COMBINING THE GLOBAL VALUE

CHAIN AND THE INNOVATION

SYSTEM PERSPECTIVE
A NEW AGENDA FOR GLOBELICS RESEARCH
Asialics Conference, Daegu, Korea
September 25th, 2014

Bengt-Åke Lundvall
Globelics Secretariat
Aalborg University
Background and Objective
• This presentation is based upon a paper co-authored with 

Roman Jurowetzki and Rasmus Lema from the Globelics Secretariat

• Not a classical key-note where I present one of my favourite topics:

innovation systems or the learning economy. Instead it is work in
progress where I move into new territory. The printed version is a
very early draft!!! Do not quote that paper, please.

• Globelics was established 2001 to bring together scholars from two

fields: innovation studies and development studies. The long term
success depends on interchange and cross-fertilization between
scholars from those two traditions
• In this paper: How can we combine ideas from two fields of
knowledge innovation systems and global value chains?
 Adam Smith on
Specialisation in Science
• In the progress of society, philosophy or
speculation becomes, like every other
employment…. subdivided into a great number of
different branches, each of which affords
occupation to a peculiar tribe or class of
philosophers; (Adam Smith 1776: p. 9)

• A ‘tribe’ does not easily communicate and

exchange ideas with another tribe. Specialisation
creates barriers – new ideas come from
combining different perspectives.
 Outline

• Characterising the two fields

• The method used – combining scientometrics with

hermeneutics

• Results from the scientometric analysis!

• Results from the qualitative analysis!

• Conclusions and next step

 ‘First glance impression’:
Differences!
• Innovation Systems (initiated by Economists bringing in the social
dimension):

• predominantly national level with advice on the design of national

institutions and state policies

• interactive learning between equal partners!

• Global Value Chains (initiated by Sociologists bringing in economic

perspectives)

• developed to overcome limitations of nation state perspectives

• ‘governance’ as the power dimension between the lead firm and

the other firms in the value chain
 Common objective but
different mechanisms
• Innovation System and Global value chain
approach both see the promotion of development
in less developed economies as the objective.

• Innovation system approach is about building

absorptive capacity in less developed economies.

• Global value chain is about upgrading firms

through linking up with foreign lead firms.
Each approach has obvious
limitations
• On the limitations of NSI: To design intelligent
institutions and policies at the national level requires
an understanding of of the openness of the innovation
system. Managing the openness including the
dependence of foreign multinational firms is a major
challenge for national governments.

• On the limitations of GVC: To understand how and to

what degree a specific firm’s or cluster’s integration in a
global value chain contributes to economic development
requires an understanding of the national innovation
system as context.
 Earlier attempts to
overcome limitations
• (Pietrobelli and Rabelotti, 2010) starts from Global Value
Chain analysis and argue for including local, regional
and national institutions’ roles in upgrading
opportunities.

• (Ernst and Kim, 2002) start from Innovation System

perspective and point to the need to take into account the
role of global networks in relation innovation strategies.

• (Nelson and Malerba, 2010) on catching-up and sectoral

systems also combine the two perspectives. 

Why we combine quantitative scientometrics
with hermeneutic qualitative analysis
• We use scientometrics to map the two fields of knowledge and to
locate the core literature in each of the two fields (Roman is the
expert). With this method we can reveal internal structure, overlaps
and coupling between the two perspectives.

• Standing alone scientometrics cannot locate the origin and explain

the evolution of the a knowledge fields. Similar wordings may cover
opposite views. Qualitative analysis is necessary in order to
understand why the two fields evolve in parallel with little exchange
between the two ‘tribes’.

• We therefore use the combination of scientometrics and

qualitative analysis to locate differences as well as similarities.

• The ultimate aim is to move toward A NEW COMBINATION

 Method and data for the
scientometric analysis
• Web of Science Data since 1990

• Innovation systems and development (searchstring: ‘Innovation system*’

AND ‘develop*’): 1059

• Global Value Chains (searchstring: ‘Global Value Chain*’ OR ‘GVC’): 419

• Step 1: Subfield mapping:


Clustering within each field - Bibliographic coupling within the two fields
– a cluster is characterized by a common knowledge base as reflected in
the sharing of references.

• Step 2 A and 2B: Overlap identification:

• Semantic similarity between abstracts
• extraction of shared references in the overlap area
Papers over time
419
1059
Top cited journals are respectively Research Policy and
World Development/Review of international political
economy – but also some overlap (Regional Studies)
 Top Cited Publications
Share of Share of
Top IS publications Top GVC publications
citing citing

Lundvall B-A, 1992, National Systems of Innovation, Gereffi, G; Humphrey, J; Sturgeon, T, 2005,
0.2691 0.4296
Book REV INT POLIT ECON, 12, 78
Nelson RR, 1993, National Innovation Systems : A Humphrey J & Schmitz H, 2002, REG STUD,
0.2266 0.2959
Comparative Analysis, Book 36, 1017
Freeman C, 1987, Technology, policy, and economic
performance, Book! 0.1265 Gereffi G, 1999, J INT ECON, 48, 37 0.2888

Porter M, 1990, Competitive Advantage of Gereffi G & Korzeniewicz M, 1994, Commodity

0.1029 0.1933
Nations, Book Chains and Global Capitalism, Book - Chapter
Edquist C, 1997, Systems of Innovation: Gereffi G & Korzeniewicz M, 1994, Commodity
0.1029 0.1838
Technologies, Institutions and Organizations, Book Chains and Global Capitalism, Book - Intro
Cohen WM & Levinthal D A, 1990, ADMIN SCI Henderson, J; Dicken, P; Hess, M; et al., 2002,
0.0935 0.1384
QUART, 35, 128 REV INT POLIT ECON, 9, 436
Nelson RR & Winter S, 1982, An Evolutionary Giuliani, E; Pietrobelli, C; Rabellotti, R, 2005,
0.0878 0.1193
Theory of Economic Change, Book WORLD DEV, 33, 549

Cooke P, 1997, RES POLICY, 26, 475 0.0859 Bair J, 2005, COMPETITION CHANGE, 9, 153 0.1098

Bathelt H, Malmberg A, Maskell P, 2004, PROG

0.0746 Ponte S & Gibbon P, 2005, ECON SOC, 34, 1 0.1002
HUM GEOG, 28, 31
Hekkert MP et al., 2007, TECHNOL FORECAST Porter M, 1990, Competitive Advantage of
0.0718 0.0955
SOC, 74, 413 Nations, Book
 GVC Clustering
Trade
Article A 18%
Shared references

Governance
43%

Article B GVC, Industrial Clusters & Innovation

26%
 Two main subclusters
• Governance perspective!

• Main Journal: Review of International Political Economy

• 2/3 of the 181 publications from UK, USA and China and DK

• Main reference: Gereffi, G., Humphrey, G.J. and Sturgeon, T. (2005), ‘The governance of
global value chains’, Review of International Political Economy

• No obvious overlap with the IS literature

• Regional perspective!

• Main Journals: RP, World Development, Reg. Stud

• Countries: China, USA, Italy, Spain

• Main reference: Humphrey, J, and Schmitz. H. (2002), ‘How does insertion in global value
chains affect upgrading in industrial clusters?’, Regional studies

• Overlaps with IS on several levels: RP (Journals), Giuliani&Pietrobelli (Authors aiming at

bridging), Industrial Clusters
 IS Clustering

Cluster / Role of Distance

33%

Science & Triple Helix

8%

Agriculture & IS
6%
Management
26%

TIS 13%
 Three main subclusters
• Innnovation and Geography!

• Main Journals (also ref.): European Planning Studies, Regional Studies

• Countries: UK, USA, Germany, NetherlandsMain reference: Bathelt H, Malmberg A, Maskell P, ‘Clusters
and knowledge: local buzz, global pipelines and the process of knowledge creation’ 2004, PROG HUM
GEOG

• Overlaps with GVC: To some extent on the journal level and contextual: “Cluster”

• Management of innovation and innovation policy!

• Main Journals: Research Policy

• Main References (only books): Nelson, Lundvall and Freeman

• Technological systems!

• Main Journals (also refs.): Energy Policy, Technological Forecasting and Social Change, RP

• Main reference: Hekkert, M. P., Suurs, R. A., Negro, S. O., Kuhlmann, S., & Smits, R. E. H. M. (2007).
Functions of innovation systems: A new approach for analysing technological change. Technological
Forecasting and Social Change
 Step 2:
Semantic Similarity of Abstracts
• Latent Semantic Indexing - Special technique to measure
location of papers in knowledge space based upon word co-
occurrence in abstracts.

• Identification of latent topics

• Projection of all abstracts into the generated vector space

• Calculation of pairwise cosines between abstracts creates:


A network of all papers (IS and GVC) connected by their
level of contextual similarity

• Clustering of the network


Louvain Algorithm (Blondel et al., 2008)
 Context similarity of abstracts

Article A

Article B
IS

GVC
Shared Refs in the Overlap
count of shared
Cited works occurrences
Humphrey J & Schmitz H, 2002, REG STUD, 36, 1017, DOI 10.1080/0034340022000022198 8
Cohen WM & Levinthal D A, 1990, ADMIN SCI QUART, 35, 128, DOI 10.2307/2393553 7
Gereffi, G; Humphrey, J; Sturgeon, T, 2005, REV INT POLIT ECON, 12, 78, DOI 10.1080/09692290500049805 7
Gereffi G, 1999, J INT ECON, V48, P37, DOI 10.1016/S0022-1996(98)00075-0 5
Belussi F., 2000, EVOLUTIONARY PATTERN 4
Edquist C, 1997, Systems of Innovation: Technologies, Institutions and Organizations, Book 4
Bair J, 2001, WORLD DEV, V29, P1885, DOI 10.1016/S0305-750X(01)00075-4 4
FREEMAN C, 1995, CAMBRIDGE J ECON, V19, P5 3
Maskell P., 2001, IND CORP CHANGE, V10, P921, DOI DOI 10.1093/ICC/10.4.921 3
Boschma RA, 2005, REG STUD, V39, P61, DOI 10.1080/0034340052000320887 3
Sammarra A, 2006, ENTREP REGION DEV, V18, P543, DOI 10.1080/08985620600884685 2
Maskell P, 1999, CAMBRIDGE J ECON, V23, P167, DOI 10.1093/cje/23.2.167 2
Nelson RR, 1982, EVOLUTIONARY THEORY 2
Czarnitzki D, 2003, SERV IND J, V23, P1, DOI 10.1080/02642060412331300862 2
GRANOVETTER M, 1985, AM J SOCIOL, V91, P481, DOI 10.1086/228311 2
Furman JL, 2002, RES POLICY, V31, P899, DOI 10.1016/S0048-7333(01)00152-4 2
Giuliani E, 2005, RES POLICY, V34, P47, DOI 10.1016/j.respol.2004.10.008 2
Storper M, 2004, J ECON GEOGR, V4, P351, DOI 10.1093/jnlecg/lbh027 2
Muller E, 2001, RES POLICY, V30, P1501, DOI 10.1016/S0048-7333(01)00164-0 2
PAVITT K, 1984, RES POLICY, V13, P343, DOI 10.1016/0048-7333(84)90018-0 2
Torre A, 2000, REG STUD, V34, P169 2
Martin R, 2003, J ECON GEOGR, V3, P5, DOI 10.1093/jeg/3.1.5 2
 Conclusion from Scientometrics: The
Overlap Relates to Clusters, Knowledge
and Distance

• Very little overlap!!

• The literature in the overlap is related to industrial

agglomerations in both traditions:

• GVC: Industrial Clusters

• IS: Regional / Sectoral Innovation Systems

 Presenting some results
from the qualitative analysis

• US-Europe divide in both camps?

• The evolution of the issue of governance

• Going back to the origins

• Lessons to be learnt

• Overcoming bias in both camps

 A US-Europe divide
• Schmitz, Humprey and Rabelotti (Europe) study clusters in
developing countries with inspiration from the Italian
industrial district literature. Trust and collective action,
including public policy, are seen as contributing to
collective efficiency. Gereffi, Sturgeon and Bair (USA) are
sceptical both to collective efficiency and to national
policy intervention.

• In innovation system analysis a corresponding difference

between Mowery and Nelson focusing upon narrowly
defined innovation system (focus upon science) and
Freeman and Lundvall working with broader definitions
of innovation systems.
Evolution of the understanding
of GVC-governance
• The two most cited papers are about governance.

• In Gereffi 1994 the governance of value chains is simple – they are dominated
either by major US customer firms or by producer firms. Branding and
techological capacity give dominance.

• Humphrey and Schmitz (2002) introduce transaction cost analysis and argue
that the dominant form in a value chain will reflect the capability of the
supplier, the complexity of the product and the need for quick response.

• Gereffi, G., Humphrey, G.J. and Sturgeon, T. (2005), develops this perspective
further – introducing modularisation as a process that reduces complexity
and transaction costs. Focusing on specific markets – not the chain as a
whole.

• Gibbon, P., Bair, J. and Ponte, S. (2008) and Bair (2005) are critical to this
economics turn of the governance discussion.
 Origins

• Value chain analysis has roots in Wallerstein’s

World System in Michael Porters analysis of
Competitive Advantage but also in Gereffi (1978).

• Innovation system analysis has roots in Friedrich

List’s national systems of production but also in
Lundvall (1985)
 Gereffi 1978
• Draws conclusions from a case study of
pharmaceuticals in Mexico. Demonstrates how a very
promising national industry was destroyed by a
combination of US intervention and corrupt
government. Here the normative perspective is that
there is a need for protection and intervention.

• Gradually this perspective changes and focus moves

toward the opportunities for upgrading offered by
entrance in global value chains. Since governments
are weak and international organisations do not allow
protection it is necessary for firms in LDCs to enter GVC.
 Lundvall 1985
• Based upon case studies of Danish industrial
complexes with focus upon the interaction
between users and producers in connection with
product innovation. At the core was analysis of
transaction cost theory. Patterns of user
respective producer dominance were seen as
resulting in ‘unsatisfactory innovations’

• The interactive learning perspective became

micro-foundation for analysis of national systems
of innovation but the critical focus was soon lost.
What innovation system research can
learn from global value chain analysis
• Interactive learning needs to be specified in
relation to more or less hierarchical relationships.

• The openness of national systems and the

insertion of national firms in global value chains
are crucial for national strategies.

• On the importance of functional upgrading:

Innovation in products and processes without
building research capacity and market control
through branding may be insufficient.
What global value chain research can
learn from innovation system analysis
• The discussion of governance may be qualified by giving more
attention to processes of interactive learning and taking into
account that the benefits of the firms’ access to diverse sources
of knowledge is as import as transaction costs.

• The firm’s own efforts and the support it gets from the national
innovation system needs to be integrated in the analysis of the
firm’s upgrading in value chains.

• On the limits of case studies: Diversifying the research methods

so as to be able to link micro-processes of upgrading to
catching up at the level of sectors and of the national economy
as a whole.
Overcoming Implicit Normative
Bias through the synthesis

• Innovation systems: ‘Innovation is good for you!’!

• Global value chains: ‘Globalisation is good for you!’

• Soete, L.G. (2013), ‘Is innovation always good?’, 


in Fagerberg, J., Martin, B. and Andersen, E.S., eds.
Innovation Studies: Evolution and Future Challenges,
Oxford: Oxford University Press.
Making the new combination
a reality
• Opportunity to establish a Globelics Giga Project to
study the consequences of the integration and
exclusion of firms and clusters located in regional,
sectoral and national innovation systems. Bringing
together scholars from the regional Lics including the
newly founded EuroLics and scholars with roots in
innovation system and value chain tradition.

• Using many methods aiming at linking micro to and

meso to macro and the other way around. Giving the
regional scholars a central role as those bridging
between the two tribes.
Thank you for your
kind attention!