Policy and innovation in low-tech : knowledge formation, employment & growth contributions of the 'old economy' industries in Europe : PILOT

The PILOT project comprised partners from nine European countries. The national research teams have conducted a series of case studies on non-research-intensive, so called low-tech companies in eleven countries, investigating their value chains and regional networks, and the policies that impact on these firms and on low-tech and medium-low-tech (LMT) sectors in general. A second thread of work has been quantitative analyses of the contributions of these industries to employment, growth and innovation in OECD countries. Finally, the members of the project made a number of conceptual advances. Among the most important results are the following: The project established that most growth and employment in OECD countries still emanate from LMT industries. It provided ample evidence of the existence, and in many cases the crucial importance, of nonresearch based innovation. The analysis shows that innovativeness is based on a particular enabling configuration of resources that a company possesses rather than on excellence in R&D alone. In fact, PILOT found that significant innovation might occur in the absence of any activity that could be classed as R&D under commonly-used definitions. Internal organisational practices - knowledge management and personnel policy in particular - play a vital role for innovation in and the innovativeness of LMT firms, while network relations between companies and supportive social networks on a regional level are also important as they are resources for firm capabilities. The analysis also substantiates that interrelationships of mature LMT sectors on the one hand and young high-tech sectors on the other are of major importance for the innovativeness of industry in general. In relation to policy, PILOT has provided evidence that there has been a bias in policy towards science-based innovation and high-tech industries. This is a problem because the relationship between R&D and high-tech on the one hand and economic success on the other is at best tentative. Efficient and sustainable policies to support innovativeness should therefore be non-discriminatory; that is to say, policy makers should be aware that "LMT actors" are an important segment of a country's innovation infrastructure. On a more general level, PILOT's results lend support to a new understanding of the restructuring of the economic landscape of Europe in the early years of the 21st century. Europe's future does not appear likely to result in wholesale structural replacement of "old" sectors with "new" ones, or to a sweeping substitution of "old" technologies with "new" ones, but rather to lead to a continually changing blend of technologies of various vintages. This process of change is evolving as a restructuring of sectoral and 11 technological systems, transformed more from within than from without. It is not dominated by industrial activities for which competitive advantage, capability formation and economic change are generated by front line technological knowledge. Rather, it is dominated by what are often pejoratively termed low-tech and medium-low-tech industries. And it is unambiguously characterised by the continuous combination and recombination of high and low-tech attributes.