DIFFERENTIATED KNOWLEDGE BASES AND

VARIETIES OF REGIONAL INNOVATION

SYSTEMS

Bjørn Asheim

This article introduces a theoretical and analytical framework for discussing regional development
and regional advantage with reference to a regional innovation system strategy. It uses the
differentiated knowledge base approach to transcend the traditional codified
tacit dichotomy of
knowledge, and for providing a trans-sectoral understanding of economic activities. Different
regional innovation systems are presented and described. The discussion of various types of
regional innovation systems is contextualized using a variety of capitalist perspectives. The article
concludes by discussing the question if regional innovation systems can exist.

Introduction
For more than 20 years a strong case has been made that territorial agglomerations
are growing in importance as a competitive location of economic activities in post-Fordist
learning economies (Asheim & Isaksen, 2002; Cooke, 2001). The main underlying argument is
that territorial agglomeration (or clustering) provides the best context for the promotion of
innovative firms based on sticky knowledge and localized learning. Governments and
agencies at all spatial levels are seeking to stimulate innovation, and, consequently,
innovation policy is put at the centre of policies for promoting regional and national
economic development. At the regional level clusters and regional innovation systems have
been looked upon as policy frameworks or models for implementation of long-term,
development strategies initiating learning-based processes of innovation, change and
improvement (Cooke et al., 2000; Asheim, 2001; Asheim & Isaksen, 2002). The aim of this
paper is to give a theoretical background in the form of a synthesizing overview to these
various concepts in order to provide a framework for understanding similarities and
differences in their origin, development and use in regional development theory and policy.
An important empirical background for these theoretical arguments is the rapid
economic growth of territorial agglomerated and networked small to medium-sized
enterprises (SMEs) in industrial districts (or regional clusters) such as in the ‘Third Italy’
(Asheim, 2000), characterized by a ‘fusion’ of the economy with the rest of society (Piore &
Sabel, 1984). Theoretically, in the definition of post-Fordist societies as learning economies,
innovation is understood as a socially and territorially embedded, interactive process,
which cannot be separated from its institutional and cultural contexts (Lundvall, 1992).

Innovation, Vol. 20, No. 3, 2007

ISSN 1351-1610 print/ISSN 1469-8412 online/07/030223-19
– 2007 Interdisciplinary Centre for Comparative Research in the Social Sciences and
ICCR Foundation
DOI: 10.1080/13511610701722846
224 BJØRN ASHEIM

A dynamic, process-based understanding of competitiveness clearly indicates that

enterprises, in order to keep their position in the global market, must focus on developing
their own core competencies through transforming themselves into learning organiza-
tions. However, internal restructuring alone cannot sustain the competitiveness of firms in
the long run. As firms are embedded in regional economies they are dependent on a
favourable economic and industrial environment. Close cooperation with suppliers,
subcontractors, customers and support institutions in the region will enhance the process
of interactive learning and create an innovative milieu favourable to innovation and
constant improvement. This influences the performance of the firms and strengthens the
competitiveness of the clusters, and is increasingly seen as an important aspect of
fostering regional competitive advantage. Generally, the innovative capacity at the
regional level can be promoted through identifying ‘the economic logic by which milieu
fosters innovation’ (Storper, 1995, p. 203).
Modern innovation theory based on new institutional economics supports this view
of the importance of the regional level. According to this approach, ‘regional production
systems, industrial districts and technological districts are becoming increasingly
important’ (Lundvall, 1992, p. 3). If innovation is understood as culturally and institutionally
contextualized, strategic parts of learning processes emerge as highly localized, as
opposed to placeless. Thus, local contexts represent important parts of the knowledge
base and knowledge infrastructure of firms and regions, underscoring the role of historical
trajectories. In what follows we shall deal with regional innovation systems and clusters in
the context of different knowledge bases and institutional frameworks.

Differentiated Knowledge Bases

In recent years innovation processes have become increasingly complex: there is a
larger variety of knowledge sources and inputs to be used by organizations and firms, and
there is more interdependence and division of labour among actors (individuals,
companies and other organizations). Nonaka & Takeuchi (1995) as well as Lundvall &
Borras (1997) have pointed out that the process of knowledge generation and exploitation
requires a dynamic interplay and transformation of tacit and codified forms of knowledge
as well as a strong interaction of people within organizations and among them. The
relationship between the codified and tacit elements of disembodied knowledge is often
both complex and dynamic. Even if codified knowledge can be transferred almost
frictionless over time and space, it relies on tacit knowledge embedded in people and
organizations to be understood and applied (Nightingale, 1998). Lam (2000) argues that
the skills required for knowledge interfacing within and between collective learning
processes are highly time
space specific. Interactive, collective learning is based on intra-
or inter-organizational institutions (routines, norms and conventions) regulating collective
action as well as on tacit mechanisms for the absorption of codified knowledge. This
requires that the actors in question have tight connections to the ‘local codes’, on which
collective tacit as well as disembodied codified knowledge is based.
To make sense of the increased diversity and interdependence in the knowledge
process, I would argue that it is important to start from the premise that the innovation
process of firms differs substantially between various industries and sectors whose
activities require specific knowledge base(s) (Asheim & Gertler, 2005; Asheim & Coenen,
2006). Here we will distinguish between three types of knowledge base: ‘analytical’
 DIFFERENTIATED KNOWLEDGE BASES 225

(science-based), ‘synthetic’ (engineering-based) (Laestadius, 1998) and ‘symbolic’ (creativ-

ity-based). These types indicate different mixes of tacit and codified knowledge,
codification possibilities and limits, qualifications and skills, required organizations and
institutions involved, as well as specific innovation challenges and pressures from the
globalizing economy.

Analytical Knowledge Base

In industrial settings where scientific knowledge is highly important, and where
knowledge creation is often based on cognitive and rational processes, or on formal
models, we talk about the existence of an analytical knowledge base. Examples are
biotechnology and nanotechnology.
Both basic and applied research as well as systematic development of products and
processes are relevant activities in this type of knowledge base. Companies typically have
their own R&D departments but they also rely on the research results of universities and
other research organizations in their innovation process. University
industry links and
respective networks are, therefore, important and more frequent than for other types of
knowledge base. Similarly, knowledge inputs and outputs are frequently codified. This
does not mean that tacit knowledge is irrelevant (Nonaka et al., 2000; Johnson et al., 2002).
Rather, codification is more frequent because of the way in which knowledge is generated
and processed, namely, on the basis of reviews of existing studies or the application of
known scientific principles and methods. Consequently, knowledge processes are more
formally organized, with outcomes documented in reports, electronic files or patent
descriptions. These activities require specific analytical skills such as abstraction, theory
building and testing. This implies that the workforce more often has to rely on research
experience or university training.
The analytical knowledge base is more likely than other types to lead to scientific
discoveries and technological inventions and, in turn, to patents and licensing activities as
well as products and processes. An important route of knowledge application is the
establishment of new firms and spin-off companies, occasionally formed on the basis of
radical new inventions or products.

Synthetic Knowledge Base

The synthetic knowledge base is found in industrial settings, where the innovation
takes place through the application of existing knowledge or the novel combination of
knowledge. Often this occurs in response to the need to solve specific problems that
emerge in interaction with clients and suppliers. Industrial examples of synthetic
knowledge bases include plant engineering, specialized advanced industrial machinery
and production systems as well as shipbuilding. Products are often ‘one-off’ or produced
in small series. R&D is generally less important; where it occurs, it takes the form of applied
research, or, more often, relates to product or process development. University
industry
links are relevant, but more with reference to applied research (as opposed to basic
research). Knowledge emerges less through either deduction or abstraction but rather
inductively through testing, experimentation, computer-based simulation or practical
work. Knowledge embodied in the respective technical solution or engineering work is at
least partially codified. Insofar as knowledge results from experience gained at the
226 BJØRN ASHEIM

workplace and through learning by doing, tacit knowledge is more important here as
compared with the analytical knowledge base. Compared with the latter, the synthetic
knowledge base displays more concrete know-how, craft and practical skill. These are
often provided by professional and polytechnic schools, or through on-the-job training.
The innovation process is often oriented towards the efficiency and reliability of new
solutions, or the practical utility and user-friendliness of products from the perspective of
the customers. Overall, this leads to a rather incremental way of innovation, dominated by
the modification of existing products and processes. Since these types of innovation are
less disruptive to existing routines and organizations, most of them take place in existing
firms, whereas spin-offs are relatively less frequent.

Symbolic Knowledge Base

This knowledge base is associated with the aesthetic attributes of products, the
creation of designs and images and the economic use of various forms of cultural artefacts.
The increasing significance of this type of knowledge is exemplified by the dynamic
development of cultural industries such as media (filmmaking, publishing, music),
advertising, design and fashion (Scott, 1997, 1998). These industries are innovation- and
design-intensive since a crucial share of work is dedicated to the ‘creation’ of new ideas and
images and less to the actual physical production process. As a result, competition tends to
shift from the ‘use-value’ of products to the ‘sign-value’ of brands (Lash & Urry, 1994, p. 122).
In the cultural industries, in particular, the input is aesthetic rather than cognitive in
character. This demands rather specialized abilities in symbol interpretation than mere
information processing. Knowledge is therefore incorporated and transmitted in aesthetic
symbols, images, (de)signs, artefacts, sounds and narratives. This type of knowledge is
strongly linked to a deep understanding of the habits and norms and ‘everyday culture’ of
specific social groups, and is, therefore, characterized by a strong tacit component.
The acquisition of essential creative, imaginative and interpretive skills is less tied to
formal qualifications and university degrees than to practice in various stages of the
creative process. The process of socialization (rather than formal education) in the trade is
not only important with regard to training, but also for acquiring ‘know who’, that is
knowledge of potential collaborators with complementary specialization (Christopherson,
2002). This is essential since production is typically organized via temporary projects
(Grabher, 2002). De facto, cultural industries, like film production, are emblematic project
settings (see, for example, DeFillippi & Arthur, 1998; Starkey et al., 2000; Sydow & Staber,
2002). More generally, the project provides an organizational arena in which a diverse
spectrum of professional cultures that ranges from the artistic world to the commercial
world of business services is brought together for a limited period of time. Projects in the
symbolic knowledge base, however, are not necessarily aimed at bridging or minimizing
such diversity in a straightforward fashion. They also can be understood as arenas of
productive tensions and creative conflicts that trigger innovation.
Table 1 provides a summary of the main differences between the knowledge bases.
However, as this threefold distinction refers to ideal-types, most industries are in practice
composed of all three types of knowledge-creating activities. The degree to which certain
activities dominate, is however different and contingent on the characteristics of the
industry (see Figure 1 for an illustration).
 DIFFERENTIATED KNOWLEDGE BASES 227

TABLE 1
The three knowledge bases

Analytical Synthetic Symbolic

Innovation by creation of new Innovation by application or Innovation by recombination of
knowledge novel combination of existing knowledge in new ways
existing knowledge

Importance of scientific Importance of applied, Importance of re-using or

knowledge often based on problem-related knowledge challenging existing conventions
deductive processes and (engineering), often through
formal models inductive processes

Research collaboration Interactive learning with Learning through interaction in the

between firms (R&D clients and suppliers professional community, learning
department) and research from youth/street culture or ‘fine’
organizations culture and interaction with
‘border’ professional communities

Dominance of codified Dominance of tacit Reliance on tacit knowledge, craft

knowledge due to knowledge due to more and practical skills and search skills
documentation in patents concrete know-how, craft
and publications and practical skill

‘Varieties of Capitalism’ and National Differences in Institutional Frameworks

Lam (2000) underlines that learning and innovation cannot be separated from broader
societal contexts when analysing the links between knowledge types, organizational forms
and societal institutions in order to meet the needs of specific industries, in particular with
respect to learning and the creation of knowledge in support of innovations. Soskice (1999)
argues that different national institutional frameworks support different forms of economic
activity: thus, coordinated market economies (e.g. the Nordic and (continental) West-
European welfare states) have their competitive advantage in ?diversified quality produc-
tion’ (Streeck, 1992) based on problem-solving, engineering-based knowledge developed
through interactive learning and accumulated collectively in the workforce (e.g. the machine
tool industry), while liberal market economies (e.g. the USA and UK) are most competitive in

Synthetic

Automotive

Food
Film

Pharmaceuticals
Advertisement
Biotechnology

Analytical Symbolic

FIGURE 1
Knowledge bases and industries: an illustration
228 BJØRN ASHEIM

production relying on scientific-based knowledge, i.e. industries characterized by a high rate

of change through radical innovations (e.g. IT, defence technology and advanced producer
services). Following Soskice, the main determinants of coordinated market economies are
the degree of non-market coordination and cooperation which exists inside the business
sphere and between private and public actors, the degree to which labour remains
‘incorporated’ as well as the ability of the financial system to supply long-term finance
(Soskice, 1999). This represents a situation in direct conflict with a preference for unilateral
control over work processes, generated by certain finance and governance systems found in
liberal market economies, where competitive strength is based on the institutional freedom
as well as financial incentives to continuously restructure production systems in light of new
market opportunities (Gilpin, 1996). While coordinated market economies at the macro level
support cooperative, long-term and consensus-based relations between private and public
actors, liberal market economies inhibit the development of these relations but instead offer
the opportunity to quickly adjust the formal structure to new requirements using temporary
organizations frequently (for a summary, see Table 2).
The differences that emerge in relation to the specific modes of organization of
social institutions such as the market, the education system, the labour market, the
financial system
in themselves and in relation to the state
contribute to the formation
of divergent ‘business systems’ (Whitley, 1999), and constitute the institutional context
within which different organizational forms with different mechanisms for learning,
knowledge creation and knowledge appropriation evolve. The ‘varieties of capitalism’
approach focuses on institutional complementarities and, therefore, on dynamic
ensembles of mutually reinforcing sets of organizations rather than on isolated individual
forms and their impact. However, despite its emphasis on institutional complementarities,
this approach considers predominantly institutions at the national level, and tends to
ignore ‘the multi-scaled set of institutional forms’ (Martin, 2000, p. 89) (Asheim & Coenen,
2006).

Regional Innovation Systems and Localized Learning

The concept of the regional innovation system is relatively new, having first
appeared in the early 1990s (Asheim, 1995; Asheim & Isaksen, 1997; Cooke, 1992, 1998,

TABLE 2
A summary presentation of varieties of capitalism

Varieties of capitalism Liberal market economies Coordinated market economies

Financial regulation Short-term financial markets, equity
financing
Corporate governance Shareholder value, limited business
coordination; antitrust laws
Innovation systems Radical innovation, involving sharp
breaks with extant processes
Capital
labour Decentralized bargaining,
relation contentious workplace relations
Training and Basic education and firm specific
employment training, short tenure, high turnover
jobs, high interfirm labour mobility
Long-term patient capital, debt
financing
Stakeholder value, strong business
associations, intercorporate
networks
Incremental innovation involving
continuous process development
Coordinated bargaining, statutory
worker representation
Vocational training, long tenure,
low turnover jobs, low interfirm
labour mobility
 DIFFERENTIATED KNOWLEDGE BASES 229

2001), following Freeman’s use of the innovation system concept to analyze Japan’s
economy (Freeman, 1987) and, around the same time, the examination of national
innovation systems by Lundvall (1992) and Nelson (1993). Characteristic of a systems
approach to innovation is the acknowledgement that innovations are carried out through
a network of various actors underpinned by an institutional framework. This dynamic and
complex interaction constitutes what is commonly labelled systems of innovation (Edquist,
1997), i.e. systems understood as interaction networks (Kaufmann & Tödtling, 2001). A set
of variations on this approach have been developed over time, either taking territories as
their point of departure (national and regional) or specific sectors or technologies
(Fagerberg et al., 2005). As this chronology suggests, the regional innovation system
concept was inspired by the national innovation system concept, and it is based on a
similar rationale that emphasizes territorially based innovation systems.
One such rationale stems from the existence of technological trajectories that are
based on ‘sticky’ knowledge and localized learning within the region (Maskell et al., 1998).
These can become more innovative and competitive by promoting stronger systemic
relationships between firms and the region’s knowledge infrastructure. A second rationale
stems from the presence of knowledge creation by organizations whose output can be
exploited for economically useful purposes by supporting newly emerging economic
activity. The emergence of the concept of a regional innovation system coincides with the
success of regional clusters and industrial districts in the post-Fordist era (Asheim, 2000;
Asheim & Cooke, 1999; Piore & Sabel, 1984; Porter, 1990, 1998). The elaboration of the
concept represents an attempt to understand better the central role of institutions and
organizations in promoting innovation-based regional growth (Asheim et al., 2003; Gertler
& Wolfe, 2004).
The regional innovation system (RIS) can be thought of as the institutional
infrastructure supporting innovation within the productive structure of a region. An RIS
is in place when the following two sub-systems of actors are systematically engaged in
interactive learning (Cooke et al., 1998): first, the regional production structure or
knowledge exploitation subsystem which consists mainly of firms, often displaying
clustering tendencies; second, the regional supportive infrastructure or knowledge
generation subsystem which consists of public and private research laboratories,
universities and colleges, technology transfer agencies and vocational training organiza-
tions. From this it follows that clusters and RIS can (and often do) co-exist in the same
territory. However, whereas the regional innovation system by definition hosts several
clusters, a cluster is not part and parcel of a RIS. Furthermore, Cooke et al. (1998)
emphasize the mainly informal institutional context (i.e. norms, trust and routines) in
which such interactive learning takes place.
The region corresponds to an important level of governance of economic processes
between the national level and the level above the local or municipal level (Asheim &
Cooke, 1999; Cooke & Leydesdorff, 2006). Regions are important bases of economic
coordination at the meso-level, although the level of regional administration can differ
significantly across countries. In varying degrees, regional governance is expressed in both
private representative organizations such as branches of industry associations and
chambers of commerce, and public organizations such as regional agencies with powers
devolved from the national (or, within the European Union, supra-national) level to
promote enterprise and innovation support (Asheim et al., 2003; Cooke et al., 2000).
230 BJØRN ASHEIM

The systemic dimension of the RIS derives in part from the associational character of
innovation networks (Cooke & Morgan, 1998). Such relationships, to be systemic, must
involve some degree of inter-dependence, albeit to varying degrees. Likewise, not all such
systemic relations need to be regionally contained, but many are. As the interactive mode
of innovation grows in importance, these relations are more likely to become regionally
contained, for example in the case of specialized suppliers with a specific technology or
knowledge base. Such suppliers often depend on tacit knowledge, face-to-face interaction
and trust-based relations and, thus, benefit from cooperation with customers in regional
clusters, while capacity subcontractors are increasingly sourced globally. The prevalence of
a set of attitudes, values, norms, routines and expectations
described by some as a
distinctive ‘regional culture’
further reinforces the systemic character of the RIS and
influences the practices of firms in the region. It is this common regional culture
itself the
product of commonly experienced institutional forces
that shapes the way that firms
interact with one another in the regional economy.

Varieties of Regional Innovation Systems

The ‘innovation system’ concept can be understood in both a narrow as well as a
broad sense. A narrow definition of the innovation system primarily incorporates the R&D
functions of universities, public and private research institutes and corporations, reflecting
a top-down model of innovation. A broader conception of the innovation systems includes
‘all parts and aspects of the economic structure and the institutional set-up affecting
learning as well as searching and exploring’ (Lundvall, 1992, p. 12), and, thus, has a very
weak systemic character. This broad definition incorporates the elements of a bottom-up,
interactive innovation model which alternatively could be called ‘learning regions’
(Asheim, 2001).
In order to reflect the conceptual variety and empirical richness of the relationships
linking the production structure to the ‘institutional set-up’ in a region, Asheim (1998)
distinguishes between three types of RISs (see also Cooke, 1998; Asheim & Isaksen, 2002).
The first type may be denoted as territorially embedded regional innovation systems, where
firms (primarily those employing synthetic knowledge) base their innovation activity
mainly on localized, inter-firm learning processes stimulated by the conjunction of
geographical and relational proximity without much direct interaction with knowledge
generating organizations (i.e. R&D institutes and universities). This type represents a
market-driven non-systemic model, where demand factors determine the rate and
direction of innovation. Cooke (1998) calls this type ‘grassroots RIS’. The best examples
of territorially embedded regional innovation systems are networks of SMEs in industrial
districts. Thus in Italy’s Emilia-Romagna, for example, the innovation system can be
described as territorially embedded within that particular region (Granovetter, 1985).
These territorially embedded systems provide bottom-up, network-based support
through, for example, technology centres, innovation networks or centres for market
research and intelligence services, to promote the ‘adaptive technological and organiza-
tional learning in territorial context’ (Storper & Scott, 1995, p. 513).
Another type of RIS is the regionally networked innovation system. Firms and
organizations are here also embedded in a specific region and characterized by localized,
interactive learning. However, through the intentional strengthening of the region’s
institutional infrastructure
for example, through a stronger, more developed role for
 DIFFERENTIATED KNOWLEDGE BASES 231

regionally based R&D institutes, vocational training organizations and other local organiza-
tions involved in firms’ innovation processes
these systems have a more planned character
involving public
private cooperation. The networked system is commonly regarded as the
ideal-type of RIS and is characterized by mixed supply/demand interaction: a regional cluster
of firms surrounded by a regional ‘supporting’ institutional infrastructure. Cooke (1998) also
calls this type ‘network RIS’. The network approach is most typical of Germany, Austria and
the Nordic countries. This regionally networked innovation system is a result of policy
intervention to increase innovation capacity and collaboration. SMEs, for example, may have
to supplement their informal knowledge (characterized by a high tacit component) with
competence arising from more systematic research and development in order to carry out
more radical innovations. In the long run, most firms cannot rely exclusively on informal
localized learning, but must also gain access to wider pools of both analytical and synthetic
knowledge on a national and global basis. The creation of regionally networked innovation
systems through increased cooperation with local universities and R&D institutes, or
through the establishment of technology transfer agencies, may provide access to
knowledge and competence that supplements firms’ locally derived competence. This
not only increases their collective innovative capacity, but may also serve to counteract
technological ‘lock-in’ (the inability to deviate from an established but outmoded
technological trajectory) within regional clusters of firms.
The third main type of RIS, the regionalized national innovation system, differs from
the two preceding types in several ways. First, parts of industry and the institutional
infrastructure are more functionally integrated into national or international innovation
systems
i.e. innovation activity takes place primarily in cooperation with actors outside
the region, and can, thus, resemble a sectoral innovation system. This type of RIS
represents a science/supply driven model in which exogenous actors and relationships
play a larger role. Cooke (1998) describes this type as ‘dirigiste RIS’, reflecting a narrower
definition of an innovation system incorporating mainly the R&D functions of universities,
research institutes and corporations. Second, the collaboration between organizations
within this type of RIS conforms more closely to the linear model, as the cooperation
primarily involves specific projects to develop more radical innovations based on formal
analytical-scientific knowledge. Within such systems, cooperation is most likely to arise
between people with the same occupational or educational background (e.g. among
scientists). This functional similarity facilitates the circulation and sharing of knowledge
through ‘epistemic communities’, whose membership may cross inter-regional and even
international boundaries (Amin & Cohendet, 2003; Coenen et al., 2006). One special
example of a regionalized national innovation system is the clustering of R&D laboratories
of large firms and/or governmental research institutes in planned ‘science parks’ and
technopoles, normally located in close proximity to universities and technical colleges, but,
according to evidence, typically having limited linkages to local industry (Asheim, 1995).
Science parks are, thus, an example of a planned innovative milieu comprising firms with a
high level of internal resources and competence, situated within weak local cooperative
environments. These parks have generally failed to develop innovative networks based on
inter-firm cooperation and interactive learning within the science parks themselves
(Asheim & Cooke, 1998; Henry et al., 1995). Technopoles, as developed in countries such as
France, Japan and Taiwan, are also characterized by a limited degree of innovative
interaction between firms within the pole, and by vertical subcontracting relationships
with non-local external firms. In those rare cases where local innovative networks arise,
232 BJØRN ASHEIM

they have normally been orchestrated by deliberate public sector intervention at the
national level. These characteristics imply a lack of local and regional embeddedness, and
lead us to question the capability of science parks and technopoles to promote
innovativeness and competitiveness more widely within local industries (especially
SMEs) as a prerequisite for endogenous regional development (Asheim & Cooke, 1998;
Longhi & Quére, 1993).

Clusters and the Creation of Competitive Advantage

In recent years the cluster concept has become somewhat of a catchword in
academic circles as well as in policy discussions on regional economic development
(Asheim et al., 2006a). What is a cluster? In a recent article Porter defines clusters as follows:
[Clusters are] geographic concentrations of interconnected companies and institutions in
a particular field. Clusters encompass an array of linked industries and other entities
important to competition. They include, for example, suppliers of specialized inputs such
as components, machinery, and services, and providers of specialized infrastructure.
Clusters also often extend downstream to channels and customers and laterally to
manufacturers of complementary products and to companies in industries related by
skills, technologies, or common inputs. Finally, many clusters include governmental and
other institutions
such as universities, standards-setting agencies, think tanks,
vocational training providers, and trade associations
that provide specialized training,
education, information, research, and technical support (Porter 1998, p. 78).

As a contrast, Porter’s original cluster concept was basically an economic concept

indicating that ‘a nation’s successful industries are usually linked through vertical (buyer/
supplier) or horizontal (common customers, technology etc.) relationships’ (Porter, 1990, p.
149). These ideas are more or less the same as the ones Perroux presented in the early
1950s. Perroux argued that it was possible to talk about ‘growth poles’ (or ‘development
poles’ at a later stage in his writing) in ‘abstract economic spaces’ defined as the vertical
relationships of a production system as well as the horizontal relationships of a branch,
where firms are linked together by an innovative ‘key industry’ to form an industrial
complex. According to Perroux, the growth potential and competitiveness of growth poles
can be intensified by territorial agglomeration (Haraldsen, 1994; Perroux, 1970). However,
even in 1990 Porter argued along the same lines as Perroux by emphasizing that ‘the
process of clustering, and the interchange among industries in the cluster, also works best
when the industries involved are geographically concentrated’ (Porter, 1990, p. 157).
Porter has often been criticized for lack of academic rigour with regard to his
approach to the study of, as well as definition of clusters. Martin & Sunley (2003), for
example, identify a major source of confusion in Porter’s work with regard to the definition
and study of clusters and the effects of cluster dynamics. They identify two major
definitional problems in his writings. The first major problem lies in the delimitation of the
clusters, spatially as well as by sector. It is difficult to delimit a cluster with respect to its
activities and the links between them, as well as the requirements in terms of sectoral
specialization. Spatially, it seems highly unclear within which boundaries ‘real’ cluster
dynamics, for example spill-over effects, can arise and operate. Second, they point to the
fact that the social dimension, considered important for facilitating cluster dynamics, is
insufficiently theoretically defined and developed. Malmberg (2003) attributes much of the
 DIFFERENTIATED KNOWLEDGE BASES 233

conceptual confusion concerning clusters to the fact that clusters can be seen as both
industrial and spatial phenomena, i.e. either confined to industrial systems defined from a
functional (national) perspective, or defined by geographical (regional) boundaries.
However, instead of regarding these multiple definitions of clusters as problematical,
Malmberg seems to accept the possibilities of using both definitions. Here I agree with
Malmberg’s view of the need to operate with both conceptualizations of clusters, as it is a
quite normal situation to find (geographical) clusters of specialized branches being part of
a national (economic) cluster of the same branches.
Porter (2000) argues that the existence of a cluster has positive effects on the
competitive advantage of firms in a number of ways, one of them being a positive impact
on the innovation capabilities of the cluster firms. According to Porter, ‘untangling the
paradox of location in a global economy reveals a number of key insights about how
companies continually create competitive advantage. What happens inside companies is
important, but clusters reveal that the immediate business environments outside
companies play a vital role as well’ (Porter, 1998, p. 78). The pressure to innovate is
promoted through local rivalry, increasing the necessity to be innovative among firms in
the cluster. Moreover, co-location and proximity further facilitate learning through close
collaboration and interaction with other firms, stimulating innovative activities. The co-
location within a cluster thus enables strong relationships between producers and
suppliers, integrating local suppliers in the innovation process. Furthermore, the
specialized labour market is one of the more important components in this respect,
providing firms within a cluster with skilled labour, which is necessary in order to enhance
the innovative performance of the cluster (see Porter, 2000). Thus, Porter consequently
argues that ‘a vibrant cluster can help any company in any industry compete in the most
sophisticated ways, using the most advanced, relevant skills and technologies’ (Porter,
1998, p. 86).
Porter’s extension of the definition of the cluster concept to incorporate public
agencies and knowledge infrastructures indicates a deepening and widening of the
degree and form of cooperation taking place within a cluster. The original and simplest
form of cooperation within a cluster is in terms of territorial integrated input
output (value
chain) relations. These may be supported by informal, social networking, but, alternatively,
they may take the form of arms-length market transactions between a capacity
subcontractor and the client firm. The next step of formally establishing inter-firm
networks is represented by a purposeful, functional integration of value chain collabora-
tion as well as building up a competence network between the collaborating firms. A
distinction between clusters defined as input
output relations and those based on
networks is that proximity is the most important constituting variable in the first case,
whereas systemic (i.e. planned) and horizontal forms of cooperation are more defining in
the second case. The development towards more planned forms of cooperation
represents a further more formalized step in the process of formation of (regional)
innovation systems.

Knowledge Base and Institutional Framework: Connecting Clusters and

Regional Innovation Systems
An explicit conceptual clarification of the linkage between clusters, on the one hand,
and regional innovation systems, on the other, has so far received relatively little attention
234 BJØRN ASHEIM

in the literature. Notwithstanding Porter’s (2000) extension of the cluster concept, which
more or less eliminates the differences between clusters and regional innovation systems,
the different industrial development paths of ‘pure’ clusters, where regional innovation
systems are built in order to support innovation in already established industries, and the
establishment of relations between clusters and regional innovation systems in order to
promote emerging industries based on new knowledge, could be explained in a more
systematic way. In a territorially embedded regional innovation system, the emphasis lies
on the localized, path-dependent inter-firm learning processes that involve innovation
based on synthetic knowledge. The role of the regional knowledge infrastructure is
therefore mainly directed at industry-specific, hands-on services as well as concrete, short-
term problem-solving activities. In a regionalized national innovation system, R&D and
scientific research take a much more prominent position, with innovation building
primarily on analytical knowledge. Linkages between existing local industry and the
knowledge infrastructure are, however, weakly developed. On the other hand, this
facilitates the promotion of new industries at the start of their industrial and technological
life cycle. In this, the role of the regional(ized) knowledge infrastructure is very central, as it
provides the cornerstone for cluster development (through the precarious task of
commercializing science). Similar to the regionalized national innovation system, knowl-
edge infrastructure within the regionally networked innovation system plays an
indispensable role, even if more territorially embedded. Yet the cluster is not wholly
science-driven but represents a combination of a science and market-driven model. In
comparison to the territorially embedded regional innovation system, the networked RIS
often involves more advanced technologies combining analytic and synthetic knowledge
as well as having better developed and more systemic linkages between universities and
local industry. While territorially embedded RIS are often found in mature industries and
regionalized national innovation systems are more likely in emergent industries,
networked regional innovation systems can support various types of industries in different
life cycle phases. Firms and knowledge infrastructure form a dynamic ensemble,
combining ex-post support for incremental problem-solving and ex-ante support to
counter technological and cognitive lock-ins. Table 3 shows combinations of different
types of regional innovation systems and knowledge bases.
In order to further deepen the understanding of the role and workings of different
types of regional innovation systems in a globalizing economy, the question of

TABLE 3
Types of regional innovation systems and knowledge bases

Type of knowledge
Type of RIS Analytical/scientific Synthetic/engineering Symbolic/creative
Embedded IDs in Emilia-Romagna ‘Advertising village’

(grassroots (machinery) Soho (London)
RIS)
Networked Regional clusters
Regional clusters
regional Barcelona as the
(network RIS) regional university technical university (mechanical design city
(wireless in Aalborg) in Baden
Württemberg)
Regionalized Science parks/ Large industrial complex
national technopolis (biotech, (Norwegian oil- and gas-related
(dirigiste RIS) IT) industry)
 DIFFERENTIATED KNOWLEDGE BASES 235

governance structures and supporting regulatory and institutional frameworks regionally

as well as nationally has to be explored. In this regard, the linkage between the
institutional frameworks of the larger national innovation and business systems and those
of the regional innovation systems are of special importance. Understanding the
correspondence between the macro-institutional elements of a national economy and
the dominant form and character of its regional innovation systems provides a link to the
theoretical approaches of ‘varieties of capitalism’ and national business systems (Asheim &
Gertler, 2005; Hall & Soskice, 2001; Lundvall & Maskell, 2000; Whitley, 1999).
This question of forms of governance has recently (indirectly) been addressed by
Cooke (2004), who, based on studies of the biotechnology industry in the UK, the USA and
Germany, has introduced a distinction between the traditional regional innovation system
(which he refers to as the institutional regional innovation system
IRIS) and the new
economy system (NEIS), which he also calls an entrepreneurial regional innovation system
(ERIS). The traditional IRIS
more typical of German regions or regions in the Nordic
countries whose leading industries draw primarily from synthetic knowledge bases
is
characterized by the positive effects of systemic relationships between the production
structure, on the one hand, and the knowledge infrastructure, on the other. These are
embedded in regional networking governance structures and supporting regulatory and
institutional frameworks at the national level. In contrast NEIS or ERIS
to be found in the
USA, UK and other Anglo-American economies
lack these strong systemic elements, and,
instead, get their dynamism from local venture capital, entrepreneurs, scientists and
incubators. Cooke calls this a ‘venture capital driven’ system. Such a system will, of course,
be more flexible and adjustable and, therefore, will not run the risk of ending up in ‘lock-in’
situations like traditional regional innovation systems that are dependent on old
technological trajectories. On the other hand, new economy innovation systems do not
seem to have the same long-term stability and systemic support for historical
technological trajectories, raising important questions about their long-term economic
sustainability (Asheim & Gertler, 2005).
From this perspective, the traditional institutional regional innovation system (IRIS)
typified by a region such as Germany’s Baden
Württemberg is most compatible with the
institutional frameworks of a coordinated market economy, while the new economy
innovation system (ERIS) (e.g. Silicon Valley) reflects the institutional framework of a liberal
market economy (Asheim & Gertler, 2005). Different types of market economies display
different types of strengths and weaknesses: thus, coordinated market economies are
strongest in diversified quality production, while the strength of liberal market economies
lies in industries characterized by radical innovative activities. Still, both types of

TABLE 4
Forms of governance of regional innovation systems (Cooke, 2001)

ERIS (Entrepreneurial RIS) IRIS (Institutionol RIS)

Venture capital driven R&D driven/interactive learning
Serial start-ups Networked
Market focused Technology/production focused
Radical innovations Incremental innovations
Incubators (university
industry relations) Clusters
Initial public offerings Bank borrowing
Knowledge-based economy Learning economy
236 BJØRN ASHEIM

innovation system can sustain, support and promote a knowledge-based economy, if such
an economy is understood as being more than merely science-based. However, with
respect to policy recommendations, it is counterproductive to rigidly associate ERIS with a
knowledge-based innovation system and IRIS with a ‘normatively stylized’ innovation
system, as suggested by Heidenrich (2004). He maintains that ‘in normatively coupled
innovation systems, calculability and stability is much more important than the revision of
disappointed expectations’ (Heidenrich, 2004, p. 509), while in knowledge-based innova-
tion systems (ERIS) ‘the innovation strategies of firms are restricted less by legal, political,
ethical, and social considerations; they are more closely coupled with economic, scientific,
and technical perspectives’ (Heidenrich, 2004, p. 510). While this is not in itself a totally
incorrect description of the differences between coordinated and liberal market
economies, it carries with it an implicit normative view of the superiority of the ERIS
system and the liberal market economy, which clearly could be contested if broader
societal consequences of economic growth are taken into consideration.

Conclusions: Can Regional Innovation Systems Exist?

Regional innovation systems have played and will continue to play a strategic role in
promoting the innovativeness and competitiveness of regions. The RIS approach has lately
been strengthened by attention being directed towards the need
perceived by policy
makers at both EU and regional levels
of constructing regional advantages (Asheim et al.,
2006b). This is the result of the increasing global competition from newly industrialized
countries such as Taiwan, South Korea and Singapore, and rapidly catching up countries
such as China and India. This frame of analysis emphasizes constructed advantage as the
next evolutionary step in regional economic development (Cooke & Leydesdorff, 2006),
criticizing comparative advantage for dismissing the role of technological change and
innovation and competitive advantage for its narrow market focus. The theory of
constructed advantage is more flexible, especially with regard to the role and impact of
the public sector and policy support. Hence it recognizes the importance of private
public
complementarities in knowledge economies, unlike theories of comparative and
competitive advantage. Under this approach, the rationale for policy intervention is less
to fend off market failure but, rather, to reduce deficits within regional innovation systems
with regard to interaction and connectivity.
I thus disagree with Bathelt (2003), who argues that
it seems questionable that region-specific innovation and production processes are
typically associated with the existence of regional innovation systems. To assume that
such small-scale systems exist bears the risk of underestimating the importance of those
institutions which are negotiated and defined at the level of the nation state. In reality,
however, regional and national innovation contexts are fundamentally different. Regional
production configurations are often dependent on structures and developments which
are shaped and take place outside the region (Bathelt, 2003, p. 797).1
Bathelt uses social systems theory to replace the element/relation dichotomy of the
innovation systems approach with a system/environment dichotomy (Kaufmann &
Tödtling, 2001). This leads him to believe that one of the core problems of the regional
innovation system is ‘that it portrays the region as an entity which hosts a large part of an
economic value chain and has a governance structure of its own, independent from its
 DIFFERENTIATED KNOWLEDGE BASES 237

environment’ (Bathelt, 2003, p. 796). Aside from the formal systems theoretical arguments,
there is no substantial theory to corroborate this statement. Empirically it may be shown
that regions can in fact contain large parts of a value chain (e.g. Italian industrial districts)
as well as having a relative autonomous government structure (e.g. regions in federal
countries such as Baden
Württemberg in Germany and Catalonia and the Basque country
in Spain). Furthermore, in a globalizing economy characterized by vertical disintegration
and distributed knowledge networks, the important perspective ought to be the
interdependences between regions and nations, where the deciding criteria must be the
location of core activities (and not the whole value chain as such) and the relative
importance of their connections to regional knowledge infrastructures. With the possibly
exception of the USA, the argument that ‘production configurations are often dependent
on structures and developments which are shaped and take place outside’ of the actual
territory could as easily apply to most small and medium-sized countries and regions,
especially in the context of membership in a supra-national political framework like the EU,
‘in which ‘‘region formation’’ has and continues to evolve apace’ (Cooke, 2007).
It is nevertheless essential to recognize the interlocked character of a region within its
wider geographical context (Howells, 1999). Research has revealed that the regional level is
neither always, nor even normally, sufficient for firms to stay innovative and competitive
(Isaksen, 1999); also, that the learning process is increasingly inserted into various forms of
networks and innovation systems (at regional, national and international levels). At the same
time, research confirms the continuing importance of the regional level. Isaksen’s (2005)
analysis, based on results from a European comparative cluster survey, shows that regional
resources and collaboration are of major importance in stimulating economic activity within
clusters. The survey, however, also found an increased presence of multi-national companies
in many clusters, and also that firms increasingly tend to outsource major components of
their work outside the cluster (Isaksen, 2005). Tödtling et al. (2005) also report empirical
support for clustering because of the importance of social interaction, trust and local
institutions. Yet they also note that both local and distant networks are needed for
successful cooperative projects. This is especially the case for projects involving product
development as these necessitate combining both local and non-local skills and
competences in order to go beyond the limits of the region (see also Asheim & Herstad,
2003; Bathelt et al., 2004; Cooke et al., 2000).

ACKNOWLEDGEMENTS
Although not directly involved in the writing of this article I would like to acknowledge
my debt to my former and present PhD students, Lars Coenen, Jerker Moodysson and Jan
Vang Lauridsen, with whom I have greatly benefitted from working, developing many of
the ideas presented in the article.

NOTE
1. In a more recent article Bathelt (2005) once more underlines his position by arguing that
‘at this geographical level (i.e. a region, my addition), it is unlikely that a self-referential
system can develop because regions are strongly dependent on national institutions and
other external influences and lack important political decision-making competencies. . . .
238 BJØRN ASHEIM

Regional production configurations hardly have the potential to gain and retain
structural independence and reproduce their basic structure.’

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