January 2012, “Drugs patentability nd technological innovation in developing countries: the mixed results of the TRIPS agreements”, by Nejla YACOUB (Lab.RII - RNI)

Today 17 years have gone since the signature in 1994 of the Trade-Related Intellectual Property Rights Agreements (TRIPS) in the framework of the World Trade Organization (WTO). The controversies they arise as regards their consequences on the developing countries remain still topical, though. Extending the patentability to pharmaceuticals is one of the major factors that revived these controversies. In addition to its economic dimension, the question has worn a social dimension. This explains the multiplying number of scientific papers dealing with the accessibility of medium and low revenue populations to patented drugs. However, the issue of patentability is much less explored as regards its impacts on the pharmaceutical innovation in developing countries.

The theoretical developments reveal ambivalent relationships between patentability and innovation. While the theoretical arguments based on the knowledge market failures - and therefore those of the pharmaceutical invention market- (non-rivalry, uncertainty, high research and development costs, etc.) justify the drugs patentability in developing countries as an incentive to innovate, the empirical evidence shows mixed results according to countries. This is explained by the fact that innovation is a complicated process which requires the combination of several factors (financial, human, technical, informational … resources) and the contribution of several actors of different nature (institutional, human, etc.) and at different phases (the financing, the research, the production, etc.). The impact of the patentability, which is perceived on the endogenous innovation (via the internal resources) as well as on the exogenous innovation (via the technology transfers), is difficult -even impossible- to isolate; it depends largely and more on the “quality” of the sectoral national innovation system (SNIS).

Without claiming their homogeneity, the SNIS in developing countries are globally, still at primary stages of development; same for the pharmaceutical innovation which appears embryonic and even absent in some countries. In such a situation, the impact of patentability is perceived at two scales. On the one hand, in the absence of the required determinants (financial, scientific, infrastructural … resources) so that innovation could be conducted, the incentive to innovate procured by patentability seems to be of minor interest. On the other hand, since pharmaceutical innovation in developing countries is often conducted through the imitation of technologies from developed countries, drugs patentability increases their (technologies) costs and hence limits their diffusion in developing countries; in this case, drugs patentability generates a negative impact on pharmaceutical innovation in developing countries.

The experience of the occidental pharmaceutical industries, themselves developed through imitation until the middle of the twentieth century, confirms that drugs patentability is an incentive for innovation only when the industry transforms from a “net imitator” into a “net innovator”. Thus, the TRIPS agreements seem to have imposed to developing countries a “premature” reform at this stage of development of their local pharmaceutical industries. If on the short run drugs patentability relative to the TRIPS appears rather as an obstacle to pharmaceutical innovation in developing countries, on the long run, its impact depends on the ability of these countries to put into effect alternative mechanisms to imitation which could facilitate their accessibility to new foreign technologies. One major mechanism in this framework would stem from the creation of attractiveness dynamics towards “innovation seeking” pharmaceutical foreign investments.

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December 2011 : “Food system: a long way towards sustainability” by Delphine Gallaud (Agrosup Dijon, RRI)

The food system has deeply evolved since the sixties. It has been focusing for a long time only on a quantitative goal : to be able to feed an increasing population. The sustainability of our food model is currently at stake, as far as the 3 guiding principles of the sustainable development -environmental, economic and social - are concerned.
On the social and economical ground, the recurring sanitary emergencies since the nineties speak volume about the flaws of the food process system. Besides, there is a clearly established link between feeding behavior and obesity as well as cardiovascular diseases outbreak. From an environmental perspective, developed countries food systems have always been based on an increasing distance between consumption location and production centers, badly damaging environment.
However, consumers’ demand for an increase of sustainability appears (in particular in France) through a growing demand for organic products. But, if this new demand grows quickly, it remains still marginal. The food expenditure for organic products accounts for only 1,2 percent of the households total food spending (Agence bio, 2011). This demand is thus insufficient alone, to contribute to structure the whole agro food chain. The State intervention has supported this demand by imposing the introduction of a 20 percent quota of organic product in collective catering (especially in schools) by 2012. In the mean time, collective catering only account for merely 25 percent of household food spending as oppose to the remaining 75 percent dedicated to home consumption. Organic food expansion is also hindered by the price, preventing a regular consumption to back a real take off of this sector. In addition, certain contradictions must be raised from the environmental perspective: too much use of packing, fruits and vegetables import and food freezing which limits the positive effects of the organic mode of production.

 

Changes of practices are thus necessary as well for supply as for consumers’ practices. These changes are still possible because the organic food chains are not yet well structured. But these changes will need a strong implication of consumers, civil society and firms of the agro food chain.

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November 2011 : “On the transformation of the venture capitalist into capital-risqueur” by Christian Poncet (Art-Dev and RNI) and Nejla Yacoub (Lab RII, RNI)

Since thirty years ago the small enterprises have become a privileged place for breakthrough innovations. Thus, it is imperative to promote the creation of a dense network of innovating small enterprises. However, this implies a risky and a long run investment. Therefore, according to the dominant forms of capitalism appropriate tools have been created and put into effect in order to answer the needs of these enterprises. The regulationist school (Amable et al., (1997) suggests a typology opposing the Anglo-Saxon model (market regulation, market based funding) to that of the continental Europe (regulation by the State, bank based funding). Conformingly to this typology, the activity of operators in venture capital (market based context) is fundamentally different from that of operators in the “capital risqué” (bank based context). Indeed, the efficiency of the venture capital in the innovation process in the USA leads several countries to adopt it in a bank based context but this requires a financial aim for the operators. Throughout this transatlantic migration the venture capitalist drops an important part of his managerial activity. But the interaction synergies between the managerial and the financial prerogatives fade when the financial institutions interfere.
In their definition of the venture capital, Grompers and Lerner (2004, p.17) emphasize the independence of its management. In the USA, there is a disconnection between the sponsor (limited partner) and the sponsored (general partner). In a market based context, the venture capital becomes an opportunity for diversification towards riskier and more rewarding investments. The mediation throughout the markets constitutes a guarantee of independence to the venture capitalist. Hence, if the market based environment favours the sponsored, the bank based environment favours a coalition of the activities of the sponsor and the sponsored: the financial institutions hinder the dynamics of the venture capital. The limits of the importation of the operator in venture capital in a bank based context seem obvious in continental Europe: a difficulty to orient the savings towards the small innovating enterprises; weak expertise capabilities of operators in venture capital; insufficient involvement in the enterprises’ needs; in this market based context the specific host markets of the sustained enterprises’ bonds (Initial Public Offering) valorise the investments, which represents an additional incentive to the project.
Then, a virtuous circle constructs justifying the gap with the Anglo-Saxon countries: in the USA, the venture capital funds (4 million dollars) are twice more important than in Europe, their amounts per enterprise reach 8 million dollars against 2,5 million dollars in Europe and the internal rate of return (IRR) of investments in venture capital (15%) are in a total contrast with the negative and the zero IRR respectively in France (-3%) and Europe. These gaps require a public intervention that encourages the investors to maintain into these funding circuits. This would reinforce the position of banks and limit the emergence of independent operators which maintains a strong involvement of the public authorities. Another circle, vicious, is drawn which strengthens the role of the State in funding innovation.

 

Amable, B., Barré R., Boyer R. [1997] Les systèmes d’innovation à l’ère de la globalisation, Economica, Paris.
Gompers, P. , Lerner J. [2004]  The venture capital cycle, second edition The MIT Press.
Black, B. S. and R. J. Gilson. [1998] Venture capital and the structure of capital markets: Bank versus stock markets, Journal of Financial Economics (47) 243-277.
Hall, P., Soskice, D. (Eds) [2001] Varieties of capitalism; The institutional foundations of comparative advantage, Oxford University Press.

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 October 2011 : “The Entrepreneurial society, myth or reality?” by Sophie Boutillier (Lab RII, RNI)

Since the beginning of the 1980’s, the entrepreneur is becoming a new fashion. The entrepreneurial society has taken the place of the salaried society. Big enterprises always control the world economy, but their relationships with small enterprises have changed. Taking into account the weight of more and heavier investments because of the higher cost of innovation, big enterprises promote cooperation with different partners. In this way, they promote a new creativity. It is the return of the entrepreneur.

The increase in the number of scholars of the entrepreneurship has been very important during these last 30 years in different social and human sciences (economics, management, sociology, psychology, etc.). On the other hand, some spectacular cases of entrepreneurial success (Apple, Microsoft, etc.) have contributed to create a new myth of the return of the entrepreneur that J. A. Schumpeter’s (1942) thinking condemned during the 1940’s. The years of high economic growth, which followed the end of World War II (1945-1975), validated Schumpeter’s thesis: capitalism was becoming managerial. The entrepreneur had been replaced by a collective management composed of managers and shareholders. The entrepreneur described by Galbraith (1968) was a miserable worker disconnected to the technological progress. Some big enterprises, public and private, controlled the industries on which was based the economic growth: car industry, aviation, communication, chemist industry, etc. Galbraith even observed a convergence between capitalism (in United States) and socialism (in Soviet Union). In the two cases, big enterprises dominated. Technological reasons explain this situation, because of important investments to develop new modern technologies. Then, in the context of the Cold War, in the East like in the West, the main markets of the enterprises were military. On the other hand, salaried employment increased to concentrate on the most important part of the working population in the United-States and in Europe.

Since the 1980’s a new model of enterprise appears: the network-enterprises. Their objective is not to be bigger (according to the number of employees or of assets), but to develop relationships with a large range of partners (enterprises of different size, research centers, universities, etc.). The contractual relationships replace the act of production. In this new context, entrepreneur has an important new role to play. Governments and big enterprises attribute to him, or her, a new function: to innovate and create jobs. Because of the destruction of jobs, to create an enterprise is considered by governments as a solution against unemployment, thanks to an appropriate economic policy (financing, consulting, training, etc.). Progressively, in the United States, as in Europe, the institutional frame to create an enterprise is becoming more flexible (reduction of the number of procedures, reduction of the timing to create a business).

Today, the most important part of the working population is always salaried (but the number of employment short contracts has increased more than the number of employment long contracts) in Western Europe and in the United States. For this period, the number of new enterprises increase but also the number of failures. A lot of small enterprises failed after five years, the entrepreneur remains without enterprise, without money, without a job, but with debts. Nevertheless, this humus of enterprises is useful to reproduce capitalist economy, because by this humus the new start-up will be created and that means new jobs and new innovations.

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September, 2011 : “Information in the heart of Competitive Intelligence” by Jean Louis Monino (Laser-Tris and RNI)

In the United States, academic works of the 1960s revealed the importance and the necessity of competitive intelligence as a branch of economics. Harold Wilensky defines competitive intelligence as the activity of producing knowledge collected and produced in a legal context and throughout open sources and serving the economic and strategic aims of an organization.

Stevan Dedijer conceptualizes intelligence as an economic matter and provides a broad definition for it: “intelligence is the information itself and its treatment and the organization which carries it out all by obtaining, evaluating and using it in more or less secret, competitive or cooperative conditions and this for needs of conduction of any social system and as regards the nature, the capacities, the intentions, the current or the potential operations of internal or external opponents”.

Klaus Knorr is one of the first economists to advocate a large diffusion of competitive intelligence, beginning in universities. According to him competitive intelligence is “the operation allowing procuring and treating the information as regards the external environment in which an organization wants to maximize reaching its different goals”. Competitive intelligence becomes a major component of the firms’ strategy and stands on the information which is the base of every decisional process. However, information as it is had received a fundamental scientific treatment without which competitive intelligence would not have been developed.

In France, the contribution of a group of experts gathered at the General Commissariat of Plan was published in 1994, under the name of the Martre Report. These works called “Competitive Intelligence and Firms’ Strategy” propose in the introduction of the report a definition of competitive intelligence which “can be defined as the set of coordinated actions of research, of treatment and of distribution in order to exploit useful information for economic actors.

These various actions are lead legally with all the protection guarantees necessary to preserving the assets of the firm in the best conditions in terms of quality, deadlines and costs. The useful information is that which is needed at the different decision levels within the firm or within the community to elaborate and to put in practice (in a coherent way) the strategy and tactics necessary to reach the defined objectives of the firm in the aim of ameliorating its position within its competitive environment. Within the firm, these actions organize in an uninterrupted cycle generator of a shared vision of the targets to be reached…”.

Competitive intelligence faces problems to establish in France. Nine years after the Martre report, the government asks the deputy Bernard Carayon for a new one. Five years after this latter report we find in the white book on defence of 2008 a particular attention for competitive intelligence in the framework of protecting the frail industrial sectors and the competencies of which could have a sensitive character. Eventually, in its “steps report” of the 5th January 2010, the general states of the industry underlines the necessity for the French industry to better know its competitive environment, its potential markets and the opportunities that could be offered by new technologies. This report emphasizes supporting exports throughout “a better appropriateness of productions with the global demand by competitive intelligence and a steady promotion of the ‘made in France’…”.

Information: an economic good? Information becomes a strategic stake not only for the State security but also to defend the global competitiveness of a country. Nevertheless, this importance of information for the economic world only appeared recently. Economic information is not a good like other ones in the knowledge society. A firm will be better than its competitors if it owns, before them, the appropriate information at the appropriate time, either as regards knowing the markets or as regards judicial, technological, normative, etc. information. To confirm its competitive advantage, the firm must be able to create an information asymmetry to its own favour.

Competitive intelligence targets a better information control in order to be a supporting instrument for decision. Information, even that which is a priori trivial, could constitute after treatments and refinements an economic value. Information constitutes then an economic good for the enterprise.

In fact, the public means (financial, human,…) mobilized in the framework of the support to innovating projects must be oriented more particularly towards the targeted phases of the innovation process and their effects must be evaluated in the feedback. These two imperatives conjugate to build the bases of an efficient public policy to support innovation. Thus, the complexity of the process and the various organisms (public and private) which invest in it contribute to limiting the visibility of the public powers involvement and especially that of the returns on public investments (at the economic, social or financial level for the local authorities). Economic intelligence puts in perspective all these information useful for an organism either they are scientific or technical or related to the markets, the products, the competitors, the regulation and the behaviours.

Innovation, the technologies of information and communication and the economy of services, use new growth drivers which are: knowledge, creativity and technologies. These new raw materials define what some people call the immaterial economy, which needs the enforcement of a strategic competitive intelligence.
Strategic competitive intelligence is a mode of governance the aim of which is to control and protect the pertinent strategic information for every economic actor. It could be:
- Offensive: when it collects, analyzes and diffuses useful information for different economic actors;
- Defensive: when it protects strategic information for the firm from malice and internal and external negligence acts.

Philippe. Baumard, « Stratégie et surveillance des environnements concurrentiels », Paris: Masson, 1991.
Philippe. Baumard, « Guerre économique et communauté d’intelligence », La Revue Politique et Parlementaire, 1992.
Stevan. Dedijer, « The Rainbow Scheme: British secret service and Pax Britannica », in W. Agrell, B. Huldt, Clio goes spying: Eight essays on the Histroy of Intelligence, Lund
Studies in International History, Malmö: Scandinavian University Books. 1983.
Christian. Harbulot, « Techniques offensives et guerre économique », Étude No 131, Paris: Centre de Prospective et d’Évaluation/Aditech, 1990.
Klauss KNORR, « Failure in national intelligence estimates; the case of the Cuban missiles », World Politics, 1964.
Harold Wilensky, « Organizational Intelligence: Knowledge and Policy in Government and Industry », New York: Basic Books, 1967

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August, 2011 : “On Merit Pay in Science” by Julien Pénin (BETA  / Université de Strasbourg and RNI)

Over the last few years, a number of reforms in France have aimed at introducing a larger part of merit pay in the field of science, with the avowed aim to increase researchers’ incentives and hence to increase scientific productivity (the two best known measures being the bonus for scientific excellence and the publication bonuses allocated by a growing number of institutions). Without really denying this evolution, an in-depth analysis of the motivations which explain scientists’ choices leads to questioning its efficiency. Two essential elements emerge from research works in the economics of science:

First the complex nature of the motivations of researchers should be stressed. Economic analysis considers that the motivation of a scientist relies on three elements: salary, intellectual challenge (the puzzle effect) and peers’ recognition (reputation effect). A researcher does not do research only to become rich but also for the intellectual challenge and by narcissism. Consequently to provide him/her with a stable remuneration, whatever its short term performances, is often considered as the best incentive for him/her to focus its efforts on fundamental research, which does not pay immediately and which is difficult to measure (and hence to reward) but which is stimulating from an intellectual point of view and a potential source of recognition by the scientific community.

In this framework it is actually the plural nature of the motivation which urges researchers to do Research. This means that if the part of proportional remuneration is too high, scientists might be deterred from concentrating on real fundamental research, which is however the only supplier of long-term growth. This is all the more true since the main indicator in science remains publishing: although unavoidable, publishing raises many critical comments about its ability to measure research performance.

The second criticism calls on economic theories of incentives and goes much further into the analysis of individual behaviours. Economic literature on incentives provides a major contribution on the link between remuneration and incentive, when the motivation of actors is partly intrinsic (as it is the case in science). This outcome was summarised as follows by Uri Gneezy and Aldo Rustichini: « pay enough or don’t pay at all ».

In other words, to be efficient remuneration must be significant, otherwise it will probably not increase the scientists’ incentives, on the contrary. As many examples show, “micro-payments”, which interfere with non-monetary motivations, may reduce the strength of the latter and hence lower the global motivation level. According to this literature, there might hence be a “hidden cost” when scientists are financially rewarded. Furthermore, even in the case when the remuneration is significant, side effects may arise and the performance of some researchers (for instance those who do not think they will be granted bonuses) might be negatively affected by the introduction of merit pay.

To conclude research in economics of science shows that the issue of merit pay of researchers, although legitimate, is complex and that no simple answer – like bonus for publication – can be completely satisfactory.

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July 2011: Public-private innovation networks in services by Faridah Djellal and Faïz Gallouj (Clersé, Lille 1 & RNI)

Innovation networks (INs) have been and continue to be the object of an extensive literature that has undergone theoretical, empirical and methodological renewal at regular intervals. The success of this notion is due in particular to the simplicity of the principle underlying it, namely interaction as a means of producing knowledge, innovation and, more generally, economic performance. It is due also to the relevance it has for company management and public action. An IN can be defined simply as a group of economic agents who interact with each other with a view to producing innovation. Although they are extremely heterogenous, (traditional) IN essentially involve interactions dominated by manufacturing industries and designed to generate R&D activity and technological innovation.

Public-private innovation networks in services (ServPPINs) are particular kind of innovation network, as yet relatively unknown but which is developing against the background of economies dominated by service industries. Such networks involve collaborations between public and private service organisations in the field of innovation. They are not the same as public-private partnerships (PPPs), which are a halfway house between the public provision of a service and privatisation, in which the provision of a public service or the funding of an infrastructure project are entrusted on a contractual basis to a private provider. They also differ from traditional innovation networks in several ways. Firstly, the relations between the public actors and the private actors lie at the heart of the analysis. Secondly, service providers are the main actors in them. Finally, non-technological innovation (service innovation), which is often overlooked in the literature, is taken into account.

The servPPIN European project (1) made it possible to collect more than 40 detailed servPPIN cases in different sectors: health, transportation, KIBS (including tourism). This data base includes examples of networks set up to develop new vocational training courses, new tourism products, advisory services for farmers, innovation in elderly care, a dynamic intermodal trafic information system for a region…

The concept of the ServPPIN enriches the traditional concept of the IN in various ways. It opens it up to new actors: all market services and third-sector organisations. It extends the possible forms of participation for certain actors. Thus public organisations are no longer confined to a support role in the innovation process; rather, they may be active participants in that process, particularly as far as their own activity is concerned. It also extends the range of purposes for which networks are established. Technological innovation is no longer the sole objective, since non-technological innovation in all its forms, particularly innovation in public services, is now included in the model. ServPPINs are both an object and an instrument of public policy. They must be supported and used in order to reduce the innovation and policy gaps that still characterise modern service economies.

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June 2011: Why CSR may be considered as a deceit? by Yvon Pesqueux (CNAM)

CSR appears in correlation with the ‘crisis of the Law’ in the context of globalization and the related deregulation. It is not an answer to a social demand but an auto-standardization, an auto-enactment, a transfer of legitimacy and a justification of the disappearance of the organs of legislation for the benefit of a freedom of expression of the corporations’ headquarters. CSR is considered as being able to answer expectations within the framework of a managerial-centered representation towards stakeholders in the context of an utopian capitalism (its future) and a situation of predator (its present). CSR would be considered as able to mark the limits of predation.

CSR considers the corporation and the society as separated. CSR would then be an opportunist attempt to catch the sympathy of the public opinion by a communication on the interest given by corporations to social and environmental concerns connected to their activities. CSR is based on the postulate that the corporation can be considered as having ‘clean’ intentions.

As it often goes with notions of this type, CSR cannot be considered as a new idea. It should be connected with the history of charitable activities that have existed since the Middle Ages and with references such as H. Ford with his decisions about salaries of 5 USD a day, the paternalism of entrepreneurs in Europe and the lifetime employment in Japan, aspects which already were CSR.

CSR is at the origin of an informative inflation, expression of a commitment coming to convince that a ‘dialogue’ has been built with stakeholders. But it is also possible to qualify CSR as a monologue sent to social agents because they asked for nothing.

CSR is considered with few debates and with an apparent consensus on its correlates: solidarity, responsibility, equity, etc. CSR tends to establish a protean meaning of the responsibility of corporations: economic responsibility (contribution of the corporation to development by an optimal allocation of scarce resources, taxes paid – or avoided, technology transfers, local employment, etc.), social responsibility for employees (social standards, human rights, labor law, social welfare), corporate social responsibility (for the environment and the society), political responsibility (according to the role of corporations in local policies, governance of subsidiaries, fight against corruption, etc.), extraordinary responsibility (in case of natural disaster, of conflict, of emergency situations) and charitable responsibility (donations to local populations). CSR also ends on a mostly optimistic discourse, which contrasts with its related eschatology.

The most radical critique is the absence of convincing global effects, particularly against global warming.

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May 2011: Functional economy, a different reading of the current changes towards a sustainable growth by Ingrid Vaileanu Paun (RNI)

When the economists and practitioners dare to get out of the mainstream fordist economic reasoning in order to try to understand differently the levers of the firms’ new innovative strategies for performance, they embrace the functional economy approach. Introducing on the market the « use value » of the products or services instead of basing the profit making logics on the sell of the same products or services, brings structural change. This change refers not only to innovate fundamentally firms’ offer but also to changes in their production system and their relations with the stakeholders.

In France, the Grenelle de l’environnement in 2007 and the research concerning the trends towards the « economicisation of the ecology » (developed during the Prospective Mission “Transitions towards an ecological economy” of the Ministry of Environment in 2010) had encouraged research work in understanding the new functional economy model. This model seams to be revealed by the changes in terms of new consumption and life style patterns, by the revisited relation with the client and the territorial values as well as by a repositioning of the “gouvernance”. The central issue gathering the interest of academics and professionals is the adequacy of the functional economy model with the sustainable development. How could this model propose a new virtuous circle of growth associating the firms’ dynamic and the supported interest of the stakeholders ? The economists are invited to analyze the environmental and social implications of what we could tend to perceive as the wind of change. It is thus crucial to understand the structural changes of the « offer-demand » relation that evolves towards a smart grids approach (BEPOS and Smart Grids). These changes illustrate the emergence of a new economic model where the territorial dimension reveals as a new value creation center for the firms, generating a « territorial embedded value ».

New practices emerge: innovative organization and services strategies of firms in different sectors, new organization of several towns and regions basing their growth strategies on the dematerialization approach and thus focusing on « selling performance » instead of selling merchandise. The growth would no more rely on the sell of the standardized products or / and services but on the sell of the co-produced solutions (integrating products and services and a new value of the relation between producers and consumers).

But this new dynamic trend to support the research for a new economic model meant to be socially and environmentally virtuous is not new. Analyzes started at the end of 20th century leaded to the development of concepts like the Product Service System. These same research works emphasized also the important barriers to the generalization of the economic model especially because of the institutions forms rather adapted to the fordist economic model. The functional dynamic of the microeconomic level seams thus confronted to the fordist heritage at the mesoeconomic level. The functional economy seams to demand radical changes of the institutional forms in order to respond efficiently to all the issues (economic, social and environmental) concerning the sustainable dévelopment.

We selected here the definition of the functional economy proposed by l’ecole francaise – Club de l’Economie de la fonctionnalité et Développement Durable (Atemis, 2011) : « The functional economy intend to promote the solutions integrating products and services during their use in order to respond to the evolving expectations of the individuals (mobility, health, proximity services, thermal comfort) and of the firms (energy management, decrease in use of material resource, offer and maintenance of the evolving work environment, information management…). This integration is conceived on the basis of a « systemic leap » which offers the possibility to deal with the sustainable development objectives. The organizations’ performance is no longer based on the development of the volume of products and services but on the performance engagements integrating the social and environmental externalities ».

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April 2011: New medias, new concepts : innovative innovation, in networks… by Françoise Amossé (RNI)

The development of Web use, and especially Web 2.0 with its combination of discussion groups, blogs, social networks and other medias of social computing, creates third type exchanges, that are open and based on human contribution and cooperation. This dynamic relies not only on economic motivations, since the interrelations are based upon the numeric, telecommunications and electronic industry. It relies on a social concept. Such transfers of knowledge through internet reasserts the value of human intervention in the different fields of social life : work and business, creation and cultural activities, information and citizenship, services. However, cyber exchanges have particularities that cannot be ignored by economists or the corporate world : they are de-monetized and based on voluntary participation and responsabilization. After a period of strong consumerism and productivism, society is experiencing a new trend, that of contribution, a form of cooperation that could be the basis for a development model.

Within the corporate world, the arrival of digital collaborative platforms brings up several questions. They challenge work organization and management models and group benefits linked to them. The statement also applies for the potential of teleworking. How can the contribution of individual cognitive resources to the expertise of a work group within a business be evaluated when shared by information systems for example? Which standards should be used ? Are they in fact necessary within the frame of a new management that would view them as an inseparable part of human activity? All these issues apply to public life.

A yet unknown form of economic and management system is at work. Its driving force : the place of Man in the development of cooperative internet and contribution. The expansion of information and communication technologies via Internet puts research on innovation into question. The expertise of the social sciences is essential to understand the issues and the range of these evolutions where anthropology, economy, sociology and philosophy are all interlinked.

The concept of innovation needs to be examined: are the usual standards of costs, developments and economic innovation still viable? These questions are an invitation to create forum for cooperative deliberation. This will be done here, on a dedicated website, which will be created next April by the RNI.

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March 2011: Brands against counterfeiting: willing victims ? by David Dumont (Westford, RNI)

During the last Christmas holidays, we were witnessing an increase of counterfeit goods, which may more and more easily be found on commercial web sites, at the markets and even on the stores displays as well. It is estimated that one company out of two is the victim of counterfeiting, and that the number of articles seized at EU borders has increased sevenfold in ten years (UNIFAB). Although counterfeiting concerns all sectors and all types of products (toys, automotive brake pads, perfumes, clothing); the high value-added brands, especially in the luxury-goods sector, are particularly affected. How are these brands dealing with counterfeiting? Are they really victims?

Just a few years ago, some brands were proud to be copied: this meant that the brand was envied and desired. For others, counterfeiting enabled a brand to significantly enhance its fame, and some took advantage of this free advertising. Other brands, whether they liked it or not, widened their target market thanks to counterfeiting (as for example the brand Lacoste). Furthermore, the brands themselves unconsciously organized their own counterfeiting by relocating or by subcontracting their production in less protected countries where the fake is mingled with genuine within the same factories (Ralph Lauren in Mauritius or Nike in China).

The Internet and commercial Web sites have significantly contributed to increase the phenomenon of counterfeiting by enabling the easy and anonymous sale of counterfeited goods. Last September, the French Court of Appeal upheld the conviction of Ebay, for having, as an editor, advertised and allowed the sale of copies of LVMH products. Yet many brands are still selling their articles on those same web sites and let the consumers distinguish by themselves fake from genuine.

For a long time, companies whose brands were copied kept silent and did nothing, thus becoming if not accomplices, at least willing victims. Today, however, more and more of them are tackling this scourge. According to UNIFAB (Union of fabricants) the consequences of counterfeiting for firms are considerable: loss of revenue (six billion euros for France in 2007), damage to the corporate image and risks of lawsuits in case of accidents (for example faulty disc brakes). All these arguments encouraged companies to organize a real anti-counterfeiting offensive. In the luxury and design sector, the Colbert committee (1) which gathers 75 member companies; aims to raise consumer awareness on the consequences of purchasing counterfeit items through advertising campaigns.

Some brands choose to turn to those real “hunters of counterfeiting” – the specialized consulting firms. Budgets devoted to the fight against counterfeiting have increased significantly. In a recent study of the UNIFAB (April 2010: the impact of counterfeiting as seen by companies in France), 27% of those polled businesses spend more than one million of euros per year to protect their rights throughout the world, and 16% of them spend more than 10 million of euros. Decided not be a victim anymore, even less consenting, brands counter attack.

(1) Founded in 1954 by Jean-Jacques Guerlain, the Comité Colbert is an association governed by the French law of 1901, which has a membership of 75 French luxury-goods companies. The Comité Colbert aims to collectively promote the shared values of its members in France and internationally. Its quest is to combine tradition and modernity, craftsmanship and creativity, history and innovation.

University Wesford Geneva and the Institut de Recherche sur la Marque are organizing the 1st International Conference on “Luxury and Counterfeiting: Issues, Challenges and Prospects” - 9 and 10 June 2011, Geneva (Switzerland)

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February 2011: Combinatorial Innovation in Computing by Philippe Batsale (University of Paris 12, RNI)

According to Eric Schmidt, Google’s CEO, it is noticeable that new ideas in the computer industry have been getting very scarce in recent years. He may see a new system of data encryption designed around 1975, but since then … Yet, we all have a Facebook account, an unprecedented kind of application: a program and its data scattered over on the Internet, somewhere on unknown servers, in no way on our hard drives, that is to say an application which deeply renews our use of computers.

But Eric Schmidt reminds us that in 1983 he was already involved in the launch of the SUN 3M machine that did not have any hard disk and was designing, even then, a kind of of Cloud Computing Terminal. Likewise, Oracle and, and of course, always Eric Schmidt, introduced in 1997 the Network Computer, a new version of the famous Cloud Computing Terminal. Why did it not work at that time?

Two things were missing then. First of all, the global performance of computers, which was to get higher and higher as time went by, according to Moore’s Law; global performances of computers have been multiplied by 1000 in 15 years. The Power and speed multiplied by a thousand for processors, networks and disks. Moreover, the typical Web applications that are now essential, were not there: for instance Gmail, Maps, Twitter, etc.. And (as well as) the software environment that allows their development: Perl, Html5, LAMP etc.

Cloud Computing then comes from old thinking; it came through thanks to the integration of a myriad of components which have permitted its purchase by consumers and which have promoted a deep change in our practice of computing: everything on the network , very little on our hard drive; and our computer which was previously stuck on its desk, can suddenly leave the room by becoming mobile as a smartphone or a tablet (iPad etc..).

To Hal Varian, Google’s Chief Economist, this is part of a mode of innovation which may be called combinatorial. We are experiencing a wave of combinatorial innovations around the Internet after experiencing waves of integrated circuits (1960), combustion engine (1900) and mechanics (during the 19th century).

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January 2011: For a “Large Step” Toward Sustainable Development: “Reinventing” Global Governance by Lamia Yacoub (LABRII, EAS-Mahdia (University of Monastir, RNI)

Today, twenty three years have passed since the publication of the Brundtland Report. Twenty three years during which the objective of Sustainable Development has continued, in a context of Globalization, to enrich and renew the traditional economics of development. Twenty three years during which international conferences, summits and protocols multiplied in the perspective of a development managing to combine the economic with the social and the environmental. The last one is the 16th United Nations Conference on the Climate which took place at Cancún from November, 29th to December, 10th 2010.

Sharing clean technologies, financing and governing a Green Fund helping the South in fighting the climate deregulations … If these questions remain far from targeting a binding agreement, they seem at least to have blown a breath of life into a moribund negotiations process. But, how about the future of the Kyoto protocol? It is a major question which all the same had to be postponed. While Greenhouse Gas emissions are reaching record levels, some countries like the United States and Bolivia still do not agree to make genuine concessions. At the same, if some other countries such as India, China or Brazil seem to be willing to make compromises, the adopted text has no legal or judicial value to make them fulfill their commitments. Worries about a repetition of the Copenhagen Scenario could hence appear to be unfounded. However, we are still at the stage of few good intentions while the differences remain unresolved in regard to the terms of a new binding agreement.

Here is then one more conference which shows to which extent the reflection on the Sustainable Development arises with a perpetual acuity on the global level. And here is one more failure which reveals to which extent this reflection still arises more questions than it brings answers; collective and efficient answers still need to be thought. There is a long path to cover toward Sustainable Development, so far, the crisis of the global governance system is indeed obvious.

By the mere measurement of the breadth of the social inequalities and the international development gaps, it becomes misleading to pretend the efficiency of this system. Globalization remains an opportunity for enrichment marked by a strong distributive asymmetry. Also in regard to environment matters, it is obvious that the defined measures and actions crucially miss pragmatism, which opens the field to avoidance strategies. The capitalism continues to shape our natural environment according to its own laws and in a very contestable way; global heating, pollution, biodiversity reduction … These are as many cumulative unresolved problems. The issue of Sustainable Development shows eventually how much does the discrepancy between “be willing to do well” and “doing” remain flagrant. Even though all the countries seem to be conscious about the stakes, many among them are not yet willing to make the necessary concessions for the global benefit.

Today, it is very obvious and commonly agreed that it was a fundamental mistake to put the economic over the social and over the environmental. But do not we learn most from our own mistakes? Indeed, the failures of the current global governance system and the recurrent and successive failures of the international conferences on environment are as many lessons for those who take it their duty and get down to reinventing global governance for a large step toward Sustainable Development. Institutional innovations worthy of this challenge have never been as much crucial as they are today. If we have not been able to provide the necessary solutions to global problems we are facing today so far it is because the economic relationships and logics have not changed in the intended dimension and sense. Such a change requires the genuine, collective and concerted involvement of all the actors at different levels. It is then needed to implement a genuine global consensus on the responsibilities of the different actors and on the political, economic and legal tools to be put into practice in the framework of a global governance responding to global challenges. This governance should be rethought as an integrated and complementary system and as a form of participatory democracy so that the Sustainable Development becomes more the expression of a genuine political willing and collective challenges than a simple slogan.

Today, we all know that only the collective and concerted confrontation of these challenges has chances to be pertinent. In this perspective, the Sustainable Development thought, a wonderful source of technological and institutional innovations, has followed a real process of trials and errors. Nevertheless, it still does need to be refined and enriched in order to build a “new economy” the duty of which is to be sustainable.

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December 2010: Does the future of the French comptetiveness lies in the ETI? by Nadine Levratto (EconomiX, University of Paris Ouest, RNI)

The German example of Mittlestand, this powerful and efficient industrial subgroup of SMEs, is generally highlighted by French analysts to explain the good positioning of the German companies in the international business and the positive trade balance that results from this advantage. Following the recommendations of several reports recently published the public authorities and the economists, worried to set up the conditions making it possible to ensure the growth of companies able to become the future national champions. That is why the modernization of the economy Act enacted in August 2008 defined as an ETI an independent company whose size is between 250 and 4999 employees, and presents either a turnover not exceeding 1.5 billion euros, or a total of asset not exceeding 2 billion euros. This category exists nowhere else and is not considered as a pertinent group by the European Union from the point of view of grants and subsidies allocation policy.

The conditions about the structure of capital and the property rights makes of their enumeration a difficult task. Until 2008 the firm as a legal entity was the basic unit of the national statistical system. The new law replaced it by the group as an economic entity what requires an additional step concerning governance structure in the enumeration process.  The results are highly sensitive to the definition. When taken into consideration, independence leads to count almost 1,700 ETI, whereas if not the INSEE enumerates a little bit less than 5,000 legal units which respect the thresholds fixed by the law. As the French government considers these ETI as firms able to improve innovation and the domestic situation in the international trade and provided that the increase of this group is a major stake of the industrial policy, it is particularly crucial to depict these companies.

An identikit image of the ETI. The representative ETI is a company which employs approximately 650 employees, active in the manufacturing industry, most of the time included in the perimeter of a group, whose head office is generally located in Ile-de-France and whose age is generally higher than the average age of SMEs. Fifty percent of ETI employ more than 250 and less than 700 employees but this range is quite higher looking only at ETI under foreign control, which employ about 780 workers. Concerning the international trade, one observe that ETI are as much internationalized than large companies either because they are subsidiary companies of foreign groups, or because they have subsidiary companies established out of France. The industrial orientation of these companies differentiates them from remaining of the population: 42% of the employees of the ETI work in industry, against 27% on average.

Presented as the weak link of French economic system, pinned between a broad base of very small companies and SME (2.4 million) on one hand and 250 very large companies on the other, the ETI recently became a priority for public authorities. Their development is seen as a key condition of an increased performance of the national productive system.

The spearhead of the French economy. February 17th, 2010, the senator, Bruno Retailleau presented a report to increase the number of ETI. Several reasons justify this objective. The perennial ETI are seen like supports of innovation and productivity thanks to their size and acquired competencies. They are also mainly represented in the manufacturing sector and are considered to represent a “virtuous capitalism” involved in a long run perspective, preferring the investment to the dividend, locally anchored and anxious to preserve proximity between the leaders and the employees. Especially, they represent one third of the turnover to export, the same proportion of the total of the investments and the quarter of the internal expenditure of RD. To promote the growth of large SMEs in order to allow them to up pass the threshold towards ETI, the report recommended the usual decreases in the tax burden and social fees and, also, the simplification of the administrative and legal formalities. It suggested moreover encouraging the increase of equities thanks to tax advantages, an improvement of the research tax credit and the creation of guarantee funds for innovation. Since then, perimeters of intervention of some institutions, like Oséo, and the targets of public policies were adapted to include these companies in their field of application.

Two drawbacks are likely to go against government policy in favor of the improvement of national competitiveness. Firstly, the independent ETI are it rather in the trade industry. Secondly, the large companies are quite eager to purchase dynamic SMEs what obstructs the emergence of ETI. On the whole, even if the will to promote firms’ growth will permit to compensate the negative effects of policies mainly interested in the creation of new entities, one can fear that the French industry moved back so much so that policies based on the size cannot alone mitigate the consequences of an excessive expansion of the service industry.

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November 2010: Does the entrepreneur have a real position in the European innovation policy? by Najoua Boufaden (ISG Paris, RNI) & Honorine Awounou (ISG Paris)

Since the Treaty of Lisbon up to the recent reforms presented by the European commission, Europe has shown its willingness to focus on research and development (R&D) in its innovation policy. Therefore, R&D appears at the heart of the European Union’s strategy, i.e. the increase of R&D investments to a level of 3% of GDP, the pooling of funds to equip Europe with world class infrastructure, the fostering of partnerships to fill skills gaps.

Thus, European business leaders share this view wih the European commision of stimulating innovation through research. Furthermore, governments are more and more demanding for a strengthening of scientific and technological production. However, entrepreneurs cannot fail to remind their scepticism towards the innovation policy of the European commission. As expressed by the founder Bart Van Coppenolle, President and CEO of the Belgian company of hardware Metris “Innovation is firstly about entrepreneurship, not about science and research, as the Commission believes. We already have excellent scientists. It is not always about inventing new technologies but more about to be abble to integrate the existing ones” (http://www.euractiv.fr/). According to this latter point of view, European competitiveness based on innovation is more an issue related to the transfer and integration of new technologies and concepts within the industrial sphere. However, this vision needs to reconsider the entrepreneur’s position and does necessarily imply a revaluation as a vehicle of the growth dynamic.

Indeed, with reference to Schumpeter’s growth theory, innovation and growth are intimately linked. In his chapter “The fundamental phenomenon of economic development” (The theory of Economic Development, 1934, Cambridge, MA: Harvard University Press ), the author said that besides capital accumulation, innovation is the engine of economic development. Innovation takes the form of new products, new methods of production and new sources of supply, new markets and new forms of industrial organizations. In this framework, the entrepreneur plays a key role and has a central position. The Schumpeterian entrepreneur is defined as an innovator. He is driven by a desire to found a private kingdom (power and independence) and to succeed; “he brings about change through the introduction of new technological processes or products” and therefore appears as the vehicle that enables any change to occur; which impacts economic growth. Thus, entrepreneurs consider that the European Union’s approach of innovation does not give enough emphasis on entrepreneurial dynamics requirements. Furthermore, they demand an active venture capital market able to provide necessary funds to support start-ups and business activities in high technology sectors.

The 2020 growth strategy set by the European commission clearly displays its interest for the improvement of the financing conditions of SMEs. Some further reforms have been planned so as to improve the tools and mechanisms facilitating access to funding i.e. partnerships to attract investments through seed capital, improvement of the structure of other financing funds like state support. But SMEs still underline their difficulties to access to European funds and the regional aids are still the only source of financing they can get access to. Similarly, venture capital structures which constitute one of the key levers of entrepreneurial activities and a breeding ground for innovation are not sufficiently supportive; which impedes entrepreneurial dynamics. Finally, the European Association of Venture Capital (EVCA), considers that directives concerning managers of alternative investment funds (AIFMD) aiming at restricting the activities of hedge funds funds can only counteract the targets set by the 2020 growth strategy.

In addition to the lack of institutional framework for the financing of SMEs, entrepreneurs underline the lack of structures useful for helping entrepreneurs facing failure in their activity. It appears that psychological brake may also hinder entrepreneurial initiatives. Is there any response that the Commission can bring to this last point? As a whole, can we define a public policy which really focuses on “the entrepreneur”?

Karen Wilson, Member of the Organization for Cooperation and Development in Europe (OECD) seems to support the idea to change the European bankruptcy laws; which would provide a greater opportunity to SMEs to start and to overcome their fear of failure. At the same time, the entrepreneur is supposed to be able to make decisions in the context of radical uncertainty and benefits from the “reward-profit, as the return for bearing uncertainty”, as Knight (Risk, uncertainty and Profit, Boston: Houghton Mifflin, 1921) recalls. So what are the expectations of entrepreneurs? Are they so diverse? Furthermore, what is the origin of uncertainty? Isn’t it multi-dimensional? Can the European commission suggest a response taking into account individual particularism? This is a real issue to think about.

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October 2010: A sustainable innovation? by Sylvain Allemand

However curious it may be, the Brundtland report, through which the notion of sustainable became accepted, does not evoke the stakes of innovation. This reason may be found in the fact that this notion amounted to the valuing an economic model which showed consideration to the freedom to undertake. When the report was released, we were in 1987: The Berlin Wall still stood, the cold war was still in the minds; the objective of the authors of the report was to gather the largest number of countries, from the West to the East, the North and the South, around the global challenges (it is probably for the same motive that human rights were not either evoked).

Since, the idea has been admitted: sustainable development cannot be a turnkey solution, but it is the result of an innovation process. However, what does it mean? The analyses which enter the black box of the relations between innovation and sustainable development so as to understand how they are exactly formed are very scarce. And especially on the following aspects: how the approach in terms of innovation leads to re-examine sustainable development and, vice versa, how sustainable development - with its claim to reconcile the environmental, economic and social dimensions (its three famous pillars) - renews the vision of innovation, in brief how the crossing of both may result in an “innovative” sustainable development or a “sustainable” innovation …

Of the two proposals, the first one maybe better since it ensues from the experience obtained through local Agenda 21 programs: the focus on innovation incites to analyse sustainable development not as the simple application of a list of actions, but as a structural behaviour favouring the formulation of good questions on already-made answers and taking uncertainty into account.

Conversely, sustainable development challenges innovation to consider not only technical and organizational aspects but also to include environmental, social, economic (or cultural) ones. Environmental aspects contribute to reduce the exploitation of resources and the impacts of human activities on ecosystems. Economic aspects mean the creation of jobs. Social aspects imply the whole society. Cultural aspects relate to a plurality of knowledge including secular knowledge. In a nutshell, if sustainable innovation has a meaning, it cannot be an end in itseld and it cannot serve the purpose of a competitiveness race which would deny its social and territorial consequences.

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September 2010: The philanthropist entrepreneur: The Bill and Melinda Gates foundation by Sophie Boutillier (LABRII, University of Littoral Côte d’Opale and RNI)

Like Rockefeller at the end of his life, after he had managed to be the richest man in the world and had stopped running his enterprise, Bill Gates and his wife created in January 2000 a philanthropist foundation: The Bill and Melinda Gates Foundation. It is the result of the merger of two foundations: the first, created by Bill Gates Father in 1994 with the aims “health in the world” and “the needs of the north-west Pacific Ocean communities”; the other, founded in 1997 is the Gates foundation for libraries. In 1999, the latter became the Gates foundation for knowledge and then, the father’s foundation was renamed: Bill and Melinda Gates foundation.

Its aim is to provide the population of the world with innovations in the field of health (support to development programs of medicines in the third world countries) and in knowledge acquisition (support to libraries). But recently the Foundation has also turned to green technologies. In 2006 more than 240 persons were working for it. It is funded by Bill and Melinda Gates. This represents huge sums of money as their annual donations exceed the expenses of World Health Organization (WHO), but various contributors also fund the foundation, as for example the American billionaire Warren Buffet.

The sums of money invested by the Gates Foundation are impressive. In January 2010, the Gates announced that they will spend 10 billion dollars over 10 years for the development and the distribution of vaccines for children of the third world countries, amount added to the 4.5 billion dollars donated by the Foundation during the ten last years (Le Monde, 14/07/2010). B. Gates also played a major role in the creation of the Global Alliance for Vaccines and Immunization (GAVI), a private-public partnership. In June 2010, M. Gates announced that the foundation will invest 1,5 billion dollars between 2010 and 2014 to support innovative projects in family planning, care of pregnant women, newborns, children and nutrition. The Gates Foundation has committed hundreds of millions of dollars for the fight against Malaria, tuberculosis, programs of prevention and treatment of AIDS in India and Africa.

B. Gates attended the international conference of Vienna in July 2010. His speech somewhat cooled the assembly. After having reminded that “world has historic opportunity to change the face of AIDS” (Libération, 20/07/2010), he stressed that “we have to be honest: we cannot continue to spend resources allocated to research against AIDS as we do today. We can continue to raise funds, but we must also ensure that we make full use of every dollar and that we make good use of every effort made. It is needed to target, through statistical methods and modeling, the regions of the world at high risk”. B. Gates particularly insisted on the role of prevention, a more profitable investment.

Like J. Rockefeller, B. Gates manages his foundation as a company, with the same rigor. The financed programs are carefully chosen. Philanthropy is not synonymous to wasting. Though, nowadays, B. Gates has become the biggest global private funder for the fight against AIDS, and the second funder of the WHO. As a matter of fact he plays a leading role in the fight against AIDS worldwide, directing research in this area, at a time when political leaders have withdrawn from this fight.

J. Rockefeller had created his foundation in the late 19th century, like Carnegie and many others in the so-called period of “savage capitalism”, while the workers’ demonstrations were increasing (events that are the origin of the festival from May 1st workers in the 1880s). This is not by philanthropy that these billionaires became philanthropists but because they refused the interference of the State in their businesses. Moreover, philanthropy also creates markets, and this is what Bill and Melinda have well understood thanks to John’s teaching.

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August 2010: Public research and SME: The question of technology transfer by Florin Paun (ONERA and RNI)

The technology transfer has been the subject of different academic research works. A specific Journal, The Journal of Technology Transfer, edited by the Technology Transfer Society, is entirely dedicated to this topic. Nevertheless, the majority of these papers are more related to several practices than to concepts. The theoretical corpus of these works is generally based on various innovation models, starting with Schumpeter’s up to Xu’s, passing trough Abernaty’s, Uterback’s or Von Hipel’s models.

The study of technology transfer or of the valorization of research could be inspired from the transposition and the adaptation of the Stiglitz concept of information asymmetry to the dual relationship occurring between a public research laboratory and an industrial during the technology transfer process. This is as much pertinent as the eventual receptors are small production units. In fact, the French SMEs specificity (more Very Small Enterprises than SMEs) linked to the French public researcher specificity (not market oriented), have favored the identification of other important asymmetries (already published in Marchés & Organisation, vol. 10) occurring between the public R&D and the SMEs; the socio-cultural asymmetry, the financial risk asymmetry, the technological capacity asymmetry and the temporal scale asymmetry.

Indeed, their small size and turnover are not allowing the big majority of the French SMEs to sustain internal research capacities. In accordance, very few SMEs are able to adopt new technologies not matured more than the TRL 6-7, levels corresponding to the operational demonstration Technology Readiness Level. On the other side, few public research laboratories are able to mature their technology offer more than the TRL 3-4, levels corresponding to the laboratory proof of the technology feasibility.

Thus, this respective positioning makes that the two actors could not cooperate without adapted compensating tools designed to address this technological capacity asymmetry. In addition, this “technological gap” is superposed sharp on the “equity gap” occurring in France exactly between the same TRL 3-4 to TRL 6-7 levels. The different instincts, in Veblen’s, one of “predator” related to the entrepreneur and the second of “workshipman” related to the researcher, are reinforcing this identified gap that faces the technology transfer process, particularly in France between public R&D and SMEs.

It is hence about to identify and justify these different asymmetries as well as to propose innovative collaborative tools developed and successfully implemented by some valorization institutions in France as possible solutions for the compensation of these asymmetries.
In fact, if the information asymmetry identified by Stiglitz is value creating, it becomes necessary to consider that in the technology transfer process -itself part of innovation based on an emerging technology- the value creation cannot occur without some of the relational asymmetries being compensated as part of the “collaborative relation”.

This type of process, being highly “collaborative”, cannot be installed between the actors in a geographical proximity without creating what the author names as “confidence space” based on a “cognitive proximity” (Uzunidis) and by means of collaborative tools leading to asymmetry compensation. This allows going beyond a “sectorized approach” to propose a “territorial approach of innovation” based on a multi-sector dimension as the “confidence spaces” are created at the territorial level.

The landscape of the valorization of the public R&D results and of the technology transfer is preparing for structural changes in the near future following the governmental projects related to the Future Investment programs. The different relational asymmetries identified could be compensated through the good use of collaborative tools. Some of these conceptual tools have already attracted the attention as activities proposals supporting the future Institutions for Technology Transfer Acceleration.

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July 2010: The Pharmaceutical Innovation in Crisis: What Strategies of Big Pharma? by Nejla Yacoub (LABRII, University of Littoral Côte d’Opale, University of Tunis El Manar and RNI)

Since the end of the 1990s, the pharmaceutical R&D expenses have tripled. A priori, this growth could testify an acceleration of the innovation rhythm in the sector. Nevertheless, it is just a mirage. The weakness of the technological contribution of the new approved medicines reveals rather a slowdown in the rhythm of pharmaceutical innovation (e.g. in 2005, over 80 brand name drugs approved in the USA by the Food and Drug Administration -FDA- only 20 stem from new active principles, while the 60 other medicines result from older molecules).

The increase of the pharmaceutical R&D expenses is thus illustrated by the upper blade of a price scissors, the lower blade of which illustrates the decreasing number of innovating medicines. Hence, it is an innovation crisis that is affecting the pharmaceutical industry since a decade. Its characteristics are observed through the new strategies of Big Pharmaceutical Firms (Big Pharma) which are adapted to face the new legal and economic stakes of the sector. The extremely high costs of R&D (about 1M$ to develop and market a new molecule), the expiry of numerous important patents, the important sales losses due to generics competition, the generalized policy of medicines democratization, the financialization of the pharmaceutical industry, are today as many factors that penalize the profitability of Big Pharma and urge them to adopt a short run vision.

Undertake investments that generate high profits in the short run all by supporting lower costs: This is recently the main objective of Big Pharma which more and more privilege knowledge-capital valorization strategies (commercial, legal) over knowledge-capital accumulation strategies (exploration in the purpose of innovation). Accumulation is in priority targeted on minor innovation which is less costly and a generator of short run profit, while major innovation, the profitability of which is realized only in the long run, is related to R&D of niche (rare pathologies) and/or to biotechnologies.

Indeed, recently, Big Pharma follow a generalized movement of R&D expenses rationalization by cutting jobs (e.g. almost 10.000 R&D jobs eliminated over the last two years) and closing and/or delocalizing R&D sites in countries that offer the best triple ratio: quality (competencies) – price (costs) – risk (imitation). The short run strategies of Big Pharma have consequences on the pharmaceutical industry as a whole, which is witnessing a global movement of concentration. Accelerated since 2009, this movement is translated by mega operations of mergers and acquisitions (M&A) within pharmaceutical laboratories and with enterprises of biotechnologies (e.g. in 2009, Wyeth has been acquired by Pfizer and Merck KGaA merged with Serono).

Subsequently, exploiting external resources and opportunities plays a more and more important role in the constitution of Big Pharma knowledge-capital. Nowadays, open innovation is indeed in the heart of their strategies of development, allowing them to consolidate their research potential in costly and/or few explored therapeutic domains (e.g. in 2009, GlaxoSmithKline –GSK- and Pfizer have merged their research activity in anti-aids treatments, giving birth to a new independent unit expected to gain a market share of 19%).

But, are there latent motives behind the multiplication of these strategies of open innovation? Do they really reflect a true pooling of knowledge in order to innovate? Don’t they rather respond to an objective of innovation costs rationalization in the framework of short run profitability strategies?

The answers to these questions raise themselves further questions about the underlying causes of the pharmaceutical innovation crisis. Does it announce the transition from a declining technological paradigm (that of the chemical pharmacy) to a new growing paradigm (that of bio-pharmacy)? In that case, would the innovation crisis, characterized by the declining pharmaceutical blockbusters model, be just a break that would end through a growing biopharmaceutical blockbusters model? These are many questions that are posed today with the biggest acuity.

To go further: YACOUB, N. & LAPERCHE, B. « Stratégies des grandes firmes pharmaceutiques face aux médicaments génériques. Accumulation vs valorisation du capital-savoir », Innovations, Cahiers d’Economie de l’Innovation, N°32, 2010/2, Juin 2010.

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June 2010: Place of global venture capital financing of innovative SMEs: Reality or utopia? by Samia Haddad (Faculty of Economics and Management of Nabeul and member of RNI)

Considered one of the drivers of competitiveness, innovation is both a determinant of corporate profitability and economic growth of a country. While high-tech industrial structures can now win market share because of their competitiveness, sectors of very unstable activity, especially because of the rapidity and magnitude of technological change, require high investments that depend on three factors: the cost of implementation (R&D, production, marketing and sales), the downtime of these resources to create a viable economic activity and risk. Nevertheless, innovative start-ups have reduced flow capacity and reduced ability to access external capital due to the nature of their assets that can be used as a security for bank loans. In this context, they require special financial arrangements in terms of both financial engineering and their actors: This is the venture capital market. Conceived for the first time in 1945 in the United States, venture capital activity is dedicated to finance innovative start-ups in exchange for a stake in their capital that will be sold with a consequent increase in value upon resale of the company or its IPO. His success in the U.S. is explained by the ability to huge investment of U.S. pension funds that fuel the venture capital. Thus, the success of the U.S. experience has motivated the European countries, especially Britain and France, which in turn created their first venture capital firm, respectively, in 1962 and 1965. Again, it took more than fifteen years before attending a breakthrough for venture capital in the years 1985-1990.

Notwithstanding, following the crisis of the Internet bubble of 2001, venture capital investment worldwide income levels are very important in 2006 and 2007 but, following the financial crisis triggered in the last quarter of 2007, amounts invested in 2008 were down 10% compared with 2007. According to statistics published by the EVCA (European Venture Capital & Private Equity Association), the European private equity industry raised a total of 65.3 billion € in 2008, dropping 20% from 2007, which was a record year (81.4 billion €). Similarly, the Venture Capital Market in the United States has declined significantly from 32 billion in 2007 to 29 billion € in 2008 (1). This contraction results in a reduced supply of capital on the anticipation by venture capitalists to unfavorable economic conditions that penalizes innovative companies, in particular, and risk taking in general. In France, the venture capital industry has again topped the one billion Euros (1.03 billion €) invested in 2008 (2). By positioning itself at the top of the list, is the first health sector investment with 121 million Euros in the last half of 2008 (2).

Even if the venture capital world has experienced cycles of despair, it is at least a relatively mature industry that has mobilized hundreds of billions of dollars from institutional investors (pension funds, insurance companies…) and deploy these funds for innovative business projects worldwide. Also, the role played by governments towards the support for innovative SMEs remains an important part in encouraging the private sector, including venture capital sector, to play an active role in the financing of these industrial structures, and, secondly, by promoting innovative creators and the range of financing options available to them with financial and institutional actors (government, banks, private investors).

(1) Ambassade de France aux Etats-Unis, 2009. Le capital risque aux Etats-Unis et le financement de l’innovation : réalités et tendances. Août 2009. 27 pages.
(2) Source : Indicateur Chausson Finance, 2008. Panorama semestriel du capital-risque en France.

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May 2010 : Finance: From a Bubble to Another by Denis Langlet (Engineer in a big industrial group and member of RNI)

The public debt rate of the twenty most developed countries has risen, on average, of twenty five points of GDP since the beginning of the crisis of 2008. In 2010 the economies have entered a new phase of doubt. The budget recovery plans or the monetary stimulation permitted the rescue of the markets in 2009, but their effects are slowly going to disappear. In counterpart, to absorb the deficits, the states will have to increase the fiscal pressure, limiting the recovery of households’ consumption and of firms’ investments, and thus the rhythm of the economic growth. It is like trying to square the circle. On another matter, the international financial capital destroys employments (dismissals, closing of factories, low wages, precariousness…) to increase or to preserve the profitability of investments. As a consequence, a situation of growing insolvency of households, of firms and of the States is created.

One of the characteristics of globalisation is the growing debt level of households, firms and states. The debt in the United States has been multiplied by 10 between 1980 and 2008. Within the euro zone, in 25 years, the debt rate grew from 25% of the GDP to 70% of it. To implement their politics, for example the recovery plan and its billions of credits to the banks and to the employers, the States borrow and to do so they raise funds on the financial markets in exchange of treasury bills or guaranteed bonds. Into the euro zone, the total of the funds raised in 2009 was of 870 billion Euros and the borrowing previsions in 2010 for this zone are about of 1000 billion Euros. Those figures show by their sum the importance of the public debt market. A new speculative bubble is in formation.

However, even if the States are stronger than any financial institution, the failure can hit them because, as it happened for the other bubbles of the last twenty years, a bigger mass of investors are competing for the purchase of bonds, which thus become the object of speculation. What will happen when this huge mass of loans issued by developed countries and by the BRIC countries (Brazil, Russia, India and China) will be on the markets?

In Europe, today Greece, tomorrow Spain and Portugal, the day after tomorrow… All the States are concerned and weakened. With the crisis, the fiscal receipts are decreasing and the needs are increasing, which leads to the implementation of a policy of budget deficit and to resort to borrowing. The spiral of debt begins. To overcome this situation, the governments, the ones after the others, choose the implementation of an austerity plan and to strongly reduce expenses, keeping a part of the budget to face the financial charge of the debt. However, this choice is not riskless. Indeed, austerity plans goes with the increase of more sacrifices asked to employees and to the social classes that already are the victims of the crisis. The social stability is not guaranteed anymore. The political crisis appears. Moreover people are increasingly going to consider as illegitimate to pay for a situation caused by the banks and the financial system.

We have to remain that after the crisis of 1929, the United States had to wait until 1942 to recover the GDP they had before the crisis. The war had been the source of the recovery and of the exit of the crisis. What about our close future?

Further Readings: Denis Langlet, The economy in ruins. Finance and the end of an history (In French), L’esprit économique, L’Harmattan, Paris, 2010.

Text translated by Alexandre Uzunidis.

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April 2010 : The “Green Growth” at the Crossroads by Marc-Hubert Depret (BETA, Université Henri Poincaré - Nancy University Agrosup Dijon and RNI)

Despite the failure of the Copenhagen Conference on Climate, the “Green Growth” is still considered as one of the most promising solution to the ongoing crisis. 

Paradoxically, this viewpoint is today equally shared by the active “environmentalists”, by the “ecological realists” and by the “climate skeptics”. All consider that green (or clean) technologies constitute a tremendous source of future growth and jobs that may replace the declining contribution of traditional industries. Indeed, many studies provide clear evidence on the recent boom of green business sectors. However, the convergence between the three “schools of thought” stops here as their respective views strongly diverge on the scope and contents of this “Green Growth”, and on the policies that should be engaged in order to spur it.

For the “climate skeptics” (such as Claude Allègre in France, and the industrial lobbies in many countries) who do not adhere — the word is weak! — to the global warming argument, green technologies are THE solution to most of our problems. These technologies are seen as a key means for Western countries looking for less dependence on oil and its derivatives without challenging their citizens’ way of life or the competitiveness of their industries and companies. Clean technologies could also allow Western countries to cope with the growing competitive pressure exerted by the powerful Emerging countries (the famous “BRIC”: Brazil, Russia, India and China) that are threatening their leadership. Indeed, in the USA, this “technologist” approach is shared by large portions of the public opinion and by the administration. It also finds an echo in Europe (see for example the relative unpopularity of the Carbon Tax project and the powerful influence of some industrial lobbies in France). However, it is probably in Developing countries that this approach finds its most concrete application through strong investment policies in less-carbon energies.

By contrast, others consider that the ongoing crisis is of systemic nature as it challenges our economic model based on consumerism, unquestionable growth, productivism… and on the use of resources that are mostly non renewable. Technology appears here as being the key cause of environment harming and climate change. Hence, as expressed by the “De-growth” partisans (inspired in France by Serge Latouche and others following his inspiration), the solution should stem first from more frugal consumption and use or resources, which therefore should contribute to a more sustainable development model — at least from social and environmental views.

Finally, for the “ecological realists”, growth, jobs and the ecology are perfectly compatible issues … under the condition of abandoning regressive or technologist conceptions of the “Green growth” for some, or “Green de-growth” for the others. Following this “Third way”, the solution to the crisis lie in innovations in technology, the organization and services as well, and more probably in “systemic” innovations combining these various dimensions (see e.g. the case of Vélib’ in Paris). This “Great Transformation” (Jean Gadrey’s expression paraphrasing Karl Polanyi) requires a complete rethinking and deeper integration of all policies related to the environment, to transports, energy, housing, agriculture, education, territorial development planning… Such a transition supposes as well the investment of important public and private resources in infrastructures, but also for amortizing the cost and consequences that this transition will induce for the inevitable “losers of the green growth”. Finally, it implies a deep, paradigmatic change in consumption and production behavior.

As a matter of fact, many are those who are still hesitating on which attitude to adopt vis-à-vis ongoing climatic and environmental problems. This is particularly the case in France where none of the three conceptions of “Green growth” seems to dominate. If the “Grenelle de l’environnement” is undoubtedly is a key step in direction of the “Third way”, the persistent hesitations regarding the carbon tax project — which implementation has been recently postponed to an undefined future… — may at the same be interpreted as a breach of the technologist approach of green growth. This is an additional reason why this issue should be tackled seriously, making it therefore a genuine societal choice, even a civilization issue.

Further Readings:

Depret M.-H., Hamdouch A. (2010) « Développement durable, innovations environnementales et green clusters », In : Zuindeau B. (ed.), Développement durable et territoire, Presses universitaires du Septentrion, Villeneuve d’Ascq, new original edition, forthcoming.

Gadrey J. (2010) « Une économie post-croissance riche en emplois », Alternatives Economiques, n° 288, February, pp. 66-69.

Hamdouch A., Depret M.-H. (2010) “Policy Integration Strategy and the Development of the “Green Economy”: Foundations and Implementation Patterns”, Journal of Environmental Planning and Management, Vol. 53, n°4, June, in press.

Laperche B., Crétiéneau A.-M., Uzunidis D. (dir.) (2009) Développement durable : pour une nouvelle économie, P.I.E. Peter Lang, Bruxels.

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March 2010 : “The “Mammoth” and the “Gazelle”: What Place for a Typical SME?’” by Delphine Gallaud (UMR CESAER, Agrosup Dijon and RNI), Sophie Reboud (CEREN, ESC Dijon and RNI) et Corinne Tanguy (UMR CESAER, Agrosup Dijon and RNI)

Knowledge and innovation are now considered as the main sources of wealth creation. At the Lisbon Summit, the European Union has set the objective to become “the most dynamic and competitive knowledge-based economy in the world”. EU has also acknowledged regional innovation systems as the geographic scale on which innovations are the most likely to develop (1). This implies that it is possible to measure innovation and encourage regional actors to become more innovative. In fact, public financial support is currently quite significant. However, even if Europe already has a data collection instrument with the Community Innovation Survey (CIS), where data is collected at the national level, there is no data collection at the regional level. As a consequence French regions have started in 2008 to establish a way to analyze their innovation potential, according to the method proposed by Prager (2).

This method uses traditional indicators which give the possibility to measure the innovation capacity of companies: measurements of inputs and outputs and the link between the two. Traditional measurements of innovation within a country focus on inputs such as research and development expenditures or the number of research scientists employed. Outputs are the number of patents and of scientific publications as well as the introduction of innovations and the contribution of innovation to the annual sales of innovative companies.

Although these indicators demonstrate a certain level of diversity, the patent indicator is particularly frequently used in France, as well as in Europe and by OECD (3). Patent data has been collected since the 1950s and is available for international comparisons. It can be considered as limited though, because not all innovations are patented, differences in the use of patents are very significant across sectors, and not all patented inventions become innovations. This indicator is however often considered, despite its limitations, as a good proxy for technological innovation.

Large firms were responsible for 65 % of national R&D spending in 2006 compared to 18 % for companies with less than 250 employees (4). The selected indicators are essentially used to measure disruptive technological innovation in these companies and/or in high-tech sectors. In spite of this quantitative difference in terms of R&D spending, Small and Medium Enterprises (SME) innovate. But they have very particular characteristics: they do not usually do formal and continual R&D (5), but more often they do R&D on an occasional basis, by employing graduate and PhD students. As a result, when only indicators measuring national spending on R&D are used, total innovation activity in companies is underestimated. As a matter of fact, innovation is not limited to R&D, which actually only represents on average 20 % of the sum of total innovation-related expenditures.

R&D spending differences are also significant across sectors. Thus companies which manufacture electronic equipment – the leading sector in terms of spending – spent 5.3 billions Euros in 2005 compared to 500 millions Euros for the agri-food sector. But these differences especially expose the skewed vision that public policy has of innovation, because agri-food is actually an innovative sector, but mostly in organisation and marketing (6).

The indicators overestimate large companies “the mammoth” and the “Gazelles,” which are small and very innovative high-tech start-ups, while disregarding innovation activities of companies in traditional sectors, whose contribution to GDP and employment is significant, like for agri-food and SMEs, whose contribution to innovation is equally important. It is thus increasingly important to better measure organizational, marketing and environmental innovation activities (7), and to be able to do so at the regional level.

Finally, the construction of indicators tends to standardize data collection. And yet innovation activities are very concentrated in some regions of France. The Ile-de-France region alone represents 42.6 % of national R&D (8) spending, while Rhône-Alpes, the second largest region, only accounts for 12 %. Are current indicators going to widen the disparity between innovative regions and those which are labeled less-competitive? What will the possibilities of adjustment be for the less-competitive regions if public financing goes to the aforementioned regional champions? There is an urgent need to correct this biased image in favour of radical technological innovation and to rethink the importance of quantitative indicators to better take into account the diversity of regional trajectories.

(1) See RRI’s editorial of October 2009.
(2) PRAGER J. C., 2008. Méthode de diagnostic du système d’innovation dans les régions françaises, Étude réalisée par l’Agence pour la Diffusion de l’Information Technologique pour le compte de la Direction Générale des Entreprises, 130 p.
(3) For example the Eurolio project uses it.
(4) CPCI (2008).
(5) Doing continual R&D means an employer has at least one researcher working full-time
(6) Measured in this way, 60% of agro-food businesses innovate compared to 40% in the manufacturing sector.
(7) This kind of innovation was added to the eighth version of the CIS.
(8) OST (2008)

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February 2010 : “Sustainable Development and Small Entreprises’” by Leïla Temri (ERFI, University of Montpellier 1 and RNI)

At a time when we are having to deal with the excess of the financial world and the implications on the “real economy”, and when technological innovation is propounded as the solution for exiting the crisis, a series of innovative entrepreneurial initiatives have been developed at the territorial level and have started to arouse the attention of a growing number of market players. These initiatives cut through institutional barriers, are founded upon a commitment to society, and offer human solutions to these new challenges. They span a broad range of sectors of economic activity, including housing, consumerism, the environment, culture, and tourism, and respond to unresolved social needs or offer alternative solutions to what is currently available. For instance at a local level, communal housing projects are starting to take shape. These projects simultaneously tackle a number of issues, including urban development concerns, social diversity and eco construction. Other services may include bio-catering directly offered by the producers to the local authorities, support in relocating people, as well as green and social tourism, etc.

Despite the failure of the international summit of Copenhagen, sustainable development (1) is still a preoccupation for the civil society as well as for enterprises. Whereas large firms have been sensitive to this problem for a long time, small ones have not been interested until recently. Today, most of the academic or professional surveys show that the sensitization step is now reached with success for this type of firm. For instance, the CCIP CROCIS barometer shows that about 70% of the owner-managers know what sustainable development means, although they were 30% in 2003 (2). But if many studies show that big and small firms are now interested in the abstract principles of sustainable development, their effective behaviour is not the same. Thus size seems to be a determining factor in the real engagement of firms in sustainable development processes.

Many studies have tried to identify the reasons of these differences between big and small firms. The characteristics, values, perceptions and the vision of the owner-manager, a central figure of the small firm, seem to be fundamental in this explanation. The characteristics of the small firms: the limitation of their financial resources, competencies and internal knowledge, of their absorptive capacity, the short available time that workers can dedicate to it, seem to be other factors explaining their lower commitment in sustainable development. Finally, small firms are less influenced by their socio-economic environment, especially by their stakeholders. Furthermore, they have a limited power upon their environment and have less visibility to the public. This fact softens the impact of their sustainable development possible commitment, for themselves as in terms of reputation towards the stakeholders, especially in the ecological field. However, the influences of the supply-chain and of regulations should become more important in the next years.

In terms of behaviour, small firms are thus clearly less committed than big ones in sustainable development. They generally give preference to the environmental dimension, but some reservations have to be brought because many small firms sometimes realise actions in the field of sustainable development without even being conscious of it. During a long period of time, the tools elaborated to give incentives to enterprises for the adoption of responsible behaviour were drawn especially for big firms. However, today, an effort is made in favour of the small ones. For instance, in the field of environmental management, there are many systems like EMAS (European Eco Management and Audit Scheme) or Eco-Label, at the European level, or ISO 14001 standard. But they are not really adopted by small firms. New tools are now being elaborated especially for SMEs. For instance, in France, CJD (Centre des Jeunes Dirigeants) proposes the « Guide de la performance globale », and AFNOR (the French Agency for Standardization) the SD21000 standard. AFNOR is now working with ISO to elaborate the international standard ISO 26000. However, small firms, which are not used to very formalized processes, do not find tools adapted to their needs, and an effort has to be made, especially towards very small ones.

Today, the sensitization of small firms to sustainable development seems to be achieved and the barriers to its implementation seem to be identified. But, the tools and methods aimed at giving incentives to these firms to move from a positive attitude toward sustainable development to its concrete implementation have still to be invented. This can be analysed as an innovation process that may concern different types of innovations: technological ones, like eco-technologies as well as organizational ones, like, for instance, short channel in the food sector, or social ones when it concerns actions towards local communities. 

(1) In this paper, we consider sustainable development and corporate social responsibility as equivalent in the field of management.

(2) Terlier-Deudon A. (2009) , “Le développement durable dans les entreprises de la région parisienne” ; Baromètre 2009 », CROCIS-CCIP (www.crocis.ccip.fr)

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January 2010 : “Social Innovation and the Social Economy: Innovation Purely for ‘Living Better Together’” by Delphine Vallade (UMR ARTDév, University of Montpellier 3 and RNI) et Nadine Richez-Battesti (LEST-CNRS, University of  Méditérranée and RNI)

At a time when we are having to deal with the excess of the financial world and the implications on the “real economy”, and when technological innovation is propounded as the solution for exiting the crisis, a series of innovative entrepreneurial initiatives have been developed at the territorial level and have started to arouse the attention of a growing number of market players. These initiatives cut through institutional barriers, are founded upon a commitment to society, and offer human solutions to these new challenges. They span a broad range of sectors of economic activity, including housing, consumerism, the environment, culture, and tourism, and respond to unresolved social needs or offer alternative solutions to what is currently available. For instance at a local level, communal housing projects are starting to take shape. These projects simultaneously tackle a number of issues, including urban development concerns, social diversity and eco construction. Other services may include bio-catering directly offered by the producers to the local authorities, support in relocating people, as well as green and social tourism, etc.

Associations and cooperatives back the development of economically viable activities whose focus is not on increasing individual wealth. Their set-up allows for governance structures consisting of a large number of stakeholders who participate in the decision-making process. However their innovation status has changed compared to what it was at the dawn of social innovation: not all aspects of the social economy are innovative. Nevertheless, it is a combination of the refusal to act with a view to individual profits, the dual capacity principle, in which users/employees participate in the governance of the organisation, and the firm anchoring of the principle of economic democracy which formed these innovations, and which now guide them.

Although a satisfactory definition has not yet been formulated, these social innovations all share the characteristic of being open and public; they are all based on social and/or environmental demands; and have strong territorial roots. For more than 20 years now, a group of researchers from Quebec at CRISES (a research centre for social innovation) have focused their work on social innovation, working towards clearly defining the concept. According to Marie Bouchard (2006), the notion can be used to “explain initiatives that meet social expectations”. “The initiatives involve managing relationships between social players in the aim of solving socio-economic problems thereby improving the performance and well-being of the community.” (Harrison, Vézina 2006, p.130). From another perspective, social innovation “is territorialised and based on collective dynamics aiming to transform social relationships” (Richez-Battesti 2008).

More broadly, social innovation reaches out to both the researcher and the citizen, the specialist and the layman, at many levels. Indeed, its origins are less bound by market pressure and competition than by the social and political environment. Because it isn’t profit-driven, it responds to demands that the market fails to meet. And its alternative response may be the preferable option, even for well-off consumers. Likewise, the aim is not to replace the public authorities via projects of general interest, nor to organise drip fed companies, but to create the necessary conditions for experimenting with new forms and ideas which may be reproduced, or even institutionalised.

Nowadays, encouraging these processes would involve redesigning innovation systems on both a local and national level to integrate social innovation into these technology-based innovation systems. On one hand this would serve to establish the status quo and capitalise upon it, and on the other hand, it would support and promote the furthering of social innovation.

In this context, researchers, and more particularly researchers in human and social sciences, are increasingly looking towards creating support mechanisms for social innovation. In Quebec for example, for the past 10 or so years, thematic platforms uniting researchers, professionals and users around a “coordinator–translator” have been working together to produce a stream of social innovations. More recently, through social economy companies such as Scop Entreprise and CRES, the Languedoc-Roussillon region (in France) has initiated innovative endeavours including Alter’Incub (a social innovation incubator), PRIS (a regional centre for social innovation) and it will shortly launch an incubator for cooperative enterprises.

As Marie Bouchard (1) remarked, one of the main challenges—beyond that of support—is recognizing these innovations and the type of criteria used to assess them. On the one hand, just as with technological innovation, experiments in social innovation come up against possible failures or dead ends. But then who’s to say what “successful” social innovation is? As soon as we move away from the idea of the market’s competitive advantage, on what other criteria can we judge its effectiveness? How can we assess the mid- and long-term impacts, and the social, societal and environmental impacts?

At a time when the economic climate is still bleak, social innovations, even if they are few and sometimes fragile, demonstrate the capacity to “produce inclusion” which goes against the grain of market logic. They are also capable of attracting a solvent demand which is driven towards consumer awareness even if it is not yet won … More generally, they unite public and private entities, producers and users, in the aim of “living better together” within a democratic economy.

(1): Round Table “Social innovation : a challenge for the social economy!”, at the Conventis social economy companies’ convention in Montpellier, 11 December 2009

BOUCHARD M., De l’expérimentation à l’institutionnalisation positive : l’innovation sociale dans le logement communautaire au Québec, Annals of Public and Cooperative Economics, Vol. 77, n°2, pp. 139-166, Juin 2006.

HARRISON D.,VEZINA M., L’innovation sociale, une introduction, Annals of Public and Cooperative Economics, Vol. 77, n°2, pp. 129-139, Juin 2006.

RICHEZ-BATTESTI N., Innovations sociales et dynamiques territoriales : une approche par la proximité, in Zaoual H. (dir.) Développement durable des territoires, Coll. Marchés et Organisations, L’Harmattan, pp. 61-88, 2008.

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December 2009 : “Electric Vehicles: A Profitable Market for the Motor Industry” by Malik Driad (INRETS, University of Lille 1 and Research Network of Innovation)

The idea of driving electric cars is not new, it is even an old one given the fact that the first prototypes have been made at the beginning of the last century. The high cost of the batteries and the weak endurance, the issue of developing a distribution network (charge time being long) etc. explained the boom of heat engine vehicles offering more advantages regarding production and operation. Nowadays, manufacturers are about to position themselves on the all-electrical market. Some fifty models have been presented at the Frankfurt car show. Renault believes in it and intends launching as of 2012 a complete range of all-electrical vehicles intended to individuals.

Learning theories let us know that innovation is the result of a long process and show that despite the linear vision of technological development, technological learning, carried out by businesses, determines the absorption and transfer of technologies as well as research and development evolution. Nevertheless, things are not so simple when the development of one technology is related to important challenges such as the energy source of tomorrow’s cars. In the automobile industry, the entrance of “clean” vehicles can be seen within two “prevailing” categories: the models with a hybrid engine, Toyota being the pioneer in the field. This hybrid technology combines an electrical and a heat engine thus allowing between 20% and 30% reduction of GES [1] emissions. Then, there are the electrical cars, called “decarbonized” because they do not emit GES at all. One could believe that the first engine category allowed making the technological transition towards the all-electrical engine. This would be a progressive evolution from a classical heat engine to an electric one passing through the intermediate stage of a hybrid. Can we as well speak of a break which made possible the technological jump thus answering environmental requirements? The reality is different. The environmental challenges to which the generalization of clean engines (all-electrical) responds partially (because there will be left congestion problems mainly in the urban centers) are already bringing, and will continue to do so in the future, to automobile manufacturers possibilities for improving their brand image and unquestionable support from public powers. This support, already existing in the form of ecological and scrapping bonuses, or mass orders of clean vehicles (the case in France [2]) as well as governments’ aid, allowed the automobile industry to survive the economic crisis, strongly impacted by it in 2008.

If this crisis, added to the increase of oil prices, leads automobile manufacturers to “adapt” themselves and face sure bankruptcy of their economic model, there is still a need to reinvent another one. The economic model of the future automobile industry seems to already define itself as a model supported by public powers taking into account their “growingly important role in saving the planet”. The electrical engine is a well kept resource which is about to resurface on the market and get a second wind to an automobile industry already suffering from insufficient growth.

[1] Greenhouse gas : composed of CO, NOx, COV, Particles, CO2, Pb, SO2…NH3. (Data gathered by the Transport and Environmental Laboratory of INRETS).

[2] Ministry of Ecology, the Energy, the Sustainable development and the Sea: the private individuals will benefit from a “5000-€ super-bonus”. Chistian Estrosi reminded the participation of SFI (Strategic Fund of investment) in Flins project (Renault Production unit of electric vehicles) is 125 M€ and 900 M€ of the budget for installing electric terminal.

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November 2009 : “The Crafts Industry and the Very Small Firm: A real Challenge for the Society or a Very Convenient Antiphony in Times of Crisis” by Claude Fournier (LABRII and Research Network of Innovation)

During the last months, many media events have praised this economic and social sector, often neglected by public policies; to illustrate this, we can refer to the publication of articles on training and learning in a national daily newspaper or a TV program, in prime-times, showing how one may become rich by being a craftsman or the manager of a very small firm, as well as to the various national demonstrations mobilizing the representatives of the State….

However, taking strictly into account the crafts sector, we can state that it represents about 920 000 companies - located on the whole territory, that is to say at the closest of inhabitants – occupy 3,1 million people and achieve about €90 billions of value-added (VA) for a turnover of €250 billion. Does this attractive image of “the first company of France” mean that the Crisis does not concern the crafts sector?

But to what kind of crisis do we refer? To the one of immateriality, not to say of the unreal character of services which would be the cause of all the troubles? To that of globalization and the die-hard liberalization wanted by some States and actually imposed to the others through the WTO (World trade organization) for example?

Nevertheless all these causes that we seemingly stigmatize, were presented, in a close past, as the only possible solution to the development of companies. It is enough to remember speeches on the immaterial society, on companies without factories, on the knowledge-based society and on what we could now name “the society of the thought”; don’t we have to rethink the “employment polices and practices”, to rethink “the economy”?

The crafts sector is the example of the society of the reality, the economy based on the concrete of the transactions. In this “society of the thought”, the craftsman, quite as Mister Jourdain who made prose, is an economic actor who -without being aware of it- rethinks the economy: he produces not to increase in the short term the value of a line registered on the screen of a computer, but to improve the satisfaction of his customer. The price of its service is the one of its know-how and of its supplies: it is based on concrete aspects and not on the fear of a bad news or on a sophisticated statistical calculation of the evolution of an asset on the stock market.

The craftsman also has an unquestionable social function, one that every economic actor should have: he gives to the community the possibility to have a “livable life” and he is a major element of the social stability; we cannot ask for a stable and non violent society while lauding the perpetual uprooting of individuals.

Naturally the crafts sector is not a paradisiacal island lost in the middle of an ocean facing a storm, but due to its characteristics (in particular the large number of small units scattered on the whole territory), the misadventures that may concern this sector are less visible (it benefits from a strong coefficient of profusion which, correctly understood, could become an essential element of a thoughtful economic policy) and its clientele, often of proximity, has quite simply always the same needs to live.

It would nevertheless be an error to limit the crafts sector to what it is agreed to call “the economy of proximity” because the craftsmen not only have an enlarged market but many of them try to export and work with the industrial and agro food sectors which do not know regional and national borders. So qualifying the crafts sector by the formula of “economy of proximity” is reducing and does not correspond at all to the complexity of this sector. In spite of the pleonasm it contains, the expression of “economy of the reality ” would be more appropriate.

when the elected representatives show the best intentions and denounce the past practices, building on the values founding the crafts sector to propose new practices and new rules could be profitable to all the citizens, what would correspond to the fundamental role of politics: work first and foremost for the eneral interest and not for the individual interest.

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October 2009 : “Did You Mean “Regional Innovation System” ? About the “Territorial Schizophrenia” of French Policy-Makers” by Abdelillah Hamdouch (CLERSE-CNRS-University of Lille 1 and Research Network of Innovation) and Christian Poncet (University of Montpellier 1 and Research Network of Innovation)

It has become nearly impossible to find any single national government which does not put forward the crucial role of innovation in spurring economic growth, and, accordingly, in stating the necessity of promoting, via appropriate national policies, a “National Innovation System” (NIS) that could compete at the continental or global level. At the same time, the key role of innovation in enhancing and sustaining regional development dynamics is highlighted in every aspect of local political communication strategies. The obvious reference here is the notion of “Regional Innovation System” (RIS) that has literally invaded scientific publications as well as newspapers and political speeches. The approaches founded upon this notion underlie the idea that the regional level tend towards becoming the area where the innovation process and the policies which sustain it are being decided and deployed, and, most of all, the area in which these processes and policies generate the spill-over effects that irrigate the whole local economic activity. In both cases, it is admitted that the support of (national versus regional or local) authorities to the innovation process has become decisive. Hence, this dual territorial claim on the part of political officials raises three dreadful questions : Who defines these policies? Who decides the design of their implementation? And who finances them?

In France, the political decentralization movement started in 1982 of a number of public policies (including, in theory, industrial, scientific and technological issues) should have been translating into an increased autonomy of local territorial authorities. This should have lead probably to an unambiguous answer to the three questions raised above: “The region”. Such an evolution should have shifted supra-regional authorities towards a coordinating role, but endowed with tools that should have allowed them eventually to orient the local choices. This bottom-up configuration-type could have allowed to structurally root the innovation process at first within a local dynamics, therefore providing a methodological foundation to the idea of RIS.

But things have turned quite differently: It is the traditional (top-down) descending logics regarding political prerogatives that have prevailed. This results in the continuing fact that each of the territorial levels concerned is conduced to take over the initiative in the operations. Hence, the cumulative shape of the phenomena results in a stacking up of the political entities involved in the innovation process that generates a structural confusion in the distribution of prerogatives and in the identification of decision-making centres. This confusion then extends “on the field” through the multiplication of “support desks” to innovation projects.

Still, one could have expected from the recent evolution of industrial, R&D and Higher-Education policies that have been engaged in tune with the “Lisbon Strategy” — in France, policy of “Competitiveness Clusters” or “Pôles de Compétitivité” (PdC), and then policy of “Research and Higher Education Poles” or “Pôles de Recherche et d’Enseignement Supérieur” (PRES) — that it should result in the initiation of genuine RIS following a bottom-up approach of policy support to innovation. However, in this latter specific case, the fact that the European policies (“Lisbon Strategy”) preceded the national ones (PRES), which in turn shaped the choices made in the different French regions demonstrate again that things have not really changed. For the most part, the direction in which policy decisions are made remains of top-down style, reducing therefore the role of local authorities to more or less just conform to choices and orientations decided by upstream political bodies. At the financial level, this situation is illustrated by the structure of funding sources supporting innovation: Nearly 36% from the EU; 14.7% from the State and 11.7% only from the Regions (18.4% coming from other territorial entities and various public funds, and 19.2% from the private sector). In the frame of the PdC and PRES, the regional thematic priorities and the means corresponding devoted to these “labels” are for the most decided by the State. The idea of RIS tends then to slip towards the one of sub-systems involved within a more global (European and national) dynamics whose objectives stand far beyond the local framework.

Given this state of things, the core issue for the public policy-makers is that of the efficiency of the top-down model as regarding innovation policy. Of course, it is still too early to assess thoroughly the model that is on way of implementation in Europe (and specifically in France). However, the architecture of this model contains important flaws that already limit seriously its potential efficiency. This is particularly the case if one refers to the distortions between the interests of political lobbies and the local potentialities. These distortions result in a sprinkling of the means mobilized (due to the multiplication of regional poles); even worse, they lead to an under-valorisation of the local resources that are the most specific to a territory (competences, know-how, learning and adaptation capabilities, synergies among local actors, cultural and social capital, etc.). Meanwhile, local initiatives are very often locked in an administrative logic that leaves only very few space for original experiences and for socio-economic and institutional innovative initiatives adapted to the particular context of a given regional/ local territory.

In fine, one can wonder if the solution to this innovation policy mismatch (what we call here the “territorial schizophrenia” of French policy-makers) should not start before all with the promotion and the development of innovations in the way public policies (in general, and specifically as regarding innovation) are designed and implemented…

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September 2009 : “Corporate Social Responsability and Economic Crisis: The Unbearable Precariousness of Being” by Blandine Laperche (LABRII, Université Littoral Côte d’Opale and Research Network of Innovation)

Theory teaches that the economic crisis, while destructing activities, is also at the origin of new opportunities: creation of enterprises, new technologies, and improvement of working and life conditions. Corporate social responsibility – or the voluntary integration of environmental and social aspects in the firm’s objectives- which for a long time were considered as restricted to economic aggregates, could easily become a fashioned ethics in a context of environmental and economic crisis.

What is the current situation? On the one hand, in industrial countries, the green economy is in expansion. In France, for example, the production of environmental goods and services amounts to 59 billion Euros in 2007 with a rate of growth reaching 7,7% per year between 2004 and 2007.The number of job in environmental activities amounts to 400 000 with 4,2% of growth per year between 2004 and 2007 (1). National and international regulations explain a large part of this trend. New markets are created by economic, social, technological and institutional constraints. The snowball effect occurs if consumers (directed by the media and also constrained by new regulations) are convinced. In France, the households expense dedicated to the protection of environment reaches 11, 8 billion Euros in 2007 and account for 29% of this expense estimated to 41,2 billion Euros (2,2% of GDP). It is mainly devoted to the management of wastes and of waste water. Since 1990, the share financed by households has increased (it reached 24% in 1990), compared to the one of enterprises which has decreased (42% in 1990 and 37% in 2007), while the share of public administrations has remained stable (2). The ingredients appear to be gathered for the emergence of new economic trajectories: the State, through regulations, outlines the market (its stimulation would require sizeable investments). Enterprises jump at opportunities, or more modestly respect the rules and look after their public image. Consumers are constrained but also more and more convinced. Environment is no more reduced to the private territory of passionate persons and in a green path could open out the buds of a new growth. Will they be sufficient to face the climatic stakes? This is another question.

On the other hand, the social and societal aspects seem to be poor relation to “social responsibility”. Many enterprises shut down due to economic difficulties and due to the necessity to increase profitability and the shareholder value. This gives evidence of the weak interest granted to the social side of corporate social responsibility. In France, the number of job seekers amounts to 3 634 800 at the end of June 2009, with a surge of 18,7% compared to last year (3). The situations of stress at work are numerous and sometimes lead to the worst (see the recent surge of suicides in big enterprises such as France Telecom or Renault) (4). Whereas households support a growing share of the expenses linked to environment, they endure the negative externalities (or the collateral damages) of the growth regime. Most certainly, when necessity calls for it, social responsibility spreads, as demonstrated by the preparation of enterprises to face the H1N1 flu (purchase of masks, development of home office, etc.). Except sanitary crisis, the social measures implemented are often selectively released and are focused on the most consensual themes (5). Sustainable development should have harmoniously linked, as a rosette, the economic, social and environmental sides. However, if the economic aspect dominates, will sustainable development be something more than a mere “new market”… a decoy?

(1) Commissariat Général du Développement Durable, Les éco-activités et l’emploi environnemental, Etudes et documents, n°10, juillet 2009.

(2) Commissariat Général du Développement Durable, Les ménages dépensent plus pour l’environnement, n°19, Juillet 2009.

(3) Dares, 2009.31.1 Demandeurs d’emploi inscrits et offres collectées par Pôle emploi en juin 2009.

(4) See S. Lauer, Souffrances et suicides au travail, Le Monde, 21 mars 2008

(5) See for example Groupe Alpha, Les informations sociales dans les rapports 2007. Sixième bilan de l’application de la loi NRE, 2008.

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August 2009 : “Commercial Urbanism and Large Retail in France: The Consequences of Raffarin Act” by Jean-Louis Monino et Stéphane Turolla (Research Network on Innovation)

French regulation on commercial urbanism, which is based on the Royer and Raffarin Acts, will probably be amended. The reason for that: the non-compliance of this regulation with the European Legislation related to the freedom of establishment and to the freedom of service provision within the European Union — both principles being more commonly associated with the EU “Bolkestein Directive”. Even though the implementation of this directive has been delayed as a consequence of the French and Dutch “No” to the project of European Constitution, it has been adopted meanwhile by the European Parliament though in a revised and reduced form. Still, this directive contradicts the French Legislation as it poses that the access to a service activity cannot be submitted to any authorization, except for General interest reasons. The incompatibility goes even further as the directive prohibits the possibility to “… subordinate the grant of an authorization to the provision of the proof for an economic need or a market demand, and to the evaluation of the actual or potential economic effects of the activity …”. Clearly, according to this principle, the “Departmental Commissions for Commercial Infrastructures” (“Commissions Départementales d’Equipement Commercial” — CDECs —) instituted by the Royer and Raffarin Acts should loose all their raison d’être. These Commissions were conceived by the legislator as safeguards against the expansion — considered as harming the economic equilibrium — of large retail companies, and especially against maxi-discounters. The Departmental Commissions are in charge of delivering an administrative authorization (Article L.750-1 of the French Code of Commerce) prior to obtaining the planning permission for all new establishment, extension or transferring of activities exceeding a retailing surface of 300 squared-meters. This control upon the entry in retail market is based on a variety of criteria — economic, social and environmental or related to urban and spatial planning issues.

This assault against the French legislation is not the first one. Five years ago, the German maxi-discounter Aldi has presented a legal settlement to the European Commission already arguing that the Raffarin Act was violating the rules of free establishment in the European Union. Clearly, the European Commission has in its sight the ambiguous role of the CDECs — whose members are at the same time judges and parties. J.-P. Raffarin, who was Prime Minister at this time, went personally to Brussels in order to defend his new regulation. But the Commission has exerted an increasing pressure on the French Government, and by the 5^th of July 2005 it has officially asked France to revise its legislation.

Since, the dissents have also arisen at the national level. Today many people in France claim that the Royer and Raffarin Acts have lost their raison d’être. According to Renaud Dutreil, the former Minister of SMEs and Commerce: “[…] these legislations failed to achieve their objective which aimed at favouring a better balance between large and small retailing structures, and between the centre and the suburbs of cities”. Along with other negative effects and criticisms, the core explanation of this failure lies in the tremendous increase of the volume of surfaces allocated by the CDECs (over than 7 million cumulated squared-meters over the last two years), while the prime objective of the Raffarin Act was precisely to limit the expansion of large retail surfaces. Seeking for responses to this situation, Mr Dutreil has created at the end of 2006 a “Commission for the modernisation of commercial urbanism” whose mission was to re-conceive the French legislation and, in fine, to comply with the European directives. Unfortunately, the working orientations that have been revealed following the discussion rounds with the stakeholders show that the French legislator is likely to try to “mend” the existing legislation in order to calm down Brussels while preserving its own control on entries in the retail sector. Instead, one should have expected a clearer, coherent re-statement of the legislation in line with the objectives pursued and the means allocated.

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July 2009 : “Teleworking: A Finally Irresitible Innovation” by Serge Le Roux (Association Française du Télétravail et des Téléactivités / Research Network on Innovation)

Current events put teleworking into light: two French , beginning from scratch succeeded in the vote for a private bill; enterprises (such as Michelin Norauto, France Télécom) and local communities begin to implement it.

Definition of teleworking: Teleworking is a form of organization and /or of achievement of work, using information technology in the framework of a work contract and into which, a work, which could have taken place in the employer’s office, is achieved out this office, on a regular base (extract of article 1 of the inter-professional national agreement, signed by unions and management on July 15, 2005).

It is without doubt a major change: as a matter of fact, since its origins in the 1990, the history of teleworking in France has badly begun: this innovation is without any doubt too disturbing for the organizations with influence; it questions the Taylorian logic. It makes necessary new cooperations between firms and territories. The State did not take account of what was happening: it has considered this innovation as a banal industrial project. The result is visible: nothing happened during many years.

One may consider that this information revolution cannot be reduced to a traditional approach (the one of the industrial revolution). This word of revolution suits it, as this revolution is profoundly innovative. It constantly (de)positions and (re)positions each of the components of the Taylorian-Fordian system; for example the current irruption of an unexpected guest: “work”, which inexorably takes the status of nodal point of this new productive revolution (revolution which is all in the same time technological, organizational, social, economic, managerial, territorial, human, environmental, that is to say everywhere that work plays an essential role). As a result, it is imperative to analyze always more accurately what means the objectivation of the mental functions of work.

Labour, but also inevitably capital of course: what is today the status of the productive combination, the never-ceasing but always central, because still not out of date, issue of value, in this renewed immaterial and free world?

At this evolution point of capitalism, one may observe the convergence of crises: accumulation crisis first, but henceforth followed by various other crises, the one of the planet, of towns, of employments, of the State, of regulations…

Teleworking is a window that opens the view on this complex and intricated set; It allows to reach various fields of issues, together and separately, and new emerging words: the ways are opened toward collaborative work, the right of a settled way of life, the renewal of economic territories…

A window and a call to create knowledge, to know the global character of the crisis and of its issue, of all its components, to take again the glorious torches to revive, after Marx, Keynes and Schumpeter, the existential debates that have never been so topical: future of capitalism, future of regulation, future of subsumption….

For more information on teleworking: www.aftt.asso.fr

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June 2009 : “The Future of Public Service” by Pierre Le Masne (LABRII - CEDES / University of Poitiers, France / Research Network on Innovation)

From the 1980s, neo-liberal policies have aimed at reducing the role of public services and privatizations were very numerous. France was less affected by this movement compared to other countries and kept, for a long time, a developed system of public services, especially for education and health. In the current economic crisis, this public services system, qualified by neoliberal economists as “old fashioned”, constitutes a strong protection for the population. A patient, who pays 22 Euros for a medical consultation refunded at 21 Euros, would not hesitate to resort to health care in spite of the crisis. Furthermore, medical expenses play a major role as an automatic stabilizer capable of maintaining demand.

While the Obama’s United-States are rediscovering the virtues of public services, the government in France has, for two years, held fearsome attacks against them. Named as the “General Revision of Public Policies”, these attacks are about to drastically reduce ministries’ expenses and the number of civil servants and to impose a culture of private-owned enterprises on public services, unfamiliar to the general interest. It does not much matter if public services are weakened by the treatments to which they are subjected, in particular in education and health. Public services must be as much profitable as possible even if that means to eliminate the too expensive tasks of general interest; if impossible, it is the “sink or swim” rule which prevails, the private sector will replace them.

In front of the double economic and ecological crisis into which we are diving, the current project led in France and in the rest of the world appears to be out of phase and old-fashioned. The public service has several qualities which are usually under-estimated. On the economic plan, and in a Keynesian logic, public services are efficient institutions to fight the lack of demand, to stimulate investment and to produce the use values and rights needed for the population, without “financialising” the economy. For education and health, public services are irreplaceable if we want the whole population to be involved. Public services address all people, propose egalitarian models and contribute to the reduction of inequalities (which have increased for more than 20 years). On the ecological plan, public services promote –on the national as well as the international level– the protection of the environment (The Conservatory of the Littoral, the Ozone layer agreements …), the implementation of more respectful growths of environment, of climate, of biodiversity.

Public services are usually efficient. But their efficiency needs to be assessed regarding their socio-economic objectives, at the difference of private enterprises the efficiency of which is evaluated simply regarding profit objectives. Likewise any institution, public services could improve, better take account of the population needs and, in this optic, be the object of consensual assessments. If their financing resorts to progressive taxes (income tax), they will be better accepted and will promote the reduction of inequalities.

Another future than the one promised is hoped for public services: that of big comeback of efficient and powerful public services, based on a large socio-ecological compromise and integrated into a profoundly renewed European framework. These public services would be capable to fight the ecological and the economic crises and guarantee better living conditions to the immense majority of the population.
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May 2009 : “The End of the Public Statutes? The Cas of the French Post Service” by Céline Merlin-Brogniart (GRANEM / University of Angers, France / Research Network on Innovation)

In 1990, the French Postal service shifted from a state owned-Company to an autonomous for-profit public company. Company managers are thinking about a new legal statute. This new change takes place in a deregulation and competition context in which the Dutch Post, Limited Company listed on the Stock Exchange since 1998, and the German Post, listed on the Stock Exchange since 2000, seem to be examples of effectiveness and management.

In order to catch up lost time regarding the other European postal services, La Poste has tried first to modernize its production tool (3,4 billion euros from 2003 to 2010) and to develop its external growth. But if its results for 2007 were sufficient to develop self-financing capacities for its growth and modernization, the statute is still considered as a brake on major stock and banking transactions (JP Bailly, 2007 p. 146).

La Poste has decided to increase its capital to develop its resources and to convert its statutes into a Limited company. Converting its statutes into a Limited Company would allow La Poste to obtain 2,7 billion euros to finance its development. This strategic choice raises criticisms and fears from citizen, staff as well as unions and elected representatives. After the French public service of electricity, gas and telecommunications, would this capital increase be the beginning of another loss of collective goods as some editorialists believe? [Les échos, july, 7th] ?

Four options have been proposed. The first suggestion consists of an increase in capital through institutional and staff investors. The second suggestion puts forward an increase in capital orchestrated by the Government and the French Public and Investment Organization: Caisse des dépôts et consignations The third suggestion proposes an industrial increase in capital by the means of a restricted access to industrial partners of the company (working in the same economic sector). Finally, the 4^th suggestion is to increase capital through the entry of financial investors (pension funds or investment funds).

Temptation to open the company to private investors was strong. The economic and financial crisis probably contributed to the final rejection of the financial suggestion, which required a strong short-term profitability. The postal company is also extremely sensitive to the economic context. Today the financial proposal is neither reasonable nor credible. Furthermore, the sale of the electricity company’s capital in Stock Exchange, described as an appropriation of the company by the citizen whereas the strategic policy of external growth were badly anticipated, stays in the minds. The option of the industrial partners also carries a risk. Resorting only to subsidiary companies endangers the long-term postal unity. Furthermore, the 2005 French national law of public service forces La Poste to be mostly controlled by the State.

In fact, following the results of the official Ailleret report, the directors of the company have chosen a Limited Company with a 100% public capital. The current proposal has the advantage of linking up investors knowing public interest issues (The Government and the French Public and Investment Organization Caisse des dépôts et consignations). The institutional change is planned for 2010 after the integration of the European postal directive into the French law.

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April 2009 : “Crisis and exit from crisis” by Dimitri Uzunidis (Research Unit on Industry and Innovation / University of Littoral, France / Research Network on Innovation)

Since more than three decades, economists have criticized the efficiency of free financial markets; the politicians accepted it though. The debate on the interconnection of the financial markets and of the system of international payments seemed to be outdated and out of place. The “Big Depression” which followed the “Roaring Twenties” did not serve as a lesson. Several economists declined the comparison because the intervention of the central banks moderated the risks of a crash that could spread to the real economy. Is history repeating itself? Yes and No. By comparison, the too much money replaced the little of money. But, the fact is that the international financial institutions lost their credibility. They didn’t know how to play the role of guardians of the temple; they let the machine be carried away. The liberal principles and the speeches advocating the neutrality of the economic policy have developed and applied since the 1980s with the supremacy of the monetarist approaches. Then, in a certain extent, they have become a reality in the Washington Consensus and after that, more moderately, in the propositions of “good governance”, while the Keynesian-inspired regulations were already obsolete. The failure of the policies followed so far is perceived by the aggravation of inequalities and by poverty.

For more than a year, the real-estate crisis in the United-States has transformed into a banking and monetary crisis and then, into a stock market crisis which, by contagion, has spread in Europe and the rest of the world. Weren’t the “financial drifts” unavoidable, given that the financial markets were little or not controlled at all? These drifts have been even encouraged by the globalized finance cycle, the open markets, the privatizations and the investments aiming at answering the insatiable demand of “value acquisition by the shareholder”.

Twenty years of financial and social crises later, the model of the minimum State lauding the limited and punctual intervention of the State in the economy to optimize the efficiency and the repartition of the resources is strongly questioned. The modern economy has, however, been founded on the power of the State and of the national economy. For the mercantilists, the classics, the Keynesians, it is not possible for growth and development to be conceived without the State… Nevertheless, without the enterprise, it is! Are the active economic policies at the agenda? If yes, how to avoid this time the bureaucratic drifts?

To face the new « Big Depression », three ways are currently possible: a) let the capital markets act and continue to devaluate any junk asset (monetary, technological and human) with as a forward consequence the economic revival based on the emergence of new technologies and activities at the risk of generating, at the end of the period, a plethora of unused capital; b) create a new world financial architecture without a hegemonic currency with the risk of curling up in the national cocoon and in the “every man for himself” and thus of multiplying the pretexts of conflict; c) invent modes of co-development by banning any reference to currency while the future of the humanity and its connections with the rest of the animal and plant worlds are being drawn.

Indeed, the current limits of the economic cycle suggest thinking of the economy according to (its) the environment, not the opposite. It will be necessary to make a success of the revolution of the thought and of the economic connections, in order to draw an environment-friendly economy and determinedly turned toward sustainable development. However, the permissive conditions of the valuation of all the scientific and technical knowledge and -all the monetary wealth- accumulated in environmental protection can appear only if the economic relationships modify. From their part, the economic relationships (and logics) change by the voluntarist political intervention, reflecting, itself, the pressure of the “social need”. Whether it is mechanisms for a development respecting the natural resources, applications of science to the production or transfers of technologies within countries …, the relationship between the human activities and nature must be revised and corrected!

It is a question of thinking about a « system of global governance » whose pertinence would be considered by its capacity to change the objective of global performance and whose efficiency would be evaluated by its ability to subject the economic to the environmental and social imperatives. In every case, the present crisis cannot be rescuing without the intervention and the application of new roles, functions and economic principles. Do not we say that the crisis is the laboratory par excellence of innovations?

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March 2009 : “Environment: What Utopia for Tomorrow ?” by Anne-Marie Crétiéneau (Research Unit on Industry and Innovation / University of Poitiers, France / Research Network on Innovation)

Almost forty years after the Meadows Report and the idea of a zero growth, there is no doubt about the fact that our industrial development mode brings the ecological disaster and that merciless constraints weigh henceforth on our survival. During the 20^th century, Greenhouse Gas emissions were doubled, provoking an accelerating climatic disorder. The international convention on the Global Warming and the Kyoto Protocol, aim at reducing these emissions and at looking for a climatic equity. In fact, although the poorest countries’ emissions are weak, they may undergo quite hard the effects of warming. Because of human activities, living species disappear yearly at a rate of 1%. Preserving biodiversity, forests, water, oceans and littorals, fighting the desertification and the strong dependency towards fossil energies which dry up very quickly, become a requisite for the human life: the perspective of a global ecological crisis sends back each actor in front of his responsibilities. Besides, it is necessary to promote at the same time economic, social and cultural rights in compliance with the Objectives of the Millenary for Development, all by taking into account poverty and the strong economic and social inequalities becoming more and more accentuated by the present world crisis.

In front of the apocalyptic paintings and the catastrophe scenarios which flood the media, acting for a sustainable development has become the inescapable watchword and this at all the levels of decision. The pressure on the most polluting nations should bring them to reduce their ecological footprint since they are responsible for the deficit produced by the world economy by mobilising more resources which the biosphere is unable to regenerate. It is necessary to make all actors sensitive and to raise their awareness of the effects of their consumption/production/commercialization mode. In this purpose, France, with its Environment “Grenelle”, gathering the representatives all the different actors (State, unions, associations, territorial communities, enterprises), seeks to build an “ecological democracy”. We can then begin to dream of an “ecological growth”. The lambda citizen participates; he can henceforth estimate the impact of his daily activities and choices on environment and on the mode of development. The online tests and quizzes are multiplying: “are you a good citizen?”, “which development model do you sustain?”, “calculate your footnote, your Greenhouse Gas emissions, make your personal carbon balance sheet, measure the impact of your trips, of your diet … your sustainable house, your citizen’s actions, etc.” The education to environment is made everywhere and eco-gestures allow without “ecological consciousness” to act against the industrial society carrier of disasters. Beyond the visible changes and the shop window represented by the notion itself of sustainable development, two big major options are currently superposed with in each the crucial question of the place and the trust granted to the sustainable innovation.

On the one hand, can we hope that an ecological growth is possible? Or must we rather opt for de-growth? In the first case, a new industry founded on the savings of energy and resources and on the development of renewable energies can be job creating. However, we can’t escape from the necessity of a material de-growth to reduce Greenhouse Gas emissions, which strengthens the second vision. This latter vision aims at acting on both variables that are the abundance in terms of consumption and the technology through a bigger efficiency. The choice of the frugality or sobriety is acquired, but noticing that innovations of product or of service inducing a gain of efficiency produce also a bounce effect generator of ecological problems, the current of de-growth recommends a “frugal” innovation generator of a bounce effect as much economic as ecological. On the other hand, if populations are called to participate at this vast project which is at the same time economic, ecological and social that is sustainable development, are they simulated to appropriate completely the problem in order to examine at their level all its faces and consequently to innovate? What world to come would prefigure the good technological news, the one for example which announce that the totality of consumed electricity in the world could be produced by a solar power station with concentration on a surface equivalent at 1% of the Sahara?

It is at the opposite, on the local level, that citizens feel capable to act by taking initiatives and by elaborating micro-projects which stem from the down-to-earth utopia and by defending, in the North as well as in the South, the techniques, the knowledge and the knowhow that allow the human society to survive in its environment. If a feeling of impotence in terms of the control of global development rises, it comes along with the concern for others and with an international solidarity. The emblem of innovation which constantly modifies the daily life and produces a better world, remains the economist/entrepreneur Yunnus, Nobel Price for Peace in 2006, and this thanks to the microcredit, which is quite far ahead the “sustainable dance club”, opened in last September in Rotterdam.

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February 2009 : “The University of the Economic Machine” by Marlyse Pouchol (Research Unit on Industry and Innovation / University of Reims Champagne Ardenne, France / Research Network on Innovation)

The mutation of the university, already in process for long time ago, has been considerably accelerated recently. Training young people for a job in a world where jobs are constantly changing, is the real challenge for contemporary academics. Thus, they are compelled to renew “their training offer” every four years and to seek for changes they have to imagine before even those changes actually occur.

The incontestable necessity for a young people to find an employment should not eliminate the crucial consideration of other dimensions of public and social life of human communities. Hannah Arendt restates that, as well as the independence of a judicial power, constitutional governments have recognised the necessity of laying out places serving as “refuges of truth” (1) which should be held away from social pressures and the political power.

Today, we do not see anymore the necessity of this independence of academics we do no longer seize the interest of the existence of places where truth is the highest criterion of the word. Equally sobering, the challenge facing the contemporary university extends beyond continuous adjustment, not only to the requirements of an ever-changing economy, but also to enlarge the number of students in order to deserve a public funding inadequately distributed. Academics are therefore compelled, such as advertisers, to make call for seducing arguments in order to maintain a diploma which, hardly been created, finds itself already dismissed by another one.

After being formations creators, academics must become “images manufacturers” in competition with one another. Should we not be alarmed about this change of the university status moving from an austere and daunting role of “truth teller”, which at the end is the only solid foundation of its authority, to that of “images manufacturer” skilful in communicating and catching funds? Indeed, how are we to regard transformation of research into a weapon for a national economy to survive in a context of a merciless economic competition? We forgot that Keynes had designed the political economy as a tool to avoid that external trade becomes a supplementary source of conflicts between nations and that their pacific coexistence constitutes the horizon of his reflexion in the field of monetary systems. In addition to this disturbing aspect, could we really believe that the “carrot” via the distribution of bonuses and the “stick” through the threats of demotion are likely to foster genuine innovations?

It is necessary to welcome the deleterious environment, ransom of a permanent agitation introduced within the old university institution, by seeing a healthy competition favourable to the emergence of the new under the pretext that it creates a conductive environment to the elimination of positions established by the oldest. Are we really sure that progress is obtained through victories against social gravities or a satisfied conservatism and that it would thus inevitably require violence and destruction? The change for the sake of change, imposed as a kind of the reason for the state which does not leave any place to the authentic cooperation established by a contradictory debate fed by real arguments, returns, really, in cutting the wings of the newcomers. So much it is true, as Arendt indicates that wanting “so that to prepare a new generation for a new world can only mean that one wish to strike from the newcomers’ hands their own chance at the new (2).

(1) Hannah Arendt, “Truth and Politics”, in Between past and future. Eight exercises in political thought, p. 261

(2) Hannah Arendt, “The Crisis in Education”, in Between past and future. Eight exercises in political thought (p. 177).

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January 2009 : “Cute-Rate Labor and Economic Growth Potential” by Sophie Boutellier (Research Unit on Industry and Innovation / University of Littoral, France / Research Network on Innovation)

Predictions for the evolution of unemployment in 2009 are dismal for both industrialized and developing countries, therefore the number of poor people will increase. Indeed, in spite of regular technological and scientific progress, the human condition in 2009 is little different from the historical past. Inequality and poverty continue to dominate. Is there a solution? Professional economists continue to be divided between so-called free-market and social welfare-oriented approaches. Indeed, is full employment even possible in a capitalist society organized according to free market principles? The only example of full employment, throughout the history capitalism, occurred between 1950 and 1970. Certainly this period was unique, however, due to exceptional factors including reconstruction following World War II and the Cold War.

Clarification of the role of the state pertaining to economic and social welfare values is central to understanding historical outcomes juxtaposed against ideological prescriptions. Implicit are industrial, technological and scientific developments, and also scale economies of mass production realized during the 20th Century. By 1980, for instance, one could characterize the debate between free-market and social welfare approaches as the “revenge against Keynesianism” by its liberal critics, in ascendancy since 1950. Milton Friedman and others were harsh in their criticism of the so-called welfare state, encased in their paradigmatic view of free-market capitalism in which unemployment is assumed to be voluntary. If workers can exist without working, then salary declines can be arrested: Perhaps not an attractive outcome for hardcore capitalist ideologues. For Keynes, by way of contrast, durable wages and benefits represent increased purchasing power and therefore potential new market opportunities.

During the 1980’s and 1990’s the rate of economic growth in the United Kingdom and the United States was buoyant and was accompanied by lower rates of unemployment, but not necessarily lower rates of poverty. The “hero” of this period was not so much the Schumpeterian entrepreneur, but, the trader, instead, who manages from his computer, without the visible realities that astute trades may negatively affect the lives of millions, including in the developing nations, particularly.

Indeed, this image illuminates the main contradiction of capitalism. If workers can’t live adequately on their incomes, they also can’t purchase the goods which they produce. The wealth of entrepreneurs, ultimately, is anchored in the consumption of poor people, from a myriad of supermarkets and fast food restaurants, among others. The consequence of this crisis is now being revealed in increasing unemployment and increasing business failures.

What can be done? There are too many poor among the working class and not enough affluent consumers to purchase excess merchandise inventories. Must we wait for a new Keynes to describe the solution to this contemporary crisis?

How can we find a new Keynes? Indeed, is this a fundamental question, since the situation today is not exactly the same as the situation in 1930? Perhaps the mass production society we have created in the ensuing decades now clouds our judgement as we search for solutions amid the environmental rubble of our own creation.

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December 2008 : “Speculative Capitalism — U.S. Style” by Jim Sawyer (Fulbright Program, France / University of Seattle / Research Network on Innovation)

Short-termism is a hallmark of contemporary, American-style speculative corporate capitalism. Doctrinally, it grows out of the neoclassical profit lacuna, spoken of by Joan Robinson, which conceals the use-value of assets. For instance, if a horse is in the field, pulling a plow, under the classical system it would have qualified as a productive capital placement. If the horse should be permanently removed from the field and tethered by the farmer’s door for the pleasure of his children, however, then “capital” would have been removed from productive use. That is, its use-value would have shifted from a capitalist controlled asset to one used for consumption by an individual qua rentier. The neoclassical paradigm provides no practical avenue, however, for making this crucial distinction.

The world changes, of course, but the way in which the world is believed to work, doctrinally, does not stay apace. Economists tend to obfuscate on contemporary “real world” problems for which—all too often—their prescriptions are doctrinally rather than pragmatically motivated. Indeed, we tend to look in crises, to the solution that seemed to work in the last crisis, in this case the Great Depression (or arguably, the neoclassical synthesis of the early 20^th Century). Then, however, industrial capitalism did not rely extensively upon sophisticated secondary financial markets, globalization, and technology capable of moving financial capital at the speed of light.

Because the neoclassical profit lacuna does not specify what the relatively greater reward should be for the capitalist, beyond the rentier, neoclassicism therefore is a doctrine without a theory of profit. Practically, there is no capitalist (as distinct from the rentier), and therefore no capital (as distinct from asset placements by rentiers).

Doctrinaire capitalism has evolved, from laissez-faire capitalism, through so-called mixed capitalism, to what may now be called “relative capitalism,” I believe. The crisis spawned within the U.S. financial system should be connected to the doctrinal neoclassical profit lacuna that conflates financial capital with “real” capital. Crucial changes to doctrine (shifting toward viewing capital as “relative” rather than absolute) and social science method (away from “linearity,” to account more crisply for subjective “stake-holder” preferences) are needed.

Finally, government oversight will not improve “pseudo-capitalist” outcomes, unless articulated tightly with what we call “vision,” and which Harvard competitiveness “guru” Michael Porter calls “strategy.”