Expanding Innovation System

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Expanding innovation system and policy

– an organisational perspective
a
Elise Ramstad
a
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Kyllikinportti 4, PO Box 69, FI-00101, Helsinki, Finland
Available online: 20 Oct 2009
To cite this article: Elise Ramstad (2009): Expanding innovation system and policy – an
organisational perspective, Policy Studies, 30:5, 533-553
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Policy Studies
Vol. 30, No. 5, November 2009, 533553
RESEARCH ARTICLE
Expanding innovation system and policy
Elise Ramstad*
an organisational perspective
Finnish Funding Agency for Technology and Innovation, Tekes, Kyllikinportti 4, PO Box 69,
FI-00101 Helsinki, Finland
(Received 3 July 2008; final version received 19 May 2009)
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Studies of innovation systems and policies have tended to focus on scientific and
technological innovation; organisational innovations continue to receive scant
attention in many countries. The purpose of this article is to study the front-
runner countries in organisational innovation activities, in this case Germany,
Norway, Sweden and Finland, as well as the ways in which they have integrated
organisational innovations as a part of broader innovation policies. The
evaluation framework consists of four levels: (1) governmental and strategic
level; (2) ministerial level; (3) research and development (R&D) programme level;
and (4) performance level. This article discusses innovation systems’ similarities
and differences from the organisational innovation point of view and suggests
future recommendations for policy-makers. Although the results show that the
countries studied support organisational innovation R&D projects and pro-
grammes, only Finland and Sweden have been able to create broad-based
innovation strategies at the governmental level that include organisational
innovation. Even so, a stronger political commitment is needed to foster a
comprehensive approach to innovation and support the legitimacy of organisa-
tional innovation. In the future, it will be necessary to systematically embed an
organisational innovation perspective into innovation systems throughout the
governmental, ministerial, R&D programme and performance levels. To enhance
learning concerning innovation activities in Europe, a concrete tool for a joint
learning platform in the field of innovation activities is also presented.
Keywords: innovation policy; innovation system; organisational innovation;
innovation infrastructure
Introduction
In many countries, innovation is seen as the major source of performance
improvement and the prosperity of a country; this is the innovation-driven growth
approach. Innovation policy literature contains a wide variety of opinions on the
relative contributory merits of innovation policies and strategies. Traditionally, most
science, technology and innovation (STI) polices aim at facilitating and supporting
research and development (R&D) that focuses on technological innovation. At this
moment, however, these policies are in the middle of a transition period.
Owing to globalisation, increasingly stringent competition and an aging work-
force, the traditional innovation policy is currently being challenged in many
European countries. The world is becoming dramatically more interconnected and
*Email: elise.ramstad@tekes.fi
ISSN 0144-2872 print/ISSN 1470-1006 online
# 2009 Taylor & Francis
DOI: 10.1080/01442870903208551
http://www.informaworld.com
534 E. Ramstad
competitive; the innovation economy requires a new vision and a new action agenda.
At the same time, the workforce is aging and shrinking in most of the European
countries. To maintain economic growth, it will be necessary to improve long-term
productivity. A broader innovation strategy, encouraging individuals and organisa-
tions to initiate the next generation of knowledge creation, technologies, business
models and dynamic management systems, is needed. Policy-makers and researchers
(Shapira et al. 2001, Smits and Kuhlmann 2004) have emphasised the importance of
a broader innovation policy in Europe. For example, the Commission of the
European Communities (2006) has created a broad-based innovation strategy for the
entire EU that needs to be implemented in the member states. In this broad-based
innovation strategy, the concept of innovation and policy activities is not limited to
industrial, scientific or technical innovations; the innovations can also be social or
organisational. If new technologies are to be adopted successfully, changes will also

be required in working, organisational and management systems. Because the
various organisational components (technology, strategy, organisation, manage-
ment) need to be mutually supportive, a balanced emphasis on technological and
social innovations is required.
The prevailing trend currently favours more broad-based approaches to STI
policies in many European countries, each of which is struggling with implementa-
tion of the policy in its own way. This provides an excellent opportunity to reflect
upon, and learn from, current innovation systems and policies. Because Finland,
Germany, Norway and Sweden are among the most innovative countries (European
Innovation Scoreboard 2006), examining their innovation systems and strategies, as
well as their related institutions and activities, is instructive. The data used in the
article were gathered between 2006 and 2007 as part of the WORK-IN-NET (work-
oriented innovation) project funded by the European Commission within the ERA-
NET scheme.
The article aims at developing a better understanding of European good practices
with the emphasis on the development of a broad-based innovation policy. To
implement a broad-based innovation strategy, improved governance and a knowl-
edge infrastructure for organisational innovation is necessary. The countries with the
best policies, activities and institutions for broad-based innovation will most likely
optimise their innovation potential.
The importance of organisational innovation

An organisational innovation can involve renewals in the structures, processes or
boundaries of a work organisation that achieve savings in the use of labour or capital
resources, or an improved ability to respond to customer needs. Reforms can be
intrinsically radical or incremental; examples of reforms are self-managing teams,
flatter hierarchies, outsourcing, diversified personnel skills and management systems.
Certain studies have shown the impact of organisational innovations on
economic growth. The statistical analysis by Sanidas (2005) demonstrates that
organisational innovations have explained economic growth at least as much as
technological innovations in the USA and Japan, since the end of the nineteenth
century. The historical analysis by Freeman and Louçã (2001) illustrates how the
‘long waves’ of the economy have been, during the last 200 years, interconnected with
various technological innovations, as well as with managerial and organisational
Policy Studies 535
changes. Technological innovations do not always occur automatically, but they

require a number of complementary innovations. A study by Ramstad (2005) showed
that the organisational development projects at Finnish workplaces (N 312),
including reforms in work processes, teamwork, management, skills and multi-
skilling, networking, job rotation and other factors, were positively related to
performance. Approximately 72% of the respondents (N 842) estimated that the
development project had improved productivity and the quality of working life
(QWL). These studies show that organisational innovations can impact indepen-
dently on productivity and economic growth, as well as indirectly on the success or
failure of implemented technological innovations.
Although organisational innovations are important sources of performance, they
have so far played a negligible role in most of the European countries’ innovation
policies. Brödner and Latniak (2003) estimated that only about half of the European
Union’s member states had national-level programmes for the development of work
organisation at the beginning of the year 2000. The most significant exceptions in
Europe were the Nordic countries and Germany, where there has been a long
tradition of such programmes since the 1980s and 1990s (Den Hertog and Schröder
1989, Fricke 2003, Alasoini et al. 2006).
There are several key reasons for the current state and marginal status of
organisational innovation policies and strategies. Firstly, organisational development
and innovation activities are highly heterogeneous; several definitions for the term
‘organisational innovation’ can be found in the literature. A certain conceptual
vagueness has also hindered measurements of the impact of new organisational
reforms and the production of evidence-base that could be used to convince
policy-makers. Compared with concrete technological innovations, organisational
innovations are more abstract constructs that may be difficult to disseminate among
work organisations.
The differing policy rationales of organisational and technological innovations
must also be taken into account when creating a systemic innovation policy.
Organisational innovations can contribute to productivity and QWL and to the more
rapid adoption of new technology (Huselid, 1995, Appelbaum and Steed 2005,
Ramstad 2005), while technological innovations are seen as sources of improved
performance. The QWL can consist of harmonious social relationships at the
workplace, the mental wellbeing of personnel, effective cooperation between the
management and staff, as well as opportunities for developing professional skills.
Secondly, organisational innovation activities are typically implemented jointly with
management and staff, not always the case with technological developments. Thirdly,
the policy rational of technological innovations usually concerns the industrial
sector. Organisational activities, on the other hand, are targeted at diverse industrial
sectors. The development of the public and third sectors, where the productivity is
often low and difficult to measure, is also important. Fourthly, organisational
development is intrinsically more sensitive than technological development because
it is closely linked to the issue of the employer’s right to influence.
To overcome the above-mentioned challenges of different policy rationales, a
broad-based innovation policy needs skills from diverse policy actors, agreements on
joint concepts, systemic tools, as well as broader R&D programmes and project
funding. To avoid potential conflicts of interest, societal partners must be integrated
when formulating a broad-based innovation strategy.
536 E. Ramstad
Analysing innovation systems from the perspective of organisational innovation

Before analysing national innovation systems and policies, the term ‘national
innovation system’ has to be defined. Kuhlmann (2003) offers a broad-based
definition of a national innovation system, positing that the innovation system
encompasses schools, universities, research institutes (education and science system),
industrial enterprises (economic system), the policy-administration and intermediary
organisations (political system), as well as the formal and informal networks of these
institutions’ actors. It also provides a broad framework for evaluating institutions
and their interaction.
To integrate organisational innovations into a national innovation policy, there is
a need to focus, at the least, on the following issues and levels of the innovation
system. Firstly, a broad-based innovation policy and strategy must be given a high
priority on the political agenda, primarily at the governmental and secondarily at the
ministerial levels. The government and its ministries can play a key role in creating a
favourable environment for organisational innovations; any national strategy should
cover technological as well as organisational innovations. At the ministerial level,
this means the need to coordinate every field and level of innovation-related policy-
making. Secondly, a public support system for organisational innovations is
necessary. In Europe, the administration of the support is typically coordinated by
organisational development programmes sharing a joint framework. The pro-
grammes act as intermediaries coordinating the relationships of actors and diverse
activities. The funding of projects is directed for both private and public-sector
organisations. Thirdly, there is need for an innovation infrastructure consisting of,
for example, expert organisations that generate knowledge (produce, use, dissemi-
nate) related to organisational innovations (Ramstad 2008a). The innovation
infrastructure refers to both public and private R&D units that support work
organisations’ innovativeness. Public sources include universities, government
research institutes, polytechnics, and other educational and training institutes.
Private sources can be knowledge-intensive business services such as management
consultancies and other types of private R&D organisations.
Purpose and approach

The purpose of this article is to analyse the current state of broad-based innovation
policies in four countries. Its conceptual aim is to demonstrate that innovation policy
promoting organisational innovations requires coordination at every level of the
innovation system. It employs a framework (see Figure 1) in which a differentiation
is made among (1) the governmental level that shapes the content of innovation
policies such as strategies, (2) the ministerial level that directs and administers the
formulation of the innovation policy, (3) the R&D programme level that implements
the innovation policy, and (4) the performance level that executes research,
development and innovation activities. Deriving a broad-based innovation system
requires the creation of a balance between policy strategy, policy implementation
functions and performers, as well as sufficient reflexion and learning opportunities.
The best legitimacy and potential is given to organisational innovation when it is
acknowledged at a country’s highest political level. When expanding STI policies, a
broad-based innovation policy also requires new instruments and tools that facilitate
Policy Studies 537
National strategy: Agenda setting:

government ministries
Policy Performance
evaluation evaluation
Impact Programme
evaluation evaluation
Implementation: Intermediaries:
performers and design, funding
tools e.g. programmes
Figure 1. A balanced evaluation framework for innovation systems.
the entry of new actors.The study deals with the following important questions: how
is organisational innovation or development taken into account in the national
innovation strategy? Which ministries are active in the field of organisational
innovation? What kind of organisational development programmes exist? Which
R&D units participate in organisational innovation activities? Based on the country-
specific analyses, the results and policy recommendations that can be considered
crucial for the future innovation policy are presented.
In the study, the focus is on front-runner countries in organisational innovation
activities in Europe (European Innovation Scoreboard 2006) that can provide
examples for organisation innovation and in this way show a lead capacity in the
field. The countries covered were Germany, Norway, Sweden and Finland. The data
were gathered between 2006 and 2007 as part of the WORK-IN-NET (WIN) project.
Several data sources have been used; these include reports of national innovation
systems, Internet websites and discussions with WIN colleagues. A study for the
R&D units involved with organisational development in Germany, Norway, Sweden
and Finland was conducted and a one-day workshop for European policy-makers
and researchers was also organised in Berlin in March 2007. The results have also
been discussed with the researchers or policy-makers of the countries in question.
Based on these comments, certain adjustments have been made to the country-
specific analyses. The conclusions of the study were further discussed at WIN
workshops in Rotterdam in 2008 and Berlin in 2009.
Comparing innovation systems

Although several interesting studies on innovation policy and the innovation system
(e.g. Arnold and Kuhlman 2001, Kotilainen 2005) exist, they often provide an
538 E. Ramstad
excessively narrow view of the innovation system by neglecting the structures and
actors of organisational innovation. To supply the missing link, innovation systems
will be illustrated from the broad-based innovation system view and particularly
from organisational innovation perspective. Innovation systems will be analysed at
the governmental, ministerial, programme and performance levels. The linkages
between different levels are also important when gaining an understanding of the
environment and the philosophy behind the directing and supporting mechanisms of
organisational innovations.
Figures 25 depict the main actors of the national innovation systems in
Germany, Norway, Sweden and Finland. Because each country’s innovation system
functions differently, they are not directly comparable. In the following sections, the
innovation systems of each country are discussed separately.
Germany
Owing to its size, governmental structure and developmental history, the German
innovation system is complex. There is a clear division between the funding of
governmental and intermediary institutions, and the performance of R&D. Innova-
tion is emphasised at a high political level (OECD 2003, Kotilainen 2005, Kuhlmann
and Heinze 2007). Typically, the government formulates the thematic areas for
programmes and funding allocations, while agencies handle the operative aspects.
Co-funded by the federal government and the governments of the 16 Länder, the
German Science Council is the most important scientific advisory body. Its task is to
draw up recommendations concerning the development of institutions of higher
education, their structure and performance, development and financing and general
questions relating to the system of higher education. In 2008 a new forum, Joint
Science Conference (GWK) (www.gwk-bonn.de), was established to emphasise joint
science and research coordination between the federal and state governments.
Science council Federal and state government GWK
Ministry for Education and 16 Federal states

Ministry for Economy and
Research (BMBF) Länder
Technology (BMWi)
(Development of Work and Services) (e.g. GIB)
Foundations
Forschungsgemeinschaft AiF
(e.g. Stifterverband)
Reseach institutes e.g. Consultancies Industry

Higher
Fraunhofer
education
Public domain Private domain
Figure 2. German expanded innovation system.

Policy Studies 539
Government Research Government Innovation

Government
Board board
Ministry of Local
Ministry of Education Ministry of Trade and
Government and
and Research Industry
Regional development
SIVA, the Industrial

Research Council of
Innovation Norway Development
Norway (VRI 2007-17)
Corporation
Education and research system:

Universities, university colleges, state colleges,
Research institute, e.g. SINTEF
Corporate R&D
Figure 3. Norwegian expanded innovation system.
Germany’s total R&D investment as a percentage of its GDP was approximately

2.5%, somewhat higher than the OECD average (2.3%), in 2005. Compared with the
other countries studied, Sweden (3.9%) and Finland (3.5%) spent more money on
R&D, while Norway ranked lower (1.8%) (National Science Board 2008). Germany
invested much more substantially in R&D during the 1970s and 1980s, but the level
Government
Ministry of Health Ministry for Education Ministry of Industry,

and Social affairs and Science Employment and
Communications
Fas Research Council NUTEK Vinnova ITPS
Almi
Public research institutes Private research institutes Industry
Figure 4. Swedish expanded innovation system.

540 E. Ramstad
Parliament
Research and
Innovation Policy Government
Council
Ministry of
Ministry of
Employment and Ministry of Social
Education
the Economy (ESF)
The Finnish Work

Academy of Tekes
Environment Fund Sitra

Finland (Tykes)
(WEF)
Universities and Public Research Institutes
Business Enterprise and Private Reseach Institutes
Figure 5. Finnish expanded innovation system.
of funding shrank significantly in the 1990s. Today, however, an upswing in these

types of investments can be discerned in Germany.
In 2007, the federal government presented a national strategy for innovation
policy ‘The High-Tech Strategy for Germany’ for the first time; it was developed
jointly with all federal government departments. The strategy consists of objectives
in 17 different thematic fields. One of the areas is the development of innovative
services; although the programme ‘Innovation with Services’ approaches the concept
of organisational innovation, the terms organisational development and innovation
are not mentioned explicitly in the strategy.
At the federal level, two ministries the Ministry for Education and Research
(BMBF) and the Ministry for Economy and Technology (BMWI) grant funding
for R&D. The BMBF is responsible for almost two-thirds of the federal R&D
budget. The research projects of both the ministries are managed and coordinated by
the Projektträger, a form of management organisation whose role is to distribute
funding, monitor projects, disseminate information and foster interaction between
research and customers. The Projektträger of the Deutsches Zentrum für Luft- und
Raumfahrt manages the organisational R&D programme ‘Working Learning
Developing Skills: Potential for innovation in a modern working environment’ for
the Federal Ministry of Education and Research. It aims at developing new solutions
for working life in a knowledge-based and service-oriented society. Important
thematic areas in the programme include the promotion of competence, health and
employability, sustainable corporate development, equal opportunities and demo-
graphic change, new implementation methods and interregional alliances. In 2006,
the programme financed 350 work-oriented projects with over EUR 26 million. Most
Policy Studies 541
of the projects were run by research institutes and universities, while the combined
projects also included consultancies and development agencies.
The funding system at the provincial level is similar to the federal funding and its
thematic areas, although the administrative structure is lighter and the support
system varies in the 16 federal states, or Länder. Regions also have their own
activities for organisational innovations. In North-Rhein Westphalia (NRW), the
GIB (Innovative Employment Promotion Company) has the programme ‘Work-
Oriented Modernisation Programme’ that finances the development of workplaces
through collaborations between expert organisations and industries. It is deeply
embedded in regional innovation policy and there are 16 agencies at the sub-regional
level. The programme promotes the competitiveness of small and medium
enterprises (SMEs), the modernisation of work organisation, life-long learning and
employability. In the ‘Pre-operating studies’ programme, the role of universities and

research institutes is important, whereas in the joint projects and ‘Potenzialberatung’,
consulting companies, as the transmitters of new knowledge, are used as experts. The
programme monitors the competitive position of SMEs, qualification standards,
employability and the extent of employee participation. The GIB is governed by the
Länder NRW, which in turn is directed by the Federal Ministry of Labour, Health
and Social Affairs.
The institutionally complex German knowledge infrastructure is one of the
largest in the OECD. The R&D units have traditionally been divided into institutes
of higher education, governmental institutes, research institutes, the laboratories of
the Confederation of Industrial Research Association and national research centres.
The responsibilities of the R&D infrastructure are shared between federal and state
governments.
There are approximately 350 institutes of higher education, 92 of which are
universities and almost 160 of which are state-funded and state-recognised
universities of applied sciences. The number of universities and post-secondary
institutions changed dramatically during the late 1990s as educational reforms in
Eastern Germany were implemented. The universities of applied science do not
award doctoral degrees, and their R&D activities are limited and more practicality-
oriented compared to other universities.
The public governmental institutes include the so-called Bundes and Länd-
esforschungsanstalten that carry out research for the government and provinces. The
four largest research networks are the Max Planck Society (basic and interdisci-
plinary research, 77 institutes), the Fraunhofer Society (long-term applied research
and intermediary activities, 58 institutes), the Helmholtz Association comprising 15
national research centres (long-term, large-scale and high-cost research activities)
and the Leibniz Association with 80 non-university institutes. Together with several
other research institutes, these institutes employ a total of approximately 70,000
researchers. Additionally, the laboratories of the Confederation of Industrial
Research Association (AiF) employ 128,000 researchers who carry out product-
oriented industrial research, particularly on behalf of SMEs.
Concerning the performers of organisational innovation, no nationwide studies
on the number of R&D units active in the field exist. Currently, however, some
information can be gleaned from the websites of individual R&D units and work-
oriented R&D programmes. In 2007, an inquiry was sent to over 800 R&D units that
have been active in the programmes, but only 35 responded to the questionnaire.
542 E. Ramstad
Altogether, 22 R&D units stated that they were active in the field of organisational
R&D, employing a total of nearly 400 researcher-developers. These units were
primarily public universities and research institutes. The average number of R&D
personnel per unit was small (median 9), while the total number of personnel was
usually higher. Most of the personnel were involved in R&D related to working life
(74%), while a quarter carried out research only. The amount of permanent staff was
about 62%. Women accounted for less than half (45%) of the personnel. The study
showed that organisational innovation is multidisciplinary by nature; personnel
came from a variety of disciplinary fields, such as the social sciences (36%),
psychology (15%), engineering (13%), the natural sciences (13%), economics (10%),
health care and medicine (6%) and education (4%). The experts’ level of education
was also very high; almost all had a higher education (96%). Concerning the level of
knowledge, the experts had the highest expertise in workplace management and
learning, employee wellbeing and working capacity, the organisation of work, the
content and design of work, and occupational health. The financing of organisa-
tional R&D came from the government’s budget (41%), national funds and
programmes (27%), structural EU funds (18%) and the sales of services (14%).
Norway
Innovation-related R&D investments are relatively lower in Norway compared to the
other countries studied. It has been argued that high incomes from the oil industry
have overshadowed the importance of research and the creation of a knowledge-
based society (Thoresen and Paus 2004, Kotilainen 2005). In recent years, however,
more attention has also been paid to the development of an innovation policy. There
is a stated goal that Norwegian R&D investments should exceed the levels in the
other Nordic countries by 2010.
There is no forum solely responsible for an innovation policy in Norway, but the
responsibility for innovation and R&D activities is distributed among several
ministries. At the governmental level, two boards the Government Innovation
Board and the Government Research Board focus on the coordination of
innovation and R&D policy issues. The Ministry of Trade and Industry is
responsible for the comprehensive innovation policy, while the Ministry of Education
and Research is responsible for coordinating sectoral R&D policies, e.g. organisa-
tional R&D. Research programmes are funded directly from the ministries or
through governmental funding institutes like the Research Council of Norway,
Innovation Norway and the state-owned enterprise SIVA, the Industrial Develop-
ment Corporation of Norway.
Although the Ministry of Education and Research outlined its approach in a
White Paper ‘Commitment to research’ (20042005), no specific focus on organisa-
tional development has been developed so far. In December 2008, a White Paper on
innovation launched by the government focused on design-driven innovation and
human creativity. No particular systemic policies aimed at improving the status of
organisational innovation exist, but the government is considering new measures for
promoting staff-driven innovation in collaboration with societal partners.
The public funding of research for innovation efforts and organisational
innovations has relied primarily on programmes set up by the Research Council of
Norway, a national strategic research agency responsible for funding basic and
Policy Studies 543
applied research in all fields, and for advising the government on questions of
research policy. The Research Council has three main divisions. The Division of
Science is responsible for basic research; Strategic Priorities assists ministries in
policy issues and the Innovation Division promotes value creation. The Research
Council is technology and science-oriented, but it also has programmes for
organisational development. National programmes are typically 10-year initiatives
with a mid-term evaluation after the fifth year. The programmes have typically local
implications; the development of regional innovation strategies is encouraged. The
Regional R&D and Innovation programme (20072017) provides professional and
financial support to long-term, research-based regional development processes (The
Research Council of Norway 2007). Besides promoting regional collaboration
between trade and industry, R&D institutions and government authorities, the
programme reinforces the cooperative mechanisms among national and interna-

tional networks. The Virkemiddel for regional FoU og innovasjon (VRI) funding
initiative, built on a system-oriented perspective that views innovation as an
interactive process, aims at promoting knowledge development, innovation and
value creation through regional collaboration. The VRI has three funding instru-
ments: company-driven innovation projects, strategic R&D projects and cooperative
projects undertaken among industry and R&D institutions.
The Research Council works closely with Innovation Norge, whose main
functions encourage regional development by funding companies, running networks,
stimulating investments and counselling investors. Employing a total of 700 people,
Innovation Norge has 40 offices in 34 countries and 20 regional offices in Norway.
The core group of clients consists primarily of SMEs.
The main R&D performers in Norway are universities, university colleges, state
colleges, research institutes and corporate R&D units. Norway has seven universities,
six specialised institutions at the university level, 24 public university colleges and
two private university colleges (Ministry of Education and Research 2008). The
higher education sector carries out approximately a quarter of total R&D activities.
R&D efforts are financed through basic state funding, grants from the Research
Council and contracts with private and public-sector workplaces.
Norway’s scientific and educational system has undergone several transforma-
tions. During the 1990s, a ‘Network Norway’ linking all universities, university
colleges and state colleges was established. The aim was to improve the quality of
education and research through a more effective utilisation of resources, and to
establish a network of national centres of competence. Renewed university legislation
(2004) created opportunities for universities to establish independent companies for
performing commissioned research or for buying into existing companies. This
possibility, enabling universities to expand their external research funding, has been
exploited only during the last few years.
Approximately 70 institutes are devoted to R&D. The largest research institutes
in the innovation field are the SINTEF Teknologi and Society, NIFU STEP, FAFO,
Agderforskning, Rogalandforskning and International Research Institute of Sta-
vanger. Research institutes have traditionally played a key role in the Norwegian
research system’s performance of applied research for public and private purposes.
Collaboration between the institutes and universities is extensive, and the larger
research institutes have a long history of in-depth and formal cooperation with the
universities.
544 E. Ramstad
As a part of the WIN project, I sent a questionnaire to Norwegian R&D units

that had been active in the VC2010 (Value Creation) programme (N 13) and
received responses from five R&D units. These units employed a total of 121 experts,
with an average of 20 experts per unit. Almost all employees had permanent job
contracts (96%). The most typical educational emphasis among experts was social
sciences (68%), while few had educations in psychology (7%), economics (5%),
engineering (5%) and education (4%). The experts studied exhibited an extremely
high degree of know-how in networking (100%), as well as rather high proficiency in
negotiation and participation systems, social relations and interaction, organising
work and gender equality. Their development projects’ targets typically related to
productivity and QWL. Development projects were often research-based and
implemented in collaboration with other universities and labour market organisa-
tions. Finance for R&D activities came either from national funds and programmes
or from the sales of services.
Norway is currently improving the knowledge platform for an innovation policy.
Prioritising research fields and establishing an improved system for the dissemination
of knowledge are the main challenges (Thoresen and Paus 2004). A high priority has
been given to research that provides a basis for growth and development in the
industrial and business sectors. Research focusing on management, organisation,
information technology, health and the environment is also included.
Sweden
Since 2001, several changes in the Swedish innovation system have occurred; new
organisations with new tasks have been established, while a large number of research
councils and institutes have been discontinued. This pattern can be discerned at the
governmental, programme and performance levels.
At the governmental level, the National Research Committee, consisting of
researchers and industrial representatives, advises the government on research policy.
In 2000, the Ministry of Education and Science was chosen to chair the Research
Committee charged with the responsibility of coordinating the government’s research
policy, as well as its science and technology innovation policy.
In 2004, the first innovation strategy ‘Innovative Sweden’ was created jointly with
several ministries: the Ministry of Industry, Employment and Communications, the
Ministry of Education and Science and the Ministry for Foreign Affairs. Sweden’s
goal is to be Europe’s most competitive, dynamic and knowledge-based economy.
The strategy focuses on the long-term promotion of growth. Innovation means that
knowledge is translated into new products goods or services or their combinations.
Innovations can also be new ways of designing, producing and marketing existing
products. The strategy’s organisational development objective emphasises the
importance of promoting flexible production, better skill utilisation, networks,
diversity and participation that leads to creative and dynamic labour markets. There
is also an objective concerning the performance level of organisational development;
it is argued that a more comprehensive exchange of knowledge among researchers
studying working organisations is required. The role of societal partners also needs
to be taken into account. The strategy is also broad in the way it encourages the
creation of knowledge related to the links between technology and working
Policy Studies 545
organisations. The strategy suggests that the development of new technology must be
coordinated with the development of work organisations.
The Ministry of Industry, Employment and Communications coordinates three
authorities for R&D: the Swedish Agency for Economic and Regional Growth,
NUTEK; the Swedish Agency for Innovation System, Vinnova; and the Swedish
Institute for Growth Policy Studies, ITPS. The objective of the ITPS is to develop
and disseminate knowledge concerning future economic growth. The NUTEK is
responsible for questions related to creation of new enterprises, economic develop-
ment of companies and regional development. With approximately 260 employees in
11 offices throughout the country, the NUTEK cooperates closely with the ALMI
Group whose objective is to stimulate trade and spur business growth by partially
financing business development programmes. The ALMI operates in 21 regional
offices offering management programmes, business development consultation and

advice for companies. Vinnova and ITPS were both established in 2001. Vinnova,
focusing on growth, innovations and regional dynamics, has a triple-helix approach
that emphasises the cooperation between industry, academia and political/public
sectors.
Concerning organisational development, Vinnova has seven departments, one of
which is the Working Life Department. Currently it is running several programmes
in the field of organisational development related to long-term sustainable working
life. The focus in the programmes is on management, competence and learning,
innovation systems, health and safety, democracy and gender equality, dynamic
labour markets and the environment. Public R&D units such as universities and
research institutes in the public and private sectors implement all programmes
financed by the department. Labour market organisations do not have an active role
as strategic players.
Since 2001, three new research councils have been established in Sweden. The
largest of these is the Swedish Research Council that supports basic research and
provides research policy analyses. The other two research councils have been set up
to create new knowledge in specific areas. The Swedish Research Council for
Working Life and Social Sciences (FAS) supports basic research and needs-driven
research related to work organisation, social care, health care, labour markets and
welfare. The FAS is a government agency operating under the jurisdiction of the
Ministry of Health and Social Affairs. The FAS provides grants for research projects,
as well as scholarships for postgraduate studies abroad. Almost all FAS projects take
place in university departments or university-connected institutes. The third council,
the Swedish Research Council for Environment, Spatial Planning and Agricultural
Sciences, is related to several ministries and focuses on sustainable development
research within its area of responsibility.
The university sector is the main actor in R&D; by international standards, the
research institute sector in Sweden is small. In Sweden, there are a total of 39
institutions of higher education, of which 14 are state universities and 25 are
university colleges. Although only the universities are authorised to offer post-
graduate education, certain university colleges are entitled to conduct research in
particular disciplines, and have the right to offer postgraduate programmes in these
fields. Universities and university colleges are publicly funded. Currently an ongoing
discussion is taking place as to whether the number of universities is too high in a
546 E. Ramstad
small country such as Sweden; most universities and university colleges are
experiencing financial hardship due to reduced funding and rising costs.
The Swedish National Agency for Higher Education, the central agency
responsible for the country’s institutions of higher education, has three main tasks
in Sweden: teaching; research; and societal interaction. The latter, the so-called ‘third
mission’ was added to their basic tasks in 1997 along with knowledge transfer. This
means that workplaces cooperate with universities or university colleges based on the
needs of industry and the labour market.
Besides the public universities and colleges, there are a small number of privately-
run higher educational institutions that receive government grant funds. These
include the Stockholm School of Economics, Chalmers University of Technology
and the University College of Jönköping. Although most of their funding comes
directly from the government, additional project-based R&D funding is secured

from research councils, public agencies, the EU and workplaces.
Of the governmental research institutes, the National Institute for Working Life
was for many years the main actor in the field of workplace R&D. It was however
closed down in the summer of 2007. The government felt that workplace R&D
should be implemented in the universities. Many of the institute’s activities were
parcelled out to the universities and other institutions.
The questionnaire concerning the R&D units related to organisational develop-
ment was sent to 76 units that were active in the Vinnova programmes. Of the 16
responses we received, 12 indicated a performance of organisational R&D. In these
units, representing universities and research institutes, there were a total of 219
researchers and developers, with an average of 10 persons per unit. Contractually,
only half of the personnel had permanent jobs, but they had a higher educational
level (94%) representing a broad range of scientific fields. The R&D units exhibited a
high degree of competence in personnel management and supervision, work
organisation, management systems and networking. The units collaborated most
often with universities, research institutes and labour market organisations.
Compared with other Nordic countries, the collaboration with international R&D
units was valued most among the Swedish experts. Finance for organisational R&D
activities usually came from national funds, programmes and government budgets.
Finland
During the last few years there have been substantial reforms in the Finnish
innovation system and policy. The new Research and Innovation Council created in
2009 replaced the Science and Technology Policy Council. This change depicts the
heightened importance of a horizontally-oriented innovation policy in Finland. The
prime minister’s chairmanship of the committee gives it a high political status. Its
task is to advise the Council of State and its ministries in matters concerning
research, technology, innovation and their utilisation and evaluation. The Council
has two subcommittees, one responsible for science and education and the other for
technology and innovation.
In 2008, a new National Innovation Strategy (www.innovaatiostrategia.fi) was
launched. The innovation concept in the strategy is understood broadly; for the first
time it also specifies organisational development as one of 10 main thematic areas. It
is stated that organisational development needs to be seen as part of a broader
Policy Studies 547
innovation policy on a par with financing and expert services. Secondly, it is

suggested that more financing should be directed towards research, development and
innovation activity that takes new methods of work organisation into account.
Thirdly, it is argued that new techniques of disseminating organisational innovations
for companies and other organisations are needed. The strategy also emphasises the
importance of promoting the QWL. As a whole, the strategy creates a fertile
framework for implementation of a broad-based innovation policy.
In early 2008, the Ministry of Labour, Ministry of Trade and Industry and the
Ministry of the Interior’s Regional Development Unit were merged into the Ministry
of Employment and the Economy. The new ministry has a wide-ranging agenda; it is
responsible for Finland’s entrepreneurial and innovative activities and environment,
the functioning of labour markets, employability and regional development.
With this reform, the government-organised Finnish Workplace Development

Programme (Tykes) was transferred from the Ministry of Labour to the Finnish
Funding Agency for Technology and Innovation, Tekes. Tekes, the main govern-
mental finance organisation for research and technological development, will now
broaden its scope from the funding of pure technology development and innovations
to include more broad-based innovation. The promotion of organisational develop-
ment and QWL has now been added to its charter. A new technology and research
area ‘Workplace Innovation and Development’ has also been established. The Tykes
programme will continue as a Tekes programme until the end of 2009. Besides the
new type of organisational development project service, currently being planned in
Tekes and covering all industrial branches, a follow-up programme for Tykes is
slated to begin in 2010.
Tykes promotes efficient operational modes at companies and other work
organisations. Its development activities are based on cooperation between the
management and staff, as well as the simultaneous improvement of performance and
QWL (Ramstad 2009). The programme typically features close collaboration
between workplaces, R&D units and policy-makers, such as labour market
organisations. This complementarity approach to diverse knowledge systems has
been called the expanded triple-helix model (Ramstad 2005). There are four types of
projects: basic analysis; development; methods development; and learning networks.
Approximately half of the development projects in the programme are implemented
by private consultancies, about one-third by institutions of higher education and
about one-fifth by other research and educational institutes. One of the programme’s
targets is the financing of 70 postgraduate education degrees in the field of
workplace development between the years 2004 and 2009.
The Finnish higher education system comprises two parallel sectors. The
university sector contains 20 state-owned universities, each of which has further
education institutes offering services for workplaces. The non-university sector
consists of 29 regional polytechnics offering vocational education and bachelor
degree studies with a professional emphasis. It is worth noting that until the 1970s,
universities were not allowed to cooperate with companies; such cooperation was
considered detrimental to the universities’ general research and educational
functions. Since then the situation has changed dramatically due to changes in
public policy. In the mid-1980s, universities were granted autonomy regarding
teaching, research, tuition, student intake, number of staff, appropriations and other
internal affairs. In the early 1990s, Finland was the first country to adopt the
548 E. Ramstad
national innovation system approach in its science and technology policy; as a result,
universities were encouraged to cooperate with private corporations. Finnish
polytechnics have also been assigned a statutory ‘third task’ to support working
life and regional development.
Other R&D units, such as governmental research institutes, educational and
training organisations and the units of societal partners and foundations, are
involved with organisational innovations. Finland’s most important governmental
research institutes are the Institute of Occupational Health, VTT Technical Research
Centre of Finland and the National Institute for Health and Welfare.
The study by Ramstad (2008a, 2008b) focusing on the expert organisations of
organisational innovation included public R&D units, as well as private consultan-
cies. Overall, more than 3000 experts were engaged in organisational R&D in 223
units. The R&D units were fairly small; the average number of personnel per unit was
10. The number of experts was the highest in polytechnics; women accounted for
57% of the sample. The findings also indicated that the expert organisations’
knowledge resources differed; academic R&D units focused on research-based
development, the promotion of QWL, the development of broader networks and the
public sector. Backed up by solid regional contacts, the training and educational
institutes’ knowledge resources emphasised workplace learning, wellbeing and the
QWL, quality issues and the learning environment. The consultancies’ more
customer-oriented approaches tended to focus on practicalities, management
techniques and performance. It was suggested that the complementarity of experts’
knowledge base can serve as a learning environment for workplaces offering broader
and qualitatively better customer services.
Conclusions and recommendations

This conclusion begins with a brief summary of the findings of the analyses of
innovation policies and systems in Germany, Norway, Sweden and Finland from an
organisational innovation perspective. We then turn our attention to the practical
lessons which can be drawn from the empirical investigation.
The study’s examination of innovation policies and systems at four levels proved
to be a workable approach that helped shed light on relevant issues warranting
discussion; it also demonstrated the importance of maintaining a holistic view
towards innovation policies. The benchmarking approach applied to the model
sharpened the focus on good practices and the differences between the practices in
each country, facilitating their utilisation as a learning resource for expanded
innovation policies.
At the governmental level, councils of science, research, technology or innovation
typically advised top-level political decision-makers. In Germany, the advisory
boards were the Science Council and the GWK, in Norway the Government
Research Board and the Government Innovation Board and in Finland, the
Research and Innovation Council. In Sweden, three research councils function
under different ministries. Concerning innovation strategies in Sweden and Finland,
organisational innovation was mentioned as an explicit target; this was not the case
in Germany and Norway. Sweden’s broad-based ‘Innovative Sweden’ strategy takes
into account the importance of the performance level of organisational knowledge,
the role of labour market organisations, as well as the interaction between
Policy Studies 549
technology development and work organisations. The Finnish innovation strategy,

besides promoting the importance of funding organisational innovations as a part of
the broader innovation policy, also searches for new ways to disseminate new
organisational innovation practices to other work organisations. Additionally, only
the Finnish innovation strategy states the promotion of QWL as an explicit goal.
At the ministerial level, the analysis revealed that the policies promoting
organisational innovations are often dispersed, with several ministries involved.
The responsibility for innovation policies has been assigned to at least two ministries
in each country; the one responsible for education and science and the other
responsible for industry, employment or the economy. Additionally, the ministries
responsible for health and social affairs in Sweden and Germany were also
responsible for organisational innovations to a certain degree. Germany’s local
governments also played an important role as actors in the national innovation

system. Finland was the only country where a specific unit for organisational
innovation has been created at the ministerial level at the Ministry of Employment
and the Economy.
At the programme level, the analysis showed that all countries have R&D
programmes and projects focusing on organisational innovations. The programmes
and councils are intermediary organisations responsible for the implementation,
coordination and funding of organisational innovations. These can be seen as
important integrators of complementary innovation activities and actors active in
the field of organisational research, development and policy-making. Germany’s
national and regional programmes differ from the three Nordic countries where the
programmes are administrated at the governmental level. This is fairly logical
considering Germany’s larger population compared to the Nordic countries. Germany
and Norway resemble each other in that the programmes are financed through the
Ministry of Education and Research, while in Finland and Sweden this is undertaken
by the ministry responsible for employment, trade and industry. In Finland and
Sweden, the main role of the Ministry of Education and Research is to support research
and education. In these two countries, there are also institutes that finance basic
research focusing on organisational innovation; in Finland, the Finnish Academy and
Finnish Work Environment Fund, and in Sweden the FAS. Individual R&D
programmes usually have considerable independence and flexibility regarding the
implementation of their innovation activities. This is the case particularly in Finland
(Tekes and Tykes) and in Sweden (Vinnova). On the other hand, ministries control the
German programmes closely, while in Norway a research council governs them.
The role of labour market organisations in the R&D programmes is important in
the Finnish and Norwegian organisational programmes; there are opportunities to
participate in the decision-making processes of certain financed projects. In Finland,
the situation may change in the future in connection with the shift to Tekes, where
there is no tradition of integrating societal partners in a decision-making process that
is fairly closed compared to that at Tykes.
At the performance level, there are several potential actors for organisational
innovations. Basic research funding is for the most part directed to public R&D
units, while R&D programmes finance both public and private expert organisations.
The study shows that in each country studied, funding is available for public R&D
units. On the other hand, it is more difficult for consultancies to obtain public
support for development activities, particularly in Norway and Sweden; public
550 E. Ramstad
money is also available for consultancies in Finland and Germany. The tendency to
favour the support of public R&D units seems fairly understandable from the public
policy point of view; supporting public R&D activities facilitates the dissemination
of knowledge.
Recommendations
Although several contextual factors different economic development, political
traditions and cultural preferences make each countries’ innovation systems
unique, certain general topics will be raised for future discussion; existing piloting
policies will continue to be a valuable learning resource as they produce knowledge in
this new policy field.
Building organisational innovation perspectives into innovation

system studies and policy
Although each of the countries studied agrees with the importance of innovation as a
source of national competitiveness, organisational innovations were stated as an
explicit objective only in two countries at the innovation strategy level. In the future,
the challenge will be to build an organisational innovation perspective into the
innovation system and its policies, but also to the research on innovation systems
(Arnold and Kuhlman 2001, Kotilainen 2005). The broader view on innovation
could raise awareness of the importance of organisational development as a source
for sustainable economic growth and wellbeing in general, but also facilitate long-
term strategic development and financial support for organisational innovation
activities in a country.
Promoting inter-ministerial coordination

Innovation researchers have been recently developing a synthesis approach, where
the aim is to forge an understanding of innovation that is applicable to all economic
and policy activities (Tether and Tajar 2008). In the countries studied, the innovation
strategy was created jointly with diverse ministries; however, the responsibility for
the innovation policy resided either with a ministry of education and sciences or in a
ministry of enterprise. In the future, there is a need to strengthen the cooperation
among diverse ministries, particularly between the education and enterprise
ministries. This kind of ‘superministry’ coordination would facilitate a balanced
approach for innovation. Elsewhere in Europe, Ireland is the only country that has
launched a workplace strategy at the governmental level, where all the existing
policies have been able to be jointly connected (National Workplace Strategy 2005).
Promoting the role of research and development (R&D) programmes

As the knowledge on innovation in our society is dispersed (Powell et al. 1996), it has
become a requisite to integrate complementary knowledge in order to achieve
collective outcomes. The organisational R&D programmes play a key role in
strengthening a country’s culture of organisational innovation. They are able to
connect the diverse levels and activities of the innovation system and disseminate the
Policy Studies 551
evaluation-based knowledge gained from R&D projects to policy-makers, thereby

enhancing the legitimacy of organisational innovation activities. Good programme
and development practices must also be disseminated to other European countries to
facilitate the creation of new programmes. At the moment, there are organisational
R&D programmes only in the minority of European countries (Alasoini et al. 2006).
Here, of course, local labour market systems, as well as other institutional and
cultural differences, will have to be taken into account. Moreover, increased
exchange of experiences across countries is important for providing better under-
standing on how to manage R&D programmes.
Developing the innovation infrastructure

The weakness of the earlier innovation studies and policies is that they often focus
either on the development of workplaces or R&D infrastructure. The balanced
evaluation framework of innovation system integrates the simultaneous development
of workplace (user-orientation) and innovation infrastructure (supply-orientation)
that share the same challenges and interests, but from different points of view. The
innovation infrastructure plays an important role by offering diverse knowledge and
helping workplaces to develop their practices, but also creating new knowledge. In
addition to universities and research institutes, the consultancies and educational
institutes also need to be acknowledged as important actors, as they provide diverse
knowledge and services that can be complementary and combined with internal
knowledge (management and employees) (Ramstad 2008a). Similarly, Tether and
Tajar (2008) found that policy-makers should not fixate on direct industryacademic
links, while indirect links and alternative sources are also important and may be more
effective. Policy-makers and R&D programmes can play a critical role in the process of
supporting the broader innovation infrastructure and promoting the collaboration
between workplaces and diverse expert organisations.
Creating a joint database for the innovation infrastructure

The broad-based innovation policy asks also for new tools for involvement of new
actors when broadening STI policies. During the course of the study, several
methodological difficulties emerged when attempting to contact R&D units working
in the field. To assist with this issue, we created a database rdmaps.ath.cx (Ramstad
and Saarenpää 2008) on the main R&D units, their particular areas of interest and
expertise, as well as links to more detailed profiles and contact information. The
database can make it easier for clients and R&D units to search for experts and
partners for national and international collaborations, for example, when assembling
joint R&D teams and activities.
In sum, a balanced evaluation framework of innovation system was used to
benchmark the innovation systems across countries showing their strengths and
differences in their innovation activities. The framework emphasised the importance
of developing simultaneously the diverse knowledge systems that share the same
interest at different levels of an innovation system. Hence, future research should
concentrate on a more appropriate and precise measurement of organisational
innovation input and output, as well analyses of the country-specific conditions of
552 E. Ramstad
organisational innovation. Furthermore, the complementarities between technolo-

gical and organisational forms need to be more fully understood.
Acknowledgements
The author would like to thank Claudio Zettel, Claudius Riegler, Friedhelm Keuken,
Marianne Döös, Pär Larsson and Tuomo Alasoini for their valuable comments on the earlier
versions of this article.
Notes on contributor
Dr. Elise Ramstad is working as a Senior Technology Advisor for the technology and research
area ‘Workplace Innovation and Development’ at Tekes the Finnish Funding Agency for
Technology and Innovation. She also works for the Finnish Workplace Development
Programme (TYKES). Her doctoral dissertation (production economics) entitled ‘Innovation
generating model simultaneous development of work organization and knowledge
infrastructure’ was passed in 2008 at the Helsinki University of Technology. Dr. Ramstad is
a national contact point for the WORK-IN-NET project (2004) within the ERA-NET
scheme, which is funded out of the European Commission’s Sixth Framework Programme for
Research and Technology Development. She has been responsible for launching European-
level joint call activities and benchmarking between European R&D programmes and
innovation infrastructures. Her main fields of interest are organisational development,
innovation policy and infrastructure and effects of organisational development activities
(performance and quality of working life).
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organisational. If new technologies are to be adopted successfully, changes will also

The importance of organisational innovation

changes. Technological innovations do not always occur automatically, but they

Analysing innovation systems from the perspective of organisational innovation

Purpose and approach

National strategy: Agenda setting:

Figure 1. A balanced evaluation framework for innovation systems.

Comparing innovation systems

Science council Federal and state government GWK

Ministry for Education and 16 Federal states

Reseach institutes e.g. Consultancies Industry

Figure 2. German expanded innovation system.

Government Research Government Innovation

SIVA, the Industrial

Education and research system:

Figure 3. Norwegian expanded innovation system.

Germany’s total R&D investment as a percentage of its GDP was approximately

Ministry of Health Ministry for Education Ministry of Industry,

Fas Research Council NUTEK Vinnova ITPS

Public research institutes Private research institutes Industry

Figure 4. Swedish expanded innovation system.

The Finnish Work

Environment Fund Sitra

Universities and Public Research Institutes

Business Enterprise and Private Reseach Institutes

Figure 5. Finnish expanded innovation system.

of funding shrank significantly in the 1990s. Today, however, an upswing in these

employability. In the ‘Pre-operating studies’ programme, the role of universities and

programme reinforces the cooperative mechanisms among national and interna-

As a part of the WIN project, I sent a questionnaire to Norwegian R&D units

offices offering management programmes, business development consultation and

directly from the government, additional project-based R&D funding is secured

innovation policy on a par with financing and expert services. Secondly, it is

With this reform, the government-organised Finnish Workplace Development

Conclusions and recommendations

technology development and work organisations. The Finnish innovation strategy,

governments also played an important role as actors in the national innovation

Building organisational innovation perspectives into innovation

Promoting inter-ministerial coordination

Promoting the role of research and development (R&D) programmes

evaluation-based knowledge gained from R&D projects to policy-makers, thereby

Developing the innovation infrastructure

Creating a joint database for the innovation infrastructure

organisational innovation. Furthermore, the complementarities between technolo-

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