Entry Date:
December 2, 2004

Local Innovation Systems (LIS) Project

Principal Investigator Richard Lester

Co-investigator Michael Piore

Project Website http://web.mit.edu/lis/

The vigor and dynamism of local economies depends on the ability of local firms to adapt to changing markets and technologies by continually introducing commercially viable products, services, and production processes – that is, by innovating successfully. Not all local economies adapt with equal success. The outcome depends on the capabilities of local firms to take up new technological and market knowledge and to apply it effectively. In the Local Innovation Systems Project at the IPC we are investigating the contributions made by local universities to those capabilities. We are carrying out longitudinal, comparative case studies of innovation-enabled transformations in different industries in multiple locations around the world. The locations include both technologically sophisticated and economically less-favored regions. The sectors include both mature and new industries. Some of the locations are home to first-tier universities, some to second-tier universities, and some to no universities at all. A key finding is that the university role in local innovation processes depends on what kind of industrial transformation is occurring in the local economy. New industry formation, industry transplantation, industry diversification, and industry upgrading are each associated with a different pattern of technology take-up and with a different set of university contributions. A current research focus is to extend our analytical framework, which emerged from our studies in advanced economies, to the problem of designing and implementing economic development strategies for universities in emerging economies.

The Local Innovation Systems Project, an international research partnership based at the Industrial Performance Center (IPC) at MIT, is addressing a central issue now confronting industrial practitioners and economic policymakers throughout the world: How can local economic communities survive and prosper in the rapidly changing global economy?

Particular focus is on the role of innovation – in products, services, and processes -- in promoting productivity growth and competitive advantage at the local and regional levels. National and local governments around the world, as well as other institutions with an interest in economic development, are greatly interested in creating and sustaining local environments that are attractive for innovation. Firms, too, recognize that their innovation performance is affected by their location.

We are currently engaged in the first phase of a projected multi-phase study. In the first phase of research, we are investigating the roles of universities and other public research institutions as creators, receptors, and interpreters of innovation and ideas; as sources of human capital; and as key components of social infrastructure and social capital. We are also investigating different approaches to individual and institutional leadership in locally-based systems of innovation. Later phases of our research will explore the process of enterprise growth and the ability of different locations to attract and retain innovating firms.

The policy debate has been dominated by a few outstandingly successful centers of technological entrepreneurship, notably including Silicon Valley and the Boston area in the United States, and the Cambridge region in the U.K. But most locales do not have clusters of high-technology ventures of such scale, nor are they home to research and educational institutions with world-class strengths across a broad range of disciplines.

Many locales, on the other hand, do have distinctive industrial capabilities and vibrant higher educational institutions, and some have been quite successful in harnessing new technology to revitalize their economies or even to reinvent themselves as centers of innovation and competitive advantage.

The Local Innovation Systems Project is investigating cases of actual and attempted industrial transformation in more than 23 locales in the United States, Europe, and Asia. Our research is aimed at developing new insights into how regional capabilities can spur innovation and economic growth. We seek ultimately to develop new models of innovation-led industrial development.

To address these questions, we are carrying out a series of longitudinal comparative case studies in multiple locations, each focused on a different field or sub-field of industry. The case studies are being carried out by teams of researchers from the IPC and our partner institutions. These case studies are augmented by qualitative and quantitative analysis using local and regional data sources, and the project also draws on related large-sample survey research jointly conducted by the University of Cambridge’s Center for Business Research and the Industrial Performance Center.