The Network Society - University of Massachusetts Amherst

5. Activating Innovation
Innovation, Technology and Productivity 143
So far, the analysis presented has focused mainly on the technological
aspects of knowledge creation and development, specifically the
link between private and public research expenditure and the demand
for highly educated researchers. Outside of this sphere, however, there
are other factors that also play an essential role in the innovation
process: the introduction of new products onto the market, the implementation
of new production techniques, the right organisational set
up, the setting up new, innovative companies, the local innovative and
entrepreneurial culture, etc.
This raises the question of the possible existence of intrinsic, institutional,
social and cultural barriers in Europe that may have a negative
impact on knowledge development and innovation. Besides the
well-known institutional barriers to innovation in Europe (the lack of
harmonization in the area of the European patent, the difficulties in
creating an effective European venture capital market, etc.), the question
can be raised to what extent certain aspects of the European continental
social welfare model might contain intrinsic obstacles to
“entrepreneurship and innovation culture,” especially in light of
Europe’s increasing structural disadvantages in the areas of innovation
and high-tech entrepreneurship. The Lisbon declaration was not only
an expression of the political desire to strive for a Europe belonging
by 2010 to the world’s most knowledge-intensive regions, but also that
this was to happen within the context of a strengthened, ‘activated’
social Europe that would have an eye for past social achievements.
The question that has in fact not been addressed in Lisbon is how activating
labour markets and what we have termed here “activating
knowledge” can go together and when one is confronted with economic
trade-offs.
Based on the so-called regulatory barriers index estimated by the
OECD, Figure 4.4, represents e.g. for the U.S. and a number of
European countries the various, most common barriers to innovation
associated with product market regulations, specific burdens on start
ups, administrative burdens and last but not least employment protection
costs associated with hiring and firing. This last one appears significantly
higher in all European countries than in the U.S., with the
UK not surprisingly with the lowest index level.