Learning Regions As Development Coalitions

Learning Regions as Development Coalitions:

Partnership as Governance in European Workfare States?[1]

By

Professor Bjørn T. Asheim,

Centre for Technology, Innovation and Culture/

Department of Sociology and Human Geography,

Faculty of Social Sciences,

University of Oslo,

P.O. Box 1108 Blindern,

N-0317 Oslo, Norway; and

The STEP Group (Studies in technology,

innovation and economic policy),

Storgaten 1, N-0155 Oslo, Norway.

Published in Concepts and Transformation. International Journal of Action Research and Organizational Renewal, 6, 73-101, 2001.

Learning regions as development coalitions: Partnership as governance in European workfare states?

Introduction

The understanding of post-Fordist societies as learning economies, in which learning organisations such as learning firms and learning regions play a strategic role, has lately been exposed to criticism. The critique has partly pointed at the structural limits to learning in a capitalist global economy, and partly argued that firms in capitalist societies have always been learning, referring especially to the role of innovation in inter-firm competition (Hudson 1999).

Lundvall argues that the concept of a learning economy can be used in two interconnected ways; partly as a theoretical perspective on the economy, and partly as a reference to a specific historical period in which knowledge and learning has attained an increasing importance in the economy, and, thus, is requiring a new theoretical framework for it to be analysed (Lundvall 1996). In this article it will be argued that the concept of a learning economy describes a qualitative change in the development of capitalist economies. This change is represented by the transition from Fordism to Post-Fordism. Thus, the crux of the question of the degree of reality in the rethoric of learning economies and learning regions, lies very much in the view of whether such a transition has really taken place or not. If one argues along with Lundvall (1996), Jessop (1994), Piore and Sabel (1984) and many others, it seems obvious that important structural changes are taking place, and the only theme for discussion is the size and consequences of the changes, and the way these changes in the economy effect the political and institutional set up.

This point is taken further by Jessop who links the developments in the global economy from Fordism to Post-Fordism to a parallell restructuring of the state from “the Keynesian welfare state appropriate to the Fordist mode of growth to a Schumpetarian workfare state more suited in form and function to an emerging post-Fordism” (Jessop 1994, 251), and a subsequently “hollowing out” of the nation state, which is a combined effect of a globalising and de-regulated world economy, dominated by TNCs, and the reduced power of nation states due to a transfer of authority to supranational organisations. These changes have led to a shift in the regime of international trade relations from comparative advantage on the basis of relative best access to endowments supplying cheap production factors (e.g. low input costs of raw material and labour) to socially created competitive advantage, resting on ”making more productive use of inputs, which requires continual innovation” (Porter 1998, 78)[2]. This has on the sub-national, regional level resulted in a growing attention being paid to perspectives and strategies that can secure the innovative capacity of regions in order to foster a regional future of endogenous economic growth. The increased focus on learning regions in the contemporary global economy as a strategy for regional development must, thus, be understood in this double context of changes in the economy as well as of the state. Contrary to the critics, it will be argued that the learning region has a large potential to offer both as a theoretical and normative concept and as a practical metaphor for formulating regional policy.

What is a “learning region”?

In his article presenting the “sympathetic” critique of the idea of a learning region, Hudson (1999) does not explicitly define the concept. However, others have made such attempts. Florida, in an article arguing for a central role of regions in “the new age of global, knowledge-intensive capitalism” (Florida 1995, 527), defines learning regions as “collectors and repositories of knowledge and ideas, ....(which).... provide an underlying environment or infrastructure which facilities the flow of knowledge, ideas and learning” (Florida 1995, 528). Hassink (1998) summerises several definitions of learning regions as “regional development concepts in which the main actors are strongly, but flexibly connected with each other and in which both interregional and intraregional learning is emphasised” (Hassink 1998, 6). The Swedish National Institute for Working Life in a project together with The Swedish EU Programme Office on “Stronger Partnership for Learning Regions” consider the perspective of learning regions as a means to “initiate and provide the basis for co-operation between enterprises in regions, local public bodies, organisations and other interest groups” (The National Institute for Working Life 1997, 1).

All these definitions and elaborations of the concept of a learning region emphasise the role played by regional based learning organisations. This underlines the important role of innovation, understood as contextualised social processes of interactive learning, in a post-Fordist learning economy, which highlights the significance of building social capital in order to foster co-operation as well as promoting the principle of broad participation in intra- and inter-firm networks. The concept of a learning region could, then, precisely be used to describe a region with an economy embedded in "institutional thickness", and characterised by innovative activity based on localised, interactive learning, and co-operation promoted by organisational innovations in order to exploit "the benefits of learning based competitiveness" (Amin and Thrift 1995a, 11). This points at a broad understanding of a learning region as representing the territorial and institutional embeddednesss of learning organisations and interactive learning, which, however, could not be said to be similar to a regional innovation system, and, consequently, be used synonymously (Hassink 1998), even if innovation systems, especially in its broad definition (Lundvall 1992), must constitute a core element of learning regions (Asheim and Pedersen 1999).

Learning regions should be looked upon as a policy framework or model for formulations of long term partnership-based development strategies initiating learning-based processes of innovation, change and improvement. In the promotion of such innovation supportive regions the inter-linking of co-operative partnerships ranging from work organisations inside firms via inter-firm networks to different actors of the community, understood as “regional development coalitions”, will be of strategic importance. By the concept “development coalition” is meant a bottom-up, horizontally based co-operation between different actors in a local or regional setting, based on a socially broad mobilisation and participation of human agency. (Ennals and Gustavsen 1999a). The attractiveness of the concept of learning regions to planners and politicians is to be found in the fact that it at one and the same time promises both economic growth and job generation as well as social cohesion. As such, learning regions must be analysed as an answer and challenge to contemporary changes in the global economy and the subsequently strategic policy reorientations of the nation state.

The building blocks of the concept of learning regions

The concept of “learning regions” has been used in at least three different contexts. The concept was first introduced by economic geographers in 1995 (Florida 1995), when they used it to emphasise the role played by co-operation and collective learning in regional clusters and networks in order to promote the innovativeness and competitiveness of firms and regions in the globalising learning economy (Asheim 1997). This approach was clearly inspired by the rapid economic development in the “Third Italy”, which drew the attention towards the importance of co-operation between SMEs in industrial districts and between firms and local authorities at the regional level in achieving international competitiveness (Asheim 1996).

The second approach expressing (more indirectly) the idea of learning regions originates from the writings of new evolutionary and institutional economics on the knowledge and learning based economy, arguing that "regional production systems, industrial districts and technological districts are becoming increasingly important" (Lundvall 1992, 3), and from Porter, who emphasises 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, 157). These ideas are more or less the same as the ones Perroux, another Schumpetarian inspired regional economist, presented in the early 1950s. According to Perroux, the growth potential and competitiveness of growth poles can be intensified through territorial agglomeration by exploiting localisation (external) economies (Haraldsen 1994, Perroux 1970).

The third approach, which conceptualises learning regions as regionally based development coalitions, has lately been applied by representatives of the socio-technical school of organisational theory taking their knowledge of how to form intra- and inter-firm learning organisations based on broad participation out of the firm context and using it to establish learning organisations at the regional level (i.e. learning regions) (Ennals and Gustavsen 1999a).

This organised form of bringing the society inside the firm through learning organisations based on broad participation, and supported by labour market legislation as well as a strong tradition of co-operation between the labour market organisations, is in many aspects the opposite way of achieving a fusion of the economy with the rest of society (Piore and Sabel 1984) than the industrial district model, in which the firm is contextualised through its embeddedness in spatial structures of social relations. These contrasting models of contextualising the firm also reflect the alternative interpretations of social capital, i.e. as rooted in the “civicness” of communities (industrial district) or as formal organisations on the system level of societies (development coalition). However, while the economic geograhic and the evolutionary economics approaches are strong on the innovation dimension, the action research approach of the socio-technical school has mainly focused on the organisational principle of broad participation. Thus, it is an important task to merge these approaches in order to obtain a coherent model or policy framework for formulations of partnership-based development strategies in order to achieve economic growth, employment generation as well as social cohesion.

a) Economic geographical studies of industrial districts in the Third Italy

The rapid economic development in the "Third Italy", based on territorial agglomerated SME's in industrial districts (ID), has drawn an increased attention towards the importance of co-operation between firms and between firms and local authorities in achieving international competitiveness (Brusco 1990). Pyke (1994) underlines the close inter-firm co-operation and networks as well as the existence of a supporting institutional infrastructure at the regional level (e.g. centres of real services) as the main factors explaining the success of Emilia-Romagna in the "Third Italy". According to Dei Ottati, "this willingness to cooperate is indispensable to the realization of innovation in the ID which, due to the division of labour among firms, takes on the characteristics of a collective process. Thus, for the economic dynamism of the district and for the competitiveness of its firms, they must be innovative but, at the same time, these firms cannot be innovative in any other way than by cooperating among themselves" (Dei Ottati 1994, 474).

The European experience of industrial districts has become a major point of reference in the recent international debate on industrial policy promoting regional endogenous development. Of significant importance is the understanding of industrial districts as a "social and economic whole", where the success of the districts is as dependent on broader social and institutional aspects as on economic factors in a narrow sense (Pyke and Sengenberger 1990). Bellandi emphasises that the economies of the districts originate from the thick local texture of interdependencies between the small firms and the local community (Bellandi 1989), and Becattini maintains that "the firms become rooted in the territory, and this result cannot be conceptualised independently of its historical development" (Becattini 1990, 40).

Thus, the major differentiating factors in play in the Third Italy are not the techno-economic structures as such, but rather the importance of non-economic factors for the economic performance of the regions. Brusco et al. (1996) maintain that the “experience in Emilia-Romagna has demonstrated that competitiveness on global markets is not a contradiction to high labour cost, high incomes and a fair distribution of income; on the contrary, we would claim that a fair income distribution is a necessary condition (although not sufficient) for consensus, and consensus and participation are an indispensable prerequisite for economic success” (Brusco et al. 1996, 35). Furthermore, the economic and social development of the region has not simply been “the result of a “spontaneous” development but, rather, it has been assisted by a process of institutional building aimed at the creation of an intermediate governance structure capable of establishing a positive enabling environment for firm development” (Bianchi 1996, 204).

b) Evolutionary economical theories of post-Fordist societies as ”learning economies”

Lundvall and Johnson use the concept of «learning economy» when referring to the contemporary post-Fordist economy dominated by the ICT-related (information, computer and telecommunication) techno-economic paradigm in combination with flexible production methods and reflexive work organisations (i.e. learning organisations and functional flexible workers) (Lundvall and Johnson 1994). In addition the learning economy is firmly based on «innovation as a crucial means of competition» (Lundvall and Johnson 1994, 26). These perspectives of the "learning economy" are based on the view that knowledge is the most fundamental resource in a modern capitalist economy, and learning the most important process (Lundvall 1992), thus making the learning capacity of an economy of strategic importance to its innovativeness and competitiveness.

When reference is made to innovation as a crucial means of competition in the learning economy it is not the previous hegemonic linear model of innovation of the Fordist era of industrial organisation and production[3], which is being thought of, but a new theoretical understanding of innovation as basically a socially and territorially embedded, interactive learning process, which, thus, cannot be understood independent of its institutional and cultural contexts (Lundvall 1992).

This more sociological view on innovation implies a criticism of the traditional dominating linear model of innovation, as the main strategy for national R&D policies, of being too "research-based, sequential and technocratic" (Smith 1994, 2). The criticism implies another and broader view of innovation as a social as well as a technical process, as a non-linear process, and as a process of interactive learning between firms and their environment (Lundvall 1992, Smith 1994). This alternative model could be referred to as a bottom-up interactive innovation model (Asheim and Isaksen 1997). The interactive innovation model puts emphasis on “the plurality of types of production systems and of innovation (science and engineering is only relevant to some sectors), “small” processes of economic co-ordination, informal practices as well as formal institutions, and incremental as well as large-scale innovation and adjustment” (Storper and Scott 1995, 519).

Porter emphasises that the reproduction and development of competitive advantage requires continual innovation, which in a learning economy is conceptualised as a localised interactive learning process, promoted by clustering, networking and inter-firm co-operation. This new and alternative conceptualisation of innovation as an interactive learning process means an extension of the range of branches, firm-sizes and regions that can be viewed as innovative, also to include traditional, non R&D-intensive brances, often constituted by SMEs and located in peripheral regions. The basic critique of the linear model is precisely the equation of innovative activities with R&D-intensity. The majority of SMEs are in branches which are not R&D-intensive, but which could still be considered to be innovative (e.g. the importance of design in making furniture manufactures competitive and moving them up the value-added chain). One further, important implication of this view on innovation is that it makes the distinction between high-tech and low-tech branches and sectors, which is a product of the linear model, irrelevant, as it maintains that all branches and sectors can be innovative in this broader sense. According to Porter, “the term high-tech, normally used to refer to fields such as information technology and biotechnology, has distorted thinking about competition, creating the misconception that only a handful of businesses compete in sophisticated ways. In fact, there is no such thing as a low-tech industry. There are only low-tech companies – that is, companies that fail to use world-class technology and practices to enhance productivity and innovation” (Porter 1998, 85-86). Following Porter, this implies that it is possible in all branches and sectors to find productive and innovative firms enjoying competitive advantages on the global markets. Thus, this theoretical perspective also broaden the scope for a policy of strong competition for post-Fordist learning economies (Storper and Walker 1989), i.e. competition building on innovation and differentiation strategies, in contrast to weak competition based on price competition.

c)Organisational theoretical action research on learning organisations as ”development coalitions”

Hudson in his criticism of the concept of learning regions questions the impact of the growth of “new and enriching and empowering forms of work” as a result of the increased importance of knowledge and learning (Hudson 1999, 60). Referring to what he sees as “necessary and possible” in a capitalist economy he will not in general accept the tendency towards a reduction in the relative significance of “the alienated and deskilled mass worker” (Hudson 1999, 60). However, changes in work organisation away from such working conditions have been underway since the 1940s and 50s starting with the studies by the socio-technical school of organisational theory, which also is a forerunner for today’s research on development coalitions. There has been a transformation of the organisation of the labour process from a work organisation on the basis of Fordist and Taylorist principles of a strict division between intellectual and manual work, building on the ideas of “scientific management”, to a reflexive based work organisation in which central, skilled, functional flexible workers are more important than un- or semiskilled, numerical flexible, peripheral workers. In such a reflexive work organisation of functional flexible core workers it is easy to understand the potential importance of intra- and inter-firm learning organisations based on broad participation, in which interactive learning plays a strategic role. In their work, Lundvall and Johnson argue that "the firm's capability to learn reflects the way it is organised. The movement away from tall hierarchies with vertical flows of information towards more flat organisations with horizontal flows of information is one aspect of the learning economy" (Lundvall and Johnson 1994, 39).