4. Place-responsive higher education institutions as policy partners
The Québec research and innovation investment strategy (SQRI 2) supports the role of HEIs as drivers of provincial innovation and entrepreneurship. This depends on a commitment to focus on talent and the ambition to stimulate entrepreneurship and innovation. The Innovation Zones established by the Ministry of Economy, Innovation and Energy (MEIE) also help connect various actors, including HEIs, to generate innovation and social capital in both metropolitan and non-metropolitan Québec. This chapter discusses the provincial innovation strategy and illustrates the nexus between research and local innovation within Innovation Zones.
The SQRI 2 has placed an increased emphasis on encouraging talent entrepreneurship and innovation by connecting HEIs with partners, including firms of all size and maturity, in all communities. In particular, the SQRI 2 support the MEIE’s ambition to spur a spatial approach for promoting entrepreneurship and innovation, through the “Innovation Zones” (zones d’innovation, or ZI), where HEIs are mobilised to promote entrepreneurship, innovation and talent in their own regional community and in specific sectors selected by provincial authorities, in co-ordination with local stakeholders. Innovation Zones deserve international attention, thanks to the assumption that both non-metropolitan and rural communities can engage with deep technology, and that breakthrough innovation can take place everywhere.
In recent decades, the provincial government has heavily invested in academic research. This has produced a steady increase in academic publications and in citations of research-intensive HEIs. Between 2000 and 2019, the number of publications rose from about 8 000 to more than 18 000 for all three major research sectors: natural sciences and engineering, health social sciences and humanities, boosting their international visibility.
Besides supporting high-level research to increase the international visibility of Québec-based HEIs, the public sector also invests in academic research to increase innovation, on the expectation that productive research will enhance the provincial economy. In particular, academic research is expected to trigger more innovation at the local level, along the lines proposed by the linear model of innovation (Bush, 1945[1]; Maclaurin, 1953[2]) (Figure 4.1).
Source: Based on (Bush, 1945[1]), “Science: The endless frontier”, https://doi.org/10.2307/3625196; , (Maclaurin, 1953), “The sequence from invention to innovation and its relation to economic growth”, https://doi.org/10.2307/1884150.
The new knowledge generated by these leading research institutions is expected to increase university-industry co-operation. Within this framework, successful companies located in the proximity of the research institutions can benefit from the knowledge spill-overs generated by research activities carried out by HEIs. Proximity is an important factor for knowledge spill-overs, especially as knowledge is sticky and suffers from considerable distance decay effects (Serrano, Paci and Usai, 2004[3]) (Box 4.1). However, empirical evidence shows that the relationship between academic research and local innovation/growth is not linear and that factors can limit HEIs’ capacity to engage with their own entrepreneurial ecosystem (Bush, 1945[1]; Maclaurin, 1953[2]).
A large body of academic research focuses on the relationship between HEIs, knowledge spill-overs and local development. Leading HEIs, such as Stanford University and the Massachusetts Institute of Technology (MIT), have played a central role in the economic success of Silicon Valley in Northern California and of Route 128 around Boston (Henderson, Jaffe and Trajtenberg, 1998[4]). Based on these examples, it is frequently assumed that investment in HEIs’ research will provide an important boost for innovation and create new economic activity at the local level. It has also been assumed that dynamic research-led HEIs can attract private-sector activity to an area and improve local productivity (David Neumark and Simpson, 2015[5]).
HEIs are seen as a fundamental source of change in local economies, and policies to promote research in local HEIs have become increasingly important in development strategies (Power and Malmberg, 2008[6]). Empirical results of such strategies, however, are mixed and often contradictory. Using cross-sectional data for the US, (Anselin, Varga and Acs, 1997[7]) first discovered a positive association between HEIs and local innovation.
Similar results have been obtained by (Woodward, Figueiredo and Guimarães, 2006[8]) although the size of the coefficient, and of the link between HEI research and innovation, is considerably smaller when adopting a panel data structure. It has also been found that the positive relationship between HEIs and local growth depends on the period chosen (Goldstein and Renault, 2010[9]). They reported that for the period 1969-1998, the influence of research conducted by US HEIs on regional development was particularly weak. Similarly, (Drucker, 2016[10]) found a weak relationship between university research and regional growth in the US over the period 2001-2011.
A more recent study focusing on the land-grant programme in the US (Liu, 2015[11]) reported that US universities had negligible effects on local output over the short and medium term (up to a maximum of 10 years), but highly positive effects in the long run (over periods of 80 years).
Source: Carlino, G. et al. (2012[13]), “The agglomeration of R&D labs”, https://doi.org/10.2139/ssrn.2149008; Jaffe, A. (1989[14]), “Real effects of academic research”, https://doi.org/10.2307/1831431; Neumark, D. and H. Simpson (2015[15]), “Place-based policies”, https://doi.org/10.1016/B978-0-444-59531-7.00018-1; Power, D. and A. Malmberg (2008[16]), “The contribution of universities to innovation and economic development: In what sense a regional problem”, https://doi.org/10.1093/cjres/rsn006; Anselin, L., A. Varga and Z. Acs (1997[17]), “Local geographic spillovers between university research and high technology innovations”, https://doi.org/10.1006/juec.1997.2032; Woodward, D., O. Figueiredo and P. Guimarães (2006[18]), “Beyond the Silicon Valley: University R&D and high-technology location”, https://doi.org/10.1016/j.jue.2006.01.002; Goldstein, H. and C. Renault (2004[19]), “Contributions of universities to regional economic development: A quasi-experimental approach”, https://doi.org/10.1080/0034340042000265232; Drucker, J. (2016[20]), “Reconsidering the regional economic development impacts of higher education institutions in the United States”, https://doi.org/10.1080/00343404.2014.986083.
Against this backdrop, the provincial government has adopted an innovation policy with a specifically spatial dimension, to help develop a collaboration framework between (academic) research, teaching and learning activities, businesses of all size and maturity, and local authorities, with a view to generating “ecosystems” concentrating production and improving the quality of life for highly skilled individuals. The policy, known as Innovation Zones, is one of the key pillars of the provincial innovation strategy.
The SQRI 2 aims to leverage HEIs, particularly those outside the metropolitan area of Montréal, and operating in Québec’s network of cities and in rural settings, to promote entrepreneurship in deep-tech sectors, breakthrough innovations and a more inclusive social fabric. To achieve this result, the MEIE has developed a spatial approach called “Innovation Zones” (zones d’innovation, or ZI). These consider innovation a multidimensional process in which economic, environmental and social aspects are connected in a given locality and supported by a coherent basket of public services and investment.
IZs support regional specialisation in “priority sectors”. The provincial government selects IZs based on applications from regional communities, which generate projects in connection with the “priority sectors” identified by the policy. The applications are selected based on their capacity to mobilise local players, including HEIs, to support the innovation ecosystem. HEIs are mobilised to promote talent, research, innovation and entrepreneurship in connection with the local IZ. The IZs aim to improve the appeal of selected places to pool talents, entrepreneurs and major clients, as well as researchers from Québec and elsewhere. Different socio-economic actors are involved in each zone, for example: companies; economic organisations; research and educational institutions; municipalities (Gouvernement du Québec, 2022[12]). The constant connection between actors and sharing of information creates networks and ecosystems that can prompt further innovations and their commercialisation in a given field.
From a HE perspective the capacity of universities and CEGEPs to cooperate in teaching and research activities (an important trait of the Québec system) represents an asset for the successful implementation of IZs as it guarantees the capacity to generate an integrate skills pool mixing technicians, entrepreneurs and researchers. IZs, however, may face the challenge of involving academic researchers in actions to promote local innovation, due to the lack of incentives and career opportunities (see chapter 3).
Innovation Zones aim to create new models of entrepreneurial ecosystems…
At the time of writing, two Innovation Zones were announced by the provincial government1: DistriQ – zone d’innovation quantique; and Technum Québec. While other zones are in the pipeline, the two established zones illustrate the potential and the challenges faced by this approach.
The first Innovation Zone is the DistriQ quantum zone (previously known as “Sherbrooke quantique”, SQ), (Infographic 1). Located in the urban area of Sherbrooke, it revolves around institutions such as the University of Sherbrooke, the Institut quantique, the Interdisciplinary Institute for Technological Innovation (3IT), the Cégep de Sherbrooke, and a large corporation operating in the ICT sector. Quantum physics is generating breakthrough technologies that will have major repercussions in fields such as pharmaceuticals, energy, transport, finance and artificial intelligence (Gouvernement du Québec, 2022[12]).
SQ benefits from a well-established, recognized ecosystem, both in basic and applied research in quantum physics. The university is specialised in quantum calculations and technologies and also in the development of components for quantum computers, and has generated a local “cluster” of scientific, technological and entrepreneurial activities. In addition, the aim of this IZ is to generate a positive dynamic for the urban environment – connecting the development of the “cluster” to the well-being and sustainability of the local community. This generates a “cultural” and “social” component within SQ. According to Québec policy makers, the approach of the Innovation Zones is to connect economic, social and environmental aspects (regional development) (Gouvernement du Québec, 2022[12]).
Source: (Sherbrooke Quantique, 2022[13]) Infographic 4.1. The DistriQ quantum innovation zone (formely known as Sherbrooke Quantique)
The second Innovation Zone is the “Technum Québec”, in Bromont (Infographic 2). This benefits from the dynamism of such key players as the MiQro innovation collaboration centre (C2MI), IBM Canada and Teledyne DALSA. Technum Québec’s reach extends well beyond the Innovation Zone. The 700 Québec companies in the intelligent electronic systems sector will also benefit from this initiative. At the heart of the digital transformation of companies in the manufacturing sector, electronic systems are accelerating the growth of strategic industries in Québec’s economy, including aeronautics, telecommunications, life sciences, energy and transportation (Gouvernement du Québec, 2021[14]). One peculiarity of this Innovation Zone is that it is less focused on the holistic approach to urban/regional development intended to be characteristic of IZs. The emphasis is on the area’s industrial specialisation, with the characteristics of an “industrial cluster”.
Source: (Technum Québec, 2022[15])
As noted above, inside the Innovation Zones, the role of HEIs is central. Many institutions, even those that are not located in the declared Innovation Zones, are well-integrated in programmes conducted in the context of the zones. Interviews showed that the University of Montréal is active in seven different projects of the Innovation Zone programmes presented to the MEIE. The IZs have catalysed further collaboration between different HEIs, which appears to be one of the advantages of the Québec higher education system. Some programmes are run jointly by different institutions. For instance, the Cellule Intégrée de Recherche, Innovation et Formation (CIRIF) consists of a programme run both by the University and the Cégep of Sherbrooke in the declared Innovation zone. Interviews revealed that Strategic sectors for Québec, conducive to major investments within the framework of Innovation Zones, combine both innovation and access to highly qualified personnel. The variety of training and the different jobs associated with these strategic sectors cannot be covered by a single institution.
… but there is room to enlarge the scope of innovation and strengthen the connection with entrepreneurship
The Innovation Zones established in the province of Québec reflect the priorities of the government. They focus investment on a selected local community to promote specialisation in a pool of priority/deep-tech sectors, which needs to connect to local characteristics and potentials. Policy efforts are focused on non-metropolitan regions, including cities and rural areas. While the assumption that innovation and entrepreneurship can take place in rural areas deserves international attention, the policy, at least in its initial phases, seems to be focused on deep-tech entrepreneurship. Deep-tech companies (often referred to as “unicorns”, that is, companies that have been valued at as much as CAD 1 billion, ignite a sense of excitement and are therefore considered more innovative and worthy. However, encouraging innovation is not restricted to creation of new technology (“Invention is not innovation”) or a focus on deep tech; innovation should also focus on devising new or improved products and services (Breznitz, 2021[16]).
Innovation Zones could support more sectors, including those that are technologically more mature and have the potential to generate valuable and sustainable jobs. HEIs could play an even more important role in this process of self-discovery by generating tailored knowledge, products, talent and research.
Innovation Zones could also become pivotal in promoting entrepreneurship education and entrepreneurship. HEIs could be mobilised to mainstream access to formal and informal entrepreneurship learning opportunities (including adult education). The aim will not only be to create more businesses but to promote an entrepreneurial mindset, training people to be drivers of innovation and introducing them within their organisations. This can also help retain skilled labour. Many of the IZs are in rural (or smaller urban) areas, where the pool of talent is smaller, and which may appear less attractive to workers than larger urban areas.
From this perspective, Québec is establishing a place-responsive approach, and should tailor interventions to the features and potential of localities. Among the characteristics of the policy, there is the attempt to generate spaces for collaboration inside the higher education institutions, including universities and Cégeps, to industrial and entrepreneurial activities, to facilitate the alignment between research activities and social impact, such as quality of life and well-being. However, the selection process for local specialisations seems to depend on top-down decisions, rather than on a process of self-discovery at the local level. The rationale for this approach is to promote deep-tech sectors in non-metropolitan Québec, but it could also reduce the opportunity for diversifying specialisations and growth in regional localities.
In general, to be successful, the SQRI 2, and the IZ actions, will need to be supported by policy complementarities among different sectors (Box 4.2). For example, to mobilise academic researchers and strengthen their capacity to engage with collaboration and co-specialisation activities will require specific incentives and career opportunities. In other words, it becomes important that the efforts of academic researchers to promote local innovation are taken into account in their evaluation and career advancement. In this realm, the IZs could be viewed as a test bed where different policy domains come together. The collaboration between MEIE and MES will be pivotal to ensure that the HE policy supports IZs. Québec is experimenting with interesting practices in terms of collaboration and policy complementarities supporting a coherent reform package. This is also reflected in the SQRI2, which includes a pillar on the coherence of government initiatives. The Ministry of Higher Education (MES), for example, is discussing pilot reform projects to support the SQRI2 and the IZs. In the same vein, it will be important to collaborate with local governments (multilevel governance) to ensure that investment in innovation generates synergies with local and regional development strategies and that no “trade-offs” among different policies emerge (see the issue of the localisation of the Campus Mil in Montréal).
Québec authorities could take into account international practices that proved effective in generating connection between HEIs and their surrounding communities to support innovation and entrepreneurship, and in which HEIs were expressly used to deliver a policy connected to regional development or SMEs (Box 4.3).
Economic theory, and empirical evidence, illustrate that coordinated reform packages – based on complementarities – are more impactful than piecemeal reforms. Piecemeal reforms can worsen rather than improve policy problems. This is assumption can be justified by the fact that piecemeal reforms (by definition) remove only some constraints to the optimum conditions, but not all of them. As stated by Lipsey and Lancaster (1956[17]): “[…] in a situation in which there exist many constraints which prevent the fulfilment of the Paretian optimum conditions, the removal of any one constraint may affect welfare or efficiency either by raising it, by lowering it, or by leaving it unchanged.” Consistent with this theory, empirical works assessing growth performance in European transition countries and developing countries (Braga, Checchi and Meschi, 2013[18]); (Aziz and Wescott, 1997[19]) find that piecemeal reforms that target some but not all distortions have an imperceptible impact on the economic performance in a given country, and may even reduce the overall welfare, in some cases.
The combined effect of reforms is superior to the effect of each factor considered separately under certain conditions. This is due to “complementarity” among the two factors. So, considering two elements – E and E’ – and their performance R, it is possible to write that there is complementary if their combined effect is greater than the sum of their individual effects:
The main insight of this approach is quite simple: welfare is maximised when a complementarity exists between an endogenous variable and an exogenous parameter in the sense that having more of the one increases the marginal return to having more of the other – i.e., the optimal value of the former will increase that of the latter. In the case of multiple endogenous variables, then all of them must also be complements in order to guarantee that their increases are mutually reinforcing.
DistritoTec by the Monterrey Institute of Technology (Mexico)
The DistritoTec initiative in Monterrey, led by the Monterrey Institute of Technology-Campus Monterrey, involves the transformation of the 20-kilometre urban radius around the campus as a comprehensive “innovation district”. It introduces an economic model supported by high technology firms and innovation-based activities, together with high-quality infrastructure. The ambition is for this campus to become a source of urban regeneration. The university has also helped the government with the creation of 14 technological parks in the past 14 years and undertaken a number of other regional initiatives:
University of Texas San Antonio (UTSA), Small Business Development Center (SBDC) (United States)
In San Antonio, Texas, in the United States, the Small Business Development Center (SBDC) Network provides consulting and technical assistance to the small business community. Its goal is simple: to help small businesses start and grow. The SBDC programme supports the growth and development of the Texas economy by assisting in job creation, economic diversification and business expansion. Rigorously competitive and quantitative, the SBDC methodology is based on close collaboration between the local HEIs who host the network and SMEs.
Source: (OECD/IDB, 2022[20]);
References
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[19] Aziz and Wescott (1997), Policy Complementarities and the Washington Consensus - Mr.Jahangir Aziz, Mr.Robert F. Westcott - Google Books.
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[16] Breznitz (2021), Innovation in Real Places, University of Toronto Press.
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Note
← 1. At the time of writing, other Innovation Zones are to be announced.