maintains to be
Thuringias main trade partner with more than 1 billion Euros worth of exports. France
and Italy come second and third. Automobiles (Opel Eisenach) and automotive parts,
plastics, metals are highly demanded products from Thuringia. However, highest export
rates are from medicine technology, toys, and pharmaceutics with more than 40% quota
(TMWAT, 2011, p. 22, 2013b, p. 8).
Thuringia has various innovation products the world has forgotten, both past and present
from high quality metal casting for bells and metallurgy, weapons, printing, medical
devices, and optics. Now, Thuringias highest export rates are from Knowledge Enabling
Technologies (KETs) such as precision technology (advanced manufacturing), medical
technology (micro- and nanoelectronics), and pharmaceuticals (biotechnology) with
more than 40% quota (TMWAT, 2012). Its international innovation products are evident
from the photodiodes for Mars explorer Curiosity, optics and precision technology from

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4
Schott in Jena, and MP3 codes that revolutionized the music industry (Heimpold, 2011;
TMWAT, 2012).
Thuringias entrepreneurship and start-up agencies are funded by European Structural
Funds (ESF and ERDF), with these financing getting less every year Thuringia has to
come up with a new strategy, an effective policy with sustainable funding (Heimpold,
2011; TMWAT, 2012). Despite having more than 20 research institutes and biggest
German commercial research institute Innovent, Thuringia has the lowest innovation
rate (25 patents/100.000 population compared to German national average of 57
patents/100.000 population) (TMWAT, 2011, 2013b). Thus, there is a strong urgency to
address improve the innovation climate in Thuringia. The question is how to unlock the
potentials further? (Interview X)

1.3 Aim
The aim of this research project is to evaluate the regional innovation system in
Thuringia in the context of Horizon 2020 Strategy, by assessing the current policy and its
possible future development. Identification of the main stakeholders involved and
innovation strategies will be of the key focus of this project.. There are many factors that
emphasize the important of innovation in knowledge economy with focus on answering
one fundamental question: What explains innovation-based industrial leadership at
regional level?

1.4 Theoretical Framework
There are two main theoretical frameworks being used in this study. Firstly, it is Regional
Innovation System (RIS). The approach focusses on the relevant processes in
technology transfers. This covers R&D policy, regional development, regulatory
framework, local culture, and network access to expertise. Thus, the focus of innovation
policies depends on how government as the key regulator puts together all the
processes as part of a regional
4
development. (B. T. Asheim, Smith, & Oughton, 2011;
Doloreux & Parto, 2005a).

4
The term regional in many cases has been disputed due to its ambiguity (B. T. Asheim, Smith,
& Oughton, 2011, p. 11). Most scholars agree that regional means cross-borders. In the case of
Thuringia, it means within Thuringia and its surrounding region (TMWAT, 2011).

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Within this RIS, I also introduce the implementation of Porters Diamond in Cluster
Approach. Michael Porters Diamond provides the guiding principles to analyse and
identify the key competitive advantage of a region which can be exploited. This helps in
understanding which innovation process should be prioritized (Ketels, Lindqvist, &
Slvell, 2006). It simplifies the analysis by placing national competitiveness through four
main factors that are interconnected: (input/production) factor conditions, (market)
demand conditions, related and supporting industries (that could benefit main economic
activities), and firm strategy, structure and rivalry (market competitions) (Porter, 2008).
The second approach is by focussing on the stakeholders. KETs innovation evolves
from a simple linear model, which relies on university as the sole knowledge source, to
multi-stakeholders process. This framework is also called as Quintuple Helix Model
(Leydesdorff, 2012). Rather than focussing on the processes, this framework puts the
focus on the innovation stakeholders. It argues that success innovation depends on the
synergy between academia, business, government, civil societies and press, and
environment (or its entrepreneurial climate). Quintuple Helix, or the Five-Helix Model,
advocates that two extra helices, media/civil societies and (natural) environments, as
drivers to innovation in globalisation, aside from the regular Triad (academia, business,
and government). Civil societies through media and culture-based public are needed in
identifying and sustaining the social capital while at the same time providing the support
to the core stakeholders. Environmental factors are also crucial putting innovation into
the right perspective, for example in green energy innovation as a response to global
warming (Elias G. Carayannis, Barth, & Campbell, 2012a).

1.5 Methodology
With Regional Innovation System and Quintuple Helix as main analysis frameworks, this
study uses Thuringia as the main case study and in particular one of Thuringias
innovation hub, Ilmenau. To delve further in this topic, a series of interviews with the
local Ilmenau innovation stakeholders will be conducted as the source for primary data.
Secondary data will be collected through vast array of written resources, such as
academic literatures, reports, studies, press releases, news articles, magazine articles,
websites of companies/governments, published statistics, a promotional materials, and
industry/trade journals. The main working language will be in English and German.




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Case Study: Thuringia and Ilmenau University of Technology
As one of the most important science centres in Thuringia, Ilmenau University of
Technology (TU Ilmenau) has been recognized by EU commission as one of the rising
stars in innovation of KETs in Thuringia as stated by Dr. Peter Hrtwich, European
Commission DG Research and Innovation (personal communication, 11 February 2014)
with and high growth of start-ups in Thuringia (Michael Fritsch, Erbe, Noseleit, &
Schrter, 2009; Michael Fritsch, Noseleit, Slavtchev, & Wyrwich, 2010; Lautenschlger
& Haase, 2005). The recent OECD report on Local Economic and Employment
Development (LEED) also highlights TU Ilmenau success in fostering entrepreneurship
and their contribution to regional economy (Hofer, Potter, Redford, & Stolt, 2013).

Another unique aspect of TU Ilmenau is its location which is rather isolated from other
major cities in Thuringia, such as Erfurt, Weimar, and Jena and surrounded by
mountains (see Annex 3 and 4 for the map). TU Ilmenau success in innovation makes it
more attractive to be studied. Unlike Friedrich Schiller University in Jena which has its
own advantages from Max-Planck Institutes and other prominent research institution and
by spill-over effects from many established technology companies (Cantner & Graf,
2006). Furthermore, TU Ilmenau is the main driver of regional economy under Ilmenau
Technological Development Area which puts Ilmenau as perfect candidate for Regional
Innovation Systems model, which emphasizes the importance of entrepreneurial
university in knowledge economy (Cooke, 2004, 2008) through an effective
implementation of entrepreneurship programs (Hofer et al., 2013).

1.6 Personal Motivation
During my biomedical research experience in the Netherlands and the United Kingdom, I
had the chance to explore the other side of science through public debates, ethic
course, and entrepreneurship trainings. These sparked my subsequent interest in
technology and innovation policy. In 2008, past Minister of Research and Technology of
Republic of Indonesia, Mr. Kusmayanto Kadiman, introduced me to the concept of ABG
(Triplex Helix: Academia, Business, and Government). Hoping that I could contribute
something positive to the innovation system in Indonesia or any other developing
countries, he encourages me to take a step forward by studying public policy.
Thuringia opens many opportunities in which I have the chance to get the support from
TU Ilmenau to delve into innovation strategy and ways to foster entrepreneurial mindset.

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Furthermore, with the introduction of KET, LEIT, and Horizon 2020, this creates a
suitable situation to expand my current knowledge and to contribute concretely within
actual EU framework. These circumstances make the case study special and worth to
learn from it, particularly with the limited time and scope of the thesis itself.

1.7 Structure of Thesis
The structure of the thesis is written in three major parts. The first part, consisting of the
first two chapters (chapters II and II), describes the methodology for the empirical data
and theoretical framework. Chapter II expands further Section 1.4 in detail about the
interview methods and the reasoning for interviewees selection.
Chapter III present the evolution of innovation theory from early 1960s to recent one
further explaining Section 1.3. It will cover Regional Innovation System, Quintuple Helix,
and Michael Porters Diamond Model. This chapter also expounds on technology
literature and its commercialization by drawing into the latest European Union
measurement of technology commercialization Technology Level Readiness (TLR
scales) for KETs. TLR determines the readiness of an innovation product to be
marketed. These theoretical frameworks from Chapter II are the main guidelines for data
presentation and analysis in the second part of the thesis.
The second part of the thesis covers the results and discussion. It is split into two
chapters. Chapter IV and V describe the recent KETs innovation policy and knowledge
management in Thuringia and TU Ilmenau strategy vis a vis with European Union
Horizon 2020 strategy. Furthermore, it also provides the stakeholders analysis of policy
making and innovation drivers.
Chapter V gives answers to research questions by discussing and contrasting theory
and practice. The final part summarizes the thesis by a concluding chapter with a future
outlook and policy memorandum for TU Ilmenau, Thuringian Ministry of Economics,
Labor, and Technology (TMWAT), Thuringian Ministry of Education, Science, and
Culture (TMBWK), SMEs, and other relevant stakeholders.




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Chapter 2 Theoretical Framework
According to Porter, the economic performance of regions is strongly influenced by the
vitality and plurality of innovation (Porter, 2003). In the context of high technology, such
as in Knowledge Enabling Technologies (KET), innovation does not follow standard
innovation model pathway (Crescenzi & Rodrguez-Pose, 2011, p. 17; Korres,
Tsobanoglou, & Kokkinou, 2011).
This chapter will first illustrate the complexity of technology innovation and how the
innovation has been studied from early 1950 in Linear Model, System Approach
National Innovation System and Regional Innovation System (Philip Cooke et al.,
2011; B. Lundvall, 2007) to the latest innovation framework Quintuple Helix together
(Leydesdorff, 2012) with Cluster approach (Porter, 2008).

2. 1 What is technology innovation?
There is a general misconception made by many policy makers and even scientists
consider that both technology and innovation are the same (Allan, 2014). Technology
and innovations are two different concepts all together. Technology refers to the
application of basic knowledge or know-how, while innovation is new insight, novelty, or
improvement that changes the current technology (Jain, Triandis, & Weick, 2010). A light
bulb is light technology that involves the application of physics law, but innovation
arrives when scientists develop LED light bulbs that could use less energy.
Technological innovation speaks about the process of finding the new applications of
knowledge coming from (basic) research that can address societal challenges
(Burgelman & Maidique, 2004, p. 4; EIT, 2014).
Technological innovation
5
process begins with series scientific experiments that involve
various trials and errors, and result in inventions or discoveries, such as light bulbs
(Edison, 1880; Hargadon & Douglas, 2001), cars, smart phones, to the latest
mechatronics or robotics (Allan, 2014; Palli, Pirozzi, Natale, De Maria, & Melchiorri,
2013). Nonetheless, innovation could also come from completely unintended (or
accidental) discoveries, for example in the case of antibiotic penicillin (Fleming, 1944;
Kardos & Demain, 2011), sweetener Aspartame (Mazur, 1976; Stegink, 1984, pp. 35),
household appliance microwave (L, 1953; Osepchuk, 2009), X-Ray Roentgen medical

5
Technological innovation will be referred as simply innovation in this dissertation.

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9
instrument (Haase, Landwehr, & Umbach, 1997, p. 81; Rntgen, 1898), and heart
pacemaker (Casas, De Gortari, & Santos, 2000; Greatbatch, 1962).
Furthermore, innovation itself can be classified into two different categories: incremental
and radical innovations. Incremental innovations refer to process of adaptation,
refinement, adjustment, and/or enhancement of existing technologies (Ali, 1994; Andries
& De Winne, 2013; Dewar & Dutton, 1986; Ettlie, Bridges, & OKeefe, 1984). These can
be seen in the case of computer processor that works faster with the improvements of
micro- and nano-chips (III, 2014; Toshihiro Hanawa, 2009) or medicines with less side
effects and higher efficacy by modifying the chemical formulas (Ooms, 2000; Wang &
Lipsitch, 2006). On the other hand, innovations that introduce new products or
revolutionize certain technologies are considered radical innovations (Burgelman &
Maidique, 2004, p. 4; Dewar & Dutton, 1986; Ettlie et al., 1984). The abandonment of
telegrams in favor of telephones was one of the most obvious examples of radical
innovations.

2.2 Technology Level Readiness (TLR)
To achieve both incremental and radical innovations, we need scientific revolutions
6
to
change the paradigm that innovation is linear one idea goes directly to the market.
Technological innovation evolves from a simple linear process to a much more complex
multi-stages process which includes regulatory framework and intellectual properties
applications (Andries & De Winne, 2013; United Nations Conference on Trade and
Development, 2001). NASA initially developed a scale called Technology Level
Readiness (TLR) to assess if an invention or innovation is ready to be marketed
(Conrow, 2011; Mackey, 2011).
TLR is divided into nine different stages. Each different stage represents a different
process/phase (see Figure 1). These processes start with basic research (TLR 1 and 2),
then feasibility studies to determine whether the innovation is really able to be
implemented (TLR 2 to 4). Next is the technology development in which enhancement or

6
Despite the obvious importance and contributions of innovations to economy, the study of
innovation only began with the publication of The Structure of Scientific Revolution by Thomas
Kuhn. Kuhn highlighted the importance of basic scientific research and commercial values
through micro-politics of innovation (Kuhn, 1962). Together with Robert Merton, Kuhn pointed out
that innovation depends on scientific knowledge; however innovation also has its systemic and
socio-cultural aspects related to scientific knowledge itself, such as ethics and cultural impacts of
radical innovations from industrial era (Kuhn, 1962; Merton, 1957) .


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improvement can still be incorporated (TLR 5 to 7). If it passes, then it moves to
demonstration and development (TLR 6 to 8). In the two phases, which are almost
simultaneously, innovation products have to pass regulations and further commercial
developments (TLR 8-9). The last touch comes with further test and commercial launch
with marketing operations.

Figure 1 Technology Level Readiness (TLR) Scheme
Simplified from (Conrow, 2011) and modified accordingly based on (Sen McCarthy,
2014)

As an example, one could imagine the development of smartphones. Microelectronics
and sensor-technology (photonics) started the innovation with touch screen technology
for mobile phones. A model will be produced to test its feasibility. This is the crucial
phase where theory is tested on miniature level. Further technology development by
incorporating anti-scratch surface or larger capacity battery is needed to develop the
technology further. With demonstration to the public and investors, this smartphone
requires system development such as software (operating system) or network security.
Lastly with more test and models, this innovation is ready for mass-production and the
market.
The example may look straightforward but one must remember that the stages do not
have clear-cut criteria. Different technologies may have different treatment and need
shorter or longer time to accomplish each stage. In many cases different stages
overlaps. Innovation in pharmaceuticals requires longer phases 8 and 9 for the clinical
trials (regulations) compared to computer chips. Nevertheless one thing is clear that
different phases represent competitiveness of the product. Any innovations are
considered pre-competitive (not yet commercially realistic) until it has a certain system

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that enables consumers to use it, for example until a smartphone has an operating
system. Once an innovation has been tested and passed all the regulations and
standards, it becomes competitive. The danger of innovation development lies in
technology and system development in which many innovative products or technologies
cannot demonstrate the added-value or their applications. These phases are also known
as Valley of Death where time and financial investments go down the drain.

2.3 How does innovation play a role in Industrial Leaderships?
Industrial leadership
7
means being in the forefront industries in world market in product
or process technology or in production and marketing. Thus, it puts the focus of
industries on the technology transfer and its translation to commercial success, rather
than merely innovation (David C. Mowery & Nelson, 1999, p. 2) Thus, it should already
pass Valley of Death (See Figure 2.2).
To achieve industrial leaderships, an industry must at least consider four main critical
factors before setting a plan or strategy based on the different TLRs (European
Commission, 2013b). These critical factors can be grouped together as resources,
institutions (management), markets, and technology. Resources reflect comparative
advantages that encompass factor productions including supply of high-skilled labors.
Institutions denote governance, firm organizations/managements, institutional
leaderships, and inter-firm linkages. Markets are concerned with market regulations and
finding the niche in existing market segments or creating a new market
8
(EIT, 2014;
Mackey, 2011; David C. Mowery & Nelson, 1999). Technology shows the capability of a
firm to stay and compete in the market through innovation. It is also important to be
noted that firms must be aware of the TLRs (see Figure 1 and 2) and know how to react
to the uncertainty brought by TLRs (Mowery & Nelson, 1999, pp. 57).



7 It has a very similar meaning to Porters competitive advantage that is to outperform ones
competitors (Porter, 1990); however industrial leadership focuses on technological sophistication
and innovative performance.
8 The latter usually involves radical innovations.

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12

Figure 2 TLR and Industrial Leaderships
Simplified from (Conrow, 2011) and modified accordingly based on (Sen McCarthy,
2014) and (David C. Mowery & Nelson, 1999)

2. 4 OECD Innovation System Approach
Following Kuhn and Merton studies, the Organization for Economic Cooperation and
Development (OECD) investigated further the contributions of science to economy
through innovations. OECD started with Cooperation in Scientific and Technical
Research (Wilgress Report, 1960). Wilgress Report findings concurs with Kuhn and
Merton, that many non-scientific aspects involved and affected in innovation process. A
follow-up study by OECD, known as Piganiol Report, set the foundation for OECD
Member States science, technology, and innovation (STI) policies for the next 25 years
see Annex 5. It is also known as the system approach. The report stated, The
scientists () has the opportunity to cooperate with the educator, the economist, and
the political leader in deciding how science as a social asset can be furthered, and how
a nation and the human community can best benefit from its fruits. Science, in a word,
has become a public concern (OECD, 1963a: p. 15). It also outlined science
contributions to social, health, economic, security, and well-beings of populations.
Piganiol Report has become the first white paper that advocated the importance and the
relationship of STI and economic policies. OECD suggested that since most of basic
research financing and educational policies come from the government, the government

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should be the key actor that drives innovation. The government innovation policy should
be focused on universities and their cooperation with private sectors a model which
was known as The Statist Model (see Figure 2.1).

Figure 3 Innovation in Statist Model
In this model, innovation is led by government policies with limited academia and
business collaboration (adopted from Henry Etzkowitz, 2010a, p. 12)

In the United States, this Statist model was prominent in 1980s. Innovation policy began
to change with the introduction of Bayh-Dole Act (The Bayh-Dole Patent and Trademark
Amendments Act). The Act guarantees federally funded research in universities or
research institutes to file patents and carry out licensing from these patents. Indirectly,
this Act also brings the involvement of industries to interact with universities as partner in
licensing or research collaborations (D. C. Mowery, Nelson, Sampat, & Ziedonis, 2001).
Thus, innovation policy has shifted from centralized top-down, to a more fragmented
model which involves universities and research institutes (academia) and industry lead
by government agencies (see Figure 3).
Reflecting on the technological dynamics, economic situations, and empirical findings,
OECD system approach evolved from 1970s to 1990s. In 1970s, the Research System
focused on the government top down approach to lead innovative activities in academia,
private sectors and their collaborations through financial incentives. In early 1980s, with
the dire economic climate in Europe, particularly the situation in Great Britain, OECD
suggested a more intensive and active undertakings with private sectors and less
government interventions. This was laid down in Technical Change and Economic Policy
(1980s) (Breschi, Lenzi, Malerba, & Mancusi, 2014; Doloreux & Parto, 2005a; EIT,
2014).

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Eventually, OECD endorses NIS approach in 1990s by highlighting importance of linked
activities between government, academia, and private sectors (business) called National
Innovation System. see Annex 5 and Annex 6 as comparison (OECD, 1995). OECDs
priority in innovation is particularly important for Europe since European Unions science,
technology, and innovation policies are primarily reflecting on OECDs directions
(Doloreux & Parto, 2005a).

2.5 National Innovation Systems
Built upon OECD systems approach concept, three researchers offered a new
conceptual framework for science, technology, and innovation with National Systems of
Innovations (NIS) by C. Freeman (1987), B.-A. Lundvall (1992), and R.R. Nelson (1993).
NIS framework suggest that innovation is part of a larger system comprising different
stakeholders with the focus of learning process resulting from different stakeholders
behaviors and relations within a certain geographical location see Table 2.3. Thus, it is
important to understand the process and primary activities of different stakeholders in
different countries (Christopher Freeman, 1987; B.-A. Lundvall, 1992; Nelson, 1993).

Table 2 Different National Innovation System (NIS) definitions by the primary
principal investigators of NIS

NIS completes the innovation conceptual framework in a more diverse and complex
approach from various case studies, primarily in Scandinavia, US, and Japan (den
Hertog & Remoe, 2001; Chris Freeman, 1995). The latter showed that innovation
paradigm also moved from incremental innovations in 1970-1980s to radical innovations
in 1990s with the rise of specialised and advanced technology research and
Freeman, 1987
"network of institutions in the public and private sectors whose
activities and interactions initiate, import, modify and diffuse new
technologies."
Lundvall, 1992
"the elements and relationships which interact in the production,
diffusion and use of new, and economically useful, knowledge ...
And are either located within or rooted inside the borders of a
nation state."
Nelson, 1993
"... a set of institutions whose interactions determine the
innovative performance ... of national firms."

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15
development. Innovation of high technologies does not depend on (technical) research
activities alone but also marketing, (legal) administrations and the understanding of
commercial world and to an extent politics (Burgelman & Maidique, 2004, pp. 48;
Klingebiel & Rammer, 2014; Lfsten, 2014; Sears & Hoetker, 2014). With the increasing
complexities and uncertainties of advanced technologies, now technological innovations
must pass several steps such as certifications, safety tests, patents, product designs,
and marketing.
In the context of policy making, the former OECD System Approach focuses on the
role of government with its capacity to make and execute policies as stated in The
Research System (OECD, 1975), research cannot make alone a valid contributions
unless it is harnessed to comprehensive policies. Rather than focused on the
governments, NIS tries to analyze innovation from the process. Thus, NIS takes into
account the globalization of research activities, networks of collaborators, clusters*, and
the role of intellectual properties see Figure 5.

Figure 4 National Innovation System Schematic Representative
Adopted from (Henry Etzkowitz, 2010a, p. 13); Etzkowitz argue that NIS represents
fragmented governance (laissez-faire) society

More fundamentally, NIS puts the emphasis on greater collaborations from networks
created from the activities supporting innovation, such as joint R&D between universities
and industries, research contracts, or licensing the main innovation sector or national
champion firm. This is one of the main reasons for OECD to study every OECD
Member States innovation policy between 2005 and 2010 see Annex 6. OECD (and to
an extent, EU) encourages regions to take action such as: promoting innovation, new

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16
forms of financing (i.e. venture capitals, business angels networks) through start-ups,
business services, and technology transfer; increasing interactions between
firms/business and high education/research institutes; encouraging small firms to carry
out R&D for the first time; building networks and cooperation in industry; and developing
high qualified labours/experts (Bonilla, Bishop, Axon, & Banister, 2014; EIT, 2014;
Korres et al., 2011; OECD, 2010)
The main critique of NIS is its focus on its national level; setting NIS almost exclusively
on the local perspective and discounting the regional and global linkages between local
cluster or and innovation partners elsewhere. This is certainly becoming more and more
relevant with globalization (Chris Freeman, 1995; B. Lundvall, 2007). In California, Apple
cannot market a new iPhone without making sure that they do not break other
companies patents or understand what their international customers wants while at the
same time licensing parts of its technology from its rival, Samsung, in Taiwan. Google
must follow certain countries regulations, for example in regards to censorships in China
or Islamic countries. Genzyme, a Dutch biotech company, is also a good example. With
their headquarter in The Netherlands, they has two production plants in the United
Kingdom, sales branches around Europe and America, and R&D with different
universities worldwide (Deborah Spencer, personal communications).


Figure 5 Learning Regions and Learning Flows in Regional Innovation
Systems

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(summarized by Author from Cooke et al., 2011)
2.6 Regional Innovation System
The expansion of NIS concept is also known as Regional Innovation System (RIS).
Coming from regional science and economic geography, it puts its core concept on
global linkages between innovation stakeholders and partners. RIS proposes that
innovation cannot be contained only on national level but also regional level bringing
innovation outside the state boundaries into the neighboring regions to form learning
regions and allow learning flows (Philip Cooke, Gomez Uranga, & Etxebarria, 1997)
see Figure 5.
This is more relevant when high/advanced technology is involved as evidenced by
European Regional Innovation Systems which is embedded in Horizon 2020 in stimulate
interactions and synergy among EU Member States. EU on the basis of OECDs
innovation policy also put their policy emphasis on regional competitiveness by the
following five main strategies: (1) regional policies for human resource development, (2)
demand-driven focus to human resource development, (3) base competitiveness on the
development of partnerships, (4) reinforcement of economic efficiency by policies of
equity, and (5) development of regional governance to consolidate national policies. This
is reflected by EUs Social Cohesion and Development Policy and Social Inclusion and
Development (Bonilla et al., 2014; EIT, 2014; Korres et al., 2011; OECD, 2010) see
Figure 6. It is EUs strong view that innovation should address societal challenges while
at the same time strengthen the social cohesions and inclusions in Europe. Thus, each
policy should be linked and in coherence with other policies which charts a strong
regional innovation system.

Figure 6 Regional Innovation Systems in Europe
(modified from Breschi et al., 2014; Korres et al., 2011)

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2.7 Cluster, Innovation, and Entrepreneurship
Both NIS and RIS are almost inseparable with the concept of industrial Cluster or
agglomerations of closely related industries for consolidating national policies and
gaining regional competitiveness. According to Michael Porter, clusters are geographic
concentrations of interconnected companies, specialised suppliers, service providers,
firms in related industries, and associated institutions in particular fields that compete
but also cooperate (Porter, 1990, p. 197) Numerous studies showed that the presence
of cluster in a region stimulate commercialization of research by lowering its entry cost in
starting business, creating existing network for reaching critical mass, and providing
better access to diverse range of innovative inputs and complementary products (B.
Asheim, Cooke, Cooke, & Martin, 2006; Brenner, Cantner, Fornahl, Fromhold-Eisebith,
& Werker, 2011; Cooke, 2008; Delgado, Porter, & Stern, 2010; den Hertog & Remoe,
2001). The latter is definitely important for innovation in achieving LEITs which requires
a mix and match similar technologies.
It is argued that Cluster approach is the most appropriate approach to allow a collective
learning system to analyze knowledge flows and competitive advantage through
interactions between certain types of activities based on four main attributes (Brenner et
al., 2011; Delgado et al., 2010). These attributes, which are also known as Porters the
diamond, are context for firm strategy, structure, and rivalry, factor (input) conditions,
demand conditions, and related and supporting industries (Porter, 2003).
Factor conditions are production factors that determine production and supply of
goods/services, such as labour, natural endowment, capital, and infrastructures.
Demand conditions speak about the characteristics of (home) market demand. Firm
strategy, structure, and rivalry cover the conditions of firms and market regulations in a
certain country. The last one, related and supporting industries are the presence or
absence of industries that supply and support the value chain of the relevant industry
(Porter, 1998) see Figure 7 .
Delgado, Porter, and Stern (2010) found that cluster stimulates entrepreneurship
through the growth of start-ups, increased productivity and collaborations among
participating firms (and other stakeholders such as academia and government
agencies). Furthermore, it also suggests facilitation of decision making through
increased communications and collaborations among innovation stakeholders,
particularly in RIS learning process. (Delgado et al., 2010)

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Figure 7 Porter's Diamond for Cluster Analysis (Porter, 1990)

The latest and more intricate technological innovation gives birth to a new key notion
technological entrepreneurship under RIS (Breschi et al., 2014; Nacu & Avasilci, 2013;
Thrin, 2014, p. 17). This notion is a fundamental driver of innovation process. Mere
technical knowledge is not sufficient to bring technological innovations. Technological
innovation requires entrepreneurial spirit of a person or persons in understanding of
commercial world and socio-political environment to make profits and tackle societal
issues see Figure 8 (Andries & De Winne, 2013; Burgelman & Maidique, 2004, p. 12;
EIT, 2014; Hargadon & Douglas, 2001). This is why cluster under RIS is very much
endorsed by EU under European Cluster Approach (Korres et al., 2011).

2.8 N-Helix Model
NIS and RIS are not without its limitations. The systemic approach introduced is not
sufficiently responsive to the dynamic of globalization, social relations, and technology
life cycle. It fails to address the changing paradigm of market and environment
interaction that moves from technology-push to a demand-pull approach in less favored
regions or regions with fragmented power (Elias G. Carayannis, Barth, & Campbell,
2012b; H. Etzkowitz & Dzisah, 2008; H. Etzkowitz & Klofsten, 2005). Both NIS and RIS
Context for Firm
Strategy and
Rivalry
Demand
Conditions
Related and
Supporting
Industries
Factor (Input)
Conditions

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assumes that innovation is generated in localized learning with fixed activities and
centralized power (H. Etzkowitz, 2004).


Figure 8 Technological Entrepreneurship and its Complexities
(adapted from Burgelman, Robert A, and Modesto A Maidique. Strategic Management of
Technology and Innovation. 4th ed. Homewood, Ill., p.5: Irwin, 2004 and modified based
on Horizon 2020 concept as outlined by European Institute of Innovation and
Technology (EIT). Horizon 2020, 2014.
http://ec.europa.eu/programmes/horizon2020/en/h2020-section/european-institute-
innovation-and-technology-eit.)


Thus, we are faced with paradox. Innovation in advanced technology by its nature is
unpredictable and full of uncertainty. The risk of failure is high (Andries & De Winne,
2013; Dewar & Dutton, 1986). Despite the effort of rationalizing innovation through the
systemic approach, it is becoming clear that there is a distinct need for new and
empirical research to simplify the complicated innovation framework, particularly as a

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21
rule of thumb in decision- and policy-making. The focus shifted from process to
actors/stakeholders
9
.

2.8.1 Triple Helix Innovation Model
As a response to NIS and RIS limitations, Etzkowitz and Leydesdorff offered another
alterative system approach to the innovation called the Triple Helix Innovation Model.
This innovation model considers three main actors in innovation policy not exclusive to
one another but cooperative and interactive with each other with overlapping roles in
between (Etzkowitz & Leydesdorff, 1996; Leydesdorff, 2012).

Figure 9 Schematic representation of Triple Helix
(remodeled from Etzkowitz, 2010a)

Innovation, the spirit on making things better and more sustainable, obviously cannot
originate from centralized policies made by the state (government), but also from
involving other intellectual actors. Academia produces and improves the technological
innovations in various universities and research institutes, while the industries are
prompted to bring them to the market. All these three actors bring economic and social
development. Together, they try to sustain it through equal and mutual relations. Here,
the institutional spheres overlap and encourage the actors to collaborate and cooperate
with each other. These reciprocal relations and their features are illustrated in Figure 9.

9
Long before, Kuhn and Merton argued that to speed up innovations, identification of key
innovation stakeholders is important. This key stakeholder should be the one who is able
to intervene and initiate innovation process (Kuhn, 1962; Merton, 1957)


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Thus, rather than dictating; what needs to be done as in NIS/RIS, Triple Helix model
allows the stakeholders to decide through learning platforms the overlapping roles of
academia, business, and government in equal way with civil societies as the
intermediaries
10
.
One distinctive view of relevance to this approach is academia-driven innovation. In
Triple Helix Model, academia is the main source of innovation which knowledge and
technology are applied together with industry and supportive policies from the
government. This is in line with Schumpeters idea that combination of knowledge is the
heart of innovation and entrepreneurship (Schumpeter & Backhaus, 2003). Furthermore,
it also gives much importance to the institutional capacity of academia, particularly the
role of technology transfer office (TTO) to synergy and liaise the innovation activities
particularly in bridging academia with government and industry (Etzkowitz, 2004).

2.8.2 Quintuple Helix
Responding to the economic crises, growth of high technologies, and global warming,
Carayannis and Campbell incorporated two other helices. First, they introduced
Quadruple Helix (2009) by adding another helix: media-based and culture-based public
and civil societies. He argues that innovation should involve democratic mechanisms in
decision making (Carayannis & Campbell, 2009; 2012). This is important because
creative industry is inseparable from technology, for example in product design and its
practicality to change the publics lifestyle. Secondly, in the context of global
environmental challenges, innovation should also incorporate environment as another
key driver to innovation this model known as Quintuple Helix. As such in global
warming, high technological innovations in solar panels and biofuels were driven by the

10
It is clear, that in this model, the definition of each actor is fluid. Rather than defined by its literal
definition, each actor is defined by its role in driving innovation (Henry Etzkowitz, 2010a, p. 17).
This can be observed in the actions of policy institutions or think tanks or any other civil societies
as they can take both roles as government and academia. Consortium of Science, Policy, and
Outcome (CSPO) is a think tank that works with the US House of Congress on issues involving
new science and technology policies. On one hand, they can be considered as part of
government, while on the other hand, CSPO also works with different universities as part of
academia, particularly Arizona State University, in conducting research and undertaking
international collaborations. Here, government can also mean international organizations and
communities depending on its role which are not bound nationally or regionally but internationally.
Some of the examples are: European Molecular Biology Organization, European Science
Foundations, Max Planck Society, National Institute of Health, and Commonwealth Science
Council.


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23
need of addressing the climate change and fossil fuels depletions (Carayannis et al.,
2012b) see Figure 10.

Figure 10 Schematic Representation of Quintuple Helix
(adopted from Carayannis et al., 2012a)

Thus, the analytical point of innovation under Quintuple Helix depends on the five
aspects: (1) the education system that provides the human capital, (2) economic system
that represent economic capital, (3) political system that administer law and create
stability, (4) civil society and public that represent the social capitals such as attitudes,
values, mindsets, and (5) environment that can be translated as natural environment (in
the case of green technology) and comparative advantage (such as natural resources)
(Carayannis et al., 2012b). Thus the flow of know-how does not depend on actor.
Innovation has to be driven by all stakeholders.

2.9 Summary
In short, the study of innovation has just begun in the less than a century. Along with the
changes and demands of the public, knowledge production, technology transfer, and
commercialization of innovations, the system approach of innovation has evolved
rapidly. The development of Technology Level Readiness as indicator to assess
innovation has brought a multi-dimension structure, in which innovators are faced with
regulatory, market, and cultural frameworks.

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24
It began with a linear model of innovation which claims that knowledge production
depends solely from specific discipline in academia (mode 1), to interdisciplinary
approach within academic communities (mode 2). With the introduction of National
Innovation System, and later its reformed model, Regional Innovation System,
innovation requires a much more comprehensive framework. It does not depend on
academia, but through learning process with other stakeholders, business and
government (mode 3).
In the last decade, in response to the limitations of NSI/RSI, the Triple Helix Innovation
Model has started the efforts to simplify and start to blur the boundaries between
academia, business, and governance. It argues that in innovation policy making,
government cannot stand alone without understanding the nature of science and
technology from academia and the market conditions from their business partners.
However, unlike RIS, Triple Helix points out the importance of intermediaries, such as
technology transfer office as university liaison with government and business.
Building upon Triple Helix, Quintuple Helix model adds two more actors: public and
environment. Understanding that knowledge in a Quintuple Helix Model is the pivotal
force and driver for progress. The Quintuple Helix is a model which grasps and
specializes on the sum of the social (societal) interactions and the academic exchanges
in a state (nation-state) in order to promote and visualize a cooperation system of
knowledge, know-how, and innovation for more sustainable development (see
Carayannis and Campbell [2010], p. 62).
Thus, the goal of the Helix-Conception is accomplished through the resource of
knowledge which produces additional value for society in order to lead in the field of
sustainable development. The pivotal question of the Quintuple Helix defines itself in the
following way: "Where does industrial leadership reside on regional level?

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25
Chapter 3 Methodology
In this Chapter, I describe the research procedure that I employed to answer the main
question. The main methodological approaches used in this Master Thesis are
assessment of conceptual framework in line with the research object (3.2) and in-depth
interviews with relevant stakeholders (3.3) with additional secondary data collection
(3.4). I also elaborate the limitations and challenges faced during the research (3.5).

3.1 Timeline, Funding, and Language
The project timeline was between 1 April 2014 1 June 2014, however the first
exploration of the topic started already from November 2013 with the initial contacts and
discussions with experts, researchers, and policy-makers. Some discussions about
innovation and cluster have also been conducted during my internship in Thuringian
Ministry of Economics, Labor, and Technology between July 2013 and January 2014.
Funding for this project was taken from Authors scholarly expenses with scholarship
grant to from The German Academic Exchange Service (Der Deutsche Akademische
Austauschdienst, DAAD) awarded by Willy Brandt School of Public Policy, amounting up
to 3.000,00.
The primary and working language in this project is English. German is also important as
many government documents and local newspaper articles are only available in
German. Despite authors German proficiency, to avoid misinterpretation, the German
text will be provided as footnotes and further consultation with native speaker was made
to clarify particular passages/ data/information. Several interviews/discussions were also
done in German.

3.2 Conceptual framework of innovation and industrial leadership
Literature review is important to establish the conceptual framework and set the
theoretical foundation of the employed methodology, analysis, discussion, and future
research. Three main reference books were used as starting points: Henry Etzkowitz,
2010b; Surinach, Moreno, & Vaya, 2007; and Varga, 2009.

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26
These books gave the initial background to the concept of technology transfer,
innovation system, and regional development with which further detailed search on
online database and reference books were conducted. Online database such as Google
Scholar, JSTOR, EBSCOhost, and Web of Science were used. Whilst for hardcopies
and reference books were obtained from libraries of University of Erfurt, TU Ilmenau,
University of Weimar, and Jena Friedrich-Schiller University collections.
Furthermore, these references were coupled with EU documents from (EU Database) to
the relevant public policy perspective and relevance particularly: Council Decision
2013/743, establishing the specific program implementing Horizon 2020 - the
Framework Program for Research and Innovation (2014-2020) and Leadership in
enabling and industrial technologies. Decision C 13/8631/EC, The European
Competitiveness and Sustainable Industrial Policy Consortium (ECSIP). (2013). Study
on the international market distortion in the area of KETs: a case analysis (DG
Enterprise and Industry). Brussels: European Commission
11
.

Table 3 List of experts/scholars in innovation and industrial leadership
Nr Name Expertises/Concepts Institution
1 Elias G. Carayannis
12
Quintuple Helix George Washington
University, United States
2 Philip Cooke
13
Regional Innovation
System
University of Cardiff, Wales,
United Kingdom
3 Michael Fritsch
14
Innovation and Economic
Geography
Friedrich-Schiller-Universitt,
Jena, Germany
4 Henry Etzkowitz
15
Triple Helix Innovation Stanford University
5 Loet Leydesdorff
16
Triple Helix Innovation University of Amsterdam, The
Netherlands
6 Bengt-ke Lundvall
17
National Innovation
System
Aalborg University, Denmark
7 Michael Porter
18
Microeconomic of
Competitiveness, Cluster
Management
Harvard University, United
States


11
Retrieved from accessed
http://ec.europa.eu/enterprise/sectors/ict/files/kets/kets_market_distortion_pdf_report_july_2013_
en.pdf , last accessed 1 December 2013
12
http://business.gwu.edu/faculty/elias_carayannis.cfm. Retrieved April 2, 2014
13
http://www.cardiff.ac.uk/cplan/about-us/staff/philip-cooke. Retrieved April 2, 2014
14
http://www.uiw.uni-jena.de/index.php/team/47. Retrieved April 2, 2014
15
http://gender.stanford.edu/people/henry-etzkowitz. Retrieved April 2, 2014
16
http://www.leydesdorff.net/. Retrieved April 2, 2014
17
http://vbn.aau.dk/en/persons/bengtaake-lundvall(11cfc64f-5a0d-4006-89fd-
9e40dcdd5730).html. Retrieved April 2, 2014
18
http://www.hbs.edu/faculty/Pages/profile.aspx?facId=6532. Retrieved April 2, 2014

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27
Subsequently, theoretical knowledge and EU policy documents were coupled and
additional relevant data, cases, and references were identified and followed up. The first
step was to go back to the initial publications and cross-referenced other publications
19
.
In sum, this thesis was based on National/Regional Innovation Systems, Triple-
Helix/Quintuple Helix Innovation Framework, Cluster and Competitiveness based on
Innovation (see Table 4.2 for the list of experts).

3.3 Primary Data Collection: in-depth interviews and discussions
Based on the Regional Innovation System (RIS) (Cooke et al., 2011) and Quintuple
Helix Innovation Framework (Carayannis et al., 2012a; Etzkowitz, 2010b), different
stakeholders from academia, business, government, NGOs/civil societies, and media
were selected for interviews (see Table 4 and Annex 8). This research employed in-
depth interviews to gather information relevant to innovation process in Thuringia and
Ilmenau. To accommodate different characters of research participants, who are
involved in innovation process, in-depth interview is the most suitable and objective
method to extract and understand hidden information, underlying motives and holistic
perspectives of the interviewees positions (Hine & Carson, 2007, p. 15). Most of the
interviews were done face-to-face in conventional manners while others were done by
telephone, Skype, Google Hangout, or email correspondences. A number of short
interviews/discussions were carried out during informal sessions in
conferences/workshops. To illustrate the process, please see Figure 11.
These interviews started with informal conversational interviews to provide friendly
atmosphere and make personal connections. This is necessary to confirm interviewees
interests in supporting the research and get the same/similar wavelength and
understanding of concepts/definitions
20
. Following the brief informal conversational
interviews, guided interview, with basic prepared questions (see Annex 7), was
employed to obtain straight answers and minimize variations between interviews. This
was also important set the context of interview to innovation and industrial leadership
within the aim of the study.
In between the set questions, open-ended questions were also asked, depending on the
situation and answers given by the interviewees. This was deemed necessary to

19
This is important as many similar and identical concepts are labelled or named differently by
different researchers/experts/policy-makers. See 4.5 Limitations and Challenges
20
See Section 4.5 challenges in conceptual framework.

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28
explore, probe, and bring forth information concealed by interviewees. In addition, these
open-ended questions provided the flexibility needed to counter different interviewees
reactions (Berry, 1999; Gubrium & Holstein, 2002).


Figure 11 Flow chart of the methodology used in this study
(source: author)

Following the completion of the interviews, relevant information and data were
summarized, catalogued based on the topics/keywords, and followed up questions were
prepared. In some cases, further correspondences by Email and telephone were made
to confirm certain statements and inquire further information.



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29
Table 4 List of experts/scholars in innovation and industrial leadership
Nr Stakeholders Participants Number of Interviews
1 Academia Technology Transfer Office
Academics
3
3
2 Government Thuringian Ministry of
Economics, Labour, and
Technology
Thuringian Ministry of
Education, Science, and
Culture
Chamber of Commerce
Thuringian Cluster
EU DG Research and
Enterprise
2


2


1
1
1
3 Business Small-medium Enterprises
(start-ups and spin-offs)
Consultancy*
6

2
4 Civil societies/
NGOs
Innovation Institutes
Academic/Research
Societies**
Tech transfer
intermediary***
Initiatives/associations
2
1

2

2
5 Press/Media Chief Redactor of Local
Business Magazine
1
Total Interviews: 29

Note: In some cases, classifications were based on the role of the participants. *) This
includes consultancy companies in Erfurt, Thuringia and Edinburgh, the United
Kingdom. Since they are profit-seeking, consultancy is considered part of business **)
Academic/Research societies includes German Research Society (Deutsche
Forschunggemeinschaft, DGF), Boehringer-Ingelheim Fonds Network, and UK
Biotechnology and Biological Sciences Research Council (BBSRC). Despite their
funding from government, research societies acts almost independently from
government, thus it can be considered as civil societies. ***) Tech transfer intermediaries
are semi-profit seeking associations which owned/directed by government with clients
primarily governments and international organisations. This refer to German Society for
International Cooperation (Deutsche Gesellschaft fr Internationale Zusammenarbeit
(GIZ) GmbH). Similar to research societies, their role in innovation and market opening
are more or less guided by international cooperation and contracts with SMEs.



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30
3.4 Secondary Data Collection
Empirics and statistics were obtained from EURO-STAT
21
, German Federal Statistical
Office (Destatis)
22
, and Thuringian Statistic Office
23
. The information about Thuringia
was primarily from TMWAT, 2011 and 2013. While information about TU Ilmenau was
taken from TU Ilmenau Yearly Report 2013-2014 (TU Ilmenau, 2013) and released
information from TU Ilmenau Technology Transfer Office. Statistics and data from case
studies presented in the discussion section will be referenced accordingly. A number of
data presented in this thesis was also taken from two innovation and entrepreneurship
studies by STIFT as follows Fritsch et al., 2010 and Thringer Netzwerk fr Innovative
Grndungen (ThrInG), 2013.
Other information was gathered from vast arrays of written sources, such as press
releases, news/magazine articles, published documents, promotional materials, and
websites of companies, governments, or institutions. Online discussions, particularly on
Horizon 2020 LinkedIn groups, were also used as reference to practical experiences.

3.5 Challenges and Limitations
The main challenge is to get the opportunities to interview relevant stakeholders. This is
primarily difficult with the time availability. In some cases, there were no replies to
interview invitations. In that situation, alternative interviewees were sought out. The
limitation of this study is the difficulty in personal bias, especially since every stakeholder
has their own interest or agenda. Thus, to get some consistency of opinion, more
interviews were conducted.
Furthermore, there is absence of unified conceptual framework of innovation system,
particularly in its definition, national/regional scale, and empirical data validation. Various
researchers use National Innovation System (NIS) and Regional Innovation System
(RIS) interchangeably in different levels, scales and inter-relations. This made policy-
makers/politicians who are not fully conversed in innovation models (also extensively
discussed in Asheim, Smith, & Oughton, 2011; Doloreux & Parto, 2005).As it will be
discussed in the next chapter, each framework has its own limitations. Thus, one has to
be careful in selecting different frameworks to interpret the information.

21
European Union Statistic Office EuroStat,
http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
22
Statistiches Bundesamt, https://www.destatis.de/EN/Homepage.html
23
Thringer Landesamt fr Statistic, http://www.statistik.thueringen.de/startseite.asp

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31
Chapter 4
Innovation in Thuringia: Moving Forward and Unlocking its
Potentials
This chapter is the first part of findings. It expounds the innovation strategies in
Thuringia based on the discussed theoretical frameworks: Cluster Approach and
Regional Innovation System (RIS). Although the theoretical framework started with RIS,
Thuringia adopted Cluster policy earlier than Regional Innovation System. Thus, the
findings will be presented chronologically. It is summarized by analyzing the
stakeholders through the eyes of Quintuple Helix (government, business, academia, civil
societies/media, and environment). This section is indebted to Authors previous work
about Cluster Analysis in Thuringia (Handoyo, 2013).

4.1 Cluster Approach in Thuringia
Following Lisbon Agenda in 2000, Germany adopted the Cluster Approach on federal
level. The government identified the key industry in each German State and focus on
one specific sector
24
(Opaschowski, 2004). In late 2010, Cluster approach was
expanded into State level. Thus, every State is expected to identify and develop specific
Cluster initiatives (Heimpold, 2011). Cluster policy in Thuringia is designated to
compensate for shortcomings of the firm landscape. Thuringia has a small number of
large companies (only one company headquarter, compared to 90 headquarters in
Bavaria) and the high number of SMEs (TMWAT, 2011, 2012). Thus, the main subjects
of cluster policy are the cluster network organizations and firms cooperation to build
enough critical mass (Heimpold, 2011a, 2011b).

24
According to Jappe et al (2008), Germany started Cluster Approach already from 1990s
following the Fall of Berlin Wall; however, the policies were rather general and did not create
cluster/industry networks which are crucial for Cluster Policy. Ketels (2006) also identified that
Cluster Policy in Europe only came about after Lisbon Agenda (after 2000).
[ see Jappe-Heinze, A.; Baier, E.; Kroll, H. (2008): Clusterpolitik: Kriterien fr die Evaluation von
regionalen Clusterinitiativen, Arbeitspapiere Unternehmen und Region Nr. 3/2008, Karlsruhe:
Fraunhofer-Institut fr System-und Innovationsforschung (Fraunhofer ISI) Competence Center
"Politik und Regionen", in:
http://isi.fraunhofer.de/iside/p/download/arbpap_unternehmen_region/ap_r3_2008.pdf?WSESSIO
NID=c15d5beb2f56cd7a31d7c281e74e4970, accessed on 02/08/2013.]

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32
To harmonize the efforts in Cluster Approach, TMWAT created Thuringian Cluster
Management (ThCM)
25
as part of broader economic framework called Future 2020
(Zukunft 2020)(TMWAT, 2012). ThCM has four main objectives. It aims to strengthen
existing cluster growth and initiated a new potential cluster; increase expertise of
relevant stake-holders and stimulate innovations; to encourage cooperation between
Cluster actors and possible directions; and to provide international network support
including regional marketing. (TMWAT, 2011)
In order to enable participation of all relevant stakeholders in innovation process,
Thuringian government sets up four main bodies: Cluster Council, Cluster Board, ThCM,
and several Cluster Networks based on the different technologies. The Council meets
once a year to review progress and policy implementations by Cluster Board and Cluster
Board. It comprises the governmental executives: the Thuringian Ministry of Economy,
Labor and Technology (TMWAT), the Thuringian Ministry of Education, Science and
Culture (TMBWK) and the State Development Agency (LEG), Chamber of Commerce
(IHK), Thuringian Foundation for the Promotion of Technology and Innovation (STIFT),
and few other governmental departments. While the Board coordinate the cluster
policies between governmental departments. Implementation of policies with Cluster
Networks falls under Thuringian Cluster Management (ThCM) which is headed by LEG.
(TMWAT, 2012)

The structural relationship between these actors is shown below in Figure 12. Its
structure is rather rigid with the decision making process is being dominated by
governmental bodies and with limited private sectors influence or even academics. This
administrative burden often delays decision making and threaten the sustainability of
Cluster approach (Slvell et al., 2003, Interview 3, 25). One could also see the typical
German bureaucratic top-down approach and the legacy of centralized governance from
the socialist East German era.
Thuringia focuses on thirteen clusters divided into three different categories: growing,
cross-sectional, and trending sectors as summarized on Table 5. Growing sectors are
automobiles (with Opel Eisenach as the driving actor), Life Sciences (under leadership
of Jena and Ilmenau), Green Energy (legacy of Solar Valley Centre Germany), and
Machinery (Schmalkalden). Cross-sectional sectors represent industries that can
support other growing and trending sectors. This category covers plastics and ceramics,

25
http://www.cluster-thueringen.de/

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33
micro- and nanotechnology, sensor technology, and optics/optoelectronics; for example,
optics/optoelectronics can support automobiles, green energy, and robotics. The third
category is trending sectors which are industries that have high market potentials. Green
technology, robotics, and edutainment (creative economy) are in this category (TMWAT,
2011).

Figure 12 Structure of Thuringia Cluster Management (TMWAT, 2012)

Table 5 Overview of Thuringian Clusters

(compiled from TMWAT, 2011, 2012)


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34
Aside from these clusters, Thuringia has two established clusters, which are food
industry and logistics
26
. Food industry includes liquor productions (Nordhuser
Doppelkorn), sausage industries, mustard industries, and other local delicacies. Under
ThCM, food industry is incorporated into Life Sciences to upgrade its quality and
transform it into functional food (nutrition) industries. Logistics is another sector that
benefits from Thuringia strategic location in Germany and Europe (TMWAT, 2012).
4.2 Evaluation of Cluster Approach
Cluster approach in Thuringia depends on the government (TMWAT) policies (Interview
23). Despite Cluster Council Board efforts to involve other stakeholders, its top-down is
still prominent in decision making. Private sector is also not included in the decision
making process directly. They are represented by its cluster network (Interview 22).
Slvel and Ketels (2003) argued that in decision making, private sector should be
participating in the Cluster Management. The rationale comes from the fact that the
private sectors are the soldiers in the war field. They know better what they need and
the fields situation. In the context of industrial leadership, this is very significant as
different companies have to complete not just regionally but also globally (European
Commission, 2013b). Furthermore, private sectors are expected to be able to compete
globally. Solar Energy cluster in Thuringia, led by Bosch, are having difficult time
recently as they are losing their market to Chinese firms
27
. Despite suspected dumping
by Chinese solar companies, this could be addressed more effectively by governments if
communications between government and firms are closer (Choi & Anadn,
2013).Connecticut Cluster Management is hailed as one of the best examples. Having
CEOs of private firms in the Cluster Management leadership enables Cluster Policy
responsive towards market dynamics (Porter & Miller, 2003). Figure 13 and 14 list more
of Thuringian assets and points of improvement for both government and private
sector
28
.
Cluster requires a holistic approach and this comprehensive approach requires close
communications and cooperation among the stakeholders (Iammarino & McCann, 2006;

26
Tourism is technically a successful cluster in Thuringia particularly with its cultural richness and
long history, but it is not part of Thuringian Cluster Initiatives. ThCM uses tourism as part of
international marketing strategy under This is Thuringia (Das ist Thringen) and Discover
Thuringia (Thringen Entdecken) programs.
27
IG Metall, Bosch Arnstadt muss bleiben, 28 June 2013, http://www.igmetall.de/SID-
60970756-94813529/bosch-solar-energy-demonstration-vor-bosch-zentrale-in-gerlingen-
12016.htm, last accessed on 21 July 2013
28
This Figure will be discussed more in the next section as part of the whole evaluation together
with RIS.

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35
Storper & Scott, 2009). However, close cooperation does not mean collective
protectionism. Many high technology firms in Thuringia lack the efforts to upgrade their
products when we compared to Bioregion in Rhein-Neckar Dreieck (Bug, 2010; Krauss
& Stahlecker, 2001). Without upgrading their products through innovation, they are
losing their competitiveness and facing the threat of exiting the market (Interviews 4, 5,
11). In addition, there is also limited cooperation between private sectors with HEI/R&D
through consortiums, as in Scotland. Corporate Social Responsibility of Pharmaceuticals
such as Glaxo-Smith-Kline (GSK) providing PhD Fellowships is often to build strong
relationship with the future scientists and innovators. Similarly, Rhein-Neckar Dreieck
through Boehringer-Ingelheim has strong CSR by building new laboratories and
supports to local research students. This way, small and medium companies can benefit
from R&D activities without spending much (Mason & Brown, 2010; von Wissel, n.d.)
and at the same time attracting bright students to stay in the area and close to the
companies (Interview 1, 24). Rhein-Neckar Dreieck went steps ahead by incorporating
Cluster approach in the Regional Planning and Infrastructure. By expanding their
innovation strategy, Neckar region adopts the full picture of Regional Innovations
System (Krauss & Stahlecker, 2001).

4.3 Regional Innovation System in Thuringia
Following one year discourse (between June 2013 and May 2014), TMWAT announces
Regional Research and Innovation Strategy for Intelligent Specialization for Thuringia or
RIS3
29
. The idea behind RIS3 is to bring the synergy between regional development,
cluster approach, and the opportunity of Thuringia innovation strength through research
and development (TMWAT, 2013a). By aligning Thuringias regional KETs innovation
strength and Horizon 2020, the Thuringian government expects to gain more benefits for
the local economy in achieving industrial leadership (Interviews 16-20).
Two specific sets of tasks underlie the foundation of RIS3. First, it identifies specific
needs of the market and what Thuringia can offer. This is imperative in making the links
between innovation or technology potentials and the market demands. This is primarily
done by Strength, Weakness, Opportunities, and Threat (SWOT) analysis as published
by TMWAT (2014) in RIS3 white paper. Secondly, it focuses on the development of
tools/instruments for an innovation friendly platform. This platform is the key in bringing
all the stakeholders together (see Figure 15).

29
Regionale Forschungs- und Innovationsstrategie fr intelligente Spezialisierung fr Thringen

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36

Figure 13 Diamond Model: Government Role in Upgrading Cluster in Thuringia
Modified from Handoyo (2013). Black represents positive aspects of the Cluster, red
represents points of improvements.


Figure 14 Diamond Model: Private Sectors Influences on Cluster Upgrading
Modified from Handoyo (2013). Black represents positive aspects of the Cluster, red
represents points of improvements.

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37
Table 6 Contribution of Knowledge Enabling Technology to Thuringia's Economy
Industries/Sectors
Gross Value Added Employment
Changes between 2008-2020 Changes between 2008-2020
[Mio. EUR] [%] [Mio. EUR] [%]
K
n
o
w
l
e
d
g
e

E
n
a
b
l
i
n
g

T
e
c
h
n
o
l
o
g
y

A
p
p
l
i
c
a
t
i
v
e

T
e
c
h

Automotive + 720-810 80-90 + 10500-12400 51-60
Life Sciences Biotechnology + 140-150 140-150 + 1600-1800 100-113
Medical Devices + 270-300 123-136 + 3800-4300 83-93
Energy, Energy Storage + 470-530 104-118 + 7100-8100 73-84
Engineering + 220-300 20-27 + 1500-3000 6-13
C
r
o
s
s
-
s
e
c
t
i
o
n
a
l

T
e
c
h

Plastics and Ceramics + 520-610 55-64 + 6100-7700 30-38
Micro- and Nanotechnology + 90-100 69-77 + 1000-2400 34-55
Precision Technology + 180-210 72-84 + 2100-3300 45-48
Optics/Optoelectronics + 270-290 135-145 + 1900-2600 46-63
Sum + 2880-3300 67-77 + 35600-43600 39-48
T
r
e
n
d

G
r
o
w
t
h

A
r
e
a
s

Green Tech + 820-930 82-93 + 9400-11000 52-61
Service-robotics + 8-9 73-82 + 100-120 43-52
Creative Economy, Edutainment + 120-130 200-217 + 1500-1600 167-178
Sum + 950-1070 89-100 + 11000-12700 57-66
Source: (TMWAT, 2011, p. 250)

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38
In RIS3, Thuringia sets its technology potentials under four main pillars of intelligent
specialisation. They are industrial production and systems, sustainable and intelligent
mobility and logistics, healthcare and its technologies, and sustainable energy and
resources utilizations (see Figure 16). Each of the pillars represents the interdisciplinary
and application-oriented approach towards the implementation of technologies from the
different Cluster specializations (see Table 6 and in comparison with Table 5) (TMWAT,
2013a, 2011, 2012).

Figure 15 RIS 3 Strategies (modified from TMWAT (2014, p. 7))

This is done by intensifying the partnerships between innovation stakeholders and taking
advantage of ICT, creative economy, and services to attain the intelligent specialisation.
Creative industries such as advertising companies can help promote innovation products
in Thuringia by regional branding Das ist Thringen (Thats Thuringia)
30
. ICT can
support the networks and communications including the use of social media for public
relation efforts (TMWAT, 2011)

30
The advertising video can be accessed on https://www.youtube.com/watch?v=UQxiYXptxqw
(DE) and https://www.youtube.com/watch?v=-_B-1ufsNZE (ENG), last accessed 1 July 2014

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39

Figure 16 Pillars of RIS3 to achieve its Vision
(TMWAT, 2013a, p. 7)

4.4 Innovation Stakeholders: Quintuple Helix in Thuringia
Unlike Regional Innovation System which focuses on innovation activities/strategies,
Quintuple Helix Innovation Model argues differently. It proposes that innovation that
leads to industrial leadership depends on the collaboration of the key stakeholders. The
key actors here are government, firms, academics, civil societies/public, and media
(Elias G. Carayannis et al., 2012a; H. Etzkowitz & Leydesdorff, 1996). However, this
classification overlaps in some organizations for example in the case of Government
initiatives (see Table 7).

4.4.1 Government
In Thuringia, based on RIS3, TMWAT is the main actor that coordinates the innovation
process based on what firms need. On financing side, TMWAT focusses on providing
loans, guarantee and subsidies. Aside from that, the focus also comes in participation
offer which depend on two different organizations, which serve as knots, under TMWAT
among several initiatives: State Development Corporation of Thuringia (LEG31) and


31
Landesentwicklungsgesselschafts Thringen, http://www.leg-thueringen.de/

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40
Table 7 Quintuple Helix Stakeholders in Thuringian Innovation System
Government Academia Business Civil Societies Press
1. EU and EC
a. DG Research
and Enterprise
b. National
Contact Points
2. BMWi
EXIST
3. BMBF
4. TMWAT
a. ThEx
b. ThCM
c. LEG + ThAFF
5. TMBWK
THGN
EU Referenten
6. IHK
TGN
7. TAB
1. HEI
a. University of
Erfurt
b. Bauhaus
University
c. University of
Jena (FSU
Jena)
d. TU Ilmenau
e. FH Jena
f. FH
Nordhausen
g. FH
Schmalkalden
2. Research Institutes
a. Max Planck
Institutes
b. Fraunhofer
Institutes
c. Leibniz
Institutes
3. TTO (linked to HEI)
4. Incubators and
Technology Parks
1. SMEs
2. Large Firms
3. Consulting Firms
4. Commercial
Research Institutes
5. Venture Capitals
1. STIFT
2. Market Team
3. ThBAN
4. FTVT
1. WIR
2. Wirtschaftspiegel
Thringen

(Author analysis)

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41
Thuringias Centre for Start-ups and Entrepreneurship (ThEx
32
) (TMWAT, 2013a, 2011),
interviews 18, 24).
LEG was formed in 1992 as part of economy restructuration program following the
German reunification. Strengthened by 250 employees, its main roles cover a wide
range of sectors from attracting investors, properties, regional development, Cluster,
international marketing, regional management and development, energy and green
technology, and high-skills employment. The latter is managed in close cooperation with
Thuringian Agency for Skilled Personnel Marketing (ThaFF
33
). Between 1995 and 2003,
LEG has helped the formation of 944 companies with 48.550 employees and total
investment of 8.6 billion EUR34. Aside its main tasks, LEG strong role in Thuringias RIS
is on managing the Cluster to as discussed before (see Section 4.1). (TMWAT, 2011)
The other government initiative, which is directly involved in innovation and research
commercialization, is ThEx
35
. Recently formed in the late 2013, ThEx works a
coordinator for various efforts in start-ups formation. Serving as a knot, ThEx
harmonizes various NGO/associations efforts particularly in consulting, mentoring, and
events such as networking day and business competitions (TMWAT, 2013a, 2011).
Furthermore, ThEx fills in the missing link, which many civil societies fail to fill see
Annex . It is to liaise with Chamber of Commerce (IHK) and other relevant government
agencies (Interviews 22, 24).
How about Ministry of Education (TMBWK)? TMBWK supports innovation by funding
basic research and support research infrastructure that favors innovative outputs. This
effort was signified by the formation of new division Research and Scientific
Infrastructure in TMBWK in the first quarter of 2014 (Interviews 9, 19)
36
. TMBWK sets
the regional research priorities and aligns its policies with the federal Ministry of Science
(BMWi). Unfortunately there are very limited programs of research commercialization
due to the Thuringian Education Law that prohibits profit-taking from education institutes.
Chamber of Commerce (IHK) is another government body that represents the interests
of private sectors. IHK has similar efforts like LEG and ThEx including trainings,

32
Thringer Zentrum fr Existenzgrndungen und Unternehmertum, http://www.thex.de/
33
Thringer Agentur fr Fachkrftegewinnung http://www.thaff-thueringen.de/
34
http://www.leg-thueringen.de/ueber-uns/uebersicht/, retrieved on 30 December 2013
35
Initially Research and Innovation was primarily coordinated by an ThrING (Thringer
Netzwerkes fr Innovative Grndungen, Thuringias Network for Innovative Start-ups). See
http://www.innovativ-gruenden-thueringen.de/
36
TMBWK, http://www.bundespresseportal.de/thueringen/item/20071-forschungsexperte-
%C3%BCbernimmt-abteilungsleitung-im-th%C3%BCringer-wissenschaftsministerium.html,
retrieved on 13 January 2014

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42
networking events, and consultations. It has also its own Start-up Network (Thuringian
Start-ups Network or TGN). The only different is the influence of TMWAT in decision
making. IHK becomes more the private sector lobby platform for the government.

4.4.2 Academia
HEI has an important role in gathering, generating, and distributing knowledge and
linking it to social challenges as innovation products (Michael Fritsch & Aamoucke,
2013). Research and Innovation in Thuringia can be found in primarily six different cities:
Erfurt, Weimar, Jena, Ilmenau, Schmalkalden, and Ilmenau with their HEI institutions
(see Table 8). Aside from HEI, R&D by other research institutes such as Fraunhofer
Institutes and Max Planck Institutes contributes largely to the research
commercialization. In terms of commercialization, each university depends on the
proactivity of their Technology Transfer Office (Interviews 1, 2, 3, 5, 7, and 15).
Technology Transfer Office (TTO) has a strong role in supporting scientists in their
research proposals/applications and/or business plans, providing information/contacts
for organizing patent applications/quality controls/certifications, and at the same time
encouraging students to be entrepreneurial through various events. In many cases, TTO
also manages the university incubator and works closely with technology parks. The
main problems of various Thuringias TTO are lack of financial supports and limited
staffs. A team of mere three to five people cannot really support hundreds of
researchers and students who would like to have consultations (Interviews 1, 2, 3, 5, 7,
and 15)

4.4.3 Business
Thuringia benefits more from Mittelstand economy or SME-based economy (see Table).
Large established companies in Thuringia such as Carl-Zeiss and Schott clearly give
contributes to the regional economy as predicted . However, it has limited effects only to
the localized area in this case Jena. Other regions of Thuringia, except Eisenach
(Opel) and Arnstadt (Bosch), do not have large companies to support them. There are
also a number of small consulting companies that fills in the role of TTO such as
Stephen Crabbe Consulting and Ellipsis. Commercial Research Centers with their
association (FTVT) are also benefitting the innovation in Thuringia (see Table 9 and
Annex 10). Many researchers moved to commercial institutes to gain more financial

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43
rewards and freedom from teaching duties (Interview 20). See Table 8 and 9 for more
details.

Table 8 R&D Excellence in Thuringia


(Author Analysis from (Michael Fritsch et al., 2009; TMWAT, 2013a, 2011, 2012)

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44
4.4.4 Civil Societies
In the Quintuple Helix Framework, civil societies such as NGOs can help the limitations
of three core innovation stakeholders described previously. In Thuringia, there are
literally hundreds of NGOs in forms of associations (e.V.) that are affiliated with either
government agencies, universities, research institutions, or certain industrial sectors.
Most of them are working closely with ThEx and LEG particularly in consulting (Interview
5, 24).
There are at least four main civil societies which could be classified based on its
affiliations. In academia, Thuringias Higher Education Institutes Founders Networks
37

(HGN, Hochschulgrndersnetzwerk) is the biggest association which covers all HEIs in
Thuringia. HGN provides an alliance among all university, university of applied sciences,
and technical university in Thuringia. The idea behind HGN is to provide exchange of
information and stimulate collaborations among HEIs. However, HGN seems to fall short
as lack incentives and competitions for grants between HEIs hinder the collaboration
(Interviews 1 and 7).
From the government part, aside from the Cluster Networks and Association, EU
Contact Points Network of Thuringia (EURNT)
38
is an association that work closely with
TMBWK and in particular Department of Research and Infrastructure. It serves as the
primary contact for EU projects through EU research projects dissemination, science
policy lobby, supports of EU project applications, and consultations. All Thuringian HEIs
are members of EURNT too. EURN has a crucial role with regards to Horizon 2020 and
EU Leadership in Enabling and Industrial Technologies by making sure that HEIs and
applicants are fully aware of the restrictions and opportunities offered. However, EURN
has limited collaborations with SMEs which are also targets of Horizon 2020. The
current strategy is to have HEIs as their extension to local SMEs.
The most important civil society in Thuringia is Thuringian Foundation of Technology,
Innovation, and Research (STIFT). STIFT publishes yearly independent innovation
studies of Thuringia. Working as partner to TMWAT, TMBWK, HEIs, and firms, they offer
consultation and mentoring. Other than that, STIFT, together with TMWAT (in particular
ThEx), organizes the Thuringias Innovation Award for innovative companies. They also
organize other business plan and elevator pitch competitions.

37
For more HEI Start-ups Network, please visit
http://hsgbi.files.wordpress.com/2011/09/c3bcbersicht_grc3bcndungsnetzwerke_exist.pdf

38
EU Referenten Netzwerk Thringen. http://www.eu-forschung.de/

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45
Table 9 Commercial Research Institutes in Thuringia
Research Institutes
B
i
o
t
e
c
h
n
o
l
o
g
y

M
e
t
a
l
l
u
r
g
y

M
i
c
r
o
-

/
N
a
n
o
t
e
c
h

A
u
t
o
m
o
t
i
v
e

E
n
g
i
n
e
e
r
i
n
g

M
e
d
i
c
a
l

T
e
c
h

P
r
e
c
i
s
i
o
n

T
e
c
h

O
p
t
i
c
s

P
l
a
s
t
i
c
s
/
r
u
b
b
e
r
s

CiS Institute of Microsensors and
Photovoltaics

x x

X x
fzmb
Gmbh
Research Center of Medical
Technology and Biotechnology x

x
GFE Society for Production Engineering and
Development

x

x x

x x x
INNO
VENT
Technology Development
x

x x x x x x x
ifw Gnter Khler Institute for Joining
Technology and Materials Testing

x x x x

x x x
TITV Textile Research Institute
Thuringia/Vogtland

x x

x
TITK Thuringian Institute for Textiles and
Plastics Research

x x x

x x x
IAB Institute of Applied Construction
Research

x

x

x

x
(Source: TMWAT, 2013a)

4.4.5 Media
The other important stakeholder of innovation is press. Media is believed as platform of
formal communication, promotion, and lobby between all the stakeholders. Aside from
other common and more federal-level magazines, such as The Business Weekley or
newspapers, Thuringia also relies primarily on WIR magazine
39
by TMWAT and
privately-owned Wirstchaftspiegel Thringen (WST)
40
. There has been lack of press
coverage in many occasions. While WIR focuses on government success, WST is less
appreciated. At the end local newspapers become the main source of information
although it is not focused on technology per se.



39
Stands for Business, Innovation, and Resources,
40
http://www.wirtschaftsspiegel-thueringen.com/startseite.html?no_cache=1

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46
Chapter 5 Innovation in Thuringia under Microscope
This chapter is the continuation of Chapter 4 with the focus on evaluating the innovation
system in Thuringia. To dig deeper, Ilmenau has been chosen to understand the
situation better. This is necessary to explore, probe, bring forth concealed informations,
particularly since most of the data gathered are only published by Ministry of Economics
(TMWAT).
With the overview of Thuringian Regional Innovation System, the question is still laid
open, where does industrial leadership from innovation reside? or in other words, with
all the strategies and framework, what or who the key driver for innovation in regional
level is? To answer this question, Illmenau in the southern part of Thuringia is an
interesting location to study. It has a population of 26.000 people from which 7000 of
them are students enrolled in Technical University (TU) Ilmenau. (TU Ilmenau, 2013)
Ilmenaus economy for centuries depended on natural resources, such as silver and
copper, and tourisms. The opening of railway that connects Ilmenau with Erfurt in 1879
marked the beginning of industrialization. The economy shifted to manufacturing of
ceramics/porcelain and glass. Following the reunifications, Ilmenau lost its porcelain
industry while the glass manufacture started to produce laboratory apparatus and
measurement devices (TU Ilmenau, 2013)

5.1 TU Ilmenau
Limited train connection (up to twice an hour connection only to and from Erfurt) and
isolation by mountainous regions do not stop Ilmenau from being the one of the leading
innovative regions in Europe (Interview, OECD). The success seems very tightly
connected with the existence of TU Ilmenau. The precursor of the university was a
technical college Thringisches Technikum in 1894. High quality graduates developed
it further into Technical University with intensive research in 1992.
The research activities of the TU Ilmenau to the six interdisciplinary and cross-faculty
research cluster Nanoengineering, Precision Technology, Biomedical Engineering,
energy and environmental technology, Digital and Media Technology, Computer

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47
Sciences and Mobile Communication. Aside from technology, TU Ilmenau also offers
courses in economic sciences and business engineering
41
.
In 2004, the University was admitted to the German Research Foundation (DFG). The
Research of the TU Ilmenau is also supported by other non-university research
institutes, such as the Fraunhofer Institute for Digital Media Technology (IDMT),
the Fraunhofer Application Center System Technology (AST), a branch of
the Fraunhofer Institute for Integrated Circuits (IIS), the Thuringian Institute for Textile
and Plastics Research and the Institute for Microelectronic and Mechatronic systems
strengthened.
University success on research and its impact to local economy can be assessed based
on two aspects among many other indicators, research grants and the number of start-
ups. TU Ilmenau received up to 44.73 million in 2012 alone (see Table 10). From this,
about 10% came from industry and another 7% from EU.
Table 10 Research Funding in TU Ilmenau
2010 2011 2012
Federal Government 10,01 14,43 13,68
State of Thuringia 4,59 7,59 7,89
German Research Society 7,25 8,39 8,09
EU 1,38 1,30 3,82
Industry/Private Sector 4,51 4,68 4,96
Charity 0,00 2,78 3,70
Sum (in Mio EUR) 30,25 39,47 44,73
(Source: TU Ilmenau, 2013, p. 19)
Between 1995 and 2008 Ilmenau contributes to 7% of the start-ups activities in
Thuringia. If we compare this with Jena (9%) with more research institutes and financial
supports, Ilmenau shows a much better and successful track record (Michael Fritsch et
al., 2010, p. 49). From these start-ups, Ilmenau has higher entrepreneurial activity,
measured by the number of or percentage of start-ups in the regions compared to the
State (see Table 11). These signify efficiency in technology transfer and research
commercialization.


41
Wirtschaftsingeneurwesen

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48
Table 11 Regional Distribution of Entrepreneurial Activity in Thuringia
Sector Ilmenau (%) Jena (%)
Cutting-edge Technology 12,4 12,6
High Technology 7,2 6,4
Service-based Technology 6,8 9,8
Non-technical Commerce 4,9 8,2
General Proportion 5,1 4,4
Source: (Michael Fritsch et al., 2010, p. 42) % represents proportion towards
total prop of State of Thuringia


5.2 Fostering Entrepeneurship in TU Ilmenau: Auftakt
To stimulate transfer of technology, TU Ilmenau relies on Auftakt
42
, a start-up forum
which is organized by Grnderforum Ilmenau e.V. and the technology transfer office of
TUI Ilmenau. Rather than top-down approach by University, Auftakt was formed by a
number of students, staffs, professors, and external partners. Since 2011, this
Entrepreneurship Initiative provides support in business issues, provides contacts and
office space and is especially popular for one thing: a founder-friendly climate in which
start-ups feel good. (Corinna Bastian, 2012; Hofer et al., 2013)
Their three pillars activities, awareness, consultations and supports, and networking,
have largely made impacts to the number of start-ups in Ilmenau. Unlike many initiatives
that rely on mere business consultations and workshops (auftakt.Basis), Auftakt also
organizes experience sharing and dialogs (auftakt.Cafe), quizzes and games about
entrepreneurship knowledge (auftakt.Rallye), and speed-dating with investors (Venture
Capital Campus). By creating networking events, discussions, competitions, and
workshops, Auftakt increases the entrepreneurial spirit among TU Ilmenau students and
researchers.(Hofer et al., 2013; TU Ilmenau, 2013)

42
www.auftakt.org

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49
The core activity of Auftakt comes in professional consulting which covers all three
phases - pre-seed, start-up and growth phase - as the contact person for any
founders/entrepreneurs especially for existing funding opportunities. To bring together all
stakeholders of the start-up support, Auftakt created local and international networks,
which are constantly being expanded. This combines particularly founders, founding
interested, investors, sponsors, coaches and mentors. In addition, this way Auftakt
creates opportunities to mutual exchanges between those who just started with the
experienced ones (Corinna Bastian, 2012; Hofer et al., 2013; TU Ilmenau, 2013). The
focus becomes changing the mindsets of those who are hesitant in taking a step forward
to commercialize their research (Interviews 1 and 8).

5.3 Assessing Regional Innovation System in Thuringia
Innovation in Thuringia is a work in progress. The recent RIS3 demonstrates Thuringias
commitment to innovation. Thuringia has many assets and potentials that can support
innovation and thus achieving industrial leadership (see Table 12, left column). Three
main assets specific to Thuringia is the location, government support in cluster and
regional innovation system, and high quality infrastructures. Thuringias location in the
center of Germany and relatively strategic to the new market in East Germany makes it
an attractive investment location, especially supported with high quality infrastructures.
Arguably, the government support is tremendous in setting an investment and political
climates that are friendly to innovation.
However, government is also the main liabilities by imposing so much bureaucracy
(Interviews 1-5, 8, 11-15, 17). While appreciating the efforts of TMWAT in streamlining
start-ups and entrepreneurship through ThEx, there are still limited collaborations with
many stakeholders, such as TMBWK and ThCM. There are also many overlapping
initiatives between IHK, TMWAT, and TMBWK. This can be seen in different initiatives
between three government bodies with the same goal: increasing start-ups.

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50
Furthermore, in the context of public policy, Thuringia suffers from political typecasting
inherent in German political system where different political parties, despite being in
coalition, are hesitant to work together (Interviews 3 and 25).
Table 12 Assets and Liabilities of Innovation in Thuringia
Assets Liabilities
Europe / Germany / Thuringia
High quality of infrastructures and
public transports;
Strategic location that connects
West and East Europe (expansion
potential);
High R&D funding from Federal
level;
Long history and rich culture with
good quality of life;
Two streams of education system:
theoretical and practical
approaches
Negative demographic changes
(productive age 18-40 segment shrinks
-10%, while 65+ grows up 40%);
Less than 2% Thuringian GDP R&D
expenditures;
Dependency on EU funding;
Lack of political discourses among
ruling parties, coalitions, and
oppositions and also between states;
Low level of internationalization,
discourages international skilled
migrants
Cluster Policy
Strong government Cluster supports
under Thringen Cluster
Management (ThCM);
Existing expansion with Saxony and
Saxony-Anhalt;
World-renowned universities and
research institutes (Max Planck,
Frauenhofer, Leibniz, INNOVENT);
Curricula is mainstreamed to
knowledge/skills needed the cluster

Lack of inter-institutional
collaborations between universities
and research committees
Too concentrated on two locations:
Jena and Ilmenau; lacking
interdisciplinary research with other
universities even between the two
core cities, they are still reluctant to
collaborate;
Cluster network has weak
cooperation between private sectors
and research activities in universities
or R&D
Regional Innovation System / RIS3
Strong commitment from
government to support innovation,
both federal (EXIST) and State
(RIS3)
Existing communication platform
through various associations

Primary operation is through
imitation;
Low export quota with diagnostics
only about 25%, lowest compared to
other clusters
Focus on start-ups not on alternative
commercialization such as licensing.

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51
Another aspect that should be highlighted is the lack of collaborations between
stakeholders and regions. Thuringia has a strong regional identity that discourages
collaborations between regions, including HEIs. This is evident from the low reception of
regional policy Tricity Project that tried to strengthen three cities in Thuringia (Erfurt,
Weimar, and Jena as a metropolis region). The citys inhabitants feel that the project will
only take away the citys identity
43
. Despite the projects benefit on paper
44
, the project
did not get through and was shelved less than a year later with the resignation of the
Minister (despite the resignation was not due to the project)
45
.
In HEIs, competition for grants and other type financing may well the main reason for the
lack of collaborations between universities or other research institutes (interviews 3, 21,
25). Other than that, each university has developed their own niche (see Table 8), thus
many feels that they prefer to collaborate with other universities in Germany or abroad
rather than within Thuringia (Interviews 2, 4). This can be fatal as many universities in
Thuringia do not cater a broad range of subjects except University of Jena (Interview
25). Studies have shown that there is a strong correlation between high technology
innovations and the wide range of subjects being taught. The reasoning behind this is
clear, high technology, such as KETs, requires mix-and-match of different technology
sectors and disciplines. Thus, becoming specialized in one sector is only pre-requisite to
be competitive in KETs (Ketels et al., 2006; Ketels, 2003).
Furthermore, if we align this with Horizon 2020 that includes societal challenges and
dimension in EU Research framework, HEIs in Thuringia has much to do complement
their missing links. For example, University of Erfurt only focuses on humanities while
TU Ilmenau has the focus of engineering and natural sciences. Obviously, a close

43
http://www.thueringer-allgemeine.de/web/zgt/politik/detail/-/specific/Machnigs-Idee-einer-
Dreistadt-Erfurt-Weimar-Jena-fuehrt-zum-Eklat-139339552, retrieved on 31 May 2014
44
http://jena.otz.de/web/lokal/politik/detail/-/specific/Raumplaner-lobt-Machnigs-Plaene-fuer-
Dreistadt-Erfurt-Weimar-Jena-1296426586, retrieved on 31 May 2014
45
http://www.spiegel.de/politik/deutschland/ermittlungen-gegen-spd-politiker-machnig-eingestellt-
a-959483.html, retrieved on 31 May 2014

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52
cooperation between the two Universities will create a better synergy, for example, a call
in Health, Demographic Change, and Well-being for Personalized Medicine
46
. TU
Ilmenau and Metralab
47
could provide the technology while University of Erfurt could
support in providing governance framework for personalized medicine. Going further
than EU framework, this close cooperation would also offer knowledge exchanges and
increase Thuringias competitiveness.




46
http://ec.europa.eu/programmes/horizon2020/en/h2020-section/health-demographic-change-
and-wellbeing, retrieved on 20 June 2014
47
SME in Robotics, a start-ups from TU Ilmenau.

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53
Chapter 6 Where Theory Meets Practice
With the situation presented in the previously (Chapter 4 and 5), this chapter seeks to
answer the hypothesis and the research questions. Moreover, it also draws new aspects
that are only explored briefly in the earlier. In order to keep this section as concise as
possible, each sub-chapter will be addressed based on the theoretical questions
presented in Chapter 1 Introduction and Chapter 3 Methodology.

6.1 Can Cluster Approach and Regional Innovation System stimulate innovation
and achieve industrial leadership?
Empirical studies have shown that economic growth and industrial leadership coming
from business formations (spin-offs and start-ups) and regional entrepreneurship culture.
However these vary between different regions (Michael Fritsch & Aamoucke, 2013;
Michael Fritsch, 2014; Slvell et al., 2003; Varga, 2009). Furthermore, industrial
leadership needs a strong synergy in networks and sectorial support (Ketels et al., 2006;
Mowery & Nelson, 1999, p. 9; Sandstrm & Carlsson, 2008; Storper & Scott, 2009). This
is positively reflected in the networks of innovation system and cluster approach as
shown by Thuringias RIS (RIS3) and Cluster Management (ThCM) (TMWAT, 2014).
Nevertheless, this framework still depends on the collaboration of the stakeholders
(Leydesdorff, 2012). While appreciating TMWATs efforts to put various initiatives for
start-ups under one umbrella, the lack of cooperation between stakeholders, including
with TMBWK is a challenge on its own. This can be seen from the several government
initiatives for example in the case of Thuringias Centre for Start-ups and
Entrepreneurships (ThEx) and ThCM which are under TMWAT. Both of the agencies
have rather limited collaborations and in many cases discourages private actors and
entrepreneurs to participate in the programs (Interviews 3, 25). Several interviews with
CEOs of high tech companies in Ilmenau argued that while they in principal support the
government policies, they find it difficult to follow the bureaucracy and in many cases
have limited information about what supports are available for them and whom to
contact (Interviews 6, 8, 12, and 13).
Moreover, specifically for Europe, Ketels (2004) pointed out that many European
industry sectors come into clusters without an organized or systemic approach from
neither private sectors nor governments. They grow organically or simply by keeping
up with the market (Ketels, 2003). Porter (1990) in his book The Competitive Advantage

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of Nations already presented several best practices of European Clusters that grew
organically such as the forestry products clusters in Sweden and Portugal and become
leaders in their respective market (p.249). However, these individual cases have been
evolving into clusters from long processes and time to reach their critical mass.
Therefore, while acknowledging the importance of RIS and Cluster approach in
stimulating entrepreneurship, it is important to change our paradigm that innovation
policy through entrepreneurship requires region-specific strategies and consideration of
local stakeholders (Carayannis & Campbell, 2012; Dejardin & Fritsch, 2011; Fritsch,
2002; Fritsch et al., 2010; Fritsch & Slavtchev, 2011; Fritsch, 2014; Kauffeld-Monz &
Fritsch, 2013; Ketels et al., 2006).

6.2 Where does leadership in enabling and industrial technologies reside?
The emphasis for Leadership in Enabling and Industrial Technologies (LEIT) lies on
R&D to strengthen industrial capacities and business perspectives, including SMEs. This
also covers Public-private partnerships (PPPs), cross-cutting technologies, ICT, and
their impact to address societal problems (European Commission, 2013b). This means
that greater variety of products and problems solutions to increase Europe competitive
advantage by having more brains and ideas, while at the same time getting out of the
deadly loops of thinking.
Numerous studies propose that industrial leadership resides on the State level
particularly with such broad emphasis, both economically and socially. Thus, the most
important actor that should drive one region to be a global player or leader in their
niches is government through their monetary and non-monetary policies. Monetary
policies can be through grants, subsidies, and bank-guarantee (Brenner et al., 2011.;
Houghton & Sheehan, 2000; Shane, 2005). On the other hand, non-monetary policies
can be the formation of agencies and intermediaries that can help HEIs and private
sectors to commercialize their innovations (B. Asheim et al., 2006; H. Etzkowitz &
Leydesdorff, 1996). In Thuringia, this is evidently can be seen through ThEx, ThCM,
THGN, and EXIST network (Interview 24).
However, in the context of enabling and industrial technologies, industrial leadership
depends on innovation and innovation depends on research. Thus, LEITs resides on the
most innovative and commercially-active stakeholders, which can be HEI or research
institutes, or firms (Interview 1, 3, 14, 15, 25). In the case of Jena, in the early 1900s that
industrial leadership depended on private firms innovation such as Schott and Carl-

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Zeiss. Recently, it shifted towards the strong collaboration between academics and
private firms, including Schott and Carl-Zeiss (Cantner & Graf, 2006). Weak links
between European university and industry are the key of losing technological
competitiveness with the United States (Feser, 2012; Fritsch & Aamoucke, 2014; David
C. Mowery & Nelson, 1999, p. 364).
How about a small region? As mentioned before that innovation requires region-specific
strategies and policies, one can look up to Ilmenau. Ilmenau started differently. While
lacking large firms and being isolated, Ilmenau has become of the most important
innovation hubs in Europe (Hofer et al., 2013). Ilmenau innovation depends on the
research commercialization coming from TU Ilmenau and the existing SMEs (Interview
17).
Technical University, such as TU Ilmenau provides an advantage by having already the
emphasis on application (Mowery & Nelson, 1999, p. 363). TU Ilmenau has the
Biomedical Engineering Faculty, an inter- and intra-disciplinary faculty that creates a
new research field, as such robotics and medical devices (Interviews 1, 8, 14). This is
important in delivering new KETs technology (Interviews 4, 15, 16, and 20). Empirical
study in the United States showed that petrochemicals industry comes from chemical
engineering faculty in 1970-1980s ( Mowery & Nelson, 1999, p. 364). In this case, LEIT
depends on the TU Ilmenau strategy and its technology transfer activities. Therefore, in
terms of policy making, government should identify the most innovative stakeholder to
consult in order to achieve LEIT.

6.3 What is the most important factor to sustain LEIT?
Regional Innovation System and Cluster approach put the emphasis on collaboration.
Based on the interviews, it is very interesting that the focus of all stakeholders is on
social capitals, particularly personal relationships and trust-building. Based on the case
in Ilmenau, many entrepreneurs started their company and stay in Ilmenau because of
their social network and close relationships with university staffs (Interview 14). One
prominent example is Metralab. The founders of Metralab are TU Ilmenau Alumni with a
wide range of subject, computer science, industrial management, and neuroscience.
Their companies are continuation of research projects with one of the founders
Professor. Despite their financial success, Metralab still puts its base in Ilmenau further
because the founders have started family there. A number of other interviews also
support the importance of social capitals (Interviews 3, 8, 11, 12, 24, and 25).

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The importance of social capitals has been overlooked for many years. The notion is
strong as indicated by the importance of mentoring and intermediaries. The founders of
Auftakt, the entrepreneurship forum in Ilmenau, went further and identified trust in social
networks is important in stimulating research commercialization. This is why Auftakts
mission is to create an entrepreneur friendly environment by changing the attitudes of
students and researchers towards entrepreneurship. Research showed that Auftakt has
rightly done so by building confidence and understanding the decision-making process
(Hofer et al., 2013).
Why trust and personal relationships are important in innovation process? The first is to
overcome the risk-averse attitude or hesitance to commercialize their research due to
risk and high uncertainty (Nooteboom, 1999; Woolthuis, Hillebrand, & Nooteboom,
2005). Mentoring is one of the solutions to deal with this reluctance by providing enough
information. Going outside ones comfort zone is not easy. Many academics have to
reconsider their tenure and career to be entrepreneurs or move to industry. In terms of
strategy, all the focus on research commercialization is by becoming an entrepreneur
and starts a company ((Goethner, Obschonka, Silbereisen, & Cantner, 2012;
Obschonka, Goethner, Silbereisen, & Cantner, 2012). Moreover, there are many ways to
commercialize. One of the ways is through licensing in which the innovator. Coaches or
mentor are expected to give a balanced opinion.
Secondly, trust and personal relationship are needed to compensate the lack
knowledge. Innovation process, represented in the regional innovation system, requires
a person to understand various aspect of regulatory framework, market framework, and
network access aside from his/her own expertise on one specific technology sector. To
fully understand the whole process is almost impossible (see Figure 13). Researchers
need someone whom they can trust to help them and at the same time becoming their
personal advisor (Interviews 1, 3, and 8). Nevertheless, in high technology sector,
several interviews also pointed out that the mentors should also understand the
researchers field a sensible idea but difficult to find mentors with similar backgrounds.
(Interviews 3, 6, 7, 12, 13, and 14)
The best case example was the GET UP Start-up Networks between 1999 and 2005 in
Thuringia. The aim was to stimulate start-ups like ThEx. However the most important
aspect from this framework that makes it different from ThEx was the decision process
that enabled each of different regions to participate. GET UP had offices in all regions
with HEI. Unlike ThEx which is centrally coordinated in Erfurt. Each office was
represented by high university officials that acted on behalf of the scientists, students,

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and entrepreneurs in the regions. This empowered trust building, while at the same time
preserved the local identity and sense-of-belongings (Goethner et al., 2012; Martinelli,
Guerzoni, & Cantner, 2013; Obschonka et al., 2012). An interview with a scientist, who
is also an entrepreneur in Ilmenau, supported framework similar to GET-UP. He argued
that the university officials know better of the region innovation and thus, speeded up the
decision making process (Interview 13)

Figure 17 Innovation Process in the Head
Source: WEF, 2014

World Economic Forum (WEF) just recently (April 2014) took attitude as the key factor to
entrepreneurial culture. They argued that before one country designs innovation policy
to increase regional competitiveness, fostering an attitude that is open to entrepreneurial
career is the beginning of innovation. An entrepreneurial attitude will encourage a
person to learn other skills while at the same time change the cultural framework in
his/her surroundings (see Figure 17 and 18).

Figure 18 Processes of Innovation
Source: WEF, 2014

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Changing ones attitude is not an easy task, particularly for academics who are the
drivers of innovation. The key influence in changing ones attitude is perceived
behavioral control or how much one could control the consequence of their actions.
Decision making in high uncertainty situation needs many considerations. But is it a
reasonable move to do? Research shows that the two influencing factors which are
necessary to encourage entrepreneurial attitude: entrepreneurial experience and ones
(working) environment (Goethner et al., 2012). In a very entrepreneurial university, such
as Harvard and MIT, the chance of academics (including students) is higher (Ketels,
2003). In Germany, this is rather difficult due to academic environment that discourage
profit-taking activities in HEI (Michael Fritsch & Wyrwich, 2013 and Interviews 1, 3, and
25).
Thus, supports from technology transfer office, linkages with public support agencies,
and closer interaction with industries are believed to be the initial steps to overcome the
initial loss zone in early development of innovation (see Figure 1). Rather than just
focusing on technology transfer activities, personal relationship and trust-building
become key aspects to consider in fostering an entrepreneurial mindset and culture in
academia (Hofer et al., 2013; Obschonka et al., 2012; Tdtling, Prudhomme van Reine,
& Drhfer, 2011; WEF, 2014). This will create a sense of belonging of a person to
his/her place of work and the city.

6.4 What are the best indicators for achieving LEIT?
LEIT covers diverse spectra from business, technologies, education, and also societal
issues. The concept of LEIT itself is rather new (2010), therefore not much have been
studied. The current assessment based on EU level put together indicators of innovation
and industrial leadership. However, these indicators been assessed as one package.
Recently, several studies (EIT, 2014; Michael Fritsch, 2014; WEF, 2014) have recently
explored LEIT, though not directly, by widening the concept of innovation, not just for
economic development but also to address societal challenges.
Before we discuss the possible indicators to achieve LEITs, it is important for us to
understand the basic requirements of innovative and entrepreneurial economy. They are
(1) the size and quality of the regional knowledge base as a source of new ideas and
entrepreneurial opportunities (Houghton & Sheehan, 2000; Surinach et al., 2007); (2) the
regional culture of entrepreneurship (Tdtling et al., 2011) (3) qualifications of the
regional workforce (van Oort, Oud, & Raspe, 2009); (4) the availability and the quality of

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other inputs (Martinelli et al., 2013); and (5) the intensity of local competition between
newcomers and incumbent firms on Porters Diamond ( Fritsch et al., 2010). From these
basic requirements, OECD argues that government should use employment and the
number of start-ups as the primary indicators for innovation. World Economic Forum
(2014) also suggested that access to financing, such as through grants and venture
capitals, should have some merit. Yet, access to finance can also be represented
through the number of start-ups (Interviews 1 and 25).
However, LEIT is difficult to be assessed based on employment or the number of start-
ups. In the initial phases of industry life cycle, there are always high numbers of new
business formations or start-ups. Then, as the industry grows and weakens,
employment goes down and business formations are relatively low. Thus, it is difficult to
conclude that both are causal. Furthermore, if we put the different technology based on
its readiness (TLR), this industry life cycle can either longer or shorter (Conrow, 2011).
For example, when one compare software and biotech start-ups. A software start-up,
which develops Apps for smartphones, can grow and decline fast. At the same time,
financing software-based start-ups requires much less investments due to its low fixed
costs. The number of new employment from this type of companies is also less
compared to a biotech start-up with much more financing, risk, and technology
development (Cantner & Rake, 2014). Thus, we can only consider employment and the
number of start-ups as initial symptoms of growth but not empirically consider that as a
stable indicator for LEIT (Fritsch, 2002; Fritsch, 2014).
Furthermore, employment on its own is also difficult as new business formations,
through these start-ups, increase competitions, and may well lead to reduction of
employment for production efficiency in other companies. As a market rule, which
inefficient producers get removed from the market, new start-ups could also replace
incumbent companies (Fritsch, 2014) just like the old cells, being replaced by the new
cells. Nevertheless, start-ups can actually positive as long as the incumbent and the new
companies could manage a strong relationship which leads to a better innovation and
share the ideas to define their own niches (Interviews, 1 and 25).
The discussion we have so far only focusses on short term measures of the number of
start-ups and we have not touched the important key aspect of LEIT, which is the (long-
term) impact to the society. Moreover, as discussed in the previous question, one could
not measure social capitals in the context of personal relationship and trust-building.
Discussions with EC and Thuringias government officials acknowledge the gap in
measuring the success of one region in achieving LEIT. The current approach relies only

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in the efficiency of Horizon 2020 approved projects evaluation. Dr. Peter Hrtwich from
DG Research and Innovation argued that Horizon 2020 encourages the participation of
SMEs and their collaboration with HEIs. He believes that collaboration between HEI and
SME is enough as of the most important indicators for LEIT, aside from the number of
start-ups and employment (Interview 10).
I would argue that the number of innovative products coming from one region is the most
important indicator in LEITs. Why can this be the case? If we look at the
pharmaceuticals industry, new medicine is the innovation product of long research. The
impact to the society can be directly measured by the number of patients being cured or
helped by the medicine. Therefore, a region should not just focus on the number of start-
ups or employment or the number of successful grant proposals but also focus on how
many new innovative products or research commercialization come from that region.
The number of sales will also indirectly indicate the success of the product in providing
solution to societys challenges. Nonetheless, we should still make exceptions in the
case of high technology such as sensors for satellites which have definitely lower
number of sales compared to medical devices.
One of the main criticisms towards using the number of products entering the market is
the fact that different KET products have different life cycle (Thrin, 2014). A
biotechnology product requires minimum five years for product development while
software could take a year or even less to enter the market. Thus, while direct short-term
general impact can be signaled by the number of start-ups and employment, the number
of innovative products could serve as the long term indicator of success.

6.5 Impact and its Possible Implementation in Developing Countries
Developing countries need the technology transfer from developed countries such as
Germany and OECD countries. Innovation products such as draught-resistant seeds or
water-filter with carbon nanotubes that can sieve harmful bacteria are useful (Carsten
Schmitz-Hoffmann, The Role of Private Sectors in Development Agenda, European
Development Days 2013). The study presented could offer two important lessons in
context of development and innovation, and innovation policy-making in developing
countries.
The first aspect is improving livelihoods of developing countries with the new
technologies. This is mutual symbiosis or cooperation. The developed countries can
help the country while at the same time these development programs can also open

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markets for SMEs and other large firms (Interviews 2 and 4). The danger comes from
dependencies on developed countries. However, under Europes Policy Coherence for
Development, any new technologies being introduced to Europes partner countries,
requires a technology transfer program. Thus, developing countries can also improve
their innovation culture while at the same time having already a step ahead with
supports from developed countries (European Commission, 2013a).
Secondly, many of developing countries entrepreneurship policy-makings are hampered
by lack of cooperation between different stakeholders. In the case of Indonesia, several
government agencies have overlapping programs and there is hardly collaboration
between universities (Kusmayanto Kadiman, personal communication). This situation is
rather similar to Thuringia. Thus, this study appeals to the importance of social capitals
in innovation policy making particularly in fostering entrepreneurial mindsets as
discussed previously.

6.6 Outlook and Future Research
Innovation covers a broad range of subjects and disciplines. This study provides
important insights towards the importance of social capitals, such as personal
relationships and trust-building in stimulating entrepreneurship in a region. Thus,
innovation policy making cannot be seen through the eyes of economists alone, but also
psychologists and politicians. Fostering a mindset requires interdisciplinary approaches.
Innovation depends on the decision making process under fundamental uncertainty.
Therefore, this brings us to exciting future research questions: how can policy makers
reduce uncertainty from strategic choice and interactions in innovation in the field of
KETs? Can strategic interactions between relevant stakeholders trigger innovative
activities and thus bring about the entrepreneurship in academia? What knowledge
management or decision-making tools can we develop to catalyze the decision-making
process, especially in a bottom-up approach? What kinds of institutional designs and
intervention are necessary to keep such frameworks sustainable, especially in a
decentralized system? Are these designs and tools transferrable to other countries, in
particular developing countries? Unmistakably this study only provides the first step in a
long and winding road ahead where we have to make decision both pragmatically and
academically or pra-cademic
48
.

48
The term was first coined by Fred van Eenennaam from Decision Insitute.,
http://www.centerforcompetitiveness.nl/vision-2/methodology, last retrieved 1 July 2014

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Conclusion
Research and development activities reflect key source of innovation to achieve
industrial leadership and economic growth in knowledge-based economy. Recent EU
Horizon 2020 Framework Program has signified the importance of innovation in securing
and improving Europe's competitiveness, particularly with knowledge enabling
technologies or KETs. KETs are cross-cutting technologies that support the
development of other technologies or their applications such as medical technology,
advanced materials, and biotechnology. With a total budget of 960 billion in the next six
years, European Union aims to bring innovation and its applications from lab bench to
boardrooms, and to the living rooms. However the whole process for applying for the
grants, despite being heavily reformed, is still rather bureaucratic. This hampers the
impact of innovative research and technology transfer for the society.
The interest in innovation studies received a wider attention from the technology boom
of Silicone Valley in mid-1990s. The general theoretical literature on innovation focuses
on Regional Innovation System while industrial leadership concentrates on Cluster
approach. However, these theoretical framework on this subject, specifically in the
context of KETs and industrial leadership are inconclusive on several vital questions
within the policy making discourse in regional level. The study sought to answer two of
the following questions. First, what explains innovation-based industrial leadership in
regional level? Secondly, where does the industrial leadership reside? This study
proposed that innovation and industrial leadership depend on active policy-making of the
government.
To answer the questions, this study selected the region of Thuringian Ilm-Kreis in
Germany with Technological University (TU) Ilmenau as the spearhead of innovation in
the region. This isolated region has become of one raising stars of innovation despite
limited funding and spill-over effects from large companies compared to other bigger
cities in the region. Numerous site visits and interviews in Ilmenau provide a better
understanding of the region. It gives the chance to connect the theory into practice and
put the gathered information in perspective. The main empirical findings are chapter
specific and were summarized within the respective empirical chapters: chapter 4 with
the regional innovation system in Thuringia with case of TU Ilmenau and chapter 5 with
the discussion and analysis in efforts to answer the research questions. This section will
synthesize the empirical findings to answer the studys two research questions.

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What explains innovation-based industrial leadership in regional level? Industrial
leadership depends on policy synergy for technology transfer and collaboration of all
innovation stakeholders, which are government, academia, business, civil societies, and
also the media. In the context of KETs, several factors become increasingly important in
technology transfer: networking and supports to find a niche and to enter the market.
Mentoring is another aspect that has been identified as significantly help start-up
formations and cultivate entrepreneurial attitude among academics. However for KETs,
it is crucial to find mentors who are technology-specific respectively.
Interestingly, for a rather isolated region such as Ilmenau, there are two most important
aspects that keep many companies stay in Ilmenau. Firstly, it is personal relationship
between entrepreneurs and the TU Ilmenau and secondly, it is the trust built from the
relationships themselves. These conclusions were based on the testimonials of many
entrepreneurs and CEOs of technology companies. In many cases, project
collaborations were made because of how well one knows each other rather than mere
personal qualifications. The difficulty in grasping other academic fields or technologies
imposes a high level degree of trust to establish partnership. Therefore, innovation
policy requires strategic approach on personal level by addressing the social capitals,
such as personal relationships and trust-building, in a region or cluster.
For the second question, where does the industrial leadership reside? Many of the
interviewed stakeholders argued that industrial leadership, in theory, resided on the
State level. This can be explained as one region cannot sustain itself, particularly in the
framework of Technology Cluster Approach. In practice, it offered a different
explanation. Innovation depends on research. Research depends on higher education
institutions (HEIs), research institutes, and R&D intensive firms. Thus, to achieve
industrial leadership resides on the most innovative and commercially active
stakeholders. This pattern can only be an indication of generalization, if the regional
innovation system clearly emphasizes collaboration and role-sharing in technology
transfer and research commercialization. Nevertheless, in the context of region with
limited cooperation among the stakeholders, industrial leadership depends on the
intensity of collaboration between HEIs/research institutes and firms as evidenced by the
innovation success of Ilmenau and TU Ilmenau.
The theoretical frameworks for innovation therefore need to be revisited in order to
further understand the dynamics and links between innovation and industrial leadership.
Inherently, Regional Innovation System (RIS) suggests a sustainable innovation
economy through interlinked innovation activities (Cooke, 1997). This approach

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complements the Porter's Diamond model that helps to identify the competitive
advantage of a regional innovation system (Porter, 1990, Delgado et al., 2009).
However, as proposed by Triple Helix Innovation (Etzkowitz & Leydesdorff, 1996) and its
further development, Quintuple Helix (Carayannis & Campbell, 2009), it is also
constructive to focus on the overlapping roles of the stakeholders, rather than the
processes. Focusing on RIS and Cluster Approach is consistent with what presented by
OECD (2014) and European Commission (2014). However, it contradicts that of Mowery
& Nelson (1999) which also puts significance in technology-specific policy for industrial
leadership for different innovation stakeholders. Nooteboom (2010), Cantner (2012), and
Fritsch (2013) argued that innovation system should also take into account the
psychological determinants of the trust-building among the stakeholders.
One particular policy program with extended theoretical underpinnings was the Auftakt
Program from TU Ilmenau. Auftakt has been hailed as an icon of success in stimulating
entrepreneurship and technology transfer by OECD (OECD, 2013). By creating an
entrepreneur-friendly climate which start-ups feel good and confident, its programs
reach out to the university students, researchers, and potential funding and private
partners through personal relationships and consultations. The relatively small university
with high research intensity makes the personal contacts possible. However, the lack of
funding and reluctance to take risks by starting a company become challenges to
overcome.
This study has used empirical findings to show that the current Regional Innovation
System and Cluster Approach are not making the full impact. These theoretical
frameworks assume that every stakeholder in innovation process is willing to collaborate
with each other. In practice, this is difficult to attain. Based on this study, conflict of
interests and overlapping responsibilities are prevalent in Thuringia. Furthermore,
Regional Innovation System approach supposes that each technology sector behaves
similarly. Again, this is also misleading perspective. High technology sectors such as
KETs have their own complexions and characteristics. While having the same natural
sciences principles, biotechnology and engineering have different approaches to
analyze and offer solutions to societal problems. The theoretical arguments for this
justification suggest the need for policy review which will enable linkage mechanisms,
either through interdisciplinary mentoring or associations by tech ambassadors and
Alumni network. These linkage mechanisms are also beneficial to address the
importance of social capitals, such as personal relationships and trust-building, in
innovation and collaboration.

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The scale of innovation debate is therefore extensive and multifaceted even at the
regional and local level. Thus, to generate achievable policy strategies and development
targets with regards to industrial leadership, there is need for more investigations at the
local level to allow further assessment of local dimensions of the subject. Exploring the
following as future research strategies can facilitate the attainment of this goal. However,
it is clear that there is no rule-of thumb that could copy the success of Silicone Valley.
Future outlook of innovation model brought forward by this study is in the behavior of
human decision making under fundamental uncertainty of technology development. This
is particularly important in the different nature of academics and entrepreneurs.
Academics are rational decision makers. They tend to avoid risk-taking behavior which
is completely the opposite of the entrepreneurs. Therefore, this bring us to the future
research questions: how can policy makers reduce uncertainty from strategic choice and
interactions in innovation in the field of KETs? Can strategic interactions between
relevant stakeholders trigger innovative activities and thus bring about the
entrepreneurship in academia? What knowledge management or decision-making tools
can we develop to catalyze the decision-making process, especially in a bottom-up
approach? What kinds of institutional designs and intervention are necessary to keep
such frameworks sustainable, especially in a decentralized system? Are these designs
and tools transferrable to other countries, in particular developing countries?
The study has put another brick onto the wall of innovation knowledge, particularly in
regional innovation system and its policy strategy. Although, there are no policy
measures that can guarantee the emergence of technology cluster and industrial
leadership, this study opens up another door to interdisciplinary approaches in policy-
making by combining economics, politics, and psychology among other related
disciplines.



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Chapter 7 Policy Recommendations
These sets of policy recommendations were derived from this study. They were selected
based on the (primary) stakeholders involved in the innovation process in Thuringia. The
main consideration of these policy recommendations are visibility based on the current
situation and comparative case studies. Several recent published policy
recommendations are also included below as further reference:

1. WEF. Enhancing Europes Competitiveness Fostering Innovation-Driven
Entrepreneurship in Europe. Insight Report. Competitiveness. Geneva: World
Economic Forum, 2014. http://www.weforum.org/reports/enhancing-europe-s-
competitiveness-fostering-innovation-driven-entrepreneurship-europe.
2. TMWAT. Regionale Forschungs- Und Innovationsstrategie Fr Intelligente
Spezialisierung Fr Thringen. Erfurt: Thringer Ministerium fr Wirtschaft,
Arbeit und Technologie, May 15, 2014.
3. Hofer, Andrea-Rosalinde, Jonathan Potter, Dana Redford, and Jakob Stolt.
Promoting Successful Graduate Entrepreneurship at the Technical University
Ilmenau, Germany. OECD Local Economic and Employment Development
(LEED) Working Papers. Paris: Organisation for Economic Co-operation and
Development, April 3, 2013. http://www.oecd-
ilibrary.org/content/workingpaper/5k4877203bjh-en.
4. Thringer Netzwerk fr Innovative Grndungen (ThrInG). Innovative
Grndungen in Thringen: Entwicklung und Ausblick 2013. Thringer
Netzwerk fr innovative Grndungen. Stiftung fr Technologie, Innovation
und Forschung Thringen (STIFT), December 20, 2013. http://www.stift-
thueringen.de/fileadmin/user_upload/stift/studie_2013_23122013.pdf.




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I. Thuringian Ministry of Economics, Labor, and Technology
TMWAT and TMBWK should have a closer cooperation, particularly in innovation
strategy as described in RIS3 white paper.
Since many innovations come from universities and commercial research
institutes, therefore it is important to incorporate University partners (or through
TGN), FTFV, and Patent Office in ThEx. The collaboration will provide a better
communication platform between the stakeholders.
In order to gain synergy in industrial leadership, ThEx and ThCM should
cooperate and seize the opportunity of closer collaboration between SMEs and
HEIs in R&D and technology transfer.
Include licensing and other alternative commercialization under ThEx
Initiate collaboration with GIZ as opportunity to open markets for Thuringian
SMEs in GIZ-partner countries.

II. Thuringian Ministry of Education, Science, and Culture
TMWAT and TMBWK should have a closer cooperation, particularly in innovation
strategy as described in RIS3 white paper.
Incorporate entrepreneurship in the curriculum already from secondary schools
Coordinate Thringer Grundernetzwerk (TGN) and EXIST-III using previously
Get-Up Framework to provide as a better decision making and collaboration
platform between HEIs in Thuringia.
Encourage more cooperation between Thuringian HEI, commercial and non-
commercial research institutes.



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68
III. Technology University Ilmenau
(particularly for the Technology Transfer Office and Auftakt)
With the success and recognition of Auftakt by OECD, when the financial
situation is possible, more staffs for TTO and financial support to Auftakt would
be necessary to boost the performance of TTO and Auftakt;
Endorsing the Alumni Network that is currently being discussed, as
communication platform between the current students and alumni. Furthermore,
this Alumni Network can contribute to the financing of start-ups;
To increase collaboration with student initiatives, such as Market Team and
Entrepreneurship Society, which have similar vision and mission.

IV. Small and Medium Enterprises (and Start-ups) in Knowledge Enabling
Technologies
Connect with GIZ and TTO to discuss the possibility of doing projects together,
particularly as GIZ could open a market for many SMEs in developing countries.
TTOs can help to minimize the administrative burdens;
Reducing costs of R&Ds by collaborating with universities or other research
institutes for product development, particularly with Horizon 2020 supports for
SMEs.

V. European Commission DG Research and Enterprise
While positively welcoming the efforts to reform application process, it is still
bureaucratic and discourages many SMEs with limited human resources to
participate in Horizon 2020. Expanding the role of Contact Points to help these
SME or having less paper work for SMEs is highly appreciated;
Leadership in Enabling and Industrial Technologies requires long term supports,
thus SMEs which have been showing some positive progress should be made
easier to apply while new SMEs should get priority and supports for application
process.

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69
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126. TU Ilmenau. (2013). Bericht des Rektors 2012 (Yearly Performance Report).
Ilmenau: TU Ilmenau. Retrieved from http://www.tu-
ilmenau.de/universitaet/bericht-des-rektors/
127. United Nations Conference on Trade and Development. (2001). Transfer of
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128. Van Oort, F. G., Oud, J. H., & Raspe, O. (2009). The urban knowledge economy
and employment growth: a spatial structural equation modeling approach. The
Annals of Regional Science, 43(4), 859877.
129. Varga, A. (Ed.). (2009). Universities, knowledge transfer and regional
development: geography, entrepreneurship and policy. Cheltenham u.a.: Elgar.
130. Von Wissel, C. (n.d.). Die Hochschulen in regionalen Innovationsstrukturen.
Relativ Prosperierend, 459.
131. Wang, Y. C., & Lipsitch, M. (2006). Upgrading antibiotic use within a class:
Tradeoff between resistance and treatment success. Proceedings of the National
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competitiveness-fostering-innovation-driven-entrepreneurship-europe
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relationship development. Organization Studies, 26(6), 813840.



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80
ANNEX 1 Overview of Different Technologies
Name of Technology Short explanation Example
Nanotechnology Manipulation technique of
materials on the atomic or
molecular scale (Nano: one
billionth of a meter;
analogous to a soccer ball
compared to the earth)
Nano tubes in the solar
cells
Micro- and Nano-
electronics
Electronics in small level,
micro refers to a
miniaturised version of
larger electronics while
nano-electronics refer to
the application of
nanotechnology in
electronics.
Microelectronics: computer
chips

Nanoelectronics: cancer
detector
Photonics The application and use of
light properties
Detectors in digital
cameras, optical sensors in
computer, laser surgery
Advanced Materials Synthesis or production of
new or better materials, this
can be based on metals or
even biologicals
Anti-scratch phone
displays, unbreakable
ceramics/glass
Biotechnologies The use of living organisms
to make useful products
Enzymes in detergents,
DNA cloning
Advanced Manufacturing New ways that improve
products or production
processes
The application of robots
and sensors to detect
cracks in ceramic
production
Information and
Communication
Technologies
Integration of wireless
communication methods,
computers, and means of
communications
Software, computer
network security, mobile
phones

Summarized and simplified from:
Karlsson, Charlie, Brje Johansson, and Roger R. Stough. Entrepreneurship and
Dynamics in the Knowledge Economy. Studies in Global Competition. New York, NY
[u.a.]: Routledge, 2006. http://www.loc.gov/catdir/enhancements/fy0654/2005012118-
d.html http://www.gbv.de/dms/bsz/toc/bsz12098542xinh.pdf.
Sismondo, Sergio. An Introduction to Science and Technology Studies. John Wiley &
Sons, 2011.


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81
ANNEX 2 Location of Thuringia in Germany

Taken from the back cover of:
TMWAT. Thuringia: 100 Stories, 100 Surprises. Regional Marketing. Erfurt: Thringer
Ministeriums fr Wirtschaft, Arbeit und Technologie. http://www.das-ist-
thueringen.de/data/download/Thueringen_100_Geschichten_100_Ueberraschungen.pdf

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82
ANNEX 3 Location of major innovation cities in Thuringia

Major cities with higher education institutes are with red box. They are (from left to right):
Schmalkalden, Nordhausen, Ilmenau, Erfurt, Weimar, Jena. Eisenach (most left) is also
included due to its significance in automotive cluster.
Taken from the back cover of:
TMWAT. Thuringia: 100 Stories, 100 Surprises. Regional Marketing. Erfurt: Thringer
Ministeriums fr Wirtschaft, Arbeit und Technologie. http://www.das-ist-
thueringen.de/data/download/Thueringen_100_Geschichten_100_Ueberraschungen.pdf
.


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83
ANNEX 4 Geographical Situation of Ilmenau

Ilmenau is located about 33km south of Erfurt in the northern edge of Thuringian Forest
at an altitude of 500m of elevation. The basin where the city and TU Ilmenau are located
is surrounded by four different mountains (indicated by green color of the forest). They
are Prlitzer Hhe (north), Ehrenberg (east), Tragberg (east), Lindenberg (south), and
Hangeberg (west). The white broken line shows administrative border. Image was taken
from Google Maps (2014) under Creative Commons License.


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84
ANNEX 5 OECD Systemic Approach Publications

Year Title
1960 Cooperation in Scientific and Technical Research
1963 Science and the Policies of Governments
1966 Fundamental Research and the Policies of Governments
1966 Government and the Allocation of Resources to Science
1966 Government and technical Innovation
1966 The Social Sciences and the Politics of Governments
1968 Fundamental Research and Universities
1968-70 Gaps in Technology
1971 The Conditions for Success in Technological Innovation
1972 Science, Growth, and Society
1972-74 The Research System
1980 Technical Change and Economic Policy
1981 Science and Technology Policy for the 1980s
1988 New Technologies in 1990s
1991 Technology in a Changing World
1992 Technology and the Economy: the Key Relationships

These are OECD publications (white papers and reports) between 1960-1992 during
Systemic Approach before adopting National Innovation Systems. Compiled from OECD
Library http://www.oecd-ilibrary.org/ (last accessed 1 February 2014)


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85
ANNEX 6 OECD National Innovation Systems
Year Title Notes
1995 National Systems for Financing
Innovation

1997 National Innovation Systems
1999 Managing National Innovation Systems
1999 Boosting Innovation: The Cluster
Approach

2001 Innovative Networks: Cooperation in the
National Innovation Systems

2001 Innovative Cluster: Drivers of National
Innovation Systems

2001 Innovative People: Mobility of Skilled
Personnel in National Innovation
Systems

2002 Dynamising National Innovation
Systems

2005 Governance of Innovation Systems
2006-2010: year gaps of OECD Member States Innovation Policy Reviews
including different technology sectors with collaboration from EU
2010 Measuring Innovation: a New
Perspective

2010 The OECD Innovation Strategy: Getting
a Head Start on Tomorrow

2013 Knowledge Networks and Markets
2014 Making Innovation Policy Works:
Learning from Experimentation
- in collaboration
with World Bank
2014 Intelligent Demand: Policy Rationale,
Design, and Potential Benefits


These are OECD publications (white papers and reports) after dopting National
Innovation Systems starting from 1995. Compiled from OECD Library http://www.oecd-
ilibrary.org/ (last accessed 1 February 2014)



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86
ANNEX 7 Guiding Questions for Interview
The main research question:
What explains innovation-based industrial leadership at regional levels?
In the context of theoretical framework:
Are Regional Innovation System and Cluster Approach sufficient to
stimulate innovation?
More specific questions for interviews/discussions:
1. How can innovation from start-ups and spin-offs contribute to regional
economy and achieve industrial leadership?
2. Who is the main stakeholder that sustains innovation and industrial
leadership?
3. What are the barriers of innovation and industrial leadership?
4. How the innovation stakeholders (academia, business, government,
NGOs and media) address the barriers of innovation?
5. What kinds of supports are available to stimulate innovation?
6. What can policy do to stimulate innovative start-ups?
7. What kind of policy is suitable to cultivate entrepreneurial attitudes and
activities?
8. Who starts innovation and industrial leadership?
9. Where does industrial leadership reside: regional, sectoral, or national?

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87
10. How can the regional innovation system in Thuringia/Ilmenau be
improved?

Some of the questions were similar to the follow up questions from:
Fritsch, M. (2014). New Firm Formation and Sustainable Regional Economic
DevelopmentRelevance, Empirical Evidence, Policies.
However, this project and the publication were conducted separately as this
project started in November 2013. The similarity is coincidental. Yet, it points out
the importance and relevance of the undertaken project.


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88
ANNEX 8 INTERVIEWS AND SELECTED QUOTES
Nr. Position DOI Justifications Quotes
1 Technology Transfer Office
Manager (TU Ilmenau)
4 December
2013
TTO is the university
gatekeeper with government,
business partners and
research commercialization. It
also helps many research
grant proposal submissions.
There is limited interaction
between different stakeholders
(decision makers)
The focus of entrepreneurship is
still on business-plan
competitions
University is not part of Cluster
Strategy
There are many overlapping
entrepreneurship programs
2 Representative of GIZ for
Thuringia in Erfurt
(Deutsche Gesellschaft fr
Internationale
Zusammenarbeit GmbH,
GIZ)
13 December
2013
German Federal Enterprise
for International Cooperation
is a federal enterprise owned
by German Federal
government with states and
many international
organizations as clients. GIZ
has a strong role in opening
new markets for German
companies in developing
countries.
Thuringia's innovation products
and technology have strong
potential to help developing
countries, however the idea of
opening new markets in
developing countries are still not
yet attractive due to the perceived
risks.

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89
3 Innovation and
Entrepreneurship Head
Coach of STIFT
(Die Stiftung fr
Technologie, Innovation
und Forschung Thringen,
STIFT)
7 January 2014 Foundation for Technology,
Innovation, and Research is a
public organization funded by
European Enterprise with aim
to promote technology
transfer and research
commercialization through
start-ups and private sector
collaborations among many
other things.
Security is an important aspect
that shapes German people's
attitude. This makes people in
many cases risk-averse and thus
demotivates them to be
entrepreneurial.
Universities only focus on
university activities, teaching and
basic research. Research
commercialization is not always
the priority - though this is
changing lately.
Innovation technology requires
people, such as mentors, who
have strong interdisciplinary
backgrounds to guide
researchers/scientists to
commercialize their research, find
the niches/market, and come up
with business models/exit
strategies.
There is a strong need of raising
the business awareness of
scientists.
There are always ways to
improve the cooperation and

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90
communications between
government bodies, universities,
and other initiatives to build
regional economy.
4 Head of Sustainable
Market, GIZ
(German Federal Enterprise
for International
Cooperation (Deutsche
Gesellschaft fr
Internationale
Zusammenarbeit GmbH,
GIZ)
14 January 2014 GIZ is a federal enterprise
owned by German Federal
government with states and
many international
organizations s clients. GIZ
has a strong role in opening
new markets for German
companies in developing
countries.
Horizon 2020 has the potential to
develop local innovation and GIZ
can provide the links to partner
countries and open the markets
there,
Through GIZ knowledge sharing,
we (German stakeholders) can
learn from Partner countries.
With limited funding from federal
and local governments, many
German states depend on EU
funding, however EU funding
requires streamlining of policy
from federal to local regional
government. The synergy is still
missing nowadays and thus
making the eligibility to get the
EU funding a challenge.

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91
5 Professor of
Entrepreneurship at Erfurt
University of Applied
Sciences
Business Mentor
Book writer "Coachment', 7
steps of entrepreneurship
22 January 2014 Representative from
academia and business
mentor
Mentoring is necessary, but we
need someone from the same
background. Someone from
biotech business should not be a
mentor for an entrepreneur
working on ICT products
We need entrepreneur
ambassadors that serve as"role
models" to students - in most
cases, personal contacts would
address the risk-averse attitude
of the students
Financing entrepreneurial
activities in HEI is always difficult,
especially in this education
financing climate.

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92
6 CEO of software company
Entrepreneur from
university
16 January 2014 Representative of
entrepreneur from academia
Mentoring is important but only
with the right person with similar
background.
For start-ups, supports from local
city council or government are
always crucial, for example in
making the application easy and
finding a place to start the
business.
What is mroe crucial is the supply
of local talents from (local)
university.
Personally, venture capitals are
very much discouraging as they
gain ownership of our hardwork
setting up the company. It is best
to grow 'organically'
7 Tech Transfer Officer of
Ernst Abbe University of
Applied Sciences in Jena
5 February 2014 Another perspective from TTO
office in Jena
Jena has the advantage of big
companies which provides spill-
overs effects. However, it makes
local talents get absorbed by big
existing companies rather than
settingup their own companies.
Cooperation with other HEIs and
research institutes are definitely
important and fruitful, despite it is
still rather limited.

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93
8 Founder of TU Ilmenau
Entrepreneurship Forum
'Auftakt'
Managing Director of
Venture Capital Firm
Entrepreneur, TU Ilmenau
Alumni
6 February 2014 Representative of
entrepreneur from academia
Part of TTO in TU Ilmenau
Initiator of entrepreneurship
forum
Bottleneck funding in TLR5 and
TLR6 innovation products
Funding of start-ups should come
from communcal (alumni)
networks to increase sense of
belonging.
Subsidies only create
dependency
ThEX is a good idea, however
universities are not part of ThEX
membership. Thus, it has very
limited cooperation with HEIs.
9 Head of Research and
Infrastructure Department,
Thuringian Ministry of
Education, Science, and
Culture
11 February
2014
Representative of Ministry of
Education, Science, and
Culture
There is a strong link between
infrastructure and research.For
example, the mission of TMBWK
is to increase research capacity
of Thuringia. Thus, the new
speed train (ICE) line that
connects Berlin and Munich will
certainly help the mobility and
knowledge exchanges.
Horizon2020 certainly can
complement the funding of
research and increase the
research capacity of Thuringia.

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94
10 EC DG Research and
Innovation
11 February
2014
Representative of European
Commission
Horizon 2020 is the improvement
of previous research funding
which couple research and
innovation under single program
for the first time. Furthermore, the
aim of Horizon 2020 is to address
societal challenges in open
society - the future of Europe.
Unlike its predecessors, Horizon
2020 requires (natural) sciences
to work together with social
sciences and humanities.
11 CEO of EU Research and
Technology Consulting
company
11 February
2014
Representative of consulting
company with much
experience in EU research
grants
LEIT reflects on the political
thinking of EU in the coming
years
Horizon2020 will force
researchers to think outside the
box, identify the application of
their research to solve Europe's
social challenges, and implement
it.
There is a strong need to
collaborate with many other
institutes from other EU Member
States, thus Horizon 2020 builds
European competitiveness as

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95
whole. Not just focused on
regional level.
12 CEO of Medical Devices
Company and a
Neuroscientist
12 February
2014
Representative of
entrepreneurial scientist
Support for start-ups, especially
in high tech company, is in the
value chains and guarantee for
investments.
GET-UP scheme in early 2000s
was, in my personal view, the
most successful entrepreneurship
funding because it specifically
involved HEI leaders to
participate in the direction of
Thuringian innovation.
13 CEO of Medical Devices
Company and a scientist
17 March 2014 Representative of
entrepreneurial scientist
The most important factor in local
economic development is
relationship and trust between the
people.
In the case of Ilmenau, the long-
term relationship with the
university supplies the talents.
Many of the grants have too
much bureaucracy which at the
end does not make sense to
spend our time on grant
proposals writing.


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96
14 CEO of Robotics Company
Engineer and Business
Developer
19 March 2014 Representative of
entrepreneurial scientist
In the case of our company, it all
started with a group of people
and a good relationship with our
professor in TU Ilmenau.
This highlights the importance of
trust, personal relationship, and
partnership - especially when we
are working interdisciplinary.
15 Head of EU Project Grants
for TU Ilmenau
26 March 2014 Representative of TTO,
providing the EU grant
perspective
In such small state, a better
cooperation between different
stakeholders and a centralized
organization would create a
critical mass that increases
Thuringia's competitiveness.
Many of researchers, CEOs of
start-ups, and other stakeholders
have not comprehend the
benefits and the importance of
EU funding, such as provided by
Horizon 2020 scheme. This
points out the importance of a
good network as a mean of
communicating the information -
selling the ideas and benefits of
EU grants.

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97
16 EU Commissioner for
Regional Politics
16 June 2014 Representative of European
Commission
Horizon 2020 aims to bring
synergy in European Innovation
by inviting SMEs to participate in
tech transfer
17 Rector of TU Ilmenau 16 June 2014 Representative of Academia,
Head of University
Technology transfer requires
strong collaborations with SMEs,
not just relying on entrepreneurial
activities.
Academics hope TMWAT and
TMBWK have a better synergy in
terms of policy
18 Minister of Thuringian
Economics, Labour, and
Technology
16 June 2014 Representative from
government
Cluster approach should be
infused to RIS.
With ThEX, Thuringia tries to
bring all entrepreneurship
initiatives under one umbrella
19 State Secretary for
Thuringian Ministry of
Education, Science, and
Culture
16 June 2014 Representative from
government
The main focus of TMBWK is
supporting the basic research
We agree that innovation is
important to the economy. That
is the amin reason why we
support TTOs
20 Chair of Innovation Strategy
of VDI Technology Centre
GmbH
16 June 2014 Innovation Researcher and
practitioner
RIS is definitely a muss have. It
creates the critical mass and
brings efficiency especially in
public-policy making.

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98
21 Professor of Network
Security and Computer
Sciences
15 January 2014 Representative of Academia One should look from the
perspective of scientists. We are
not trained to make risky
decisions.
In the context of
entrepreneurship, it is a real
danger that tenure creates a
comfort zone.
22 Creative Industry and
Entrepreneurship Advisor at
Thuringian Ministry of
Economics, Labor, and
Technology
9 June 2014 Entrepreneurship Policy
Officer
Lack of collaboration between
different actors is always the
main concern
Networking event might work but
it is difficult to assess or quantify
23 Head of Cluster Department
at Thuringian Ministry of
Economics, Labour, and
Technology
22 May 2013 Cluster Expert ThCM is a step forward in
building regional competitiveness.
The main challenge is to bring all
the actors to sit down and have
public discourse
24 State Secretary for
Thuringian Ministry of
Economics, Labour, and
Technology
19 June 2014 Representative from
government
TMWAT and TMBWK are having
close cooperation in developing
RIS3
Indeed, a closer collaboration
should be present, but we are
working on it.
Different ministries have different
guides to follow.

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99
25 CEO of Incubator 16 July 2014 Expert in research
commercialization
The key is in the University. If a
University has a wide range of
disciplines, this already create a
critical mass
Large companies only focus on
their activities in the value chain.
Large companies forget the
importance of university in
supporting innovations most of
the times.
Incubators are indeed important
especially in applied sciences.
SMEs are too small to network
with large companies. They have
not much to offers. Usually it
takes 5-8 years before they can
approach large companies and
have meaningful collaborations

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100
ANNEX 9 Overview of ThEx
Name Sector T
e
c
h

T
r
a
n
s
f
e
r

C
o
n
s
u
l
t
i
n
g

A
d
m
i
n
i
s
t
r
a
t
i
v
e

s
u
p
p
o
r
t

M
a
r
k
e
t
i
n
g

F
u
n
d
i
n
g

E
v
e
n
t

M
a
n
a
g
e
m
e
n
t

ThEGA Thringer Energie- und Green Tech
Agentur
Energy and Green
Tech
x x x x x
GWT* Beratungsnetzwerk Grnden und
Wachsen in Thringen
Cross-sectoral, support
for start-ups
x x x
ThEX /
ThrInG*
Thringer Zentrum fr
Existenzgrndungen und Unternehmertum
Cross-sectoral, support
for start-ups
x x x x
ThAFF Thringer Agentur fr Fachkrftesicherung Labor, Employment x x x
ThAK Thringer Agentur fr die Kreativwirtschaft Creative industry,
edutainment
x x x x
ThIMo Thringer Innovationszentrum Mobilitt Mobility, transport x x x x
ThCM Thringer Cluster Management Cross-sectoral x x x
TI Thringen International Cross-sectoral x x
ThBAN Thringer Business Angels Netzwerk Cross-sectoral x x


Author Analysis from http://www.thex.de/ueber-das-thex/

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101
ANNEX 10 Locations of Commercial Research Institutes in
Thuringia

Source: (TMWAT, 2013a)


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102
Declaration (Erklrung)
gem 25 Abs. 1 der Prfungs- und Studienordnung des weiterbildenden
Studiums Public Policy an der Universitt Erfurt
Ich versichere, dass ich die vorgelegte Arbeit selbststndig und ohne unerlaubte
Hilfe Dritter angefertigt habe. Alle Stellen, die ich wrtlich oder annhernd
wrtlich aus Verffentlichungen jeglicher Art entnommen habe, sind als solche
kenntlich gemacht. Ich habe mich keiner anderen als der angegebenen Literatur
oder sonstiger Hilfsmittel bedient. Diese Arbeit hat weder in gleicher noch in
hnlicher Form einer anderen Prfungsbehrde im In- oder Ausland vorgelegen.
I affirm that the work I have submitted was done independently and without
unauthorized assistance from third parties. All parts which I took word-for-word
or nearly word-for-word from any sort of publication are recognizable as such. I
did not use any means or resources other than the literature I have quoted. This
work was not submitted in this or any similar form to an examination committee
in or outside of Germany.

Erfurt,
Datum /
Date

Unterschrift /
Signature
Name (Blockschrift /
block letters)