Learning Transnational Learning [1 ed.] 9781135055820, 9780415539890

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Learning Transnational Learning

Systems of innovation that are conducted within national borders can preserve inefficient solutions and prevent development. This has led to a feeling that transnational learning strategies are more and more desirable. In practice, the field of transnational learning has been dominated by various policy-­making institutions, such as the OECD and European Union, working through different types of policy instruments and programs such as structural funds, open methods of coordination, as well as international research institutions and networks set up by cooperating national governments working on comparative analysis, benchmarking and indicators. This book lays out a set of methods which can further enhance the experience of transnational learning, starting from the sociological ideas promoted by Charles Sabel of learning through monitoring, and by Marie Laure Djelic and others of the ‘translation’ of experiences between different countries. Case studies and examples are collected from three fields: industrial development, tourism and local government. Åge Mariussen is Botnia-­Atlantica Institute leader at the University of Vaasa, Finland, and Senior Researcher at the Nordland Research Institute, University of Nordland, Norway. Seija Virkkala is Professor of Regional Studies in the Faculty of Philosophy at the University of Vaasa, Finland.

Routledge studies in human geography

This series provides a forum for innovative, vibrant, and critical debate within Human Geography. Titles will reflect the wealth of research which is taking place in this diverse and ever-­expanding field. Contributions will be drawn from the main sub-­disciplines and from innovative areas of work which have no particular sub-­disciplinary allegiances. Published:   1 A Geography of Islands Small island insularity Stephen A. Royle   2 Citizenships, Contingency and the Countryside Rights, culture, land and the environment Gavin Parker   3 The Differentiated Countryside Jonathan Murdoch, Philip Lowe, Neil Ward and Terry Marsden   4 The Human Geography of East Central Europe David Turnock   5 Imagined Regional Communities Integration and sovereignty in the global south James D. Sidaway   6 Mapping Modernities Geographies of Central and Eastern Europe 1920–2000 Alan Dingsdale

  7 Rural Poverty Marginalisation and exclusion in Britain and the United States Paul Milbourne   8 Poverty and the Third Way Colin C. Williams and Jan Windebank   9 Ageing and Place Edited by Gavin J. Andrews and David R. Phillips 10 Geographies of Commodity Chains Edited by Alex Hughes and Suzanne Reimer 11 Queering Tourism Paradoxical performances at Gay Pride parades Lynda T. Johnston 12 Cross-­Continental Food Chains Edited by Niels Fold and Bill Pritchard

13 Private Cities Edited by Georg Glasze, Chris Webster and Klaus Frantz

23 Time–­Space Compression Historical geographies Barney Warf

14 Global Geographies of Post Socialist Transition Tassilo Herrschel

24 Sensing Cities Monica Degen

15 Urban Development in Post-­Reform China Fulong Wu, Jiang Xu and Anthony Gar-­On Yeh 16 Rural Governance International perspectives Edited by Lynda Cheshire, Vaughan Higgins and Geoffrey Lawrence 17 Global Perspectives on Rural Childhood and Youth Young rural lives Edited by Ruth Panelli, Samantha Punch, and Elsbeth Robson 18 World City Syndrome Neoliberalism and inequality in Cape Town David A. McDonald 19 Exploring Post Development Aram Ziai 20 Family Farms Harold Brookfield and Helen Parsons 21 China on the Move Migration, the state, and the household C. Cindy Fan 22 Participatory Action Research Approaches and Methods Connecting people, participation and place Edited by Sara Kindon, Rachel Pain and Mike Kesby

25 International Migration and Knowledge Allan Williams and Vladimir Baláž 26 The Spatial Turn Interdisciplinary perspectives Edited by Barney Warf and Santa Arias 27 Whose Urban Renaissance? An international comparison of urban regeneration policies Edited by Libby Porter and Katie Shaw 28 Rethinking Maps Edited by Martin Dodge, Rob Kitchin and Chris Perkins 29 Rural–Urban Dynamics Livelihoods, mobility and markets in African and Asian frontiers Edited by Jytte Agergaard, Niels Fold and Katherine V. Gough 30 Spaces of Vernacular Creativity Rethinking the cultural economy Edited by Tim Edensor, Deborah Leslie, Steve Millington and Norma Rantisi 31 Critical Reflections on Regional Competitiveness Gillian Bristow 32 Governance and Planning of Mega-­City Regions An international comparative perspective Edited by Jiang Xu and Anthony G.O. Yeh

33 Design Economies and the Changing World Economy Innovation, production and competitiveness John Bryson and Grete Rustin 34 Globalization of Advertising Agencies, cities and spaces of creativity James Faulconbridge, Peter J. Taylor, J.V. Beaverstock and C. Nativel 35 Cities and Low Carbon Transitions Edited by Harriet Bulkeley, Vanesa Castán Broto, Mike Hodson and Simon Marvin 36 Globalization, Modernity and the City John Rennie Short 37 Climate Change and the Crisis of Capitalism A chance to reclaim, self, society and nature Edited by Mark Pelling, David Manual Navarette and Michael Redclift Forthcoming: 44 Gender, Development and Transnational Feminism Edited by Ann M. Oberhauser and Ibipo Johnston-­Anumonwo 45 Fieldwork in the Global South Ethical challenges and dilemmas Edited by Jenny Lunn

38 New Economic Spaces in Asian Cities From industrial restructuring to the cultural turn Edited by Peter W. Daniels, Kong Chong Ho and Thomas A. Hutton 39 Cities, Regions and Flows Edited by Peter V. Hall and Markus Hesse 40 The Politics of Urban Cultural Policy Global perspectives Edited by Carl Grodach and Daniel Silver 41 Ecologies and Politics of Health Edited by Brian King and Kelley Crews 42 Producer Services in China Economic and urban development Edited by Anthony G.O. Yeh and Fiona F. Yang 43 Locating Right to the City in the Global South Tony Roshan Samara, Shenjing He and Guo Chen 46 Learning Transnational Learning Edited by Åge Mariussen and Seija Virkkala

Learning Transnational Learning

Edited by Åge Mariussen and Seija Virkkala

First published 2013 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2013 selection and editorial material, Åge Mariussen and Seija Virkkala; individual chapters, the contributors The right of Åge Mariussen and Seija Virkkala to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Learning transnational learning/edited by Åge Mariussen and Seija Virkkala. pages cm 1. Regional planning. 2. Learning. 3. Knowledge management. 4. Transnationalism. I. Mariussen, Åge. II. Virkkala, Seija. HT391.L42 2013 307.1′2–dc23 2012045045 ISBN: 978-0-415-53989-0 (hbk) ISBN: 978-0-203-42715-6 (ebk) Typeset in Times New Roman by Wearset Ltd, Boldon, Tyne and Wear

Contents

ix xi xiii xvi xviii

List o f figures List o f tables List o f contributors Acknowledgments List o f abbreviations

Introduction: learning transnational learning Age m a r iu sse n

a n d

seija

1

v i r k k a l a

PART I

Conceptual preliminaries, theories and methods of transnational learning

11

1 Sociological preliminaries: the societal context of transnational learning

13

Age m a riu ssen

2 Geographical perspectives: regional development and transnational learning seija

3 Theory of organizational knowledge creation as a framework for transnational learning in regional development seija

51

v i r k k a l a

v ir k k a l a

a n d

Age m a r iu sse n

4 Is transnational learning possible? Age m a r iu sse n

a n d

102

seija

v i r k k a l a

138

viii

Contents

5 Methodologies and methods of transnational learning Age m a r iu s se n

a n d

seija

155

v ir k k a l a

6 New Public Management as a global community promoting transnational learning: agencification as an example

196

ESA HY Y RY L À IN EN

7 Discovering the process perspective: unfolding potential of transnational learning in INTERREG

218

VERENA HACHMANN

PART II

Nordic attempts at transnational learning

243

8 Nordic learning: introduction to Part II

245

Age m a r iu sse n

9 Industrial development and competence building: learning across converging trajectories seija

262

v i r k k a l a

10 Is there a need for transnational learning? The case of restructuring in small industrial towns

285

KENNETH NORDBERG

11 Developing destinations in the northern periphery

311

D I E T E R K. M Ü L L E R A N D U L R I K A A K E R L U N D

12 Learning transnational learning: a trans-Atlantic perspective E. W A N D A G E O R G E A N D K R I S T I N A

326

SVELS

13 Transnational learning in local governance: two lessons from Finland

343

HANNU K A TA JA MÀ K I AND AGE MARIUS SEN

Index

355

Figures

  1.1   1.2   1.3   1.4   1.5   1.6   1.7   1.8   2.1   2.2   2.3   2.4   2.5   3.1   3.2   3.3   3.4   4.1   5.1   5.2   5.3   5.4   5.5   5.6   7.1   8.1

Structure-­agency beyond structuration theory Knowledge system and SECI model Structure ba: system transformation The dialectic of structure Social integration ba Radical innovation strategy Modality ba Action ba, social integration, network ba and structure ba Learning from good practices in other regions Regional development and knowledge types Regional development policy and transnational learning in the context of the SECI model Path dependency and knowledge types in the context of the SECI model Absorptive capacity, development capacity and transnational learning in regional and local development The SECI process based on Nonaka et al. Bas and transnational learning from good practices Leading the knowledge-­creating process Botnia-­Atlantica Institute facilitates long-­term transnational learning process between three Nordic regions Several small coordinated steps may lead to big changes Restricting and enabling processes of learning loops Agencies and agency bonfires as a SECI process Open Method of Coordination as a SECI process World Heritage Site process as a SECI model The cognitive and organizational requirements of transnational learning Knowledge spiral: from conflicting perspectives to consensus and knowledge creation Transition of activities in the transnational INTERREG programmes Market learning and GDP/capita, European countries

34 39 41 42 43 43 45 47 67 87 90 92 93 117 123 126 132 148 161 167 171 176 181 193 226 248

x   Figures   8.2 Nordic institutional complementarities   9.1 The cycle of innovative cooperation between Centria Ylivieska and SMEs in Oulu South   9.2 SECI process of transnational learning in Oulu South   9.3 SECI process of transnational learning in Midwest Jutland 10.1 Population development in Kaskö 1785–2010 10.2 Southern Ostrobothnia and a part of Suupohja. 10.3 Stages in transnational learning. Interpretation of the SECI model 11.1 The research area 11.2 Bergrum Boliden – the old mining office, today a museum, was one of the first sites at the Gold of Lapland destination 11.3 Organization of the Gold of Lapland tourist destination 12.1 Transnational learning and transformation through tourism 12.2 The SECI model and ba concept 12.3 Reflecting on collaborative learning 12.4 WHTRN project – knowledge transfer and creation process applying the SECI model and ba concept 12.5 ‘Transnational learning’ – new research, new relationships 12.6 Canada-­Finland research project – knowledge transfer and creation process. Applying the SECI model and ba concept 13.1 Maria Gren represents the Umeå neighborhood council model in a learning seminar in Vaasa 13.2 A learning seminar on Umeå neighborhood councils in Vaasa

249 272 282 282 300 301 304 315 316 319 326 329 332 334 338 340 350 351

Tables

  1.1 Knowledge typology and structuration of action   1.2 Structures of global societies and preconditions for transnational learning   2.1 Structuralist and agency based approach to regions   2.2 Territorial vs. relational approach, and transnational learning in regional development   2.3 Two different types of networks and spaces: regional development networks and transnational learning networks   2.4 Regional development networks, regional innovation systems and transnational learning   2.5 Typology of regions of absorptive and development capacities   2.6 Innovation modes and regional taxonomy   2.7 Structures, modalities and actions of regional development policy   3.1 Comparison of the classic organizational theory, the pragmatic learning theory and the organizational knowledge creation theory   3.2 Political, economic and knowledge organizations, and regional and transnational learning   3.3 Similarities and differences between the organizational learning theory of Nonaka et al. and the learning transnational learning approach   5.1 Cognitive learning, organizational and spatial structures, learning loops   5.2 Modes and strategies of transnational learning   5.3 Spatial, organizational and cognitive dimensions of transnational learning processes   5.4 Typology of institutional change   7.1 Influencing factors on knowledge transfer and learning in INTERREG B projects identified in literature   8.1 Typology of Nordic learning   8.2 Case studies    8.3 SECI sequences in case studies   9.1 Role of educational institutes: endogenous vs. exogenous development, stability vs. change

19 20 56 62 68 69 76 81 88 113 130 133 162 164 179 191 230 250 251 255 267

xii   Tables   9.2 Differences and similarities between good practices in Oulu South, Finland and Midwest Jutland, Denmark   9.3 Oulu South and Midwest Jutland: the role of educational institutes with regards to sources of development and the regional development path   9.4 Innovation modes and converging development paths: building new archetypes 10.1 Transnational learning seminar in Kaskö 10.2 Transnational learning seminar in Vaasa 12.1 Benefit of collaborative learning and value-­added transnational learning

277 277 280 306 307 333

Contributors

Ulrika Åkerlund is a PhD student at the Department of Geography and Economic History, Umeå University, Sweden. Her current research draws from the fields of tourism geography, migration and mobility studies, and concentrates on lifestyle mobility and multiple dwelling; specifically the decision-­ making processes and residential strategies of international second and holiday home owners, and retirement migrants. Other topics of interest for Åkerlund are destination development and festival management. E. Wanda George is adjunct professor and researcher at Mount Saint Vincent University, Halifax, Nova Scotia, Canada. Her research and scholarship concentrates on the complex relationships and interconnections amongst tourism, commodification of local culture, community change and rural sustainability. She has published numerous journal articles and chapters, and is co-­author of the book, Rural Tourism Development: Localism and Cultural Change (2009). Dr George is Founding Director of the World Heritage Tourism Research Network (WHTRN), a group of international researchers whose primary goal is to collaborate on interdisciplinary research that addresses tourism, cultural and heritage management issues at World Heritage Sites. One of her recent works includes a project with researchers in Finland, Canada and Peru examining the attitudes and perceptions of local residents at sites affected by UNESCO World Heritage Site designation and associated tourism. Verena Hachmann holds a PhD in Geography and Spatial Planning from the University of Luxembourg and has a particular research interest in European cooperation and the complexities of knowledge transfer and development related to it. She has several years of practical experience in European programme and project management, and regional development. Until recently, she was a member of the Steering Committee of the EU INTERREG IV B North Sea Programme and involved in the evaluation of several transnational INTERREG programmes, and a variety of studies focusing on the evolution of transnational cooperation. Hachmann is currently the programme manager of two cooperation programmes funded by the Nordic Council of Ministers.

xiv   Contributors Esa Hyyryläinen is professor of Comparative Public Management at the University of Vaasa, Finland. He is currently the Director of Intercultural Studies in the Communication and Administration programme at his university. Along with studies in the various substantive areas of Public Management and Administrative Studies, he has a long-­term interest in the methodology of qualitative comparative research. Currently Professor Hyyryläinen is mostly engaged in the study of hybrid organizations, in other words mixtures of public and private organizations. He has previously published books and articles on, for example, public management reforms and contracting, and partnerships in the public sector. Hannu Katajamäki is professor of Regional Studies and currently dean of the faculty of philosophy at the University of Vaasa, Finland. Katajamäki’s research interests concentrate on new rurality, rural policy and local impacts of governmental reforms. He is active in political debates concerning regional development. Åge Mariussen is leader of the BA Institute in Vaasa, Finland, and a senior researcher at the Nordland Research Institute, Bodoe, Norway. Mariussen is a sociologist, specializing in studies of innovation, globalization and regional development. He has worked at Nordregio, Stockholm, and at NIFU and the Step Group in Oslo, Norway. Mariussen has published articles and books on industrial restructuring, systems of innovation and transnational communities. He co-­edited Household, Work and Economic Change with Jane Wheelock, University of Newcastle, as well as Diversity in the Knowledge Economy and Society with Elias Carayannis and Aris Kaloudis. Dieter K. Müller is professor of social and economic geography in the Department of Geography and Economic History, Umeå University, Sweden, and currently dean of the Faculty of Social Science. Müller’s research interests include tourism and regional development, as well as mobility and tourism in peripheral areas. He is a board member of the International Geographical Union’s Commission on Tourism, Leisure and Global Change, the International Polar Tourism Research Network (IPTRN), and the Nordic Society for Tourism and Hospitality Research (NORTHORS). Moreover, he serves on the editorial board of Current Issues in Tourism and Tourism Geographies and has published a multitude of articles in international journals, as well as authored several books on tourism in northern areas. Kenneth Nordberg is a PhD student in political science, active at the Department of Demography and Rural Studies, Åbo Akademi University, Vaasa, Finland. His research interests focus on regionalism, regional governance and the development of regional administrative structures. His previous research has also concentrated on issues of bilingualism in administrative structures. For the LUBAT project, Nordberg has investigated restructuring efforts in peripheral areas.

Contributors   xv Kristina Svels is a PhD student in social politics with the emphasis on rural development, active at the Department of Demography and Rural Studies, Åbo Akademi University, Vaasa, Finland. Her research focuses on rural sociology and regional development, new rural economies, World Heritage ­studies and nature resource management. Her recent works include studies of locals’ perception of World Heritage designation in Finland and Sweden and of second home owners in the Kvarken Archipelago. Within the LUBAT project Svels investigates tourism and destination development. Seija Virkkala is professor of Regional Studies at the University of Vaasa, ­Finland. She has also worked as a senior researcher and research manager at the Kokkola University Consortium Chydenius and in different positions at the University of Tampere. Her main research interests lie in regional development and planning, in regional economies, regional innovation studies and locality studies. Virkkala has carried out many studies evaluating Structural Funds and regional development in Finland. She has also studied innovation pro­cesses and networks in small cities and rural areas. Lately, she coordinated a Nordic research project on transnational learning related to local innovation policies. Virkkala is a member of the steering committee of the LUBAT (Learning on Development in Botnia-­Atlantica-region) project, and she collaborates with the Botnia-­Atlantica Institute in developing methods and theories of transnational learning in regional and local development.

Acknowledgments

The principal ideas of this book were developed through two different projects funded by the Nordic Innovation Centre. We found an opportunity to explore this work further through additional projects funded by the EU Interreg, CONTE ‘Cross Border Cooperation over Mountain and Sea’, Botnia-­Atlantica Program. One of the projects with this funding is LUBAT. LUBAT is based on cooperation between three regions, the Nordland County Council in Norway, the County Administrative Board of Västerbotten in Sweden, and the Regional Council of Ostrobothnia. This project made it possible to study transnational learning that took place through cooperation between four universities: the University of Nordland, the University of Umeå, the University of Vaasa and Åbo Academy, as well as two research institutes, the Nordland Research Institute in Bodö, Norway, and the Levon Institute in Vaasa, Finland. This book has also been funded by the VRI programme, which in turn is financed by the Norwegian Research Council, through the SEIKO project in the Nordland Research Institute. LUBAT finances the Botnia-­Atlantica Institute, which is a virtual institute specializing in studies and methods of transnational learning. The Botnia-­Atlantica Institute, together with our excellent coordinator Miia Mäntylä, provided the organizational framework for the production of the manuscript. The difficult task of language correction was carried out by Emilia Aaltonen. Cooperation within the framework of the LUBAT project is coordinated in a positive and well-­organized way by Professor Ulf Wiberg, University of Umeå. Under his leadership, the core ideas of the book were discussed in a LUBAT seminar in Umeå University, in the spring of 2012. There, several professors, students, researchers and policy-­makers from Ostrobothnia, Västerbotten and Nordland gave valuable contributions tothe discussion on transnational learning. We wish to thank Professor Kjell Andersson and Professor Chris Hudson for their comments on the earlier version of the manuscript. We have also got useful feedback, encouragements and ideas for the book through discussions and workshops organized by the S3 Platform in Seville, Spain, the Nordland Research Institute in Bodö, Norway, and the Faculty of Philosophy, University of Vaasa, Finland.

Acknowledgments   xvii The topic transnational learning has been presented in international Regional Studies conferences in Lisbon, 2007, in Pecs, 2010 and in Newcastle, 2011, as well as in the European Society for Rural Sociology, Vaasa, 2009. In particular, our work has been encouraged by Simon Holt at Routledge. Åge Mariussen and Seija Virkkala

Abbreviations

AC ANT AVI BA CRIPO

absorptive capacity Actor Network Theory Regional State Administrative Agency (Finland) Botnia-­Atlantica Institute Comparative Research into Current Trends of Public Organization COCO Regional Cohesion and Competitiveness Programme CPR Common Property Regimes DC developmental capacity DMO destination marketing organization DUI Doing, Using and Interacting (mode of innovation) EAFRD European Agricultural Fund for Rural Development EI educational institute EIPA European Institute of Public Administration EU European Union ELY Centre for Economic Development, Transport and the Environment (Finland) ERDF European Regional Development Fund FMI Financial Management Initiative GDP gross domestic product GOV Directorate for Public Governance and Territorial Development HEI higher educational institute ICT information and communication technology INTERREG EU fund supporting Interregional Cooperation IMF International Monetary Fund IPCC Intergovernmental Panel on Climate Change IPTRN International Polar Tourism Research Network IRSPM International Research Symposium on Public Management ISP Innovation System and the Periphery IRSPM International Research Symposium on Public Management LUBAT Lärande om utveckling i Botnia-­Atlantica NDPBs non-­departmental public bodies NGO non-­governmental organization

Abbreviations   xix NIFU

Nordic Institute for Studies in Innovation, Research and Education NISPA Network of Institutes and Schools of Public Administration NPM New Public Management NORTHORS Nordic Society for Tourism and Hospitality Research NOU Norwegian Public (Government) Report OECD Organization for Economic Cooperation and Development OEEC Organization for European Economic Co-­operation OMC Open Method of Coordination OSKE Centre of Expertise programme PGC Public Governance Committee PISA Programme for International Student Assessment PUMA Public Management Committee QWL Quality of Work Life Conference R&D research and development RDA regional development agency REG Working Party on Regulatory Management and Reform RIS regional innovation system RUP Regional Development Programme S3 Smart Specialization Strategy SBO Working Party of Senior Public Officials SECI Socialization, Externalization, Combination, Integration SEIKO project funded by the Norwegian Research Council SIGMA Support for Improvement in Governance and Management SITRA The Finnish Innovation Fund SME small and nedium sized enterprises SND Regional Development Fund SNP Strategic Business Plans SRA strategic relational approach STI Science, Technology and Innovation TDPC Territorial Development Policy Committee TECO Technical Cooperation Committee (OECD) TQM Total Quality Management UNESCO United Nations Educational, Scientific and Cultural Organization UNPAN United Nations Public Administration Programme URBACT Urban Action (EU programme promoting sustainable urban development) WH World Heritage WHS World Heritage Sites WHTRN World Heritage Tourism Research Network

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Introduction Learning transnational learning Åge Mariussen and Seija Virkkala

This book explores the preconditions for, and suggests methods for promoting, transnational learning in regional development. The case studies illustrating these methods, carried out in the Nordic periphery and elsewhere, have been collected from three different fields: industrial development, experience economy services, and municipal organization. Generally, regions and localities all over the world face similar concerns regarding securing and improving the livelihoods, prosperity and wellbeing of their inhabitants. However, the way these concerns are addressed is mediated differently depending on each individual context. Since both the contexts and local responses vary, the result is a diversity of local and regional development processes. However, if the idea that everything is different is simply accepted as it is, this also implies that we consider there being little explanatory value in the experiences of others. And if so, lessons cannot be learned and strategies and policies cannot be developed by monitoring others. We prefer a middle way, where the variety of contexts matters, but where learning from others is also possible. Accordingly, this book suggests a set of methods which can be used to overcome the problems of generalization mentioned above. Learning across distances, and connecting spaces which are today divided by national borders, pre-­dates the formation of most contemporary nation states. Transnational learning has occurred for a very long time, in a variety of ways, and involving various actors, such as merchants, travelers, migrants, imperial armies, missionaries, world religions, scientific and other transnational communities, manufacturing and financial networks, and global corporations, including global consultancy corporations, to mention just a few. Recently, transnational learning has often been referred to as globalization, which in turn is seen as flows or diffusion of material, capital, human beings (migration), know-­how and information. The concept of ‘flows’ indicates an easy process, with few obstacles, and occurring at a high speed. Flows with these characteristics were enabled and speeded up by the form of globalization created after the Cold War, where the hegemony of certain highly successful senders, namely the neo-­liberal US and UK economies and societies were crucial centers of diffusion of cultural artifacts, data, news, capital, media messages, forms of organization and codified knowledge. These senders provided ‘best practices’ to receivers in

2   Å. Mariussen and S. Virkkala more ‘peripheral’ countries, ready and willing to absorb the messages of modernization, Americanization, neo-­liberal solutions and global culture, and to disrupt their own, traditional practices which were not seen as equally good. Today, in the somewhat less-­structured and polycentric world order, these hegemonic powers have lost some if not all of their allure. The structural relations between sender and receiver are not as facilitating as before. The case of Europe is illuminating; there are almost as many ‘models’ of economic and societal organization in Europe as there are countries. We have the German model, the French model, the Nordic model (including the Swedish model and the Danish model), the Anglo-­Saxon model, and so on and so forth, but none of them seems to be recognized as hegemonic beyond their own borders. On the contrary, in the current phase of the Eurozone crisis, with a stressed alliance between Germany and France, and ongoing north–south conflicts related to austerity policy, what we see are competing models, defending themselves against ‘flows’ of advice from abroad. In this atmosphere, the preconditions for transnational learning are more likely to encourage explorative and interactive actions, without any clear definition of sender or receiver. As discussed in Part I of the book, in particular in Chapters 1 and 5, the globalization process is still driven by transnational societies, based, as pointed out in a recent book by Djelic and Quack (2010), on transnational communities of migrants, expertise, science and activism, co-­ evolving with various international institutions, such as the UN, OECD, EU and others. They work using different types of policy instruments and programs, such as the World Heritage of UNESCO, EU Structural Funds, the EU Open Method of Coordination, and Smart Specialization, to mention just a few. These efforts are often combined with work carried out in international and national research institutions and networks that use comparative analysis, benchmarking, indicators and related databases. Due to the policy-­oriented point of departure of several of these networks and institutions, attention has often focused on either administrative routines, such as setting up transnational networks, supplying indicators and updating databases, or on attempts to achieve specific policy objectives to meet the scrutiny of result-­oriented evaluators. A related method has been to try to develop generalized models of development, such as cluster policies, national or regional systems of innovation, models of triple helix, and so on. Recent versions of globalization theory, such as those of Castells (2000), insist that a new global space which is disembedded from concrete places, localities, regions and nations is emerging. On the contrary, we argue that global flows can contribute to regional development only when they are connected to spatially embedded interactions through localized cognitive processes. The reason why we insist upon this local embeddedness is that we see transnational learning as a process involving knowledge conversion. Knowledge is not an asset, item or object which can simply be bought, sold, accessed, transferred or that can flow seamlessly through space. Instead, following the founder of the theory of organizational knowledge creation, Nonaka, we claim that knowledge is context

Introduction   3 dependent and fragile. From this point of departure, transnational learning involves new knowledge creation through the localized conversion of knowledge. Nonaka refers to this as the SECI process, which occurs in places called ba. The core of SECI is the conversion of tacit, embedded and context dependent knowledge, into explicit or codified knowledge which may be translated and transformed to fit into a new context, where it might become embedded as new tacit knowledge. To prevent knowledge destruction and create a cumulative learning spiral, the SECI process of conversion must be coordinated. In this book we have developed methods for learning transnational learning. These methods have as their starting point the sociological ideas promoted by Sabel and Zeitlin (2008, 2010) regarding learning through monitoring, which is the backbone of the EU approach to the Open Method of Coordination, as well as ideas promoted by Czarniawska (2009) and others, regarding the ‘translation’ of experiences between different countries. This process of monitoring and translating moves back and forth between two forms of knowledge, the tacit and context-­dependent knowledge of regional development practices, and explicit and codified knowledge. Here, the SECI process defined by Nonaka, combined with other concepts related to organizational knowledge creation, provides a good framework for analysis. Based on these, this book suggests an approach for analyzing transnational learning, which can be used both analytically and normatively: analytically in understanding the relationship between regional and transnational learning as well as the knowledge conversion process from tacit regional practices to more explicit forms of knowledge, and normatively as tools for enabling transnational learning between regions with regards to good practices. This book uses a normative point of departure: the point is not to describe, analyze or compare regional development processes, but to give suggestions as to how regions should be developed. The answer to this question cannot be based only on regional development theories as such, nor can development pro­ cesses be carried out by copying a single ‘best practice’ formula from abroad. Instead, the point is to learn how to find a unique strategy, and transform this strategy according to new needs that appear over time. If one wants to develop a new or improved regional innovation strategy, the starting point has to be one’s own preconditions, knowledge assets, other resources, systems of innovation, and then to mobilize and develop these. One should consider how things can be improved and recombined, and in doing so, it is beneficial to examine what other regions in other countries are doing, make an informed assessment regarding the observations, and try to adapt some of the successful experiences, or ‘good practices’, in one’s own surroundings. In order to do this successfully, methods are needed for understanding how transnational learning may succeed. Theories, methodologies and methods of transnational learning between regions are presented in Part I of this book, including a typology of transnational learning. The cases presented in Part II are not ‘best practices’, but descriptions of regions and localities where actors are trying to reflect upon their trajectories and use transnational learning. Most of these cases are in an early phase regarding these pro­ cesses of transnational learning.

4   Å. Mariussen and S. Virkkala Before 2008, the general assumption was that local, regional, national and global economic growth was created almost everywhere by what seemed to be a never-­ending success story of investments from financial industries. Today, we all know better. This book addresses the current need for regional and local development strategies created in the aftermath of the global economic crises of 2008, and the following ‘austerity’ unfolding in the Eurozone and elsewhere. Under these conditions, the challenge of recreating growth depends on regional abilities to reorganize economic activity through new innovation strategies, recombining regionally embedded knowledge with external knowledge, and emerging market opportunities in new ways. In the EU, these efforts are referred to as ‘Innovation Strategies through Smart Specialization’ or ‘S3’, to be applied in ‘Horizon 2020’. The need for this kind of development is also expressed by the OECD. As described in Chapter 7 of this book, the project learning paradox is present in many of the attempts at transnational learning which are supported by transnational institutions. In looking at transfer projects, such as those organized by Interreg, in more detail, it becomes clear that, more often than not, learning is often isolated within the transnational project. In these cases, partners from regions in different countries might enjoy a fast learning experience, where data is exchanged and analyses discussed in an open and friendly atmosphere. But projects with a high level of internal interaction are often isolated from the organizations where the project outputs are supposed to be implemented. When the project ends, and the report is approved, partners move in different, new directions. Therefore, as the lessons are not transferred into practice in the potential recipient organizations, they are quickly forgotten. In Interreg IV C, which places emphasis on ‘learning by sharing’, 2,835 ‘good practices’ were identified. Of these, only 151, or 5.3 percent, were actually transferred to a region in another country (Amorosi 2012). Despite these difficulties, the field of transnational learning has been dominated by what Argyris and Schön (1978) refer to as ‘single loop learning’, in other words direct attempts to identify and transfer what appear to be successful experiences, or good practices, with relatively little attention paid to the ‘double loop’ question, or learning how the process of transnational learning may actually succeed in improving policies and practices on the ground, in short, learning how to learn. The book presents different forms of transnational learning. The first is related to what we refer to as ‘hard globalization’, which consists of learning best practices from hegemonic powers. The case of New Public Management is presented as an example of learning from the Anglo-­Saxon model. The second form of transnational learning occurs in the context of global communities and institutions, of which transnational learning in the context of World Heritage (UNESCO) is presented as an example. The third form of transnational learning is one which is currently emerging inside the European Union, and which has been defined as multi-­level governance. In relation to this we discuss learning from difference and the Open

Introduction   5 Method of Coordination (OMC), which emphasizes learning between nation states, as well the new Smart Specialization strategies (S3), with platforms based on the participation of European regions. The empirical cases of this book, presented in Part II, come from Nordic countries. We see the Nordic way of learning as a distinct mode of transnational learning. Transnational learning is crucial for Nordic countries, since they are small and very open economies with relatively big public sectors and welfare services. Our work on the topic of this book started with two projects financed by the Nordic Innovation Centre, the Innovation System and the Periphery (ISP) project in 2004–5, followed by the Peripheral Localities and Innovation Policies (PLIP) project in 2005–6. These projects were concerned with the search for, identification and transfer of good practices in regional innovation systems between Nordic countries. We expanded this approach by using the SECI model in an Interreg cross-­border project in the Botnia-­Atlantica region, between the regions of Ostrobothnia and Västerbotten, in 2008–9, based on cooperation between the University of Umeå, the University of Vaasa and Åbo Academy University. This was later extended into the LUBAT project, which also included a region in Norway, Nordland and the University of Nordland, as well as a project funded by the VRI program in the Norwegian Research Council, SEIKO. Several books and articles compare regional development policy and planning in Europe, for instance Balchin et al. (1999), but these texts do not go beyond comparisons of regional development in transnational learning, comparison is just the first step. Books on European cohesion and planning, such as the work of Faludi (Faludi 2010), present a transnational approach to spatial planning with soft national borders, but the main emphasis is on territorial cohesion as such, and not on transnational learning processes. Also, Healey and Upton (2010) have explored the circulation of planning ideas across national and continental boundaries. They emphasize that the processes of diffusion should be examined critically, especially when an exogenous idea enters a different context. However, they do not focus on regional development and transnational learning, or develop methods of transnational learning. The book reaches out to researchers and policy makers, but it is primarily intended as a textbook for students at the doctoral and masters level, taking courses in transnational learning as part of regional studies, international comparative studies, business development, public management, geography and sociology. Part I, consisting of seven chapters, focuses on conceptual preliminaries, theories and methods of transnational learning. Chapter 1, written by Åge Mariussen, discusses the relation between state borders and knowledge as an introduction to an understanding of transnational learning, based on Nonaka and Takeuchi’s (1995) model of organizational learning. Transnational learning, the chapter argues, must be seen in relation to what Giddens and Jessop refer to as the shared stocks of knowledge of societies, in this case of ones that have their own states, and the way these societies select new directions.

6   Å. Mariussen and S. Virkkala Chapter 2, written by Seija Virkkala, argues that transnational learning can provide important inputs to regional development and regional development policy. Transnational learning can improve the practice of regional development networks and encourage a new development path in cases where negative lock-­ ins are present in the local development path, or when it is affected by an external crisis. By reflecting on, externalizing, translating, and finally internalizing the good practices of other regions, and by combining them with existing local practices, the absorptive and development capacities of regional actors increase and a positive knowledge spiral, important especially for peripheral regions, can be initiated. In Chapter 3 Virkkala and Mariussen discuss the theory of organizational knowledge creation developed by Nonaka. Nonaka’s theory provides the analytical tools for understanding the knowledge conversion process from tacit knowledge, which is the know-­how of good regional practices, to explicit and transferable forms of knowledge, as well as for understanding the learning processes of regional actors. While the point of reference in Nonaka’s theory is organizations, here it is extended to the learning processes of regional development networks and actors, even if their basic objectives related to society, wellbeing and sustainability might differ from the goals of the former. In this chapter it is argued that the SECI process, ba, and knowledge vision can be used in learning transnational learning. In Chapter 4, Mariussen discusses some ways in which difficulties related to transnational learning may be overcome. First, by using root cause analysis, which helps to explain why regions score differently with regards to performance measuring indicators. Second, in order to avoid lock-­ins, the national structure needs to include emergent networks or projects which open up for new elements. Third, successful transnational learning consist of coordination of incremental steps which eventually create institutional changes (the ant hill strategy), and fourth, by translating external elements it is easier to adapt them to the local context. In Chapter 5, Mariussen and Virkkala summarize the discussions from Chapter 1 (sociology), Chapter 2 (geography), Chapter 3 (organizational theory) and Chapter 4 (theories of transnational learning), in a discussion of methods and methodologies of transnational learning. This is done in three steps: 1 methodological preliminaries, which are seen as spatial, organizational and cognitive; 2 a typology of globalization and transnational learning, introduced in Chapter 1; and 3 methods of transnational learning, which draws upon Chapter 4. The following steps are identified, with reference to the SECI process: 1 abduction; 2 translation;

Introduction   7 3 evaluation; and 4 internalization. In Chapter 6, Esa Hyyryläinen discusses the global success of New Public Management (NPM). The hegemonic position of Public Management reforms in the 1980s and 1990s has been explained by its strong position in the OECD and other international organizations. The active involvement of national top public officials in the activities of these organizations has provided possibilities for transnational learning. These organizations have also actively disseminated information about reforms within other countries that have been influenced by NPM, through their publications and journals. Agencification, semi-­autonomous public agencies that function at arm’s length from ministries, is an example of NPM-­reform ideas. In Chapter 7, Verena Hachmann discusses transnational learning in Interreg. Transnational learning is faced with a paradox: it creates a platform for knowledge exchange and the tangible transfer of policy concepts, strategies and institutions, but at the same time, cooperation programs, such as INTERREG, have been criticized as documenting the results and impacts of their work has been difficult, and these have therefore remained unclear. Therefore, it is important to try to deepen the understanding of transnational learning, and in order to do so, the use of the process perspective is indispensable. This chapter discusses the preconditions for and mechanisms of two distinct processes related to transnational learning: the transfer of existing knowledge and the production of new common knowledge. Exploring these activities allows for a more systematic understanding of how transnational learning capacity can be enhanced. Part II, divided into six chapters, presents a number of case studies exploring some attempts at transnational learning in Nordic countries. The section starts with Chapter 8, written by Mariussen. Despite differences, Nordic countries share a ‘stay happy – be competitive’ strategy for political and economic development. Their concept of happiness is different to that of the Anglo-­Saxon model, where it is considered an individual achievement. Nordic happiness is regarded as a collective accomplishment, based on the ability to combine a welfare state, which absorbs the risks and uncertainties of innovation, with a productive economy, where individuals are encouraged to take risks, learn, and be innovative. Learning between Nordic countries consists of attempts to develop this model, through monitoring successes, failures and achievements in other Nordic countries. Chapter 9 deals with industrial development, competence building and development paths in two different localities. The chapter analyses and compares good practices related to driving industrial development, in cooperation between educational institutes and local SMEs in peripheral regions in Finland and Denmark. The focus is the different innovation modes used in the two cases: the Science, Technology and Innovation (STI) mode in the Finnish case, and the Doing, Using and Interacting (DUI) mode in the Danish case. The transnational learning potential is in converging the development paths and innovation modes.

8   Å. Mariussen and S. Virkkala The analysis is based on the learning transnational learning approach, developed in this book as an application of the SECI model to knowledge conversion. The cases presented by Kenneth Nordberg in Chapter 10 draw attention to recent experiences related to restructuring within small industrial towns in Norway and Finland. First, Nordberg examines the possibilities for transnational learning between peripheral industrial societies in Norway, where a strategy of long-­term economic restructuring is carried out by local networks of actors, supported by the government policy of ‘omstilling’, and Kaskö, Finland, where industrial restructuring has been carried out on a more short-­term basis. The comparison indicates that legislation for restructuring in Finland does not impose social responsibility on the company in question, whereas in Norway it does. The description of the two cases is followed by a discussion regarding the possibilities for transferring the Norwegian good practice to the Finnish context. Chapter 11, by Dieter Müller and Ulrika Åkerlund, provides an analysis of learning and destination development in rural areas, specifically in two rural destinations in Northern Sweden and Western Finland, respectively. The development of tourism in the Swedish case is based on the logic of a local system of innovation, since the necessary institutional preconditions and a local desire to develop tourism are in place. By contrast local interest in the development of tourism seems to be limited in the Finnish case. Possibilities for learning from the Swedish case are limited because the necessary local networks in Finland are underdeveloped and tourism is not understood as indispensable. In Chapter 12, E. Wanda George and Kristina Svels discuss transnational learning using a transatlantic perspective. The concept of transnational learning is not new, in fact, ‘diffusionists’ argue it has been an implicit feature of societies throughout the evolution of civilizations, as we have learned, copied, imitated, exchanged and appropriated knowledge from each other over the centuries. However, the technological advances in transportation and communication of today permit unlimited, innovative and accelerated opportunities for transnational learning. This chapter highlights an initiative that illustrates how transnational learning can occur between two countries geographically separated by the Atlantic Ocean. The authors draw on Nonaka and Takeuchi’s SECI model of knowledge management and ba in order to explain the processes of knowledge transfer and the creation of new knowledge. In Chapter 13, Katajamäki and Mariussen discuss two lessons in transnational learning from Finland. Are there lessons to be learned in Finland with regards to the procedures of sub-­municipal district administration developed in Sweden? Two cases related to the sub-­municipal decision-­making in Finland are analyzed in this chapter, and it is demonstrated that transnational learning is an important tool in developing good administrative practices, despite these processes often being rather slow and coincidental.

Introduction   9

References Amorosi, S. (2012) Interregional Cooperation and Smart Specialization, presentation in PERIA final conference, 9 October, Brussels. Argyris, C. and Schön, D. (1978) Organizational Learning: A Theory of Action Perspective. Cambridge: Cambridge University Press. Balchin, P., Sýkora, L., and Bull, G. (1999) Regional Policy and Planning in Europe. London and New York: Routledge. Castells, M. (2000) The Information Age Economy, Society and Culture, Volume I: The Rise of the Network Society, 2nd edition. Oxford and Malden: Blackwell. Czarniawska, B. (2009) ‘Emerging institutions: pyramids or anthills?’, Organization Studies 30(4): 423–41. Djelic, M. and Quack, S. (eds) (2010) Transnational Communities Shaping Global Economic Convergence. Cambridge: Cambridge University Press. Faludi, A. (2010) Cohesion, Coherence, Cooperation: European Spatial Planning Coming of Age? London and New York: Routledge, The RTPI Library Series. Healey, P. and Upton, R. (2010) Crossing Borders, International Exchange and Planning Practices. London and New York: Routledge, The RTPI Library Series. Nonaka, I. and Takeuchi, H. (1995) The Knowledge-­Creating Company: How Japanese Companies Create the Dynamics of Innovation. Oxford: Oxford University Press. Sabel, C. and Zeitlin, J. (2008) ‘Learning from difference: the new architecture of experimentalist governance in the EU’, European Law Journal 14(3): 271–327 Sabel, C. and Zeitlin, J. (eds) (2010) Experimentalist Governance in the European Union: Towards a New Architecture. Oxford: Oxford University Press.

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Part I

Conceptual preliminaries, theories and methods of transnational learning

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1 Sociological preliminaries The societal context of transnational learning Åge Mariussen

Introduction This chapter briefly outlines an introduction to transnational learning based on Nonaka and Takeuchi’s model and theory of organizational learning (Nonaka and Takeuchi 1995), which is described more in detail at the end of this chapter and by Mariussen and Virkkala in Chapter 4. In applying this model to transnational learning, we put it into a new context. As pointed out by Giddens, societies are integrated through stocks of shared knowledge. Transnational learning, accordingly, must be seen in relation to the shared knowledge of societies which have their own states (often referred to as nation states, countries or empires). These national societies are formed and develop in a transnational context. During the formation of states in Europe, this context consisted of disintegrating empires, and battlefields soaked with blood. The societal forms which today surround nation states are most certainly made up of dynamic processes, often referred to as globalization, but they also include somewhat stabilizing structuring elements, such as transnational communities and institutions, often referred to as ‘global societies’. In short, this chapter discusses the relation between globalization, borders and knowledge.

Borders and knowledge In sociology, knowledge is seen as shared beliefs (Parsons 1951) and practices, which Giddens (1984) refers to as ‘shared stocks of knowledge’. In other words, knowledge is a collective phenomenon. As we will see in Chapter 3 of this volume, in organizational theory and economics knowledge is seen as either possessed by individuals or a collective, such as firms or other types of organizations. In the context of organizations, the challenge may often be to transform individually possessed knowledge into something the organization can exploit or use, in other words, a collective phenomenon. A sociologist would emphasize that knowledge which appears to be individual in the context of an organization may in fact be a part of a wider community. As an expert inside an organization, you may have unique individual knowledge, but this knowledge may only be

14   Å. Mariussen recognized because you belong to a wider community of scientists or experts who share your knowledge and recognize it as legitimate. These communities, sharing and authorizing knowledge, may have members across several organizations and societies, including several national societies. Seen in a societal context, shared knowledge (or beliefs) may be scientific knowledge, craft-­based knowledge, religious knowledge, popular opinions (or ‘lore’ as in ‘folklore’) or superstitious beliefs, including magic. Shared beliefs may be myths and ideologies, such as liberalism, communism or fascism. A sociologist is likely to reposition the problem of organizational theory, in other words question how to convert individual knowledge into collective knowledge to be applied in a wider context. Here, the institutionalized mechanisms which regulate and enable the transferring of elements between different forms of collectively held knowledge are crucial. This repositioning does not mean that sociologists do not recognize that knowledge exists, which is unique to a single individual, say, a genius, a great scientific discoverer or a visionary entrepreneurial innovator. Sociology points out that in order to turn individual knowledge into a socially accepted shared knowledge, the individual must communicate his or her discovery with reference to socially acceptable criteria for truth. There must be a community to report to, who knows and accepts the criteria of truth applied in the report. This community must be able to read the report, understand it and evaluate it. This was the problem for scientists like Darwin who made discoveries which contradicted the hegemonic religious knowledge of how animals and plants had developed. In order to be recognized as knowledge, his discoveries had to be evaluated by a community of scientists. Fortunately, when Darwin made his discoveries and published his results, he drew upon the methods and principles of such communities, which were in place before his discovery. Today, the scientific community recognizes Darwin’s hegemonic position, at least in most parts of the world, and religious dogma assuming that all species of living things were created in seven days are less significant. In organizational theory and theories of learning regions, this is a problem of absorptive capacity, or AC, which is closely related to developmental capacities or DC (see Chapter 2, this volume). One of the arguments in the discussion is that the capacity to absorb external knowledge elements (AC) depends on the capacity to develop or process knowledge internally (AC-­DC). In terms of sociological theories of transnational learning, argued by Bob Jessop as the strategic relational approach or SRA (see below), the strategy of the national elite, when it comes to what kind of external inputs may be accepted and applied in a national system, is composed of a selection mechanism. Transnational learning abilities depend on certain configurations of shared knowledge. There has to be an opening for new thoughts, or, as we will see below, something emergent. If the scientific community had not been there, be it in the shadow of the hegemonic church, Darwin would have been forgotten, and perhaps rediscovered at a later point in time. Thanks to certain events in European history which enabled the formation of scientific communities alongside

Sociological preliminaries   15 religious knowledge communities, Darwin could not be selected away and forgotten. This draws attention to criteria for assessing knowledge. Knowledge can be what Parsons refers to as existential or cognitive (Parsons 1951: 328–30). Existential beliefs are strongly held convictions with great significance for daily life. One example in the religious societies of medieval Europe is the theory of how God created the world in seven days. A cognitive belief is subject to ‘reality testing’, it may be reinforced, confirmed, corrected or falsified through empirically related feedback mechanisms and methods, including the application of scientific methods. This was the criteria of truth Darwin used. Today, one might say, scientific beliefs, including the theories of Darwin, have an existential position in many societies, whereas religious knowledge is regarded as non-­ existential. Knowledge may also be assessed according to its relevance. Some beliefs may be seen as true in terms of empirical evidence, but at the same time regarded as irrelevant or less important for tasks facing actors in a specific situation. Knowledge is both tacit and codified. The tacit elements of knowledge are often crucial when knowledge is applied in practice, as know-­how. Even highly codified forms of knowledge, such as conducting scientific experiments, or designing and programming computers, have to rely on various forms of tacit know-­how among scientists. Lab sessions may include practical processes and skills which are different from those described in the instruction manual, the book on methods, or the description of the experiment in a scientific journal. From this point of view, we may add, based on concepts developed by Lundvall (Lundvall and Johnson 1994; Amin and Cohendet 2004), various mixes of tacit and codified knowledge defines what is going on, or ‘know-­what’, it explains why things are done in a certain way, or ‘know-­why’, and it identifies who is authorized to make decisions and perform various other roles, ‘know-­who’, and ultimately how things are done in practice, or ‘know-­how’. We will come back to this classification in the conclusion. As pointed out by Nonaka and Toyama (2003), and with reference to the dialectics of the German philosopher Hegel, knowledge is contextual. It helps us to see ‘reality’ from a specific point of view. Accordingly, knowledge is partial and incomplete, and due to its incompleteness, unstable. It can be challenged through other beliefs, perspectives and more successful practices. Knowledge, accordingly, is both a precondition for learning while itself being constantly exposed to learning. But learning can go in widely different directions. It may strengthen and deepen the existing knowledge, make it more complex and open it up to new and complementary perspectives. Learning may transform or frustrate existing knowledge, and even destroy it and replace it with something different, as was the case with Darwin and the orthodox story of the creation of the world. In order to survive and grow, knowledge not only needs to learn through external exposure, but it also needs protection and borders. The continuity and internal consistency of knowledge is protected by its own borders, which, according to sociologists, are the borders between societies. At the same time,

16   Å. Mariussen according to Anthony Giddens, shared stocks of knowledge provide societies with continuity, integration, predictability in terms of expectation, and rationally calculated actions. Without the continuity of shared stocks of knowledge, chaos and confusion would prevail. Societies may succeed in stabilizing shared stocks of knowledge in different ways. Old and complex societies may develop states which are able to both define (in cooperation with other states) and defend physical borders on the map. Societies with states institutionalize complex forms of shared knowledge. A more basic form of society is the community. The French sociologist, Emile Durkheim, regarded religion as the basic precondition for the formation of tribal societies or communities. Tribe members accept each other as equals, with reference to a shared religious knowledge, the belief in a God, which is expressed through the symbol of the totem. In these societies integration was provided by shared knowledge, and expressed and confirmed through rituals performed in the space surrounding the totem. Integration, or solidarity, which is created by equals that share a religion, was referred to by Durkheim as ‘mechanical’. Religions become ‘instrumental’ in daily life through myths and rituals. In primitive societies, rituals are important in phases of transition, and during difficult times, when they remind the members of the tribe that they belong together, share the same beliefs and identity, rely upon each other, and may come together in common action. The example used by Durkheim (2001) was the tribe gathering to perform a ritual, the rain dance, as a response to drought. This gathering of the tribe was then seen as enabling a common action, a collective march out of the drought-­ stricken area. The formation of communities through shared knowledge enables joint actions, in this case, the march. This concept is also used on more abstract societal phenomena of shared beliefs, such as religions, scientific disciplines and ideologies. Some communities are local or in other ways spatially embedded, while others are of a transnational nature. In transnational scientific communities and communities of expertise, the scientific discipline or the field of expertise is both the integrating core of knowledge (the scientific knowledge inside the community) and the externally promoted strategy. With this strategy a community of scientists is likely to support the development of their common knowledge through the production of shared knowledge in books, journals, seminars, and in other ways. Another type of transnational community we will refer to is communities of activism, people in different countries who share the same definition and solution for a problem (Djelic and Quack 2010). Examples are revolutionary movements, like the Arab Spring in the year 2011 or the movement to regulate climate change through the reduction of CO2 emissions. In the latter case the shared knowledge is the scientific evidence which supports the theory of anthropogenic climate change, as well as various strategies to prevent global warming. Following Mayntz (2010), transnational communities should be distinguished from formalized network organizations, such as the IPCC, NGOs, networks between ministries, and other international institutions working on global warming (Mariussen 2010). The difference with regards to transnational communities is that they may shape basic loyalties and identities

Sociological preliminaries   17 between people in different organizational and institutional contexts who are working together to reach a common goal, based on shared knowledge. Structuration In societies with states shared knowledge is complex and protected by institutions. In his book The Constitution of Society, published in 1984, Giddens presents a theory of modern societies with well-­developed states from the point of departure of the structuration theory. The theory is based on the idea that society is reproduced by knowledgeable actors who routinely draw upon stocks of shared knowledge. These stocks of knowledge are stabilized by structures, which explains why societies are maintained through time. By making a distinction between structure and practice, Giddens refers to the relation between generalized principles and concrete actions: Structure thus refers, in social analysis, to the structuring properties allowing the ‘binding’ of time-­space in social systems, the properties which make it possible for discernible similar social practices to exist across varying spans of time and space and which lend them a ‘systemic’ form. (Giddens 1984: 17) Giddens connects the concept of generalized principles not just to the formal institutions of the state, such as administrative arrangements, organizations and laws. Instead, the structures stabilizing and maintaining shared knowledge as generalized principles are contained within concrete actions. Actors draw upon generalized principles in deciding upon concrete actions on a regular basis. This means that the generalized principles or structures are observable through the way the citizens of a society interact. In concrete interactions, structures are manifestations of shared tacit knowledge. When applied in practice, structures become rules, which are drawn upon by actors and which create a sense of predictability. At the same time, these general principles are reproduced through the rules applied in interaction. These rules of social life are operational techniques and procedures that are applied in the enactment/reproduction of social practices (Giddens 1984: 21). Rules are modalities, which link concrete action and abstract generalized principles. Based on this, Giddens makes an analytic distinction between three perspectives which may be applied in the analysis of a society: structures (generalized principles), modalities (applied rules) and concrete actions. In analysing societal practices, these three phenomena are present at the same time. Thus, actors do not just submit to rules and thereby confirm principles, but they may also start to practice these rules in new ways, thus ­modifying their underlying principles. This is the basic process of learning shared knowledge that takes place within societies. Giddens (1984) distinguishes three types of structural principles. The first one is signification, which refers to the rules that decide how concrete phenomena should be understood. This includes concepts and definitions, referred to by

18   Å. Mariussen Plato as the world of ideas. The modality of signification is the systems of classification or sets of definitions that actors routinely draw upon when they classify objects, talk, and exchange information at the level of concrete actions. Lundvall and Johnson (1994) refer to this as ‘know-­what’. The second type of structural principle is domination, referring to authority over people, and the power to decide on the allocation of resources to certain positions. The modality of domination and allocation is norms, rules and procedures. At the concrete level of interaction, various positions are held by people, who are able to use institutionalized patterns of domination as a source of power. Lundvall refers to knowledge of these relations of power and influence as ‘know-­who’. The third set of structural principles is legitimation, the principles which give legitimacy to norms and sanctions and make them relevant and valid. The modality of legitimation is norms, rules and procedures, which are applied directly in action. Since norms are likely to determine the expected outcome of actions, or their causal chains, it may be referred to as ‘know-­why’. In more general terms, know-­why may also be seen to include knowledge not just of societal norms and laws, but also of the impacts of actions in terms of technology, the functioning of organizations and networks, and causalities in nature. In more general terms, know-­why are theories of causality, both in society and in terms of technological systems. Through the application of these theories, actors are able to make strategies and sustain expectations of the outcomes their actions are likely to produce. By drawing upon these sets of shared knowledge, actors routinely monitor their actions, as well as the actions of others, and reflect upon their outcome (see Table 1.1). In doing so, they may sometimes correct mistakes and improve performance. Further, if these improvements are successful, they may be copied by others and diffused elsewhere. After a while, improvements, such as a new understanding of a rule, or new knowledge of how to reach results more efficiently, become part of the shared knowledge. This is the learning process of shared knowledge, where the level of action transforms the structure. A core component in learning is codification (or what we will refer to as externalization) of tacit knowledge. According to Giddens, tacit parts of shared knowledge can usually be accounted for by actors. When asked, actors are commonly able to give accounts of what they are doing, with reference to laws, definitions and other abstract structural properties. This accountability, according to Giddens, also opens up possibilities for change, as actors may make ‘new accounts count’. In other words, through new, codified accounts, they may change or transform ‘know-­what’ and ‘know-­why’. We will return to this below. Shared knowledge enables coordination and predictability. Mutual expectations are created and confirmed through interaction. Thus, actors who share knowledge and expectations are able to coordinate their actions, and interact in peaceful and predictable ways. Shared stocks of knowledge both reproduce relations between actors and collectives, organized as regular social practices (or social systems), and create continuity, order and a stable set of routines in society at large.

Sociological preliminaries   19 Table 1.1 Knowledge typology and structuration of action (based on Giddens, 1984: 29 and Lundvall and Johnson 1994) Knowledge type

Know-what

Know-who and -how Know-why

Structure (national institutions)

Signification

Modality

Interpretative schemes Principles of classification

Domination, Legitimation, values, authority, right to laws, chains of allocate resources causality

Action

Observations, facts, data, communication

Technologies, organizations, networks and other facilities Power to do something which makes a difference

Norms, rules and procedures Expectations of sanctions, feedbacks and causalities

Globalization Societies with states may sometimes become closed to foreign influences. For a long historical period, this was the case with the Chinese empire, for example. Still, most states and their societies are open for trade, diffusion of ideas and technologies, migration and a variety of ‘cross-­border’ activities undertaken by businesses, NGOs and other transnational organizations and communities. States cooperate with each other in a variety of ways, for instance, they frequently create transnational institutions together. Some of these institutions aim to ‘assist’ the state in developing its strategies. States are exposed to the global economy through flows of information, goods, services, money and people. There are peaks and ebbs in globalization, as periods with increased transnational contacts and the globalization of markets may give way to ‘renationalization’ and war. This is referred to as the two ‘waves of globalization’. These external pressures and influences create a dynamic of transnational learning, which occurs all the time. The shared knowledge of the society of a modern state is far from a closed system: ‘The state is seen as an emergent, partial, and unstable system that is interdependent with other systems in a complex social order’ (Jessop 2008: 78). Transnational learning refers to a process where the relation between this ‘complex social order’, which is the context of societies with states, and the shared stocks of knowledge inside the society of the state, are explored. For the purpose of this discussion, we will distinguish four types of complex social orders which facilitate transnational learning in different ways. In some cases, these orders overlap and reinforce each other, however in others they are quite distinct. The way in which deep varieties are created through the formation of national societies and their states is explained below. National societies are formed under

20   Å. Mariussen Table 1.2  Structures of global societies and preconditions for transnational learning Type

Structure of global society

Examples discussed in the book

Theories of transnational learning

Deep varieties

Differentiation between national system ‘models’

The German model The Anglo-Saxon model Nordic municipalities New Public Management

Theories of national system formation National business system theory

‘Hard’ globalization Diffusion of ‘best and its practices’ from a oppositions global empire

Multi-level governance Transnational and interregional horizontal cooperation ‘Soft’ globalization

‘Quasi-federalist’

Reflexive modernization Post-Fordism, post-modernism Learning through monitoring

Open Method of The Strategic Coordination Relational Smart Specialization Approach Interreg CONTE Transnational CPR The World Heritage Transnational institutions communities Actor Networks (ANT)

highly different conditions, and therefore they develop into state formations that consist of different types of shared knowledge. ‘Hard’ globalization is the result of actions between hegemonic global powers, and was initiated through the two big waves of globalization in the nineteenth and twentieth centuries. Multi-­level governance is the result of various forms of ‘quasi-­federalist’ cooperation, in particular through the EU. What we refer to as ‘soft’ globalization is attempts to solve problems which are too big for nations, through transnational institutions and communities (see Table 1.2). We will explain this typology below. By way of introduction, these various forms of transnational societal formations may be seen as suggestions for an emergent global order or a ‘world society’ (Luhmann 1995, 1997). One might speculate whether a ‘world society’ could develop into a hegemonic superpower which would be able to deliver what the British and American empires failed to do, in other words global military, political and economic supremacy. This scenario is consistent with the ideas behind mono-­centric ‘hard’ globalization where a hegemonic empire integrates peripheral countries into its sphere of influence. In this case, the structural order of the empire is imposed on other countries. In Hegelian terms, this outcome is often referred to as ‘the end of history’, as differences between nations tend to disappear. The end result, one might think, is that all humans live in similar types of societies, ruled by the same structural principles, and sharing the same

Sociological preliminaries   21 stocks of knowledge. In the history of sociology, this logic of convergence has sometimes been referred to as ‘modernization’. In classic German philosophy, the shared consciousness of humanity was sometimes referred to as ‘Weltgeist’, a global ‘Know All’, integrating all forms of human knowledge into a single model. If this was the case, the result would be a global ‘master story’, which would gather all national forms of knowledge into a single, consistent stock of knowledge, underpinning the formation of a single and consistent modern global society. Some years ago, several influential sociologists thought that the US society could become the model of development for all other countries. This vision of the United States as the global superpower is reflected in Giddens’ theory of globalization and reflexive modernization, which is discussed below. Attempts to take its position as a global superpower have so far failed for the United States. Knowledge of everything, or the Know All of the World Spirit, absorbing and integrating everything into itself, is an illusion (Zizek 2012). History continues and national varieties are reproduced. Alternatively, could a world society possibly form as a result of deeper international and intercontinental federal or ‘quasi-­federal’ cooperation, which in the end would lead to the formation of a ‘Global Commission’, or a ‘Super UN’ modelled after the EU? Federalist or ‘quasi-­federalist’ experiments may fail, as we have seen in the case of the Austrian–Hungarian federation. This problem is also illustrated in the current problems of the EU in maintaining a shared currency, the euro, through horizontal multi-­level governance institutions based on negotiations between autonomous countries. The vision of future global governance argued by Djelic and Quack (2010), and based on their analysis of global communities, is widely different. Members of communities share knowledge with each other, however, they are not formalized networks or organizations. Unlike networks and organizations, communities cannot be seen as actors. They do not do things. Although members of communities have no obligation to relate with each other, interact or set up formalized networks, they instantly recognize each other as equals or potential partners, and often demonstrate a feeling of common identity or loyalty. Communities often form the basis for creating wider processes of change, demonstrated through the rapid diffusion of ideas and methods across borders, as well as through ‘emergent’ societal phenomena. Communities may enable actors to construct networks, and they often contribute to the setting up of formalized organizations, which typically protect and cultivate the common property of the community, including its specialized knowledge base. Communities may also be active in the creation of new markets, and they may facilitate the formation of NGOs with clear targets, such as the reduction of CO2 emissions, animal welfare, or democracy. They have a message and a value-­based commitment, which can be described as ‘know-­why’ and also a solution, a ‘know-­how’. Because of their fluid characteristics, communities may easily cross organizational and national borders and thus deeply influence various formal organizations and institutions in different countries. Of particular interest in our case is what Djelic and Quack (2010) refer to as ‘communities of transnational activism’. A ‘community of activism’ consists of

22   Å. Mariussen people who share an interest to a certain set of problems, and work formally, through established networks and organizations, as well as in informal contexts through contacts with people in other countries to develop solutions to this problem. Some transnational communities are referred to as ‘imagined communities’ by sociologists and these are sometimes related to transnational communities of knowledge and expertise, such as professional and scientific transnational networks. They may also have characteristics which are similar to epistemic communities, characterized by a mutual orientation of their members, often oriented towards common cognitive and value frames (Djelic and Quack 2010: 20). There is a sense of belonging, as in a ‘real’ or spatially embedded community. Members of these communities are likely to work within widely different organizations and actor networks in different countries, but they relate to the same issues and agendas. They exchange information and discuss common problems in conferences or other meeting places, which are often set up by transnational institutions. Through these meeting points, they may discover and disseminate insights or solutions which may be useful in order to solve the local or national problems which the transnational institutions themselves, due to their fragmented character, cannot manage. If we look for a ‘world society’ which shares knowledge, what we discover, in its finest moments, is dynamic but unstable global systems of horizontal communication, oscillating between contradictory strategies and competing forms of knowledge. As the case of global warming illustrates, there is no hegemonic ‘master story’, and accordingly no platform for consistent global strategies. This does not necessarily mean that ‘the complex social order’ Jessop refers to is falling apart, only that it is unstable and fragmented. In terms of the formation of a global society, we seem to be in a situation of ‘permanent fragmentation’ (Mariussen 2002). The glue which keeps the global society together is transnational cooperation, which results in the creation of international institutions backed by states. These institutions form an environment, or ecology, where transnational communities can develop and grow. Global societies are horizontal, and discursive transnational communities often, in various ways, are mixed with formalized transnational networks and commitments, formed through conventions and transnational institutions. The co-­evolution of transnational communities and international institutions related to them, such as the World Heritage Convention discussed in this book, creates a good context, one might think, for learning between countries, in other words transnational learning. This relation between the state and transnational institutions and their societies is referred to as ‘meta-­governance’, or ‘negotiated decision making’. Thus the key issue for a research agenda into this new form of statehood becomes the manner and extent to which the multiplying levels, arenas, and regimes of politics, policy making and policy implementation can be endowed with a certain apparatus and operational unity horizontally and vertically; and how this affects the overall operation of politics and the legitimacy of new political arrangements. (Jessop 2008: 222)

Sociological preliminaries   23 With this point of departure, we can go back to the varieties of national systems. How did these different varieties of knowledge evolve in the first place?

Borders and varieties States with borders are formed as a result of complex societal processes. On a structural level there are both similarities and differences between countries and regions, which are deeply rooted in time. Among historians, ‘transnational history’ puts national development into its context, explaining the founding of nations in terms of cross-­national influences (Ian Tyrrell, see Chapter 12 in this volume). The case of Tyrrell (2007) focuses on the formation of the United States, and the way it has been influenced by different global phenomena, such as the French Revolution. Another key reference is the work of Stein Rokkan (Flora et al. 1999). An early fundamental element for several state-­like phenomena was the existence of dominating clans or ethnic groups which formed kingdoms. Following this point of origin came ethnical conflicts, mass migrations and genocide. Politically, administratively and militarily, European societies were influenced by the early empires, such as the Roman Empire, which invented and diffused as a successful form of military and societal organization not just hierarchy, but also several sophisticated technologies. The Roman Empire also created a long period of peace and prosperity in Europe. Europe has been affected by wide-­ranging cultural and religious influence from transnational churches, such as the Holy Church of Rome, the East Roman Church, as well as various Protestant religious movements which followed the Reformation. The success story of the Romans was copied by the empires of Britain, Denmark, Sweden, France, Spain, Portugal, Belgium, Russia and other European powers. The European Enlightenment and the Great French Revolution led to a powerful diffusion of ideas promoting codified knowledge, literacy, education and respect for science-­based knowledge, democracy and human rights. These influences were diffused and absorbed in various ways in different areas. Rokkan distinguishes between east – west and north – and south in Europe. In the north-­east, in Sweden, Prussia and other states under the influence of the culture of ‘Great Germany’, the European Enlightenment led to the formation of the modern, rational state with a bureaucratic system, described by Max Weber (1947). Other factors that encouraged integration and border formation are economic, and include the shifting influence of centres of economic activity and power. The European city states shaped the territories of the central continental plain through the formation of the feudal economy. Here, in the core of European plains, we find national systems, including the core city belt, which have traditionally been more open to federal solutions. Countries outside of this core, in the west, east and north of Europe, tended to develop autonomous kingdoms, republics and empires. In the northern part of the city belt, the Hanseatic League in the North Sea brought trade and formed a breeding ground for capitalism. Cities that had centres of finance and commerce were considered the ‘containers of power’ in European history for a long time, and they were also common meeting places

24   Å. Mariussen where information was shared and decisions made. These containers were protected by city walls. However, the Industrial Revolution and the creation of industrial capitalism led to the replacement of cities with nation states. (The city) began to break up, one should say, under the impact of modern capitalism, which developed in societal contexts that helped to form, and were shaped by, a new type of power container: the nation state. The disappearance of city walls is a process convergent with the consolidation of a highly elaborated type of administrative order operating within tightly defined territorial boundaries of its own. (Giddens 1984: 262) Some nation states like the Kingdom of Denmark are former empires. Denmark is 1,000 years old. A crucial turning point for establishing a transnational institutional context, which enabled the establishment of modern nation states in Europe and America, was the Peace Treaty of Westphalia in 1648, which laid down the European principles for defining a sovereign state. During the last 200 years we have seen the formation of new European states in the periphery of former empires, such as Finland (Sweden, Russia), Norway (Denmark, Sweden), Iceland (Denmark), Ireland (Britain), and more recently the Baltic countries (the Soviet Union). As the current debate on the status of Scotland in relation to Great Britain illustrates, this process of state formation is still ongoing. The European Enlightenment brought with it modernization, characterized by a rapid growth of codified science-­based knowledge, manifested in education and progress within science and technology. Institutions of knowledge creation and dissemination were formed on a national basis. National history, national geography, national literature, national biology and so on belonged to the national projects. In the case of Sweden, including the province later known as Finland, Enlightenment was adopted at an early stage, and the shared national knowledge was a point of departure for integrating the society within the state. National history, which defined the core values of the national system with reference to its history (know-­what) was the basis for the construction of a narrative of the nation state. Through its responsibility for the growing national educational sector, as well as for the creation of national science, the state maintained its hegemonic power in terms of knowledge production and dissemination. The administration of the modern state was supported by applied national sciences, created according to well-­defined rules, and dividing responsibility between different sectors and levels of administration. Crucially, these processes of national integration and formation of borders protecting the shared knowledge contributed to the creation of differences between various types of national societies with regards to their shared beliefs, which consist of nationally specific sets of relations between different forms of knowledge. These differences are found in the unique relations between institutions, which are complementary to each other, between different sectors, on a

Sociological preliminaries   25 national and regional level, in the forms of regional and local organization, and in the ways firms and public institutions work, make routines, decisions, and know-­how. These institutional differences between national systems have a deep impact on forms of economic organization, which is analysed in literature on national business systems (Whitley 1999, 2000; Kristensen and Whitley 1995). A core finding is the differences between the Anglo-­Saxon model and the German or continental model. At the centre of these models are institutionalized rules regulating how legitimate decisions are made. In the case of the Anglo-­Saxon ‘arm’slength’ model, knowledge is supposed to be controlled by a supreme agency, operating through codified knowledge, and giving codified orders or indicators of performance in a top-­down manner to organizations responsible for the implementation of knowledge. Examples of this are Fordist forms of business organization, as well as the New Public Management reform movement, which was widely diffused following the neo-­liberal success of Margaret Thatcher in reforming the British public sector. A related phenomenon is the ‘agencification’, through regional development agencies, of regional institutions (see Chapter 13). Similarly, with regards to the economy, Anglo-­Saxon countries are characterized by the strong position granted to the financial industry, which operates based on codified (financial) information, and forms of corporate governance dominated by ‘shareholder value’ principles. In general, of course, this form of governance continues to be influenced by the hierarchical principles of the Roman Empire, combined with what Stein Rokkan refers to as the forms of administration of sea-­based empires, like the British and Danish empires, where the orders from the king and his council to the colony had to be transferred as written documents by sailing boats. In this context, where vertical negotiations were out of the question, the order from the king as well as the feedback from the colony had to be explicit, well-­structured and codified. There are several accounts explaining the roots of the ‘German model’. To Stein Rokkan, the land-­based eastern empires could develop administrative systems which included vertical negotiations carried out in meetings, because the regional capital was within reach by horse and carriage from the national capital. Second, as pointed out by Arndt Sorge (2008), Germans combined the Roman principles of hierarchical control with the German principle of ‘primas inter paris’ where the chief of the tribe was the best among equals, and the leader was responsible for explaining and discussing their ideas with the tribe before making a decision. Theelen (2004) traces the origins of the German forms of a coordinated market economy to certain market regulations suggested by the German guilds and introduced by Bismarck, resulting in the application of craft-­ based skill standards in manufacturing industries in Germany. In German society, accordingly, there is more respect for the integration between codified, scientific and craft-­based tacit knowledge, whereas in Anglo-­ Saxon societies in the north-­west, science-­based or codified knowledge is seen as supreme, and tacit knowledge is suppressed. These configurations between different forms of knowledge, again, go hand in hand with various forms of

26   Å. Mariussen economic organization, labour relations and decision-­making. The Anglo-­Saxon countries rely on top-­down coordination based on codified financial information, while German societies to a larger extent combine central coordination with vertical dialogue, horizontal problem solving, and maintaining the engineering of knowledge in a core position within companies. Correspondingly, in terms of regional administrative organization, this opened up possibilities for administrative systems with a larger emphasis on ‘steering’ and a combination of horizontal and vertical coordination and consultation. In terms of regional industrial organization, ‘good German practice’ is similar to ‘Oulu South’ described by Virkkala in Chapter 8 in this book. One of the classic forms of transnational communities is communities of migrants, who establish links between local societies in different countries. Another transnational community is the multi-­lingual society of Ostrobothnia, in the region of Vaasa. Today, Ostrobothnia is a region in the Republic of Finland, but the area has its cultural and language roots embedded in a history where it was first part of the Swedish Empire. Later Vaasa was a regional administrative centre in the Russian Empire. Kvarken is the sea separating Vaasa from the city of Umeå in Sweden. Cooperation in Kvarken evolved from Nordic cooperation within Pohjola-­Norden in Finland (established 1924) and Föreningen Norden in Sweden (established 1919). The Kvarken Council was established in 1972 in a conference in Vaasa. It became part of a transnational Nordic cooperation programme coordinated by the Nordic Council of Ministries in 1979.

‘Hard’ globalization and beyond In Anglo-­Saxon history, it is commonplace to refer to two phases of globalization, that driven by Britain and the United States. In a European–Atlantic context, the Enlightenment, the kingdom of France, as well as the Great French Revolution and the Napoleonic wars were significant sources of transnational influences. This list may be extended further back in time, to the empires of the past. The Industrial Revolution and the following technological paradigm of steel constructions (including steel boats) and coal-­based energy systems enabling colonization and development of global trade evolved throughout the nineteenth century with the British Empire as its centre. On a global scale it created modern infrastructures, such as railroads and harbours which could serve modern transportation systems. Large-­scale steel boats with steam engines powered by coal connected the continents with flows of goods, passengers, modern technology and migrants. This ‘first wave of globalization’ was based on institutions such as the Victorian Free Trade Settlement and the Gold Standard. It was brought to an end, however, by the First World War. The British Empire and the first wave of globalization created the preconditions for the second wave of globalization. The second wave was driven by the development and growth of one of the former colonies, the United States, which later became the American Empire.

Sociological preliminaries   27 After the Second World War, the agenda was to Americanize Europe, a process which was initiated through the Marshall Plan (Sorel and Padoan 2008), and the creation of the OEEC, later referred to as the OECD. Crucial drivers in the process of Americanization were the technological and organizational revolutions, which emerged inside the United States before the Second World War and were diffused into the rest of the ‘Free World’ as Fordism and the organizational innovations of Sloan, based on the success of General Motors. These models not only provided templates for private economic organization for the most part of the twentieth century, but they also diffused into the public sector. In the US ‘Production Front’ of the Second World War, a number of technological innovations were developed with a highly successful application of science to serve the military industry (the nuke, the radar, air force aviation). These experiences were continued into what was called the ‘Battle of Production’ in the Cold War, with an equally successful attempt to apply science in the US military industry – and generally western industries during the Arms Race, the Space Race and in the ‘peaceful economic competition’ with the Soviet Union and its allies. The theory framing the basic ideas of this forceful political– economic system was the human capital theory of the early 1960s. Here, the core idea was that growth could be achieved by applying formalized knowledge in hierarchical organizations. This system expanded on a global (= western) scale through institutions like the OECD. The ‘knowledge economy’ that emerged on the frontline of the ‘Battle of Production’ in the Cold War was based on a linear learning perspective, and a corresponding hierarchical perspective of knowledge production and organization. The major policy instrument was the speeding up of public investments in education, and ensuring that these investments had a certain socio-­economic and spatial distribution, so as to avoid pockets of poverty and ignorance. The western states invested in human capital by expanding university budgets, as universities produced knowledge, and the well-­educated labour power that came out of universities were primarily rewarded for their skills in the segment of the labour market created by modern, Fordist, large-­scale corporations. Here, the well-­educated augmented the ranks of industrial administrative hierarchies, and production, so the story goes, was directed by scientific theory. All of this, it goes without saying, was closely correlated with technological and industrial development, not only within the military-­industrial complex and the space industry (another success story of peaceful global competition of that time), but also in Fordist consumer goods industries and the modern infrastructure that supports such production. This relates to the another factor, the Fordist–Keynesian success story, where the combination of the advantages of scale in the consumer industry, and a growing demand for standard consumer products, supported by Keynesian regulations, contributed to the boom of the 1950s, and 1960s, and the general growth in the standard of living of western consumers in that period. A core mechanism of these forms of transnational learning through Amer­ icanization was large-­scale specialized consultancies, combined with accountancy services. The first was McKinsey, but later, several others followed. The

28   Å. Mariussen global operations of these private actors were supported by transnational institutions, which encouraged massive waves of transnational learning. Here, the OECD was a core case, providing advice to countries in the modern world that were allied with the United States. The consultancies and the OECD had a centralized core for the creation of new knowledge (‘think-­tanks’, universities and consultancy corporations), as well as a system of diffusion of best case practices into the periphery outside the United States. In the implementation of the Marshall Plan, OECD recommendations could be made in what was virtually an open field, following the industrial and institutional destruction of the European continent through the Second World War. With the collapse of the Soviet Union, the disintegration of its bloc, and the opening up of China and other Asian countries to the market economy, this system of diffusion and transnational learning went into overdrive. At the same time, there were deep changes going on in the ‘Free World’. In Paris, there was talk of a post-­modernist order, which supposedly destroyed the old national order known as modernization. A theory aiming at explaining these two related phenomena was developed by Giddens and Beck in the 1990s. In his 1984 book, Giddens emphasized that structures could be changed reflexively. As actors following certain strategies get frustrated, they are likely to go in new directions. In changing their patterns of behaviour, they may also directly or indirectly contribute to the changes that take place with regards to the generalized structural principles, which they draw upon in the reproduction of their actions. At the same time, Giddens mentioned a strong factor sustaining established structures, what we may refer to as the ‘know-­how’ or tacit knowledge of a national citizen: routine. Routine, psychologically linked to the minimizing of unconscious sources of anxiety, is the predominant form of day-­to-day social activity. Most daily practices are not socially motivated. Routinized practices are a prime expression of the duality of structure, as it relates to the continuity of social life. In the enactment of routines agents sustain a sense of ontological security (Giddens 1984: 282). Within the borders of the national system, routines are protected through administrative and technological infrastructures and institutions which enable the formation of national and regional labour markets, as well as flows of goods, services, people and information, which all follow regularized and routinized patterns through time and space. These institutional and spatial mechanisms reinforced routines and existing structural principles, and helped to maintain the borders protecting the shared national stocks of knowledge. During the 1990s, with the growing force of the second wave of globalization, these walls started to crumble. Crucial drivers in knowledge differentiation and specialization were science, technology and innovation. ‘Know-­what’ was highly dynamic, in particular in economics and science. Differentiation and increased specialization was not a new trend. With the Industrial Revolution, products could be classified according to codified industrial standards, defined by the technological paradigm, and thus, complex forms of highly specialized knowledge from different parts of the world could be coordinated and incorporated

Sociological preliminaries   29 into the development of more and more advanced products. Due to the huge private and public investments in science-­based knowledge, and its diffusion through education, science-­based codified knowledge has deeply penetrated almost every corner of society, often assisted by transnational diffusion mechanisms of ready-­made expert based solutions. Scientific disciplines are increasingly diversified into different, often competing, sub-­disciplines. These forms of global knowledge differentiation and fragmentation driven by science, technology and markets are an intrinsic part of what we refer to as ‘flows of knowledge’ through globalization. At the same time, in the early twentieth century, the national society was seen as a core unit in the development of the knowledge base for processes of modernization. The crucial test for the unity of the national society was its ability to provide shared meaning, through a ‘master story’ of the formation of the state and the values and norms defined and protected by it, constituting the national identity. In western Europe, this master story was seen as synonymous with stories of national modernization, rationalization and democratization, where scientific knowledge was seen as diffused through national science institutions and journals of scientific publications. To a certain extent one might say that Hegel’s ideas were confirmed, as the modern state certainly appeared to be the One Know All. But throughout the peak of the second phase of globalization, in the 1980s and 1990s, this ‘master story’ was increasingly regarded as threatened by globalization and knowledge fragmentation. The reaction to this was a discussion on ‘post-­modernism’, initiated, among others, by the French philosopher Lyotard, in The Postmodern Condition: A Report on Knowledge (1984). Post-­ modernism meant that the ‘Grand Narrative’, the shared understanding of the society, was broken up into several small narratives, or ‘language games’. At the time, this was seen as some kind of destruction of modernization and of the belief in a rationally ordered national society. In literature on ‘post-­modernism’ which followed, this loss of rationality was a core topic (Beck et al. 1994; Giddens 1991). This discussion of the destruction of the national system is picked up again in Giddens’ analysis of globalization and high risk society in the 1990s, with the metaphor ‘Juggernaut’ applied to globalization. The Juggernaut is a monster which destroys everything that gets in its way. This metaphor was used to describe how the global economy blindly destroyed the routines of modern life and generated uncertainty. The global economic flows responsible for this outcome were primarily seen as extensions of economic relations of trade, investments and credits, through geographical space. These global chains of cause and effect were responsible for deep economic and societal disturbances in several countries. Since these relations were outside the scope of national government supervision and regulation, they were regarded as ‘blind’, and likely to create unintended impacts. In many countries, they had the potential to destroy the belief in the old order, including the shared knowledge of the national system. In addition, there was a diffusion of new technologies, products and forms of societal organization, such as neo-­liberal forms of organizing the economy from the centre, i.e. at the time from the United States, into the rest of

30   Å. Mariussen the world. These global flows opened up the ‘power container’ of the states, and created a situation of existential uncertainty, both in the former ‘free world’ in western Europe, as well as in eastern Europe and Asia. However, according to Giddens, the modernization of society, known as ‘rationalization’, did not end in the 1990s, and societies did not enter into post-­ modernism. On the contrary, the response to uncertainty created by globalization was a rapid process of ‘reflexive modernization’, the diffusion of modern forms of neo-­liberal social and economic organization. Still, this discussion from the 1990s is based on the dualism between, on the one hand, the rational forms of organization within the borders of a state, and on the other hand, uncertainty, chaos and destruction. Reflexive modernization was more or less based on the destruction of the existing society and the application of something completely new and modern. The theory of reflexive modernization, in other words, explains a move towards the UK/US neo-­liberal model of societal organization. The Juggernaut metaphor is referred to as ‘hard’ globalization. However, even in the growth phase of the second wave of globalization, convergence with the US neoliberal model was not complete. Instead, varieties were reproduced, as different countries interpreted the new forms of organization in their own ways. What is more, alternative ways of organization which survived reinforced diversity. During the 1960s, a Norwegian scholar, Einar Thorsrud, became world famous for his discussions on alternatives to Fordist hierarchy. Thorsrud’s work was based on a sociological research tradition where the focus is on the tension between the socio-­technical system of the firm, which demands unlimited achievements from the workers, and the collective protection the workers, which is sought as protection against these demands (Lysgaard 1961). One of the cases researched by Lysgaard from 1954 onwards was the labour collective of Norwegian industries, which was protecting its members through joint rules of behaviour. Initially, these joint rules kept productivity down, although Thorsrud found that this outcome was not necessary, and that worker collectives could be used to enhance productivity as well. One of the solutions to this problem was to experiment with the democratization of shop-­floor work organizations as a way to increase both worker welfare and productivity. Thorsrud was able to persuade both the Norwegian unions and the employer organization to support this initiative. Thus, experiments could be undertaken at the shop-­floor level, with the local support of identifiable partners, local unions and employers. A core element of this approach is mutual respect and friendliness, as a basis for democratic and open-­ended discussions on how to improve processes through innovations. Thorsrud and his group of Norwegian researchers were able to relate to a problem a similar group of researchers at the Tavistock Institute in London in 1949 faced. The 1949 Tavistock project addressed a pressing national issue: how to increase productivity in coal mining, which was the main source of energy in Britain after the Second World War. The Tavistock researchers, carrying out participative research inside the coal industry, discovered a process of ‘diffusion of innovative work practices and organizational arrangements that did not

Sociological preliminaries   31 require major capital expenditure but which gave promise of raising productivity’ (Trist 2001). This diffusion of innovative work practices was going on all by itself, without interference or indeed knowledge from any administrative staff. The Tavistock researchers, however, were unable to find institutional support for carrying out further research on this topic in Britain. Accordingly, they teamed up with their Norwegian counterparts, and left it to the Norwegians to play the role of pathfinders (Trist 2001). Together, they developed a programme for experimental action research for exploring the relation between the direct participation of workers through semi-­autonomous work groups on workplace conditions and productivity improvements. Through a transnational organization, the ‘Quality of Work Life Conference’ (QWL), with Thorsrud as the first chair, these findings were discussed and disseminated on an international level. The Norwegian/ British ideas made a strong direct impact on Japan and the United States (Cole and Walder 1981). These discussions were not new in the United States as they had been going on since the Hawthorn experiments on work productivity in the 1930s. However, the Japanese saw these ideas as a new opportunity to improve their work organizations in competition with the US industry. The impact of the ‘Quality of Work Life’ perspective on productivity promotion in the US industries resulted in a generalization of the model. A different but somewhat related perspective was developed by Charles Sabel. He discovered successful patterns of organization which were at odds with the best practices of the global empire. Autonomy enables workers to be innovative and creative, making it likely for them to be able to solve problems of productivity on their own. When allowed to develop, this form of industrial organization may result in learning organizations and industries, which are likely to deliver results in terms of profitability and innovation and out-­perform Fordist forms of organization. Knowledge, according to this theory, is primarily useful in a pragmatic sense, as a capability to move the world forward by solving problems. These forms of knowledge may incorporate both theories and craft-­based skill, dexterity and judgments of various sorts. This theory was promoted by Charles Sabel and Michael Piore in 1984, in a book called The Second Industrial Divide (Piore and Sabel 1984). Together with several other authors, among them Beccatini (Beccatini 1979), they promoted a theory of flexible specialization, taking place in industrial districts. This was seen as an alternative to the American model, based on advantages of scale and scope. In their analysis, Sabel and Zeitlin (Sabel and Zeitlin 1997) emphasize that radically different ways of organization can co-­exist and compete together. The alternative, according to Sabel and Zeitlin, to corporate-­based institutionalization is the experimental diversification of firm strategies (Sabel and Zeitlin 1997), based on learning by monitoring (Sabel 2002). Instead of trusting fixed models of business organization and innovation, Sabel and Zeitlin argued, actors should rely on their ability to learn by monitoring others. In pragmatic collaboration, the outcome may be experimental and open-­ended. The solution is that institutions provide open access to shared information that is relevant to the action. Examples of these

32   Å. Mariussen institutions are systems of benchmarking, evaluations, and other forms of indicators connected to the collective involved in the learning process. These theories of post-­Fordism emphasized European and Japanese forms of industrial organization as more productive than the Fordist competitors. This supreme form of productivity could be explained by the autonomy and problem-­solving capabilities of skilled workers. In the industrial districts of northern Italy, German districts in the Ruhr area, Denmark, Japan, and the United States itself, researchers supporting the paradigm of ‘post-­Fordism’ documented well-­functioning and highly competitive forms of industrial organization where autonomous skilled craftsmen were driving innovation and problem solving, thus providing competitiveness in the face of competition from the US Fordist corporate actors. Thus, a learning organization with autonomous problem-­solving teams of operators was developed. These diverse post-­Fordist models attracted wide interest in Europe, where they were seen as an alternative to ‘Americanization’. As Europe started to compete with the United States, the approach to transnational learning was multi-­level governance.

Multi-­level governance: the case of Open Method of Coordination (OMC) The Marshall Plan was based on the authority of the leader of what was at the time referred to as the ‘Free World’, and it was actively used to diffuse the ‘US model’. The core institutions set up to facilitate this process, the OECD, the IMF and the World Bank, actively promoted a neo-­liberal agenda. At the same time, the US approach was also based on cooperation. The cooperation which led to the formation of the EU was strictly horizontal, based on states which recognized each other as equals. Within the context of economic integration, the EU also focused on learning between nations, through among other things, Interreg CONTEX (see Chapter 7 in this volume) as well as through the Open Method of Coordination (OMC). In opening up possibilities for learning between EU countries, it was not surprising that the EU designed a framework for transnational learning in Europe based on American experiences of learning that had taken place between some US states. The point of departure in the American case had been Charles Sabel and his theory of pragmatic learning through monitoring and deliberative interaction. The OMC provided a framework for addressing concerns relating to European diversities because it encouraged the convergence of objectives, performance and broad policy approaches, but not of specific programmes, rules or institutions. This was the ‘theoretical promise of a new mode of EU governance’ (Zeitlin 2005). ‘OMC forms the preconditions of pragmatic deliberations in multi-­level governance systems, where actors are able to look for and find new solutions and in that way change their routines’ (Sabel 2002). An evaluation, the so-­called Kok Report (Kok 2004), is critical to the achievements of soft policy. In the CREST Report (European Union, Scientific and Technological Research Committee, 1 October 2004) assessing the application

Sociological preliminaries   33 of OMC in favour of the Lisbon and later Barcelona objective of 3 per cent investment in R&D, it is claimed that this numerical objective is not reached, and that ‘Policy mix in most member states is more often an outcome of autonomous policy developments than the result of a coherent and comprehensive design process’ (CREST 2004). So what went wrong? First, not everything went wrong. The evaluations indicate that, in general terms: OMC processes have raised the political salience and ambitions of employment and inclusion policies at the national as well as the EU level. A second broadly supported finding is that these OMC processes have contributed to broad shifts in national policy orientation and thinking, involving the incorporation of EU concepts and categories in the domestic debate. (Zeitlin 2005) To a certain extent, then, these findings indicated a change in concepts and categories, what we refer to as ‘know-­what’. But when it comes to policy learning, in other words the introduction of new practices and methods, it is obvious that national policies became crucial in deciding whether and to what extent OMC-­ based approaches should be implemented. Accordingly, there are only a few cases which clearly document policy learning on the ground. One reason for this, according to Zeitlin, is that OMC learning was designed as a ‘contextualized benchmarking’ or ‘learning with others’ process, which is more demanding than just copying or mimicking without taking the context into consideration. This contextualized benchmarking was obviously something the states wanted to do themselves, outside the scope of the EU monitored OMC. These findings, concerned with state selectivity, are consistent with the strategic relational approach (SRA) (Jessop 2008). States are controlled by alliances of leading actors, who share a strategy. This strategy is based on institutional complementarities and structural constraints, which are deeply embedded in the history of the state; it is kept in place through relations (alliances) between leading political parties, interest groups and civil society institutions. This structure creates persistent differences between state societies, which may be described as dichotomies between, for instance, the German and the Anglo-­ Saxon models. However, according to Jessop, the state as a society is not completely rigid. A dichotomy may give way to a dualism, where structures emerge and are open for transformation, and where actors are ‘partly socialized’ and open to the possibility of change. Finally, the opening up for state learning through dualism may turn into a new synthesis, a ‘dialectical duality’, where actors calculate their structurally oriented actions in ways which may slip through the selection mechanism (see Figure 1.1). States can learn, and Jessop explains this ability in the following way: the structural constraints always operate selectively; they are not absolute and unconditional, but are always temporally, spatially, agency – and

34

Â. Mariussen

Structures

Agents

Dichotomy External constraint

Dualism Emergent structures

Free-willed actions

Partly socialized agents

Duality Structurally inscribed strategic selectivity

Strategically calculated structurally oriented action

Figure 1.1 Structure-agency beyond structuration theory (modified version based on Jessop 2008: 41).

strategic specific. The latter term implies that agents are reflexive, capable of reformulating within limits their own identities and interests, and able to engage in strategic calculation about their current situation. (Jessop 2008: 41) By taking structural constraints and selectivity into consideration, it is pos­ sible to see the outcomes of the OMC failure from a new perspective: the problem was the somewhat optimistic perspective on pragmatic learning, which was based on experiences of learning through monitoring between private eco­ nomic actors. Transnational learning between European states, on the other hand, must consider the existing institutional arrangements of the state, as discussed above. Giddens saw the state as either a fairly stable or path-dependent system, where routines were important, and on the other hand an unstable structure created by the Juggernaut that destroys the national master story and encourages rapid transformation. With Jessop it is possible to see the ability of states to learn somewhat more incrementally through transformation or reinterpretation of what is transferred. This transformation is indicated by Bob Jessop as the movement from dicho­ tomy to dualism and duality at the level of the agents. At the same time, this movement also means that the structural level has to be confronted. There is a dynamic at the structural level, from dichotomy through dualism to duality, where the structural level may be able to absorb new components. The crucial element in this dialectical movement is the emergent structural forms. An example of what enables emergent structural forms is the scientific community which understood and supported Darwin, while at the same time existing along­ side the religious community. And yet it was open to the impulses which would shift this power balance between the different knowledge communities.

Sociological preliminaries   35 Another point is made in a comparative analysis of education policy and R&D policy in OMC by Åse Gornitzka (2006). She found that a pre-­existing institutional framework for transnational cooperation of a sector was crucial. Whereas the R&D sector already had well-­developed mechanisms for transnational cooperation, and OMC was a marginalized activity, the educational sector lacked these transnational institutions. Here the OMC was adopted and institutionalized as a new framework for transnational cooperation. According to Gornitzka, this led to the institutionalization of new practices in the educational sector. This process of institutionalization, i.e. the integration of new practices into know-­how, in other words the routines and practices of the sector, takes time. The need for the translation of what is to be transferred indicates that such a process of learning needs a coordinating mechanism, or a review of the OMC process itself (Zeitlin 2005: 38). This is a crucial point, as it shows that the logic of transnational learning cannot be expected to be assimilated ‘by itself ’ once externally based indicators are provided. We will return to this point below, in the discussion of SECI model by Nonaka and Takeuchi (1995). Zeitlin also pointed out the need for processes with a broader level of participation and more transparency.

Soft globalization In the previous cases, we have looked at transnational learning driven by hegemonic global powers and multi-­level governance systems, operating with platforms, such as OMC. Another point of departure for transnational cooperation and learning is the common problems of humanity that cannot be solved by national governments. These problems are often connected with common global ‘properties of humanity’ such as climate, nature and global resources. When it comes to the management of common resources, Ostrom (Ostrom 1990; Hess and Ostrom 2007) advanced the idea of Common Property Regimes (CPR), which builds on a systemic understanding of the opportunities and limitations of a given openly available but not yet privatized resource. The CPR regulates access and exploitation of a given Common Pool Resource based on the shared knowledge of the community protecting the resource. Common Pool Resources either defy privatization because of their character, or have not yet been privatized, because they are still temporarily outside the money economy. Common Pool Resources may be local, national or global. Examples of the different types are public grazing land, the world atmosphere, and, as we will see in other chapters of this book, the world cultural and natural heritage. CPR theory is a response to Hardin’s analysis in The Tragedy of the Commons (Hardin 1968). Hardin was concerned with over-­exploitation provoked by competing investors, causing a bubble and a crash (over-­grazing of land). The alternative is that institutions regulate access to resources. In some cases, a hierarchical entity, such as a national government, may move in to secure optimal levels of natural resource exploitation (fishing regulations for common fish resources, or credits to investments based on future growth expectancies). When it comes to

36   Å. Mariussen global or international common resources, in the majority of cases regulations have to be negotiated between governments. If successful, investments aimed at saving the world from global warming are likely to produce a collective good, in other words humanity avoiding disasters. The investor cannot privatize the results of investments that are preventing global warming. According to game theory, this means that one or a few countries should avoid getting into a position where they pay to protect the climate through investments in green energy, while others tag along as free-­riders. Should rich countries that already consume a lot of energy and emit high levels of CO2 pay by reducing their emissions, or should developing countries restrict their economic development? Ostrom (1990) argues that under certain conditions communities can solve the Hardin problem. A CPR is characterized by: 1 clearly defined boundaries, in terms of who may exploit the common resource; 2 appropriation rules in congruence with local conditions; 3 collective-­choice arrangements; 4 monitoring of appropriative behaviour by accountable monitors; 5 graduated sanctions on rule violations; 6 conflict-­resolution mechanisms; 7 recognition of the right to organize in order to enforce the regime. However, a CPR knows the limits of its own system, and uses this knowledge operationally to monitor and restrict its own exploitation. When it comes to global warming, there are several competing approaches. The absence of a strategic global decision-­making power was anticipated in the policy paradigm of Brundtland-­style UN-­backed theories of ‘sustainable development’. Sustainable development was to be achieved through local actions (‘think global – act local’), and sustained through positive local feedback loops (development). As a result of the 1970s oil crises, in some countries – such as the United States, Germany and Japan – domestic industries were encouraged by state subsidies, which would create market conditions where ‘clean’ energy technologies became locally profitable. In the late 1970s, the UN’s endorsement of sustainable development policies contributed to boosting the development of these ‘clean-­tech’ industries, many of them based in local and regional clusters, and embedded in localized communities where physical proximity is crucial to innovation (Cooke 2008). By contrast, there is the geophysical approach to climate change and global warming, which tries to prevent risks in the future through mathematical models. Here, alarm bells start to ring. According to geophysicists, green business moves too slowly and sustainable development does not provide hard figures to use as benchmarks for regulations. However, earth science has serious methodological problems. First, as we do not have comparable time-­series data from other comparable planets, earth scientists have only one ‘earth’ on which to compile reliable data. Second, controlled experiments on planets are not yet possible. This turns models into an important scientific instrument, since they can be

Sociological preliminaries   37 tested against historical climate data. Consensus on model building was a new step in the evolution of the scientific community which culminated with the creation of a formalized transnational institution, the IPCC. As ‘climate gate’ illustrates, even the formidable IPCC has its weaknesses as it uses science to legitimate and forge a new global order in terms of CO2 regulations to prevent climate change. So far, there is no shared generalized authoritative knowledge at a global level which is able to prescribe how to meet challenges like combating global warming. As discussed further on, other areas, such as the World Heritage Convention, and their ability to protect the natural and cultural common heritage of humanity can be seen as more promising. The World Heritage Convention, as well as other similar international institutions, are complex constructions. Their creation takes a long time and involves an extended process, with many countries having to consider and make their own decisions before the institution can be established. For instance, the preparations for the Convention concerning the protection of World Heritage started in 1965, motivated by the US involvement in trying to save the archaeological treasures of Egypt from the Soviet–Egyptian plan to construct the Aswan Dam. The Convention was adopted during the seventeenth session of the UNESCO General Conference in Paris, 16 November 1972, entering into force in 1975, with the operational guidelines put in place in 1977. The Convention has become a big success, with 188 countries as members today. By January 2011 the list contained 911 properties, 704 cultural, 180 natural and 27 of mixed origin (Borges et al. 2011). What makes this Convention a success is that inclusion in the list also means that it becomes possible to develop sites as tourist destinations. Paradoxically, this effect may also turn against the protection initiative, as too many tourists may prove to be disruptive. This convention is accordingly the point of departure for transnational communities of experts and scientists, working to find solutions to these local–global governance problems (see Chapter 12 in this volume).

Looking for rules for transnational learning Let us start with a summary of the previous discussion. Societies, including those that have their own state and that protect national borders, are containers of shared stocks of knowledge. Societies work and are integrated through the application and development of this shared knowledge in practice. Above, we have discussed transnational learning from the point of departure of Anthony Giddens’ theory of structuration and globalization, and the dialectic modification of this theory introduced by Bob Jessop. Giddens has two perspectives on change, first, in the 1980s theory of structuration he describes change as an incremental process of the internal transformation of structural principles generated through the adjustment of practices, and second, in the 1990s, the blind, transnational impact of the Juggernaut of the global market, which engages in the creative destruction of national stocks of knowledge. This destruction is supposed to lead to a reinforced and rapid process of modernization, or

38   Å. Mariussen ‘reflexive modernization’, seen as an alternative to the French idea of ‘post-­ modernism’. The chapter refers to this process as ‘hard’ globalization, driven by a hegemonic global power. In the 1990s, many thought that this form of globalization would lead to a global convergence to the US model, or ‘high modernity’. Now it is quite obvious that the world can no longer be seen as mono-­centric, with a single superpower providing a point of gravity and being able to drive such a process. Jessop, on the other hand, modifies Giddens’ structuration theory of globalization through a discussion on the dialectic transformation from national structures seen as external constraints, to ‘structurally inscribed selectivity’ which accepts ‘strategically calculated and structurally oriented actions’. His point of departure is not global hegemony, but rather multi-­level governance. The previous section briefly discusses some of the limitations of multi-­level governance, seen from the point of departure of the experiences with the Open Method of Coordination. These limitations indicate that the dialectic transformation suggested by Jessop often gets stuck halfway. As implied by Zeitlin (2005), this is to a large extent caused by national level actors who ‘select away actions’, to use Jessop’s concept, without trying to transform or translate them into ‘strategically calculated and structurally oriented’ actions. This begs the question of how such a dialectic transformation or translation of external impulses enabling transnational learning may take place. The chapter suggests that an answer can be found by taking the dialectics of Jessop one step further. According to Nonaka and Takeuchi (1995), knowledge is contextual and partial. It is one among several possible suggestions for how ‘reality’ can be seen, and how a practice may be performed. Seen from this perspective, knowledge is an unstable phenomenon. It is shared and accepted as ‘true’ and relevant by actors operating within the field of practice where it is applied, as long as there is a consistent relation between know-­what, know-­why, know-­who and know-­how. Learning means seeing reality from different, often conflicting, perspectives. It may start as a result of frustration, for instance over actions which do not have desired outcomes, or with an indicator suggesting that the other country is doing better in a particular area. In some cases, these external impacts and comparisons with other countries may destabilize the mechanisms that are reproducing the existing knowledge. This may create a demand for another understanding of what is going on, a new ‘know-­ what’. Here, new solutions (know-­why) from abroad can sometimes provide food for thought. This may lead to adjustments in the model of operation (the ‘know-­ how’ position) and ultimately to becoming a new practice, or an innovation, the ‘know-­how’ position. Still, in order to develop further from ‘know-­why’, which is an invention but not yet an innovation, one may have to change the relations of power and authority, in other words ‘know-­who’. Transnational learning means to complete a full circle, as illustrated in Figure 1.2 from the old ‘know-­how’ to a new ‘know-­how’. This is the complete SECI model process (see Chapter 3 in this volume). In order to complete a SECI, the system which reproduces and stabilizes knowledge has to be ‘opened up’ for outsiders. According to Nonaka, a process where several factors change has to rely on localized interactions characterized

Sociological preliminaries

39

by knowledge sharing and deep discussions. It takes localized interaction and discussion to open up the tacit knowledge in ‘know-how’, destabilize it, integ­ rate other forms of analytic knowledge from other countries (as in the case of the knowledge-creating company) or different parts of the organization, and create a new know-how, or a new tacit knowledge. Nonaka refers to this as the SECI process, which is initiated through the construction of ‘ba’. ‘Ba’ is groups com­ posed of people with different forms of knowledge, who create new knowledge together (see Chapter 3). The continuation of this process through time, which turns it into a process of innovation, is provided by SECI. Here, S is Socializa­ tion (shared tacit know-how), E is Externalization, or codification of the shared knowledge in concepts (know-what), C is a Combination of different forms of knowledge (why) and I is Internalization, in other words, accepting the new knowledge in practice (know-who). Since this process has several steps, it needs coordination. Nonaka and Takeuchi describes learning through ‘ba’ and SECI in the context of a Japanese corporation, seen as the knowledge-creating company. This example is clearly different from a nation state. In the Japanese case, the policy system is the cor­ porate management, including the corporate leadership, which provides a know­ ledge vision. ‘Ba’ is facilitated by actions carried out by the middle management of the corporation, which encourages and coordinates the learning process. ‘Ba’ opens up for a dialectic process where existing forms of understanding are con­ fronted with other perspectives. Here, conflicting perspectives may lead to a new synthesis of contradictions. We refer to this process as ‘knowledge creation’. New knowledge creation is a new concept, based on a synthesis of opposites. The new form of understanding is translated to a new operational model (a new know-why or an archetype). An archetype can be seen as an invention that is not

Know-how?

Know-what?

Socialization

Externalization

Sharing knowledge

Sharing concepts

Know-who?

Internalization Authorizing

Know-why?

Combination Sharing expectations

Figure 1.2 Knowledge system and SECI m odel (based on and modified from Nonaka and Toyama 2003).

40   Å. Mariussen yet used in practice. It is not yet know-­how, but just a suggestion, a prototype, a phase after which the new model is evaluated. If the model is accepted, it is applied in practice, in the actor network. Through its integration into practice, it becomes a new know-­how, in other words, an innovation. As indicated above, shared national knowledge has a peculiar structure. It is embedded in a society which has successfully created a state. Societies with their own state stabilize themselves though structuration, which includes a differentiation between generalized structural principles determining how the society may work, and the specific rules actors draw upon in interaction with each other. This distinction refers to two related mechanisms of integration, social integration, which is the reproduction of reciprocity between actors in the context of co-­presence, and system integration, which is reciprocity between actors or collectives across extended time-­space (Giddens 1984: 28). Importantly, Giddens adds that the structural principles also determine how society is able to transform itself and learn. Thus, there is a link between his ideas and those of Bob Jessop referred to above. Taking Giddens’ theory of structuration into consideration, we acknowledge three interrelated ways of looking at ‘ba’, a structure or system transformation ‘ba’, an actor or social integration ‘ba’, and a modality ‘ba’. According to Giddens, these distinctions should be seen as analytic. In structuration theory, to increase the level of abstraction means moving from the action level to the level of structural principles, such as the need for new laws. This suggests a SECI process which is coordinated as a spiral in several sequences. One possible starting point could be a creative action level ‘ba’ based on social integration where a problem and a suggested solution is discovered. This could then move to the modality level (the regional network) where the problem would be analysed in terms of structural principles. The output at this level would be the identification of the need for change with regards to the structural principles. The third level could be the investigation of how this could be done at the structural level. The above-­mentioned completes the dialectics discussed by Jessop, where structurally inscribed strategic selectivity opens up for strategically calculated structurally oriented action. Structure ‘ba’ From this point of departure, then, the structure ‘ba’ is a group discussing the structural principles of the national society which regulates how learning may take place. These structuring factors are routines, which create security, second, signification, which allows certain accounts of what is taking place count as hegemonic forms of understanding, third, structures of legitimation, which determine certain values, and fourth, structures of domination. The structure (Figure 1.3) is the mechanism which stabilizes the national system and determines how it may change. By comparison, in the case of the knowledge-­creating company, structural factors outside ‘ba’ are corporate

Sociological preliminaries

Tacit

41

Tacit

Routine 2

Tacit

Tacit

Routine 1

Signification

Dom ination

Legitimation Explicit

Explicit

Figure 1.3 Structure ba: system transformation.

management, which opens up possibilities for knowledge transformation through its knowledge vision, and the middle management, which facilitates the know­ ledge creating process that takes place within ‘ba’ - and coordinate it as a long­ term process, through SECI. Bob Jessop’s discussion, which is referred to above, outlines how the struc­ ture of a society with a state is likely to feel pressure for change. What drives transnational learning, according to Jessop, is the dialectical transformation, both on the level of action, in the ‘ba’, as well as on a structural level. On the struc­ tural level, transformation is likely to start as an ‘external constraint’, where the strategic alliance operating the selection mechanism first prevents the absorption of new external elements, but after, in the next phase, opens up for change through an emergent structural form. As we have seen above, one such emergent structural form is the scientific community which was able to read and appreci­ ate the Darwin report on Galapagos. This community was not hegemonic, as today, but instead it was in the shadow of the shared knowledge of the religious community. The important point, however, is that it was present, and therefore acted as an emergent form. This can be illustrated in Figure 1.4. Some national structures may have several ‘emergent forms’ which open up possibilities for learning. If the external element is able to link into the emergent structure, it may pass through the evaluation of the selection system, and then be

42

A. Mariussen

External constraint

Emergent structure

Strategic selectivity

Figure 1.4 The dialectic of structure. absorbed through the logic of strategic selectivity. But in order to do so, it must discover an appropriate emergent structure to attach itself to. The driver in this process is the micro-level actor. System ‘ba’ (action): social integration Ideally, in an action level ‘b a’ where we can analytically disregard the pattern maintaining the forces of the structuring principles, the system is open for innovation. Here, the initial analysis and observations lead to the destabilization of expectations, and the construction of a new archetype, which is subsequently accepted and implemented by the power-holders. What is implemented may be a continuation of what had been in place before, but also something completely new, as the SECI process may lead to the complete disruption of the pre-existing knowledge. The action level ‘ba’ is illustrated in Figure 1.5. Correspondingly, the actor ‘b a’ may take these limitations into consideration, through a process of transformation or translation of the elements of change through three phases: free-willed actions, or ideas from abroad, which are then transformed by ‘partly socialized agents’ who are able to relate the transformed ideas into something which may be seen as relevant to the emergent structure. Through the relation between the emergent structural form and the partly social­ ized agents, we can proceed to the act of selection itself, where the new element may be integrated as a ‘strategically calculated, structurally oriented action’. A different approach to translation is discussed by Nonaka. His point of depar­ ture is to move from the concrete level of know-how or S to the more abstract level of codified knowledge or E. This leap from concrete to abstract codified knowledge opens up possibilities for reconstruction at the conceptual level o f ideas, in other words C. But we may move even further away from the tacit knowledge of the fields of practice by increasing the level o f conceptual abstraction. Through increased abstraction, we may create a more open concept or a new intermediary E which may enable us to invent a completely new C. This is illustrated in Figure 1.6.

Tacit

Tacit

Shared know -how 2

Tacit

Shared know-how 1

Tacit

Making new accounts count

D iscovery o f new m odels and strategies Power to im plem ent changes Explicit

of developm ent (archetypes) Explicit

Figure 1.5 Social integration ba.

Know-how?

Know-what?

Socialization

Externalization

Sharing knowledge

Sharing concepts

Know-who?

Know-why?

Internalization

Combination

Authorization

Sharing expectations

Figure 1.6 Radical innovation strategy.

Abstract concepts

Radical innovation

44   Å. Mariussen Nonaka describes the use of metaphors and allegories in transnational learning, and uses as an example the US and Japanese car industries. In trying to find an alternative to the hegemonic American car of the 1970s, Japanese car inventors started to refer to cars through a metaphor, as ‘boys’. From the point of departure of this metaphor, the hegemonic US car was seen as ‘fat boy’. Once you are able to refer to a car as a fat boy, it becomes possible to think of alternative boys, through an allegory of ‘fat’, which in the Japanese context became ‘tall’. The result was ‘tall boy’. This new concept became an allegory referring to something new, the Japanese compact car. The Japanese success in copying US cars in the 1960s and 1970s is a good example of transnational learning, where something is taken from the outside and improved, in this case by applying Japanese forms of industrial organization. The second step, the negation of the model from abroad, was effective as it meant that something completely new was created. This indicates that a crucial element of transnational learning may be the rejection of certain ideas, in this case of car design, from abroad, as this may lead to the discovery of new possibilities, in this case a new design or type of car. Modality ‘ba’: networks and regions In the case of the knowledge-­creating company of Nonaka and Takeuchi, the knowledge vision of the corporate leadership provides the implementation of the SECI process with ‘an account which counts’. The leadership first approves the initiation and facilitation of the process. The knowledge vision of the corporate leadership is supported by the operational level middle management. Thus, the structure of the company is opened up for change through the organization of ‘ba’ which leads to SECI. One might say that the corporate leadership and the middle management thus construct an emergent structure, an opportunity for creating and evaluating something new. When it comes to the national system, actors have to discover the ‘emergent structure’. An ‘emergent structure’ is something new, a possibility inside the existing structure waiting to happen. Again, this discovery is likely to be made in the field where the abstract structural principles defining national knowledge and learning at the level of concrete action may meet. This is where Giddens locates the ‘modalities’, which we refer to as systems of classification, regional actor networks, as well as operational rules, procedures and laws. It is at the level of modalities where regional practices meet national principles, and where the emergent structure may be hiding. The mediation ‘ba’ is presented in Figure 1.7. In a dialectical method, the potential or emergence is likely to be visible as something missing, an empty space, an inconsistency, a failure or a crack, where something new might be inserted in the future. With this paradigm, the same idea could be applied with reference to different practices embedded in society. The present routines and practices are not necessarily the result of a predetermined process of evolution, but just one of several possibilities. This is the starting point of the search for the emergent structure.

Sociological preliminaries

Tacit

45

Tacit

Practice 2

Tacit

Tacit

Classifications

Practice 1

A ctor networks, regions Explicit

Rules and procedures Explicit

Figure 1.7 M odality ba.

The background of the actor network theory lies within the ‘social shaping of technology’ discussion. In the 1980s, the social shaping of technology was an altern­ ative approach to theories of technological determinism. The concept goes back to Bruno Latour and Michael Callon (Callon 1991). Latour (2005) tried to show that the distinction between knowledge possessed by society and that possessed by nature in modernism and post-modernism was artificial. Derived from the sociology of techno­ logy and markets, discussed by Callon and Latour, ANT assumes as a point of depar­ ture actors operating in fields where ‘know-what’ and ‘know-why’ are somewhat more remote. In this ‘back door’ entrance point, the mechanism of selection is more likely to be defined by tacit know-how. Here, however, there is a different form of selection mechanism at work. Actor networks may be open and emergent or closed. In the actor network (AN), knowledge is defined as answers to certain basic questions of how actors can combine pieces of technology with forms of societal organization and markets into networks, which can provide functional solutions for solving practical problems. Actor networks connect different forms of know­ ledge with infrastructures, technologies and machines when performing func­ tions which are crucial to society and the economy. Thus, technology and societal organization are interconnected, as actors make up networks, which give them their roles. Actor networks perform functions or carry out actions in society, and therefore they constitute ‘know-how’. The actor network is the hub

46   Å. Mariussen of integration of various forms of differentiated and highly specialized knowledge into a singular unit. Actor networks develop though three different phases: (1) emergence, (2) development and (3) stabilization. Phase 1  Emergence (gestation) Actor networks are created by actors and evolve out of existing networks. At the beginning there is something or someone intermediary, brought into circulation by an existing network in order to align more actors and networks. Importantly, in identifying a potential intermediary, one has to look at the existing actor networks. This emergence phase comes before the core of the new network is formed. It is unknown what the future core will look like, but it is composed of already existing elements, including elements brought in from the outside. Phase 2  Development Networks emerge and grow through the alignment of more and more actors, through the enrolment of partners, as well as the mobilization of allies. This is done through a process where the network reinvents or translates itself in order to be adapted into different contexts, where supporters and members may be recruited. Translations refer to negotiations, calculations and persuasions actors undertake to develop the network. Networks may consist of humans and non-­humans, i.e. technologies. Actors who join networks adopt different roles in relation to each other, as well as developing routines (scripts). Adding new actors may take place through translations, where the new actor and the rest of the network are mutually adjusted. Once you are a member, you are integrated into a process of communication, or circulation of intermediaries. Phase 3  Stabilization (closure) The circulation of intermediaries needs to be coordinated because the included actors must accept their translation. Actors strive towards an internal agreement which means an optimal circulation of intermediaries. The stronger the coordination of circulation, the more different elements are aligned, and the more predictable the outcome. Furthermore, the more stable the coordination, the smaller the leeway for other networks to untie the connections and redefine an actor in the network for other purposes. Densely integrated actor networks stop looking for new elements, as they become highly functioning, well adapted units, with their own highly specialized internal communication. These ‘black boxes’ are likely to be unable to think about themselves as one of several alternatives, and they are likely to reject attempts at transnational learning. Actor networks may disintegrate when the circulation of elements between actors, in other words, the alignment of actors, becomes weaker (Figure 1.8).

Sociological preliminaries

ACTION social 'ba': identify a possibility

MODALITY (network) 'ba': why is the possibility not realized?

ACTION social 'ba': adapt the solution

47

STRUCTURE system 'ba': make the possibility into a reality

Figure 1.8 A ction ba, social integration, netw ork ba and structure ba.

Preliminary rules fo r transnational learning First, what does a ‘learning environment’ promoting transnational learning look like? 1

2

3

4

Structural similarities. Some countries are rather similar when it comes to structure, especially when it comes to some individual regions. This is the ‘cross-border effect’ between regions of different countries, resulting from them once having been part of the same country, though there are also other reasons. Here, the selection systems are likely to be open, and learning can start by transferring models of development and organization at a fairly con­ crete level, without deeper institutional or structural considerations. External shocks. Following Giddens’ discussion on globalization as a Jug­ gernaut, it is obvious that blind shocks to the economy, provided by shifts in the global market, have a great potential to destabilize national systems and open them up for learning. A sufficiently hard shock may rip up the selec­ tion system and allow for deep transformations. Hegemonic global powers. This is the case of the diffusion of organizational forms from global superpowers, such as the UK, and recently also the United States. Americanization was legitimized by the convincing story of national modernization through conversion, assisted by an army of consult­ ants and supported by the OECD and other, related transnational institu­ tions. An interesting case in this respect is New Public Management, discussed by Hyyrylâinen in Chapter 6 of this volume. Multi-level governance. In this section we have discussed some aspects of the Open Method of Coordination, including some of its limitations. The

48   Å. Mariussen

5

OMC is a platform providing indicators and a context of analysis and transnational comparison. Its limitations are crucial in revealing how transnational learning may succeed. Soft globalization. Transnational NGOs and transnational institutions set up by governments provide adequate settings for the development and formation of transnational communities. This is the societal formation which comes closest to a ‘world society’. Transnational communities are crucial in processes of transnational learning.

Second, there is the issue of internal preconditions with regards to transnational learning. 1

2

Emergent structure. In order to be able to integrate external knowledge elements, the national system has to possess what Bob Jessop refers to as emergent structures. There must be structural elements present which are able to understand the external element, and participate in the process of translation which may open up possibilities for learning and development. The existence of these emergent structural elements should not be taken for granted, and they have to be discovered. This process of discovery suggests a SECI process which follows several steps. The SECI process is typically carried out between an actor level of analysis, where new opportunities are suggested, a structural level, where the continuity of the national system is taken into consideration, and the level of modalities, or actor networks. Emergent actor networks. Between the actor and structure are the modalities. Above we have briefly discussed this topic from the point of departure of ANT. An actor network or ANT may go through emergent phases where it is open, but it can also evolve into ‘black boxes’ where it protects itself from external influence. At this stage, it stops being ‘emergent’.

The implication of these preliminaries is that transnational learning is a complex process with several possibilities, but also with several obstacles. We will return to these findings in later chapters.

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Sociological preliminaries   49 Structures in China, Japan, Sweden and the United States, Working Paper Series no. 226, Centre for Research on Social Organization, University of Michigan. Cooke, P. (2008) ‘Regional Innovation Systems, Clean Technology & Jacobian Cluster-­ Platform Policies’, Regional Science Policy and Practice, 23–45. CREST (2004) CREST-­Report. Brussels: European Union, Scientific and Technological Research Committee, 1.10.2004. Djelic, M.-L. and Quack, S. (2010) Transnational Communities Shaping Global Economic Governance. Cambridge: Cambridge University Press. Durkheim, E. (2001) The Elementary Forms of Religious Life. Oxford: Oxford University Press (first published 1912). Flora, P., Kuhnle, S. and Urwin, D. (1999) State Formation, Nation-­Building and Mass Politics in Europe: The Theory of Stein Rokkan. Oxford: Oxford University Press. Giddens, A. (1984) The Constitution of Society. Cambridge: Polity Press. Giddens, A. (1991) Modernity and Self-­Identity: Self and Society in the Late Modern Age. Cambridge: Polity Press. Gornitzka, Å. (2006) The Open Method of Coordination in European Education and Research Policy Animating a Label. Oslo: ARENA, Centre for European Studies, University of Oslo. Hardin, G. (1968) The Tragedy of the Commons, Science 162. Washington: Cambridge AAAS. Hess, C. and Ostrom, E. (2007) Understanding Knowledge as a Commons: From Theory to Practice. Cambridge, MA and London: MIT Press. Jessop, B. (2008) State Power. Cambridge and Malden: Polity Press. Kok, W. (2004) Facing the Challenge: The Lisbon Strategy for Growth and Development, report from Wim Kok, SAPIR, September 2004. Kristensen, P.H. and Whitley, R. (eds) (1995) The Changing European Firm: Limits to Convergence. London: Routledge. Latour, B. (2005) Reassembling the Local: An Introduction to Actor Network Theory. Oxford: Oxford University Press. Luhmann, N. (1995) Social Systems, trans. J. Bednarz, Jr. and D. Baecker. Stanford: Stanford University Press (first published 1984). Luhmann, N. (1997) ‘Globalization or World Society? How to Conceive of Modern Society’, International Review of Sociology, 7(1): 67. Lundvall, B.-Å. and Johnson, B. (1994) ‘The Learning Economy’, Industry & Innovation, 1(2): 23–42. Lyotard, J.-F. (1984) The Post Modern Condition: A Report on Knowledge. Manchester: Manchester University Press. Lysgaard, S. (1961) Arbeiderkollektivet. Oslo: Norwegian University Press. Mariussen, Å. (2002) ‘Sustainable Fragmentation: Regional Organizations in the North’, in L. Hedegaard and B. Lindström (eds) The NEBI Yearbook, 2001/2002 North European and Baltic Sea Integration. Berlin: Springer Verlag, pp. 213–30. Mariussen, Å. (2010) ‘Global Warming, Transnational Communities and Economic Entrepreneurship: The Case of Carbon Capture and Storage (CCS)’, in M.-L. Djelic and S. Quack (eds) Transnational Communities Shaping Global Economic Governance. Cambridge: Cambridge University Press, pp. 327–46. Mayntz, R. (2010) ‘Global Structures: Markets, Transnational Organizations, Networks – and Communities?’, in M.L. Djelic and S. Quack (eds) Transnational Communities Shaping Global Economic Governance. Cambridge: Cambridge University Press, pp. 37–54.

50   Å. Mariussen Nonaka, I. and Takeuchi, H. (1995) The Knowledge-­Creating Company: How Japanese Companies Create the Dynamics of Innovation. Oxford: Oxford University Press. Nonaka, I. and Toyama, R. (2003) ‘The Knowledge-­Creating Theory Revisited: Knowledge Creation as Synthesizing Process’, Knowledge Management Research & Practice, 1: 2–10. Ostrom, E. (1990) Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge: Cambridge University Press. Parsons, T. (1951) The Social System. New York: The Free Press, Macmillan Publishing Co. Inc./London: Collier Macmillan Publishers. Piore, M. and Sabel, C. (1984) The Second Industrial Divide: Possibilities for Prosperity. New York: Basic Books. Sabel, C.F. (2002) ‘A Real Time Revolution in Routines’, in C. Hechsler and P. Adler (eds) The Firm as a Collaborative Community. Oxford: Oxford University Press, pp. 106–56. Sabel, C.F. and Zeitlin, J. (1997) ‘Learning from Differences, the New Architecture of Experimentalist Governance in the European Union’, incomplete draft, Colombia Law School, University of Wisconsin-­Madison. Sorel, E. and Padoan, P.C. (eds) (2008) The History of OECD. Online. Available at: www.scribd.com/doc/21214794/The-­Marshall-Plan-­Lessons-Learned-­for-the-­21stCentury-­OECD (accessed 9 July 2012). Sorge, A. (2008) The Global and the Local: Understanding the Dialectics of Business Systems. Oxford: Oxford University Press. Theelen, K. (2004) How Institutions Evolve. Cambridge: Cambridge University Press. Trist, E. (2001) The Socio-­Technical System Perspective: The Social Engagement of Social Science, Tavistock Anthology Volume II. London: Tavistock Institute. Tyrrell, Ian (2007) Transnational Nation: United States History in Global Perspective since 1789. New York: Palgrave Macmillan. Weber, M. (1947) The Theory of Social and Economic Organization. New York: Free Press. Whitley, R. (1999) Divergent Capitalisms: The Social Structuring and Change of Business Systems. Oxford: Oxford University Press. Whitley, R. (2000) ‘The Institutional Structuring of Innovation Strategies: Business Systems Firm Types and Patterns of Technological Change in Different Market Economies’, Organization Studies, 21(5): 855–86. Zeitlin, J. (2005) ‘Conclusion: The Open Method of Coordination in Action: Theoretical Promise, Empirical Realities, Reform Strategy Forthcoming’, in J.H. Zeitlin and P. Pochet (eds) The Open Method of Co-­ordination in Action: The European Employment and Social Inclusion Strategies. New York: Peter Lang, pp. 441–98. Zizek, S. (2012) Less than Nothing: Hegel and the Shadow of Dialectical Materialism. London and Brooklyn: Verso/New Left Books.

2 Geographical perspectives Regional development and transnational learning Seija Virkkala

Introduction This chapter discusses the relationship between regional development and transnational learning. Transnational learning is seen as a resource for regional development, and this chapter examines how it can boost regional development, and under what preconditions. It deals with local communities and sub-­national units, the main emphasis being on the latter. The concepts of region, regional and local development, regional development network and transnational learning network, path dependency, absorptive and development capacities of regional actors, and development policies are explored. With reference to Chapter 1, this chapter combines the structural view, according to which regions are products of broader structures, with the idea of regions as voluntarily constructed entities involving individual actors. It also discusses the territorial and relational approaches to regional and local development. Within the territorial approach, the region is considered the starting point for analysis, and local and regional processes, carried out through institutions and agents, are the key driving forces. The point of departure with the relational approach is the idea of regions as entities that are governed by forever changing flows and networks, instead of considering regions as static units. The territorial approach is useful when discussing regional development and learning, as well as the development policies of the regional development network. The relational approach, on the other hand, can be used in the analysis of emerging transnational learning networks. Regional and local development can be seen as a process of interplay between resources, networks and institutions. Development is path-­dependent and based on learning, and there can be both positive and negative lock-­ins in a regional development path. This chapter discusses how regional actors can escape negative lock-­ ins and external crises with the help of transnational learning. Transnational learning can lead to the discovery of new directions and the creation of new emerging regional structures, for instance through new practices employed by regional actors. The chapter also examines the preconditions for effective transnational learning, such as regional strategies, as well as reflexive regional actors who draw upon structures with absorptive and development capacities. It also

52   S. Virkkala c­ onsiders how these absorptive and development capacities can be improved through transnational inputs enabling a learning spiral. In this chapter, learning is seen as a process of knowledge creation and conversion. Knowledge types, including ‘know-­how’, ‘know-­what’, ‘know-­why’ and ‘know-­who’, introduced by Lundvall and Johnson, are applied in a regional context, especially in regional and local development and development policies. The SECI model, proposed by Nonaka and Takeuchi and introduced by Mariussen in Chapter 1 of this volume, will be used in this chapter for analyzing transnational learning inputs in regional development strategies and practices, the preconditions for the creation of development paths, and the absorptive and developmental capacities of regional actors. By reflecting on, externalizing and translating good practices from other regions, combining them with existing elements and internalizing the resulting new practice, the absorptive and development capacities of regional actors increase and a cumulative knowledge spiral, important especially for peripheral regions, can be initiated. The chapter suggests a broad typology of regions apt for transnational learning based on different innovation modes.

Region, space and place The notion of the ‘region’ is one of the key concepts in geography, and geo­ graphers are regarded as specialists of regions. The region can be seen as a research object, as a research perspective, and as a means by which results can be represented. Other key concepts in geography are place, space, environment and scale (Massey et al. 1999). Within the discipline different groups emphasize different concepts. They interact with other social scientists and therefore bring separate perspectives to bear on a shared subject matter. Traditionally the region has been defined as a differenced segment of earth-­ space and therefore the study of regions was for a long time identified as the study of areal differentiation. Especially in landscape geography the region has been seen as an object, and at its extreme, as a living organism. Nowadays, regions can be handled in at least three different ways. First, a region is comprehended as something which is taken for granted, similar to administrative regions. In this view the region is a frame of research, but not a research object in itself (Paasi 2002). Second, the region is considered at the same time a research object, and a construction that is created by the researcher, which is used as a methodological tool and basis for legitimating the research in order to classify or represent various phenomena. Natural, social and human characteristics in a given region are often divided in the research results. The region is also used by researchers as an instrument for functional classification, in other words for describing the functional spatial structures of societies, mainly ones related to center–periphery or urban–rural relations (Paasi 2002). Third, a region can be seen as a setting for social practices and discourses. These interpretations have as their starting point individual and social practice

Geographical perspectives   53 and by analyzing these they aim at conceptualizing the construction of the spatiality of the world. In this view, where regions are seen as settings for social practice, there is an indication that they may also be seen as a medium for social interaction (Thrift 1983). For example, Pred (1984) understood the region as a historically contingent process, where it is seen as a dynamic category, which is more ‘becoming’ than ‘being’. Regions can also be seen as spatial units that have been produced socially and culturally to become part of a territorial system. They exist for some time in social and cultural practices and discourses, and then disappear in the continuous processes of regional transformation (Paasi 2001). Territory refers to delimited, bordered, spatial units that are under the jurisdiction of an administrative and/or political authority, for instance a nation state, city or region. Similarly, the concepts of locality and region, in which different kinds of development may take place within specific time periods, can be considered territorially bounded units with an administrative, political and social identity. Territorial boundaries form defined areas within which particular definitions and kinds of local and regional development may be articulated, determined and pursued. Territory is not, however, an entity fixed in space or time (Taylor and Flint 2000). According to Massey (1984: 117–18): Most people still live their lives locally; their consciousness is formed in a distinct geographical place. At any one time different areas may be changing in contrasting ways; different battles are being fought out, different problems faced. For one thing, local areas rarely bear the marks of only one form of economic structure. They are product of long and varied histories. Different economic forms of social organisation have come and gone, established their dominance, lingered on, and alter died away. The structure of local economies can be seen as a product of combination of ‘layers’, of the successive imposition over the years of new rounds of investment, new forms of activity. Each spatial structure is a system of interdependence into which the industrial activity of any local area is inserted. Besides the region, an important issue in geography is the spatial organization or the spatially ordered arrangements of human activities. Christaller developed the central place theory in the early 1930s in order to understand settlement patterns. His research was complemented by studies of flows, and the movements of goods, people and information. These were modeled on the basis of the principle of least effort: people wish to minimize their travel costs. After World War II, a lot of geographical research emphasized models of spatial behavior, organization and flows based on the principle of least effort (Johnston 2006). In the 1980s and 1990s, it started to combine elements from Marxist, feminist and postmodernist approaches. Geographers also played a role in the burgeoning field of cultural studies, which brought together scholars from the humanities and social sciences resulting in new approaches to the study of human behavior

54   S. Virkkala (Johnston 2006). As geographical and social entities, places can be both bounded and fluid, as they are remade and dissolved. Writing about space and its conception in modern geography, Thrift (2006) claims that however different the writings about different kinds of spaces may appear to be, they all share a common ambition: that is to abandon the idea of any pre-­existing space in which things are embedded, and instead to argue for an idea of space as undergoing continual construction exactly through the agency of things encountering each other in more or less organized circulations. (Thrift 2006: 96) This is a relational view of space, where it is seen as a co-­product of societal proceedings, rather than being a container within which the world proceeds. Geographers commonly disaggregate bounded spaces into smaller subordinate ones, which usually maintain some of the qualities of the bounded space as a whole, but also display qualities that only operate on a smaller scale. Instead of trying to draw boundaries around flows, some geographers have tried to change traditional ways of conceiving space by suggesting that we should regard the world as made up of flows. They consider movement as the origin rather than endpoint, and stress traveling and changing identities over fixed notions of belonging (Thrift 2006). Spaces can also be considered as pictures, as we register the space around us through images. Image space refers to the process whereby the proliferation of images produces new apprehensions of space. Changing image space is not an easy process, and it might in fact be easier to change economic conditions than the image or mental maps of people (Lind and Wiberg 2011). Space can also be considered as places which are defined through individual experience. Places have cultural, social and subjective meaning for people. They can create feelings, and provide cues to memory and behavior. The concept of place is often linked with the rhythms of being in everyday life. In this chapter, space is seen in two different ways. First, as a locality or a region, which is a bounded territory with, for instance, administrative borders. In this view each locality is a unique combination of local institutions and culture. Second, space is seen according to the relational view, where it is considered a context of learning for actors and actor networks. The spatial context of learning can transcend regional and national borders and travel through different unbounded spaces. Space as a context of learning can be seen as an arena of knowledge creation. According to Nonaka and Takeuchi (1995) this specific place, the space of knowledge creation and learning, is a ba. Structuralism vs. agency perspective Definitions and conceptualizations of the region are bound up with interpretation of the relations between the regional territory and the economy, society, polity

Geographical perspectives   55 and culture (Agnew 2000; Paasi 2002; Storper 1997). There are different views in geography and social sciences concerning how best to understand and practice a regional approach (MacLeod and Jones 2007). This can also be seen as an ongoing struggle between structuralism, interpreting regions as the by-­product of broader changes, and voluntarism, which sees regions as endowed with different kinds of agency (Lagendijk 2007). From the structural orientation, regions can be seen as the outcome of broader trends and developments, such as globalization, state restructuring and urban expansion. From this point of departure, regions are by-­products of global change, and regional developments can be explained by looking at broader developments. According to regulatory and institutionalist writings, local forms of development, interaction and agency are shaped in the context of broader forms and changes. In such a view, regions are seen as political, institutional and discursive constructs where development is structurally conditioned and enabled, but not fully determined, by external conditions (Agnew 1999; Lagendijk 2007). In agency-­perspectives, regions are seen as constructed, discursively and materially, and performing through their own momentum and stable outcomes (Lagendijk 2007). Soft approaches have focused on specific practices related to economic innovation and clustering, strategic spatial planning, sustainability and collaborative, inclusive approaches to planning. In voluntarist accounts, regions are seen as entities that determine their own existence. Massey (1979) discusses to what extent the region itself presents a causal force or an agent versus the wider spatial structures constituted by regions, such as the spatial division controlled by corporate power. Soft institutionalism sees the external dimension as a set of global forces to which locally embedded, interactive agents may respond through collective forms of action (MacLeod 2001), ignoring broader economic specificities and contingencies. A localized approach to development presents an endogenous response to a uniform and inexorable set of external challenges. Recent research has also taken into account discursive aspects of socio-­economic development, providing a richer picture of how certain arrangements become temporarily hegemonic (Jessop 2008; Lagendijk 2007). According to Lagendijk (2007) we need a more sophisticated account of both structural and agency-­oriented (or strategic) aspects of spatial development (Lagendijk 2007). (See Table 2.1). Applying the SRA (strategic relational approach) to spatial phenomena is one attempt to combine structure and subject/agency (see Chapter 1 in this volume). Following the SRA regions are seen to be related to each other as well as to a wider set of social, economic and political processes. The SRA sees structures as inherently concrete, and rooted in space and time. The SRA adopts an evolutionary approach to social change as it grants social agents a significant role in reshaping structures, yet the scope for reflexive action and learning is seen to be conscribed by ‘structurally inscribed strategic selectivity’ (Jessop 2008; Lagendijk 2007). The meaning of strategic selectivity and strategic action can be seen from an agency perspective (Lagendijk 2007), where actors are intentional, but also largely driven by intuition and habits.

56   S. Virkkala Table 2.1  Structuralist and agency based approach to regions (based on Lagendijk 2007) Structuralism, functionalism

Agency-approach

Structuralism and agency together/ strategic relational approach

Definition of regions By-products of broader changes Approach Region in different structures, spatial divisions

Role of agencies

Regional and local development

Constructed by Broader change and regional agents specific practices Soft approaches: regional practices such as sustainability and collaboration, regional innovation system Determinism Voluntarism Agencies reshape structures but the scope for reflection is selective Exogenous approach Endogenous Selective, open approach Territorial approach

Strategic action is based on a combination of reflexivity, learning and practical consciousness (see Chapter 1 in this volume). A question to take into consideration in the process of strategic orientation is how the wider context and consequences of past and possible future actions are discursively mediated and understood. In each case, only certain ideas and narratives shedding light on a situation will prevail, turning into temporarily hegemonic imaginaries (Lagendijk 2007). Regional development can be seen as interplay between regional development policies and their objects, such as the regional economy. Inside the policies and their object we find agency and structure. The regional development path, which will be discussed later, can be seen as a structure that is reproduced and transformed by regional agents. Structure and agency in regional development policies will be discussed further with the help of Table 2.7. The territorial and relational approach in practicing a regional approach The territorial approach is based on the idea of the uniqueness of the place, where the specific composition of each territory affects the geographical and institutional characteristics of the region. Each place is unique, though different localities and regions may share common development histories and face similar challenges and issues, such as globalization, urbanization and decentralization.

Geographical perspectives   57 The territorial approach has been seen as a response especially to globalization. Regional and local institutions are able to construct and nurture collective capacities in order to cope with, adapt to and mitigate constant and disruptive global changes and the successive crises (Pike et al. 2011; Tomaney et al. 2011). More than 30 years ago, Friedmann and Weaver (1979: 7) outlined two major forces of social integration, functional and territorial, which alternate in regional planning. Despite being intertwined with and completing each other, they are nonetheless in constant struggle. The territorial force in each place derives from common bonds of the social order forged by history. On the other hand functional ties are based on mutual self-­interest, and the functional order is hierarchical, accumulating power at the top of the social hierarchy. While territorial ties are characterized by power inequalities, they are also tempered by the mutual trust and obligations that the members of a territorial group feel for each other. The territorial principle can be seen, for example, in regionalist movements. There is enduring tension and conflict between sectoral, functional and territorial principles (Sagan and Halkier 2005). Allen et al. (1998) consider localities and regions as unbounded, especially where their influence is beyond their territorial boundaries, and relational, in that they are mutually constituted by wider webs of spatialized social relations. Indeed, territorial borders are changeable and artificial, and newly created regions can acquire attributes of and behave like regions that have been established a long time ago. The relational approach defines regions by their linkages and relations within and outside of any predefined territorial boundary, and in this sense, they are seen as open, porous and unbounded. The topographical space of absolute distance is displaced by a topological understanding of relative and discontinuous space, emphasizing connections and nodes within networks (Allen and Cochrane 2007; Amin 2004; Lagendijk 2007). What are the implications of the differences between bounded and unbounded regions in regional learning? The bounded region places more emphasis on localized learning, which takes place in a specific territorial unit. The relational approach and unbounded regions, on the other hand, imply learning in networks which are not necessarily localized. The Actor Network Theory (see Chapter 1 in this volume) can be seen as adhering to the relational view. However, in this chapter it is applied in a local sense, i.e., localized actor networks. The territorial approach uses the region as a starting point, while the relational approach uses networks and spaces of knowing as the point of departure. Regions come with no automatic promise of territorial integrity, since they are made through the spatiality of flows, juxtapositions, porosity and relational connectivity (Amin 2004). In current literature a strong relational view can be detected, for instance in the writings of Bathelt and Glückler (2011) and Amin (2004). Besides the concept of region, also the notion of scale has different interpretations in the two approaches. In the territorial approach, scale can be fixed and hierarchical, i.e. ontologically pre-­given, or socially constructed. Geographical scale is conceptualized as socially constructed, but it is also itself implicated in

58   S. Virkkala the constitution of social, economic and political processes. In the relational approach, hierarchical systems of scale have been questioned and even rejected by multi-­scalar approaches that seek to reflect more fluid relationships between the international, national, regional, local and community (Pike 2007; Pike et al. 2007). According to the relational approach to scale, regions appear to have no necessary place in more polycentric and multi-­scalar systems of power and regulation. These two approaches will be used in my strategy of research on transnational learning and regional development. Regional learning does not have to be seen as opposite to the relational approach (Jones and MacLeod 2011) as mobility and fluidity need not be seen as standing in opposition to territories. ‘Networks do matter, but so do geography, boundaries and scales as expressions of social practice, discourse and power. Geography, boundaries and scales are not intuitive fictions and their rejection/acceptance can hardly be written away’ (Paasi 2004). I consider the territorial approach important for our research since regional developers often have the task to develop specific administrative regions, which are bounded areas. Also, for example, regional Structural Fund objectives are mostly implemented in defined bounded regions, in which regional learning occurs. However, many economic activities are organized on a translocal or even transnational level as well as just locally. The identities of inhabitants can be local but nowadays they often have multiple regional identities due to moving around and thus forming linkages to many different regions, therefore being rooted in several different regions at the same time. In this chapter I apply the territorial approach in the analysis of collective learning processes among actors in regional networks. These are different to transnational learning networks which can be characterized as relational spaces of knowing and learning. Transnational learning can be seen as a process of building a new relational and transnational space that transcends the borders of regions and nations. This space of transnational learning and knowing consists of networks of different actors and learning partners who are located in different regions, and who can be both receivers and senders of good practices in regional and local development.

Regional and local development There is not only one grand theory of regional and local development but rather several approaches with different emphases and conceptual foundations. The concept of development can generally be defined as change with a direction. This can be contrasted with change that is random, i.e. when future events are independent from previous ones. In social and regional events change is neither random nor deterministic, instead it is evolutionary: future events are not independent from past events and it is the changes in the sequence of events that creates a different outcome. The evolutionary dimension allows for an analysis of the impacts of historical structures and processes on current decisions (Bathelt and Glückler 2011: 38–9).

Geographical perspectives   59 Development is often considered in economic terms as a question of growth, which can be measured through indicators such as income, employment, and population. The economic focus of development has been dominant, but in recent years this focus has broadened in an attempt to address social, ecological, political and cultural concerns. Reducing social inequality, promoting environmental sustainability, encouraging inclusive government and governance and recognizing cultural diversity have been emphasized to varying degrees within broadening definitions of local and regional development (Pike et al. 2006). According to Pike et al. (2006) what local and regional development is for, and what it is trying to do with its aims and objectives, are framed and shaped by its definitions, varieties, principles and values. A quantitative approach focuses on numbers: the quantity of a specific something. The quantitative dimension of local and regional development may be measured by indicators, for example the number of jobs created or safeguarded, the number of new secured investment projects, or new firms established. The focus can be on absolute or relative change over specific time periods between and within localities and regions (Pike et al. 2006). The qualitative dimension, on the other hand, is concerned with the nature and character of regional and local development, for example the economic, social and ecological sustainability and form of growth, the type and quality of jobs, the embeddedness and sustainability of investments, and the growth potential and sectors of new firms. For example, the quality of jobs can be judged by the terms and conditions of employment, relative wage levels, and opportunities for career progression and so on. The objects of regional and local development may be people and/or places and the subjects are the themes upon which development is based. The sustainability of growth may be evaluated in terms of its ecological impact, and the quality of jobs can be assessed by employment terms and conditions, relative wage levels, etc. (Pike et al. 2006: 40–1). Blakeley and Green Leigh (2010) summarize regional and local economic development theories with the form lrd = c × r, where lrd equals local and regional development, c equals an area’s capacity (economic, social, technological and political capacity) and r equals its resources (natural resource availability, location of labor, capital investment, entrepreneurial climate, transport, communication, industrial composition, technology, size, export market, internal economic situation, human resources, environment, housing areas). Capacity can be weak, neutral or strong. From a development perspective, resources are often unused, and this is where local capacity comes in. The higher development capacity a locality or region has, the greater its ability to turn resources into development opportunities. It is important to identify what kind of resources there are in a region and to utilize them as development inputs. However, this is not always straightforward as sometimes actors see different things as resources depending on their development views. The evolvement of development capacity requires the help of agencies and institutions. For example, an economic development organization can address the issues and problems of a lagging economy and enhance available resources.

60   S. Virkkala On the other hand individual persons can represent different organizations while at the same time organizations and individuals can work together as a network. Regional and local development can be seen as the interplay between resources, networks with capacities, and institutions. The term institution does not only refer to an organization, but also to conventions and norms, and to shared ways of acting. Institutions reduce uncertainty by establishing a stable interaction between actors within a region. They do this by providing actors with a clear and supportive ‘playground’, and determining the opportunities they have in society. Institutions can be local, regional, national or transnational, and they have the ability to lock regions into past development paths politically, functionally and/or cognitively (North 1990). Organizations, on the other hand, are created to take advantage of the opportunities given by institutions, i.e. shared norms and ways of acting, and as they evolve, they can even alter the existing institutions. Amin and Thrift (1994) suggest the idea of ‘institutional thickness’ as a precondition for regional development in general. Institutional thickness refers to the existence of a multitude of organizations, a high level of interaction between actors, and a mutual awareness of being involved in a common regional effort. Territorial and relational approaches to development and learning The territorial and relational approaches discussed above have implications for the role of regions in development, the regions here being mostly sub-­national units. The territorial focus can be seen as a reaction to ideas of globalization as place matters more than ever because of it. The region is understood largely as local networks and institutions which determine its development. The territorial approach draws attention to geographical proximity and regional networks. The territorial approach identifies indigenous (native or inherent) and endogenous (from within) development. Core ideas within the territorial approach are the understanding of development as a bottom-­up process, and understanding the key role of local and regional actors, including social agents and civil society, and their initiatives, decision-­making functions and policy competences at a local and regional level. It is conceived as an integrated approach taking into account sector and other socio-­economic interdependencies as well as emphasizing ecological aspects and a sustainable use of natural and other resources (Tödtling 2011; Barca 2009; Cooke and Morgan 1998). The idea of endogenous development was inspired by related concepts such as the Industrial District, regional learning, and innovation systems, which have partly distinct elements but also share common characteristics. Such common elements are the search for local and regional specificities, uniqueness and identity, which are used also as a source for competitive advantages for firms, social capital and networks. A high importance is placed on entrepreneurship and innovation, and the view that learning and innovation are, despite globalization and modern ICT, to a high degree local processes, based on localized tacit knowledge and its exchange. Endogenous development also depends on national

Geographical perspectives   61 p­ olitical and institutional structures (e.g., policy competences of regions, national economic policies), macroregional conditions and institutions (EU and SFs), as well as on global regimes and institutions (Tödtling 2011). Regional learning has been an important aspect of endogenous local and regional development (Morgan 1997; Lundvall and Borras 1997; Rutten and Boekema 2007). Geographical proximity reduces the costs of face-­to-face communication and frequent communication helps to develop joint codes of interaction as well as to overcome mutual misunderstandings. A common language and cultural norms improve mutual understanding as the partners involved in interaction share the same codes. Thus the geographical proximity of actors favors an innovation process in which tacit knowledge is important, and knowledge and best practices are shared locally. It has been suggested that only partners belonging to the same social, cultural and institutional environment are able to understand each other well enough to create innovative projects together (Cooke and Morgan 1998). The results are unique local competences, skills and tacit knowledge. A regional identity is seen as a favoring factor for regional development as peculiar local and regional characteristics cannot easily be copied by competitors, and thus they are considered a source of unique competitive advantage for regional firms (Tödtling 2011). Storper and Venables (2004) suggest that knowledge is embedded in the local environment and diffused spontaneously through ‘local buzz’. Local buzz is transferred through personal contact and presence in meetings and through computer chat. Many European and national programs for fostering regional development and innovation stress the importance of geographical proximity within regional networks and innovation systems. The relational approach focuses on agents rather than space. Further, instead of dealing with regions and nation states, it stresses the opportunities and constraints of economic action and interaction within and across territorial boundaries (Bathelt and Glückler 2011: 6). Agents, like firms and organizations, are seen to be embedded in different spaces. The region is not seen as the starting point for analysis, instead it emerges only secondarily, through the social context of partners. Instead of focusing on localized learning networks the relational approach analyzes knowledge flows according to a broader spatial perspective. Also, agents are seen to participate in various processes simultaneously and therefore influence different regions with different development paths at the same time (Clark and Tracey 2004). In the relational approach, organizational proximity, along with common rules and routines of behavior, is seen as more important than geographical proximity because it enables organizations to create possibilities for interaction between its members regardless of their geographical locations (see Table 2.2). Proximities and transnational learning: temporary proximity Geographical proximity refers to the distance of two units in kilometers. It is relative in cost and time and may represent a constraint for economic actors intending

62   S. Virkkala Table 2.2 Territorial vs. relational approach, and transnational learning in regional ­development Territorial approach Relational approach ‘Transnational learning’ in a regional context Mixture of territorial and relational approaches Proximity Networks Knowledge generation learning Spaces

Geographical

Organizational, relational Localized Emerging in different scales Stickiness Learning in Learning in local networks networks embedded in different spaces Geographical Knowledge space territories ‘places’ (placeless) ‘spaces of flows’

Embeddedness Territories, localities Different scales of actors

Temporary proximity Local and transnational networks Learning in local networks Learning in transnational networks of partners Constructing spaces of learning and knowing embedded in concrete territories with the learning partners Local and translocal

to interact (Torre and Rallet 2005). Boschma (2005) suggests that geographical proximity should be examined in relation to cognitive, organizational, social and institutional proximities as they complement and substitute for each other. Organizational proximity refers to the proximity along with common rules and routines of behavior, for example the units in different locations of the same organizational arrangement. On the other hand cognitive proximity can be rooted in common professional backgrounds. Social proximity is based on personal linkages formed through joint education, social background or social events. Cognitive proximity refers to the distance between the cognitive base of actors and some level of cognitive proximity is necessary for interactive learning processes to take place. Institutional proximity covers joint formal and informal rules which reduce uncertainty about possible free-­rider behavior. A common institutional framework helps to create the basis for repeated long-­distance communication within a standardized setting (Boschma 2005). Temporary proximity between actors means that they see each other temporarily in conferences, fairs, short visits or project meetings, and therefore the benefits of face-­to-face communication are not neglected. Temporary proximity is facilitated by advanced transport technology. The basic hypothesis is that it is sufficient to realize the benefits of face-­to-face communication in a restricted time frame (Bathelt and Glückler 2011: 175–94), as partners involved in learning can use these short-­term communications to implement joint codes of interaction, which they then take further by maintaining contacts via Internet or telephone. Short-­lived events can be repeated and have a long-­lasting influence

Geographical perspectives   63 on the learning process, as temporary clusters, i.e., interdependencies between the actors, can form around a project (Maskell et al. 2006). Temporary clusters and global pipelines are seen as a connection between the local and translocal level, and are suggested as an important means for knowledge transfer and interregional learning (Bathelt et al. 2004). Transnational learning occurs in networks consisting of actors from both the receiving and sending region of the good practices which are being evaluated and transferred. Unlike regional learning often occurs in actor networks located in one administrative region, and regional learning can therefore be analyzed using the territorial approach. The emergence of transnational networks and learning processes can also be analyzed using the relational approach, which suggests that context of learning is formed as a relational space depending on the locations of the participating partners.

Regional and transnational networks Networking has become an increasingly used mechanism of governance in our complex and fragmented societies. Networks can be local and regional as well as transnational, and they can be multi-­layered and multi-­scalar. In the context of this book we are interested in two types of networks: networks that develop regions and localities, defined as loose policy networks, and transnational learning networks, which are formed around learning partners and as relational spaces in different countries. Actors can be defined as specific historical entities, and they can be individuals or collectives, with a capacity for agency, in other words being able to choose between different actions. The behavior of actors is embedded in institutions, however, rather than determining their behavior directly, institutions structure the environment of actors by defining the options available to them. Actors have the capacity to produce effects upon other social actors, operating through strategic employment of resources within the rules of particular social institutions, while at the same time being limited by the resources actually available to them and by the cognitive map of the environment in which they operate (Halkier 2005; Chapter 1 in this volume). Individuals in organizations are important decision-­makers, and their activities are purposeful, although these may have unintended consequences. Despite the importance of the individual there are also important collective actors who act in a different way to individuals and therefore have to be described separately (Bathelt and Glückler 2011: 46; Oinas 1999). In shaping regional development, collective actors are crucial and they are organized around structures and routines independently from individual agents. However, both individuals and collective actors are embedded in structures of socio-­ institutional relations and actor-­networks that influence their decisions and actions (Bathelt and Glückler 2011). Membership in an organization provides individuals with access to its network. In order for network relationships to emerge, actors have to understand

64   S. Virkkala and accept interdependency. Developing a region cannot be controlled by a single actor or based on hierarchical power relationships, but instead it is the result of the work of several different agents and groups. Kostiainen (2002) and Sotarauta (2005) refer to a group of actors developing a region as a development network. Building a regional or local development network is a way of mobilizing resources, especially in situations where resources are widely dispersed among public and private actors. According to studies on governance (for example Rhodes 1997), policy networks are a specific form of governance characterized by public–private interaction in public policy. In other words, actors are linked through informal practices as well as through formal institutions. Further, the policy network consists of public, semi-­public and private actors such as the local government, political and societal groups, pressure, actor and interest groups, societal institutions, private and business organizations, etc. who are dependent on each other’s resources and competences (Hjortnaes Kristensen 2012). Regional development agencies (RDAs) are important actors as they hold the task of developing the region or a sector in the region. For other actors within the network it is not necessarily the primary aim to develop a region or locality but instead they might try to reach their own goals by using the network to their advantage and thus indirectly influencing the development of the region. The actors in the regional development network have a strong influence on the development of the region through their own activities and mutual cooperation. However, the solidity of the network and the degree of networking can vary a great deal, depending on the region. A development network is a loosely organized strategic network which affects the long-­term development of an area (Kickert et al. 1997; Kostiainen 2002). Developing a region is a process and networks as well as regional and local policies emerge, transform and change throughout its course. Actors interact because of their mutual resource dependencies and thereby counteract the institutional fragmentation. An actor network is therefore held together by the mutual dependency of its members. The actors in a network are autonomous in the sense that they are not directed by others to think or act in a certain way. Still, in order to be a member of a network, actors must demonstrate that they can contribute resources and competences that are valuable to other actors in it. They are interdependent and at the same time mutually dependent on each other for creating successful changes. The relations within a regional development network are horizontal, though this does not imply that the actors are equal. Networks are relatively self-­regulating due to their horizontal character; they are neither commanded from the top nor regulated by the laws of the market (Hjortnaes Kristensen 2012). Regional development networks differ from regional partnerships in that the latter have the task of developing a region or area. Partnerships can be emerging but they can also be an institutionalized form of governance. In many EU countries there is a formal partnership organization designing, developing and implementing the regional programs. The regional partnership organization also makes decisions about regional programs and visions. According to Hjortnaes Kristensen (2012),

Geographical perspectives   65 networks are generally based on short-­term relations and calculations whereas partnerships are based on long-­term promises for future cooperation. Regional development networks usually function within different constellations related to different sectors, projects and other activities. There can also be general developers focusing on the whole area and its development preconditions. Regional development networks consist of more or less stable patterns of social relations, which take shape around policy problems and/or programs (Kostiainen 2002; Kickert et al. 1997; Sotarauta 2005). A region can have many development networks consisting of individuals who belong to certain actor organizations. These networks can focus on a certain sector, for example tourism (Chapter 11, this volume), competence building (Chapter 9, this volume) or industrial restructuring (Chapter 10, this volume), or they can focus on developing more general conditions for the development of a specific region. In the context of this book, actors of regional networks are seen as capable of creating good practices, but also of learning from the good practices of another region in another country. Transnational learning networks are unbounded and often open. Also they are knowledge oriented and built around learning partners and networks located in different countries. They can be formed as part of specific programs, such as territorial cooperation programs (see Chapter 7, this volume), the Regions of Knowledge of the EU, or international platforms, such as the Smart Specialization platform. Transnational learning networks can create spaces of knowledge and also be territorially non-­fixed. When analyzing transnational learning inside the networks the actor network theory of Latour (2005; Chapter 1, this volume) is useful. The term transnational knowledge refers to two different types of knowledge: knowledge to be used for products and process innovation within organizations in different regions, and knowledge needed for the design and implementation of institutions at the private and/or public level. In their protocol institutions include formal and informal rules and habits established to reduce uncertainty in society and in their region (North 1990; Wink 2010). In this chapter, we deal with learning processes related to design, generation, implementation, and the effects of institutions and regional practices on regional development. To promote innovations is often one of the aims of regional development policies. Both regional development networks and transnational learning networks can be open, self-­organizing, expanding, and have the capacity to mobilize more actors within the network. They are transformed over time, but the former mostly develop in an administrative territory demarcated by clear-­cut boundaries. By contrast, transnational learning networks are built on relational spaces which also act as knowledge spaces. They are oriented toward studying, discussing and negotiating over what constitutes appropriate regional knowledge and practice, as well as capturing, enriching and disseminating regional knowledge and practices. Table 2.3 confronts these two types of networks. Networks of regional developers and those of transnational learning can overlap, as the regional development network, or at least some of its actors,

66   S. Virkkala might belong to the changing transnational learning network. In regional development networks, geographical proximity favors trust-­based relations and face-­ to-face contacts for the transmission of complex and uncertain messages. Inside regional development networks there is also social proximity between actors, as well as a shared perception of development issues, mental models and visions. It is good to have a level of cohesion and proximity among actors; still, too much cohesion prevents creativity and the ability to implement reforms. Different lock-­ins pose a potential threat as it is possible to get locked inside the existing functional or cognitive models, or into striving towards immediate gratification, based on formulas that have been successful in the past (Kostiainen 2002). By contrast transnational learning networks are based on cognitive proximity, which in other words is relational proximity. The learning partners in different locations are linked together with the motivation to learn from each other or to jointly produce new knowledge. Transnational learning networks are oriented towards knowledge creation and transfer, while the integrating mechanism of regional development networks is resource mobilization (see Figure 2.1). In the context of this book, regional development networks are seen to create good practice through tacit knowledge about how certain things work. Transnational learning networks are formed by learning partners in different regions, and participating in them is one way for regional development networks to source knowledge and information for the development of a specific sector, program, project, or activity in the territory. Inside transnational learning networks regional development networks can be either receivers or senders of good regional practices. The outcome of network relations can be said to depend on two factors: one is the quality of network ties, and the other is the quality of actors. Actors may have strong or weak ties, strong ties meaning intense relations between agents of great similarity. While these enable a great depth of knowledge, they offer little diversity. Only weak ties can offer access to diverse types of information as they call existing knowledge into question and add new elements that then lead to innovation (Lorentzen 2008). We can suggest that strong ties are characteristic of linkages between actors in regional and territorial spaces where trust-­based relations are formed. Regional development networks contribute to the production of public purpose within their particular policy field; that is through visions, values, plans, policies and regulations aimed at the general public (Hjortnaes Kristensen 2012: 76). Actors in regional networks have a common discourse and common context of knowledge creation (‘ba’) within which they as a group communicate through discourse. In transnational learning networks different platforms form the arena of knowledge creation (‘ba’). The participants in these transnational learning platforms have temporary proximity during their participation in the learning conferences. Regional development networks develop regions from different perspectives. One important aspect is developing the regional economy as a regional innovation system (RIS). RIS can be defined as the dependency of firms’ innovations

Geographical perspectives

67

T im e 1

R2

R3 R1

T im e 2

R2

R1

R3

Good practice created in region 1 Learning from good practice of region 1 Learning from good practice of region 2 Regions R 1, R2 and R3 Actors in regions Regional Development Network Regional Learning

Figure 2.1 Learning from good practices in other regions.

on regional knowledge institutions, such as science and technology institutions, as well as educational institutions. The RIS approach emphasizes the role of innovation networks as well as of intermediary organizations transferring the knowledge between knowledge institutions and firms. Regional development networks have the task of developing an inter alia regional economy that improves the functioning of regional innovation systems through mechanisms

68   S. Virkkala Table 2.3 Two different types of networks and spaces: regional development networks and transnational learning networks Characteristics

Regional development network

Transnational learning network

Space

Bounded regions

Participating actors

Regional actors in specific territories

Interaction in network

Creating good practice, learning from good practices from other regions Geographical, social

Relational spaces of knowing and learning Learning partners and networks in different countries Space of good practices

Proximity

Orientation of networks Knowledge arena (ba)

Learning process

Quality of the ties

Resource mobilization Common learning in networks Focus group meetings

Cognitive, desire to learn from good practices or share them with other regions Knowledge oriented

Transnational learning platforms Learning inside the network Benchmarking of good practices Creating transnational knowledge together Strong ties Weak ties

such as the provision of relevant knowledge by knowledge institutions, the transfer of knowledge by intermediary organizations, and the ability of firms to absorb and utilize knowledge for innovation. Firms in regional clusters or RIS can acquire knowledge for innovation from national knowledge institutions in their region, or from institutions in other countries. The regional firms can be embedded in national systems, and at the same time be part of global value chains and product networks. Regional development networks focusing on the improvement of regional development systems reflect and respond to the development of the RIS. The development network gains knowledge by analyzing the RIS system, and comparing it with the innovation systems of other regions. Through this process actors can get ideas and learn from the good practices of other regions, and translate them into their own region in order to improve policies within their development network. We describe this process of knowledge transfer using the knowledge spiral and knowledge conversion model, i.e., the SECI model created by Nonaka and Takeuchi (see Chapter 3, this volume). According to this model, actors in the development network can develop their RIS; a fragmented RIS can be coordinated better and improved by adding and developing the lacking elements. If, for example, the RIS is lacking or it contains bad practices it can be

Geographical perspectives   69 Table 2.4 Regional development networks, regional innovation systems and transnational learning Learning inputs

Regional development network

Regional

Learning processes of actors in development networks in the region

National

Transnational

Regional innovation system

Regional innovation system: Firms acquire knowledge for innovation from regional knowledge institutions Participation in the national Integration into the national innovation system: network Firms acquire knowledge for National laws, norms and innovation from national institutions regulating institutions regional development Integration into national clusters networks Transnational learning Acquiring knowledge from networks as learning institutions in other countries inputs for the regional Learning inside multinational development network companies

re-­created or changed through the development network. Within this model, the regional development network is seen as proactive (see Table 2.4).

Cumulative causation and path dependence According to Myrdal (1957) the economy should be described in terms of a process of cumulative change rather than in terms of equilibrium. Economic development is a process of circular and cumulative causation which tends to award its favors to those who are already well-­endowed and even to thwart the efforts of those who happen to live in regions that are lagging behind. Myrdal’s theory of cumulative causation sought to explain why some areas are increasingly advantaged while others are disproportionately disadvantaged. Market forces, by their nature, pull capital, skill and expertise to certain areas, and these areas accumulate a large-­scale competitive advantage over other areas. The interplay of market forces increases rather than decreases the inequality between areas, and the divergence in regional income is therefore a predictable result. Suppose accidental change occurs in a community, and it is not immediately canceled out in a stream of events; for example a factory employing a large part of the population burns down. The firm owning it goes out of business and its workers become unemployed. This will decrease income and demand. In its turn, the decreased demand will lower incomes and cause

70   S. Virkkala unemployment in all sorts of other businesses in the community which sold to or served the firm and its employees. If there are no exogenous changes, the community will be less tempting for outside businesses and workers who had contemplated moving in. (Myrdal 1957: 23) The theory of cumulative causation emphasizes increasing rather than constant or diminishing returns to scale. It also draws attention to agglomeration and external economies, and the positive growth implications for localities and regions that were first to industrialize. Beneficial effects caused by production factors create a further advantage and propel growth in developed regions, though often at the expense of economically lagging regions. Growth in developed regions may, however, also benefit economically lagging regions when effects spread, or what Hirschman (1958) called trickle down, including technological diffusion and export markets for products. Peripheral regions can offer low-­wage labor, but this relative advantage may be offset by the centripetal forces generated by agglomeration economies as they have the ability to attract elements of production, such as the labor force into the core regions. Backwash effects, such as capital and labor flows being attracted from economically lagging to developed regions, can further reinforce disparities. Responses to market price signals, such as lower wages, therefore reinforce rather than reduce regional inequalities. Liberalized trade further intensifies this polarized development between core and peripheral regions by catalyzing growth in developed regions at the expense of economically lagging regions. Cumulative causation (increasing returns) gave regions that had gone through an early industrialization an advantage in international trade. Through feedback, cumulative causation can work in a positive direction and create virtuous circles of growth and development both locally and regionally. Conversely, a loss in the competitiveness of the region’s export levels or external shocks, such as price rises in factor inputs, can reverse this process and create a vicious circle of decline (Pike et al. 2006: 73–5). Unbalanced regional growth and divergence are central to Keynesian regional development policies. The growth pole theory draws upon cumulative causation too, in particular the potential linkages between propulsive firms capable of generating induced growth through inter-­industry linkages – both backwards and forwards, through supply chains (Hirschman 1958), and localized industrial growth (Perroux 1950). Historical trajectories and path dependency Cumulative causation leads to the path dependency of local development trajectories. Regional development paths arise through the co-­evolution of local structures and human action, and they are formed through both time and space. History influences the possible options and probable outcomes of policies and strategies for developing new growth paths. Places can move forwards or backwards, or remain static in economic and social terms, but they can also change

Geographical perspectives   71 direction, as happened for example with the rapid transition and fast growth with regards to the late industrialization of the Asian tigers (Pike et al. 2006: 94). The concept of path dependency is used especially as part of the evolutionary approach in economics and geography. The approach uses a biological metaphor to describe the ways in which the evolution of a system is conditioned by its history. The concept of path dependence is intended to capture the way in which small, historically contingent events can set off self-­reinforcing mechanisms and processes that lock in particular structures and pathways of development. Which structures and paths become locked in depends on the particular sequence of events that unfold. Path dependence is seen as a fundamental feature of the economic landscape. Lock-­in aspects of path dependence describe and explain the stability of the spatial structures of economic activity and patterns of regional development (Martin and Sunley 2006). Different components of an economic system change and evolve at quite different rates, some very slowly, and others more rapidly and radically: this indicates the existence of different degrees and types of path dependency. The essential argument behind path dependence is that small contingent events can have large and long-­term consequences. Path dependence is produced by pro­ cesses endogenous to the system in question. Yet, on the other hand, it takes an exogenous shock or intervention to enable the system to break free from those consequences and to begin endogenously evolving a new path-­dependent trajectory. Large shocks (such as major slumps, stock market crashes, etc.) can result in permanent shifts in the economic structure and relationships, and thus set off new patterns of path-­dependent development (Martin and Sunley 2006). Path dependence can be seen as a process or effect that is locally contingent and locally emergent, and hence to a large extent place dependent. One of the key defining characteristics of economic evolution is endogenously generated change. Change often creates a lock-­in, which can be defined as a stable trapping equilibrium, and can only be broken by exogenous shocks, thereby freeing the system to move toward another eventually locked-­in path. Lock-­ins hinder necessary restructuring processes in regional economies and lead to path dependency. Path dependence is based on slow forms of economic evolution, and major and radical change must always originate from outside of the region. On the other hand, substantial shifts in economic structure and relationships can occur through the cumulative effect of ongoing incremental change, and therefore cumulative change also displays elements of path dependence (Martin and Sunley 2006; Hassink and Klaerding 2011). Institutional path dependency is one of the main driving forces of history (North 1990). Research has focused both on how path dependence can be used as an explanation for economic growth in some regions, and also to explain how regional economies can break free from old lock-­in paths in development by embarking on new technological and industrial trajectories (Cooke and Morgan 1998). According to Walker (2000: 126) industrial history is embodied in the present. That is, choices made in the past, especially ones concerning technology, influence subsequent choices of method, design and practices.

72   S. Virkkala Development paths can relate to trajectories of individual local firms, industries or institutions, but also to the evolving trajectory of a region’s industrial ensemble, or its technological profile, considered as a whole (Martin and Sunley 2006). Regional economies vary enormously with regards to industrial structure, business organization, economic growth, and linkages with other regions, nations and the wider global economy. Some are economically specialized, whilst other are diverse. Path-­dependent development seems to be more evident, and stronger, in localities with highly specialized economic structures than in those with more diversified economies (Martin and Sunley 2006). In diversified economies, several different path-­dependent forms of development might co-­exist. Some high-­tech clusters are quite diversified, consisting of a number of sub-­ clusters, each of which may be evolving along its own specific path-­dependent trajectory of development. There can be many instances (and trajectories) of path dependency. Path-­dependent processes might occur within a regional economy through learning, spin-­offs, clustering and so on. However, in themselves these instances do not imply that the regional economy as a collective system is path dependent; instead, it depends on the strength of interactions and linkages within the regional system. Increasing returns, dynamic learning effects, coordination effects and self-­reinforcing expectations, can all be described as sources of path dependence (Martin 2010). The notion of lock-­in captures the observed tendency for the geographical structure of the economy well. Regional growth becomes established around an expanding industry or set of interrelated industries that stimulate and benefit from emergent external economies. This phase of growth and success – of positive lock-­in – may last for decades. Many regions, as their lead industries and technological systems mature, tend to lose their former growth dynamic, and enter a phase of negative lock-­in and relative economic decline. Lock-­ins are an important factor in many cases of regional economic decline. Regions have different vulnerabilities both to endogenous processes of negative lock-­in and to externally originated shocks, and therefore also their responses are different. Some regions seem to experience a negative lock-­in and problems of long-­term relative decline, while others are much more able to adapt and avoid negative lock-­ins, and to undergo subsequent phases of positive lock-­in (Martin 2010). Lock-­ins can be seen as situations of know-­how and of learning by doing. Martin (2010) discusses five possible scenarios of escaping a regional lock­in: indigenous creation of a new path, heterogeneity and diversity, transplantation from elsewhere, diversification into relation industries, and the upgrading of existing industries. First, in the case of the appearance of a new technological paradigm, new industries and technologies may emerge from within the region without any antecedents. In these cases regions can use the ‘windows of locational opportunity’ to establish new industrial sectors. The second possible source of adaptation is heterogeneity among agents, technologies, institutions and social networks. Here agents may learn from the practices and solutions used in adjacent fields, as in every institutional set-­up there are subdominant organizational and technological forms. In the long run regional economic

Geographical perspectives   73 d­ iversity may be more conductive than specialization in escaping a negative lock-­in. The third way to avoid lock-­ins is transplantation (Castaldi and Dosi 2004 quoted in Martin 2010), meaning the importation and diffusion of new organizational forms, radical new technologies, industries, firms or institutional arrangement, from the outside. However, regions have different levels of receptivity and learning abilities to such transplantations, as receptivity depends on the absorptive capacity of the region, which we will discuss later in this chapter. The fourth way to escape regional lock-­ins is the diversification of traditional core industries and technologies into related and other industries that provide the foundations for a new trajectory of R&D and growth (Frenken et al. 2007). Finally, radical upgrading and the enhancement of existing industries may act as an escape from lock-­ins. The revitalization and enhancement of a region’s industrial base can occur through the infusion of new technologies, or by introducing new products and services. In any given regional setting many mechanisms may be at work, and they may in fact interact in a mutually reinforcing way. What about the role of learning and regional development actors in path dependence? Martin (2010) points out a paradox of path-­dependent learning in regional economies; learning is the key to avoiding lock-­ins, by increasing the actors’ foresight and their understanding of the benefits of coordination, however, learning is also an activity that is often argued to be strongly path dependent. How can learning be both path-­dependent and essentially path-­ breaking and de-­locking? It may be that there are different types of learning, but how to distinguish these types in regional economies and explain the conditions for their existence? How does actors’ involvement in different forms of regional and extra-­regional social networks shape the nature of the learning process? Participating in networks may be a means by which actors can break paths. ‘Where agents have regular interactions with agents embedded in other institutional contexts then there may be a greater opportunity for these invasions to occur as their knowledge of and capacity to surge, innovations are increased’ (Martin 2010). One could argue that participating in a transnational learning network may help regional actors to find an escape from a regional lock-­in. Regional development can be seen as an evolutionary process that is based on development paths, which themselves might limit development possibilities. The dynamic learning effects achieved through learning by doing, learning by interacting, and learning by using, all tend to entail positive feedback (know-­what, know-­how, know-­who and know-­why; see Chapter 1, this volume). The development path and cumulative learning effects that maintain it in a lock-­in can be described as learning on a structural level. Through transnational learning inputs actors in regional development networks have the opportunity to reflect upon the structure of their development path and find the crucial elements for creating a new one. There is space for voluntarism in learning processes in the regional development and agency perspective.

74   S. Virkkala

Absorptive and development capacities of regions Regional learning and development mainly depends on the interplay between regional actor networks and transnational learning networks. The preconditions for transnational learning are the absorptive and development capacities of regional actors and networks as well as their ability to reflect on their regional practices. The concept of absorptive capacity (AC) originally refers to the ability of a firm to ‘recognize the value of new, external information, assimilate it, and apply it to commercial ends’ (Cohen and Levinthal 1990). The capacity of a firm to connect with external sources of knowledge depends on the firm’s prior related knowledge. The concept of AC has been applied in industry and in regional innovation systems (Abreu et al. 2011; Döring and Schnellenbach 2006; Niosi and Bellon 2002), as well as with regards to clusters (Giuliani 2005) and regional networks (Sotarauta 2005). AC can be simultaneously firm- or industry-­ specific. Generally, a greater AC results in higher levels of intra-­firm and inter-­ firm knowledge spillovers, where the latter includes the transmission of knowledge between firms and other institutions, such as universities and public research institutes. Giuliani (2005) uses the concept of AC in relation to clusters, where the cluster’s absorptive capacity is defined ‘as the capacity of a cluster to absorb, diffuse and creatively exploit extra-­cluster knowledge’. Sotarauta (2005) applies the concept normatively in the analysis of the leadership capabilities of regional development networks. This chapter discusses absorptive and development capacity from a structural point of view based on the SECI model, and differs in this respect from earlier contributions. The concept of absorptive capacity describes the capability of an organization or its individuals to acquire, assimilate, transform and exploit knowledge. Zahra and George (2002) distinguish between potential (acquisition and assimilation) and realized (transformation and exploitation) AC. Both aspects are important when assessing the magnitude of the AC of firms, and their strength depends on different firm endowments and transmission channels. Potential AC depends on the availability of relevant sources of knowledge and the type of cooperation partners the firm has access to, while realized AC depends on the degree of appropriability of the relevant technology (Abreu et al. 2011: 9–10). With regards to firms, absorptive capacity is often measured as the proportion of R&D expenditures in overall revenues, as well as prior knowledge embodied in human capital and individual skills. Sometimes it is measured with regards to the firm’s organizational design and knowledge bases. In the context of regional development, absorptive capacity refers to the regional actors’ and networks’ ability to identify, evaluate, integrate/assimilate and exploit/apply knowledge from outside of the region. We are interested especially in the ability of regional actors and networks to identify, acquire and assimilate knowledge and practices from transnational learning networks. The preconditions for regional actors and networks to engage in transnational learning are to have some level of prior internal knowledge, institutional set-­ups promoting transnational learning, as well as an ability to be reflexive.

Geographical perspectives   75 The regional AC has been calculated by measuring the proportion of R&D expenditure in the regional GDP, or by calculating the number of R&D employees working in the region. The more research and development is carried out in a region, the higher its absorption capacity (Azagra-­Caro et al. 2006). For our purpose, however, this definition is too limited since we believe that the amount of research and development conducted in a region might not directly influence the level of regional development. For example universities and research institutes might work in an isolated and disembedded manner from their location, and therefore it is rather the people and organizational routines in which knowledge is embodied. Further, the regional AC depends on human capital and labor skills, and the upgrading of the level of skills, for example, increases the regional AC. In order to absorb new knowledge in the form of new regional practices or new ways of organizing there has to be some prior knowledge infrastructure or knowledge system in the region. This means for instance an institutional set-­up that supports learning, such as research and educational institutions, universities, technology agencies and regional development agencies. It also depends on the knowledge bases of firms that are located in the area, which might vary. The research and educational institutes as well as regional development agencies can be either general or sector specific. In the context of transnational learning these institutions should be able to identify and evaluate different types of knowledge that can strengthen the development path or open up new possibilities for the regional economy. The regional knowledge system can be many sided and heterogeneous, with strong knowledge bases and dense connections, and with actors who are able to absorb knowledge. In a situation of high absorption capacity, development agencies and technology transfer agencies are characterized by high competence, and they are able to translate the acquired external knowledge into practical know-­how. On the other hand, in a situation of weak absorption capacity a region commonly has weak knowledge bases and a disconnected and fragmented knowledge system (compare with Giuliani’s (2005) ideas on AC and clusters). While potential absorptive capacity relates to firms’ knowledge acquisition and assimilation capabilities, realized absorptive capacity centers on knowledge transformation and exploitation (Zahra and George 2002). Potential AC is important for firms that engage in networking outside of the national borders. When applying these concepts in the context of regional development and networks, realized absorptive capacity can be seen as development interventions, as well as improvements in regional practices. Thus, realized absorptive capacity is defined in this chapter as development capacity. Development capacity (DC) refers to the collective ability to transform gained knowledge into regional practices, and to the ability of regional actors to produce development inputs and implement formulated strategies and regional practices. All of these qualities are important for the endogenous development of a region. The institutional set-­up in a region should be such that it is able to open up to new developments carried out through transnational learning. Possible ways to

76   S. Virkkala evaluate this are, for instance, looking at institutional thickness, the amount and functioning of regional and transregional networks, and the presence and importance that is given to the procedures for enhancing transnational learning in regional programs. A region with a high absorptive capacity does not necessarily have a high development capacity. For example, this might be the case in a region with big universities, educational and research units, and high technology firms, if these units are regionally disembedded, and when there is no interaction between the research and educational units and the firms, development agencies and networks. Top-­level universities may recruit academic staff and a large share of foreign students globally, offer highly international PhD programs, as well as engage globally in industrial collaboration and multinational cooperation. Still, the regional impact of these universities might not necessarily be high (OECD 2011: 103). In a region with a high absorptive capacity and a high development capacity we find dense networks around research and educational units. The dense relationships between universities, industry and administration have been described through the triple-­helix model. In industrial districts and craft-­based regions there are often dense networks, and practices based on incremental innovation are carried out. In these cases, the absorptive capacity measured in R&D is low but the development capacity, the inputs to local and regional development are high. Finally, peripheral regions are often characterized by a low absorptive and development capacity as knowledge bases are low and the regional knowledge structure is not developed or it is fragmented. Their capacity to acquire and exploit knowledge from other regions is low, and they are not able to offer knowledge to other regions (see Table 2.5). Peripheral areas can still consist of development activities aimed at improving their absorption capacity and at upgrading actors’ skills in the development network. However, in order to do this, peripheral regions often need specific national or EU level development initiatives, which are implemented, for instance, through development platforms designed by the EU. Besides the regional knowledge structure and the institutional set-­up for learning, a precondition for improving the absorptive and development capacities in a region is the existence of reflexive regional actors and actor networks. These should have incentives and be motivated to seek knowledge outside their Table 2.5  Typology of regions of absorptive and development capacities

High absorptive capacity

Low absorptive capacity

High development capacity

Low development capacity

Universities, research and educational units with regional triple helix relationships Industrial districts Craft-based areas

Universities, research and educational units disembedded from the region Peripheral areas

Geographical perspectives   77 own region, looking for the information and good practices needed for the solution of specific regional problems, or for the development of a specific sector. Learning between regional actors can be described as first loop learning, as they simply add new information to their knowledge bases without changing their routines, regional practices (i.e., regional know-­how), or regional development policies (Argyris and Schön 1978; Chapter 3, this volume). In other words prevailing ways of acting, developing and organizing the regional economy are difficult to change but new ideas might be introduced from outside of the region through transnational learning efforts. However, this often leads to a situation where the effects of learning strengthen the existing development path. Double-­loop learning (see Chapter 3, this volume) occurs in a situation where regional actors begin to reflect on their practices or development activities. Double-­loop learning is illustrated with the SECI model (Figure 2.4) later in this chapter.

Modes of innovation, types of regions and transnational learning Transnational learning is most effective when there is a degree of similarity between the regions learning from each other. The similarity might come across, for example, in the regional structure, or in the way in which the regional innovation system functions. There should also be a level of cognitive and organizational proximity between learning partners, as mutual benefits are likely to be higher in more integrated transnational networks, where partners share similar characteristics. Classifications of regions can be based on different criteria, for example: • • • • •

absorptive capacity and development capacity presented above; position of the region in the regional structure, i.e., if it is a core region, intermediary region or peripheral region; industrial structure, i.e., if it consists of manufacturing areas, service economies, agriculture or tourism areas; development strategy in the region, i.e., regional actors and networks. The strategy can be reactive, active or proactive; mode of innovation, such as STI and DUI, which are presented below.

Many different classifications have been developed and used by researchers. For instance, according to Wintjes and Hollanders (2010), European innovative regions can be classified according to seven categories based on absorption capability, diffusion capability, accessibility to knowledge, and economic performance: metropolitan knowledge-­intensive service regions; knowledge-­absorbing regions; public knowledge centers; skilled industrial eastern regions in the EU; high-­tech regions; skilled technology regions; traditional southern regions. According to the OECD (2011: 42–3) regional innovation types can be categorized in the following way:

78   S. Virkkala 1 2 3

Knowledge hubs that are either knowledge-­intensive city/capital districts or knowledge and technology hubs. Industrial production zones: the service industry and natural resource regions in knowledge-­intensive countries; medium-­tech manufacturing and service providers, and traditional manufacturing regions. Non science- and technology-­driven regions: structural inertia or de-­ industrializing regions and primary-­sector-intensive regions.

We suggest a typology of regions based on two modes of innovation: Science, Technology and Innovation (STI) and Doing, Using and Interacting (DUI) introduced by Jensen et al. (2007). The STI mode of learning and innovation is based on the production and use of codified scientific and technical knowledge, whereas the DUI mode is an experience-­based mode of learning which relies on informal processes. The STI mode gives high priority to the production of ‘know-­why’ while the DUI-­mode typically produces ‘know-­how’ and ‘know-­ who’ (Jensen et al. 2007). In this chapter, we will not operationalize the typology; instead we will discuss the classification criteria on a more general level. Industries can be dominated by just one innovation mode. The STI mode of innovation is important in firms where analytical, science and technology based knowledge dominates, as it focuses on the ways firms use and further develop science and technology. Explicit and global ‘know-­why’ are further developed in the innovation processes of these types of industries when the STI mode of innovation is applied. Both knowledge inputs and outputs generated through innovation processes in the STI mode are usually codified, such as scientific articles and patent descriptions. The STI mode is mainly linear, that is, knowledge flows from universities and research institutes are commercialized as spin-­ offs in new start-­ups, or used in existing firms (Jensen et al. 2007). Research and development is less important in the DUI mode of innovation. In the DUI mode knowledge is acquired for the most part on the job as employees face ongoing changes and are therefore confronted with new problems. Finding solutions to these problems enhances employees’ skills and ‘know-­how’ and extends their repertoires. Some problems are specific while others are generic, and therefore learning may result in the development of both specific and general competencies for the operator. The DUI mode of learning refers to ‘know-­how’ and ‘know-­who’ which is tacit (Jensen et al. 2007), while innovations mainly focus on incremental changes in existing products and pro­ cesses. Crucial knowledge in innovation processes in the DUI mode is formed through a combination of the employees’ education and work-­life experience. The knowledge base is developed through in-­house problem-­solving by individuals and teams of workers, taking place, for example, when firms cooperate with customers who are facing new problems, and when suppliers engage in innovation activity (Jensen et al. 2007; Isaksen and Karlsen 2010). The STI and DUI modes can be applied also at a regional level, for example in cluster analysis. The empirical results from a study concerning the Danish economy, gathered by Jensen et al. (2007), show that there are four types of

Geographical perspectives   79 clusters: low learning clusters, STI clusters, DUI clusters and DUI/STI clusters. Both the DUI mode and STI mode tend to increase the firm’s innovative performance. However, firms adopting mixed strategies, in other words when the two modes are combined, tend to perform significantly better than those relying predominantly on just one of the modes. This cluster (DUI/STI) includes firms in traditional sectors where it is no longer sufficient to base competitiveness on know-­how and DUI learning, as well as firms using STI learning as a base but which also have established organizational elements related to the DUI mode. According to Jensen et al. (2007) the cluster analysis shows that what really improves innovation performance is using mixed strategies that combine strong versions of the two modes. The two modes of learning co-­exist and can be made to complement each other even if they are somewhat contradictory, since the STI mode calls for codification and for codes that are general while the DUI mode tends to thrive on the basis of implicit and local codes. In the following we will use the two modes of innovation in suggesting criteria for regional taxonomies which could be used when selecting partners for transnational learning. Regional development can be seen as a process of interaction between the regional economy characterized, for instance, by modes of innovation, and regional development networks. The regional development network directs and improves the functioning of regional innovation modes with the help of transnational learning. Table 2.6 shows four types of regions based on the STI and DUI models and their combinations. In all these regions both smaller localities with good practices and others with problematic or ‘bad’ practices might exist. To search for, evaluate and translate good practices is a challenge for regional development networks, regional development agencies and researchers in regional studies. The DUI mode of innovation and learning is typical in craft-­based areas where learning is based on experience, apprentice and problem solving. The knowledge base is synthetic, and tacit knowledge is shared in the region through socialization. Also in tourism and agricultural areas the DUI mode of innovation and learning is dominant. These regions are characterized as peripheral regions in the context of knowledge-­based economies since they share a knowledge-­ related disadvantage, which might influence their development (Crone 2012). However, there can be localized hubs of development with good practices that others can learn from. Peripheral areas often have unused resources related, for example, to nature, geographical space and human skills, which can be developed with the help of local and regional policies supporting innovation processes in these areas. One way to do this is to use external inputs which can be, for example, good practices from other peripheral regions (Virkkala and Niemi 2006). The STI mode of innovation, on the other hand, is dominant in high-­tech areas, knowledge-­intensive capital districts, and in regions with science-­based clusters specializing in biotechnology and ICT, for example. The key drivers are universities and knowledge and educational institutes generating new scienceand technology-­based knowledge, and with spin-­offs in the region. Besides

80   S. Virkkala knowledge spin-­offs there is a movement of graduate scientists from universities into the labor market. Moreover, the establishment of close links between local firms and research consultancies have increased research interaction within these regions (Goddard and Vallance 2011). Universities with a dense regional network that are well integrated in the region can play a further role by helping to join up different circuits of knowledge within wider innovation processes. Silicon Valley and Cambridge are well-­known examples, but there are also similar cases in areas classified as peripheral, such as the case of the University of Oulu in Northern Finland, where the university has created multitude of spin-­ offs, academic labor markets and dense networks of firms. However, there are also locally disembedded universities and higher education institutes (HEI) that make only a small regional impact. In those cases the knowledge from universities and HEIs is underutilized by regional development networks, and the ability for knowledge to be transferred from universities as well as the ability of firms and organizations to absorb and utilize this knowledge is undeveloped. This often results in the creation of innovation gaps in these types of regions. One solution is for regional development networks to follow the example of the dense regional networks formed around universities as good practice in policy, identifying regional innovation gaps and matching regional knowledge institutes with regional firms and networks better. According to Jensen et al. (2007) combining the two modes of innovation is very useful at the firm level but it will presumably also produce a higher economic performance at the regional level. Generally, learning is effective when new elements are combined with the existing knowledge structure. Table 2.6 shows two different types of combinations of the STI and DUI modes of innovation. Innovation in most regions in the EU is more about knowledge absorption through education, training and business services than about knowledge generation with scientific effort (Grillo and Landabaso 2010). In industrial districts characterized by DUI/STI learning and innovation is based on experience, apprentice and problem solving, as in the DUI mode, but science and technology are applied widely in the production system. Examples of these types of regions are the Ruhr area and Baden-­Württemberg in Germany as well as upper Austria. Also some other industrial districts in Middle and Southern Europe belong to this category. Mariussen (Chapter 1, this volume) refers to the DUI/STI mode of innovation and learning as the ‘German’ model and the STI mode as the Anglo-­Saxon model of economic organization. The other way to combine the STI/DUI innovation modes is characteristic in regions with a concentration of knowledge-­intensive business services (Bathelt and Glückler 2011: 111–30), and with functions which have been outsourced from regions dominated by the STI mode of innovation. Knowledge-­intensive business services combine both tacit and codified knowledge and new knowledge is systematically acquired through client relationships, referred to as know­who. For these kinds of regions global flows are important. These regions can be, for example, hubs or centers of knowledge-­intensive business services in cities, or technology-­based clusters which have emerged due to outsourcing from high-­tech areas (see Table 2.6).

Geographical perspectives   81 Table 2.6  Innovation modes and regional taxonomy Innovation mode

Type of region

Type of knowledge

DUI innovation mode Know-how

Traditional craft-based regions, Industrial districts Tourism areas Agriculture areas Peripheral areas Industrial districts using the STI mode Regions with a service economy Regions with a concentration of knowledge-intensive business services High-tech regions

Tacit

DUI/STI innovation mode Know-what STI/DUI innovation mode Know-who

STI innovation mode Know-why

Tacit-Codified Codified-Tacit

Codified

This typology is rather too general and in reality there are many different types inside one category, as transnational learning can also occur in smaller units and localities. In order to use this taxonomy in practice, there are also other points that need consideration and clarification. Table 2.6 takes into account the dynamic relations that often exist between the innovation modes and regions. For example, peripheral craft based and tourism areas can be developed with the help of the STI mode, in which case they could move up in the table, i.e., in the direction of the DUI/STI mode of innovation. Regions with the DUI/STI and STI/DUI modes can be developed with more inputs of science and technology, whereas regions dominated by the STI mode could benefit from introducing more elements of the DUI or the STI/DUI mode. Experimenting with different combinations of DUI and STI innovation modes is important as it enables the continuation of the knowledge spiral. Virkkala discusses in Chapter 9 the transnational learning process between regions using the STI innovation mode in Finland and those using DUI modes in Denmark, and how they can benefit from combining the elements of the innovation modes. It is important to recognize that peripherality is dynamic, i.e. it may change over time. The position of a region in relation to any given measure or indicator of peripherality, as well as the consequences and dimensions of peripherality, may change over time as a result of learning (Crone 2012). Further, forming transnational learning networks and platforms of good practice may make it possible for regions to escape from peripherality.

Regional and local development policies Regional policies have in the past generally been designed, managed and implemented by national ministries and central government agencies, and one of their

82   S. Virkkala aims has commonly been to redistribute wealth within the national economy, from prosperous to disadvantaged areas. They often had as their point of departure the identification of economically disadvantaged regions, and local economic development was therefore framed within a discourse of economic decline or decay. Related to this, policy tended to focus on attracting new industries to deprived areas (Danson et al. 1998; Pike et al. 2006; Östhol et al. 2002). However, since the mid-­1990s, traditional regional policies have been supplemented by supra-­national EU programs and, partly related to this, there has been a growth in local initiatives promoting economic development from below. Regional development policies have become more decentralized and emphasis has been placed on endogenous development, in other words on looking for ways in which a region might be able to generate growth and prosperity through the initiatives of locally based actors, businesses and public agencies. One reason behind the failure of traditional development policies has been the tendency to replicate standardized policies in different areas of the world, regardless of the local economic, social, political and institutional conditions. In other words policies that have succeeded in a specific case have been transferred and implemented with almost no changes in different national, regional and local contexts. In many cases this has led to failures in the new environment (Pike et al. 2006: 16). Innovation has been the focus of regional and local development policies due to the increasing importance given to the knowledge economy. Since the second half of the 1980s many regions in industrialized countries have been setting up science parks, technopoles, financial and technological aid schemes, innovation support agencies and initiatives, in order to support the clustering together of industries. The central aim of these policies is to support regional endogenous potential by encouraging the diffusion of new technologies. Since the mid-­1990s, regional policies have been influenced by theoretical and conceptual ideas, such as regional innovation systems (Cooke et al. 2004), the learning region (Morgan 1997) and clusters. Despite this, they have tended to become too standardized (Tödtling and Trippl 2005). Local and regional development policies cannot be based on the principles of one-­size-fits-­all or best practice; instead, they should reflect the different conditions and problems of the respective regional economies (Tödtling 2011). Decentralized local and regional development strategy refers to adopting the territorial approach as a means of achieving economic development. According to Pike et al. (2006: 17) this strategy entails the mobilization of local resources and competitive advantages, requires participation and social dialogue, and is locally managed. Empowering local societies is a crucial element in the territorially based strategy, and the identification of economic potential is the foundation upon which development strategies are built. Regional and local development strategies concentrate on the improvement of the basic conditions necessary for the development and attraction of further economic activity (Pike et al. 2006: 17). To this strategy we can add the importance of networking and multi-­actor development policy. Many local public and private actors are involved with and concerned about development issues. However, local initiatives need a complex

Geographical perspectives   83 governance and coordination system; besides regionally based horizontal networking, also vertical coordination and the synchronization of local, regional, national and supranational institutions, such as the EU, are needed. The OECD (2009) uses the term ‘territorial development policy’ or ‘new paradigm of regional policy’ to refer to a policy approach where the objective is to enhance well-­being and living standards. The idea is to sustain regional competitive advantages with a fuller and better use of the regions’ assets. The strategy is ‘place-­ based, multilevel, innovative and geared to different types of regions’, and it is aimed at building/strengthening institutions, improving accessibility to goods, services and information, as well as promoting innovation and entrepreneurship. The territorial approach is also important in Barca’s (2009) report, in which he suggests a place-­based approach as the basis for cohesion policy in the EU. According to Barca (2009) place-­based development policy stresses three features: the place-­specificity of natural and institutional resources and of individual preferences and knowledge, the role played by the linkages between places, and the resulting need for interventions to be tailored to suit each place. Besides this, place-­based policy can be defined as: 1 2

3

a long-­term strategy where the objective is to explore the full economic potential and to reduce inequalities in specific places; through the production of bundles of integrated, place-­tailored public goods and services, designed and implemented by eliciting and aggregating local preferences and knowledge through participatory political institutions, and by establishing linkages with other places; and promoted from outside the place by a system of multi-­level governance where grants are transferred from higher to lower levels of government. (Barca 2009: 5)

If top-­down regional policies are based on imitation, the basic mean source of inspiration in the territorial approach is local experience. The idea is to use local culture and resources to create a competitive advantage. Learning from experience means that knowledge and expertise is embedded in local sets of production and social interaction. It is based on local ideas of what works, i.e., learning by doing and by interacting locally. However, there have also been transnational models for endogenous development, such as that based on the local cluster concept or the concept of a learning region. These concepts have been widely diffused and used in regional strategy in the territorial approach. Is there a place for transnational learning in the territorial approach and place-­ based policy? We encourage the territorial development approach and place-­ based development but also transnational learning, as we believe that a combination of the two could result in a more systematic endeavor, instead of imitation and copying. Especially peripheral regions could benefit from learning more about good practices from other peripheral regions. The possibilities for transnational learning in a region depend on the institutionalized power relations that exist between different levels of governance

84   S. Virkkala within the respective country. Decentralization has given regions more autonomy but not necessarily the needed resources. Generally, the possibilities for transnational learning at the regional level depend on the balance between top-­ down and bottom-­up policies. However, very seldom the bottom-­up approach is the dominant one; rather we often find a combination of top-­down and bottom­up elements in regional development approaches. Transnational learning can be seen as a resource which may be applied in developing strategies for regional development. The space inside networks open to transnational learning and knowing consists of different actors and learning partners who can be located in different regions, and who can be both receivers and senders of good practices in regional and local development. The emphasis on transnational learning in the regional development approach might vary between strong, high priority and/or radical, or weak, low priority and conservative. Learning at the regional level means that the actors and networks continuously interpret and evaluate new knowledge and information with respect to the specific context of their region. Generally, we can apply different knowledge types (see Chapter 1, this volume) in regional development strategies. Regional actors and decision-­ makers always have a certain perception of the general reasons and driving forces behind development. We call these perceptions ‘know-­why’, and they are based either implicitly or explicitly on regional development theories. Based on this ‘know-­why’, the regional actors define the regional development objectives, priorities and strategies, which can be called ‘know-­what’. To implement the strategies a wide amount of actors and networks are needed, i.e., ‘know-­who’. Regional development interventions and practices carried out by regional actors and networks can be seen as ‘know-­how’ (see Figure 2.2). Know-­how – regional practices Regional development activities are often based on tacit knowledge on what works in practice. The actors know how to operate and develop the region based on their experience, and these practices can be very successful in leading the region toward good and sustainable development. This implies the well-­being of people, social inclusion, equality, a good environment and sustainable economic development. These practices can be, in one or many respects, either successful or unsuccessful, as tacit practices might lead to either satisfactory results or on the other hand to unsatisfactory ones, to negative lock-­ins in the development path, or to the emergence of bad practices in the region. However, while local actors might feel that they have to find internal solutions for regional problems, such as outward migration, unemployment, lock-­ins or environmental problems, through transnational learning they can also learn strategies for dealing with these problems from others. An important aspect of transnational learning is the learning of good practices from others (see Chapter 5, this volume). In order to reflect upon, translate and adapt good practices elsewhere, however, regional networks need absorptive and development capacities.

Geographical perspectives   85 Know-­what – definition of regional strategies Local and regional stakeholders define and establish a regional development strategy based on their understanding of their region. In order to do so, however, they need to compare their region with other regions. This is done by asking the following questions: what is our region? What kind of structure does it have? How does it relate to other regions? By comparing the characteristics of one’s own region with those of other regions, one can in fact gain a better understanding of the former. The analysis is often made by combining different indicators, as the tacit knowledge held by local actors regarding the characteristics of the region is codified. Regional actors create the regional strategy based on an analysis of their region, sometimes also including an assessment of the concept of bottlenecks in local development (i.e., ‘know-­why’). In the process of strategy building people make value-­based judgments about priorities and what they consider to be appropriate for their localities and regions. Defining the purposes and objects of, as well as the strategies and politics for, development is a democratic process, and sometimes a matter of debate. In regional analysis, the debates regarding it, and in the formation of regional strategies and priorities, transnational learning could be an important input. Regional development actors define the strategies and priorities within the regional development programs and, thus, they codify the tacit knowledge they have about their region. Regional strategies are often organized according to four aspirations: improving the competitiveness of local firms, attracting inward investments, upgrading human capital or labor skills, and building infrastructure (Pike et al. 2006). Different programs might be used for achieving development targets. However, in order to succeed regional programs targeting economic development must find some kind of balance between specialization and diversification. Specialization is important, for instance in order to develop competencies that cannot easily be copied by competitors. Focusing on the existing regional industrial base too strongly, however, might lead to negative path dependence and lock-­ins. Focusing on strong local industry might be very effective and successful in conserving economic activity by means of sector-­ specific policies, yet triggering new economic activity necessary for long-­term development is difficult to achieve with this strategy. If the regional problem is one-­sided economic structure, the strategy should emphasize diversification. According to Boschma (2008), the solution would be to focus both on economic diversity, i.e., related variety, in order to broaden and diversify the regional economic base, and, at the same time, to build region-­specific resources and extra-­ regional connections. The role of transnational learning in the regional strategy is to compare and analyze the particular development trajectories, developmental aspirations, as well as the strategies and priorities of each specific region. The extent to which transnational learning methods are adopted in regional development strategies varies.

86   S. Virkkala Know-­why – regional development theories In order to discover effective development strategies regional actors need to understand the roots of regional development as well as look for causal explanations for the drivers of development, i.e., regional development theories. The content and priorities of regional and local development policies are generally based on conceptions of the causes and bottlenecks of development. The driving forces for development can be either exogenous or endogenous. Exogenous factors relate, for example, to external dependencies caused, for example, by regional integration in nation states or in supra-­national units, such as the EU. Exogenous factors are important in explaining the development processes in each specific area, for instance regarding the position of multinational companies, the EU agricultural policies or of global flows and value chains, as these factors can reveal important issues, such as reasons behind the spatial division of labor. It is important, however, also to emphasize endogenous factors, and encourage the development of internal factors and the endogenous growth potential in regions. One common conception within the development field relates to the knowledge or learning economy, in which innovations are important. A high level of human capital and labor skills, as well as a good regional knowledge infrastructure and knowledge base, can be considered driving forces in a region. However, it is important to point out that there are different knowledge bases (analytical, synthetic and symbolic), types of knowledge (codified, tacit), as well as learning models, such as Science, Technology and Innovation (STI) and Doing, Using and Interacting (DUI), which means that the developing preconditions for knowledge creation should be specified. Many policy-­related theoretical concepts, such as cluster or creative milieu, have circulated widely and been adopted by local and regional policy-­makers around the world. There is a lot of transnational learning involved in the conceptualization of the drivers of regional development. However, as these concepts have often been adopted as general models, in other words they are not translated according to the specific characteristic of each environment, the changes that they have led to have been more rhetorical than practical. This can be described as a ‘selective discursive mechanism’ (Jessop 2008; Chapter 1, this volume). The role of transnational learning is, for instance, to analyze and compare regional development conceptualizations in different places, as well as to deconstruct the hegemonic discourses behind them. Know-­who – actors, networks and partnerships In order to form and implement explicit or implicit strategy, agency, meaningful partnerships, individual actors and networks of actors are needed. Further, partnerships are needed which can complement the formal democratic structures and be a means of mobilizing constructive engagement. Regional actors, networks and partnerships carry out regional interventions according to their common understanding of what should be done and why. The role of transnational learning

Geographical perspectives

KNOW-WHAT: Regional strategies and priorities

KNOW-HOW: Regional practices

KNOW-WHO: Regional networks and partnerships

87

KNOW-WHY: Regional developm ent theory

Figure 2.2 Regional developm ent and knowledge types.

here could be to encourage comparison and analysis of different ways of mobil­ izing actors and networks, as well as of institutional arrangements of governments and governance. However, the degree to which transnational learning inputs can be integrated in regional development strategies depends on the absorptive and development capacities of actors and networks, as well as on actors’ previous experiences. Moving from know-what, know-why, know-who and know-how to know­ ledge creation and learning depends also on the cognitive distance between the organizations and the receiving and sending actors. The roles between the sending and receiving regions might be asymmetric, and stronger regions are less likely to seek out useful knowledge/practices from regions with weaker knowledge bases. The knowledge typology and structuration of action, developed by Mariussen in Chapter 1 of this volume (see Table 1.1), can be used in exploring structure and agency in regional development policies. The specific composition of each administrative region, practices of authorization of regional development institu­ tions as well as national laws and regulations are structures that determine regional development policies. At the level of modalities we can find regional development networks which act as agencies forming regional strategies and programs, and responding to structural conditions. These networks can develop their own procedures for regional development, based on an analysis of the local bottlenecks of development and regional development strategies. Actions, i.e., development interventions and strategies, can change due to feedback, and new analyses of bottlenecks, or when the composition of regional development net­ works themselves undergo changes, affecting procedures within regional devel­ opment. The structure of regional development policy can also change as a result of new ways of defining regions, such as Structural Fund areas, new laws and regulations, or new regional development theories adopted by the regional devel­ opment network (see Table 2.7).

88   S. Virkkala Table 2.7  Structures, modalities and actions of regional development policy Know-what Structure Definition of regions Nation/EU (NUTS, counties, provinces, etc.) Definition of Structural Fund programs (Objective 1, Objective 2) and definition of national regional programs Modalities Strategies, programs Action

Analysis of regional bottlenecks and problems

Know-who and knowhow

Know-why

Theories of regional Authorization of development regional development institutions Laws and regulations at national and EU levels Allocation of resources Regional development networks Regional partnerships Development interventions

Procedures for regional development Expectations Feedback, reflection

Regional development and transnational learning in the context of the SECI model Above we have defined the basic elements of regional development and transnational learning. Next we will explore some of the above-­mentioned elements in relation to learning processes in the context of the so-­called SECI model introduced by Nonaka and Takeuchi (1995), which has been described earlier by Mariussen in Chapter 1 and is contextualized and presented by Virkkala and Mariussen in Chapter 3 of this volume. The SECI model is important since it recognizes knowledge creation and learning as a process of interaction between tacit and explicit knowledge, and as a spiraling process, where explicit knowledge is internalized and used continuously to develop new tacit knowledge. In this chapter, the SECI model is used for understanding the influence of transnational learning inputs in three analytical scenarios: in the formulation of regional and local development policies, in supporting the process of escaping development lock-­ins, and in the upgrading of absorptive and development capacities. In all these scenarios regional processes relating to transnational learning, as well as regional development activities and practices, are improved and nurtured due to the knowledge spiral of regional actors. The SECI process has four phases. The first phase is socialization, which involves the sharing of tacit knowledge between individuals (know-­how). Socialization refers to the ability to produce shared and tacit knowledge that leads to the social integration of actors, going far beyond institutions and networking. Actors utilize informal relations as they share feelings, emotions, experiences and mental models (Nonaka and Konno 1998). The second phase involves the externalization and codification of the tacit knowledge of individuals in order to create

Geographical perspectives   89 ­ etaphors, concepts, hypotheses or models (know-­what). The third phase is a m combination of new knowledge generated in the externalization phase, and other codified knowledge (know-­why). The fourth phase involves the internalization of newly created knowledge, meaning the conversion of codified/explicit knowledge into tacit knowledge (know-­who). According to Nonaka and Konno (1998) each phase of the SECI model is characterized by a specific space of knowledge creation which they call ‘ba’. The purpose of ‘ba’ is to create the preconditions for knowledge creation and it can be developed consciously to support and accelerate regional learning. Several different ‘bas’ are involved in knowledge creation (see Chapter 5, this volume). Nonaka and Toyama (2003) examined the knowledge-­creation process inside one organization whereas Kostiainen (2002) examined it inside one region. In this book, we apply the SECI model in describing transnational learning in regional development networks. In the application of the SECI model, two different regions are distinguished: the target, or receiver, region and the sender region of a good practice. The receiving region can develop best when it reflects on, evaluates and translates the good practice of the sender region. The good practice from the sender region acts as a contribution in the development processes of the receiving area in the second phase of the SECI model, i.e. in the phase of externalization. According to the SECI model knowledge creation and learning is a continual, ongoing process, described by Nonaka and Takeuchi (1995) as a knowledge spiral. Regional development practices In the socialization phase, the actors in the receiving region share tacit knowledge of regional development practices with each other. In other words they have knowledge about how things operate in their region. In cases where actors in the regional development network are frustrated with regional problems, such as unemployment, the desire to learn from others’ good practices is greater. The externalization phase includes forming a strategy based on the codified indicators of the position of the region in the territorial system of the region. This phase also includes the externalization of the good practice in the other region, for example, by researchers, as well as an evaluation of the good practice. In the combination phase, the explicit knowledge is combined with the causal theories explaining the reasons behind and direction of the change, which is another type of explicit knowledge. The combination gives birth to new explicit knowledge which is then used in the fourth phase by local actors and networks when intervening in regional development. During the internalization phase the explicit knowledge becomes tacit knowledge of individuals. This happens as a result of the first round of the SECI process, and forms the basis for the new regional development practice, initiating the second step of the knowledge spiral (see Figure 2.3). In this process also the absorptive and development capacities of the regional actors are upgraded, meaning that they increase their learning abilities, as well as resilience in the turbulent, changing global environment.

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Transnational learning from good practices can be combined with a proactive development strategy. Laukkanen and Niittykangas (2003) argue that especially communities with weak autonomous turnaround capabilities need more interven­ tionist strategies than those functioning in more benevolent environments. Espe­ cially in difficult regions, developers should act as virtual entrepreneurs and take over some critical functions that underlie the emergence of businesses in order to

Tacit

Tacit

5. S O C IA L IZ A T IO N (Tacit-tacit knowledge) New regional development in practice (KNOW-HOW)

Tacit 1. S O C IA L IZ A T IO N (Tacit-tacit knowledge)

Tacit 2. E X T E R N A L IZ A T IO N (Tacit-codified knowledge)

Regional development in

practice (KNOW-HOW)

Indicators, strategy formation Evaluation of the good practice of the sender reg ion (KNOW-WHAT)

4. IN T E R N A L IZ A T IO N (Codified-tacit knowledge)

3. C O M B IN A T IO N (Codified-codified knowledge) C o m b in a tio n o f th e s tra te g y

Regional networks and partnerships Interventions based on the strategies

w ith c a u s a l e x p la n a tio n s like re g io n a l d e v e lo p m e n t th e o rie s, a n d w ith e x p lic it fe a tu re s o f th e g o o d p ra c tic e o f th e s e n d e r re g io n .

(KNOW-W HO AND KNOW-WHAT) Explicit

(KNOW-WHY) Explicit

Figure 2.3 Regional development policy and transnational learning in the context of the SECI model.

Geographical perspectives   91 increase the local development possibilities. These tasks include, for example, the detection and initial development of business opportunities, the provision and training of key actors, the creation of initial linkages with key customers and supplier bases, and the provision of legitimacy and trust to other resources. From the point of view of transnational learning in regional development policies: •

•

•

It is easier to transfer codified knowledge, i.e. regional development theories (‘know-­why’), regional development strategies and indicators (‘know-­ what’), than tacit knowledge embedded in regional contexts and actors (‘know-­who’ and ‘know-­how’). The transformation of codified knowledge in regional development might fail in the internalization phase of the SECI process since regional networks and partnerships are often not willing to change their regional practices and their ways of operating. The transformation process of regional ‘know-­how’ is slow and incremental and it needs to include a process of translation (see Chapter 4) of the good practices of other regions into the local context. This process is much deeper than copying or imitating, and the result of the translation process might be something new, a new regional practice which is socialized by the regional actors.

Development paths From the regional development network perspective, it is important to search for strategies for escaping regional lock-­ins. These strategies should aim at widening the already emerging new development path, thus rooting it into the region. New development paths are often born outside the dominant regional practice, and to find and evaluate the necessary conditions for the creation of a new development path, transnational learning, in other words transferring or translating good practices from abroad, for instance, can be effective. However, the new path can also be based on the mobilization of endogenous resources, for example related varieties, i.e., diversifying existing industries by combining existing areas of expertise, or simply upgrading existing industries. Still, in both using ideas from the outside, and generating them on the inside, transnational learning is important. Besides absorptive capacity, development capacity is needed in order to integrate new ideas into existing ones, i.e., to translate and transform them to one’s own context. The first phase of the SECI process consists of the socialization of actors and the creation of a positive lock-­in in the existing development path. One effect of cumulative learning is that it stabilizes the development path preventing it from changing. Transnational learning occurs during negative lock-­ins in the development path, during an external crisis, or when the possibilities for new development paths are explored. The second phase is the externalization of tacit knowledge from another region due to an external crisis or problems caused by negative lock-­ins in the local development path. Transnational learning, for example in the form of good practice, can sow the seeds for the creation of a new path. In the third phase, these seeds, in other words the preconditions, for the

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creation of a new development path, are combined with the existing regional ele­ ments and context. In the combination phase the new development path is formulated, after which it becomes rooted and stabilized in the region in the fourth, internalization phase. In the internalization phase the articulated new development path becomes tacit knowledge of the individuals, which is shared among regional actors in the new phase of socialization, initiating a new round in the SECI process (see Figure 2.4).

Tacit

Tacit

5. SOCIALIZATION to new development path Learning by doing fKNOW -HOW ) Tacit

1. SOCIALIZATION Positive lock-ins in the development path Cumulative learning

Tacit

2. EXTERNALIZATION Negative lock-ins in the development path Transnational learning Reflective learning

(KNOW-HOW) (KNOW-WHAT)

3. COMBINATION 4. INTERNALIZATION Rooting the new development path Stabilizing the new development path Learning by interacting (KNOW-HOW) Explicit

Combining the elements of new development path with the existing regional elements and contexts Learning by using/by combining (KNOW-WHY) Explicit

Figure 2.4 Path dependency and knowledge types in the context of the SECI model.

Geographical perspectives

93

Absorptive and development capacities Double-loop learning (see Chapter 3, this volume) is a situation where regional actors begin to reflect on their practices or development activities. This is illus­ trated with the SECI model (see Figure 2.5).

Tacit

Tacit

5. S O C IA LIZ A T IO N of improved regional development practice Development capacity (exploitation of new knowledge) (KNOW-HOW) Tacit

Tacit

1. S O C IA L IZ A T IO N of regional development practice

2. E X T E R N A LIZ A T IO N

Development capacity (exploitation of knowledge) (KNOW-HOW)

Absorptive capacity (acquisition of knowledge): Transnational networking Interpretation (KNOW-WHAT)

4. IN T E R N A LIZ A T IO N Development capacity (transformation of knowledge): Networking Anchoring new knowledge into the old practice

3. C O M B IN A T IO N Absorptive capacity (assimilation of knowledge): Translation combination (KNOW-WHY)

Explicit

Explicit

Figure 2.5 Absorptive capacity, developm ent capacity and transnational learning in regional and local development.

94   S. Virkkala A precondition for the creation of absorptive and development capacities is the ability to reflect on one’s own practices. In order to do this, actors need to be able to network, interpret, translate, combine, internalize and socialize the knowledge. In this context absorption capacity is divided into (transnational) networking and interpretation (‘know-­what’), and translation and combination (‘know-­why’). Development capacity (realized absorptive capacity) can be divided into regional networking and internalization (‘know-­who’), and socialization (‘know-­how’). It is important to point out that we use the concept of networking in two senses: first as the ability of regional actors to join transnational learning networks (‘relational concept’), and second as their ability to form territorial networks (‘territorial concept’). The SECI process starts from the existing regional practices, based on tacit knowledge that local actors share due to processes of socialization (existing regional ‘know-­how’). Regional actors and networks with absorptive capacity scan and evaluate regional strategies and practices from other regions. However, in order to do that properly, they have to join transnational learning networks and interpret the strategies and practices of other regions to suit the needs of their own region (‘know-­what’). This phase can also be called benchmarking. The absorption process is facilitated by cognitive proximity between the sender and receiver of knowledge or good practice, as the propensity to acquire knowledge from other regions is shaped by the perceived cognitive distance from the source of knowledge. Also the existence of a common framework, such as the EU platform of Smart Specialization (see Chapter 5, this volume), creates more cognitive proximity between regions and actors. In order to be effective the absorbed knowledge must be diffused and translated in the regional context. This occurs when it is combined with already existing knowledge or translated into a form that fits the existing structure of regional knowledge. This means the ability to assimilate and apply new knowledge in the regional context as well as the ability to combine internal and external resources and knowledge bases (‘know-­why’). The new knowledge should be assimilated and anchored in practice, which requires that regional actors are capable of networking, and that they have the ability to take advantage of their own competences and resources. Networking ability (or capability) includes the ability to involve people and empower them to act as a network, the ability to make people work to reach joint goals and renew them in an ongoing process, the ability to promote interactive processes, and to steer activities toward seeking goals and enabling cooperation (Sotarauta 2005). The regional network should find a new common view and sometimes also define a new mental model based on the input of transnational learning. This might imply changes in the regional network (‘know-­who’) as well as new ­strategies and visions concerning regional development issues that are prioritized by the regional actors. Besides regional networking, however, internalization is also needed, meaning anchoring the new knowledge into regional practice. The new knowledge can promote a continuation of the existing development paths, or broaden, widen or modify it, or it can provide new openings based, for

Geographical perspectives   95 example, on related varieties. It can also develop or strengthen the weaker actors or firms in the region, create new resources, and utilize the existing resources better. The socialization of new knowledge consists of the internalization of new regional practice, new ways of acting, practicing regional politics, and of being organized (new regional ‘know-­how’). The new regional practices might be an improvement from the earlier one, and transnational and regional learning pro­ cesses might open up new horizons and opportunities for new development paths. These begin to unfold when individuals and small groups detect new opportunities and weak signals of a changing society and plant the first seeds of change (Sotarauta 2005). I have illustrated how transnational learning inputs can nurture the knowledge spiral on a regional level. Still, it is also important to recognize that when regional actors continuously learn in the knowledge spiral, and as knowledge is embodied in individuals and collectives, actors’ skills, along with their absorptive and development capacities, become upgraded. The more networking, as well as acquiring, interpreting, translating and internalizing new knowledge takes place, the more one’s absorptive and development capacities are developed and the higher the skills for developing the region, improving current regional practices and introducing new ones. The process is self-­reinforcing and can be compared with the cumulative causation process in regional development introduced by Myrdal. The knowledge spiral enhancing the knowledge space of regional actors and networks often leads to a process of cumulative causation in which regions with higher absorptive and development capacity improve their capacities to learn through the knowledge spiral much more than regions with weaker capacities. In other words, the self-­reinforcing knowledge spiral strengthens the center–periphery divide in the knowledge-­based economy and may lead to new divisions. I argue that the actors and networks in peripheral regions can improve their absorption and development capacity in the knowledge spiral through transnational learning inputs. How is this possible if the prior knowledge and knowledge institutions, as well as the reflexivity of actors and networks, are modest? In central as well as peripheral regions, there are normally at least some regional developers who can be encouraged to construct a network around the development of the region, or a specific resource or sector within the region, aimed at solving local problems (outmigration, pollution, ageing, unemployment, debt crisis). Also, actors and networks in peripheral regions can be encouraged to build transnational learning networks with actors and networks from other peripheral areas. Transnational institutions, such as the EU, could further support network building and transnational learning between peripheral regions with platforms of transnational learning. One example of EU platforms is the Smart Specialization platform which could be used as a forum for transnational learning and good regional practices in peripheral regions. It could also be useful to set up good practice networks or forums for agents who aspire to receive and learn given good practices. In order to be more effective these networks could be

96   S. Virkkala sector specific and focused on particular topics. Especially peripheral regions could benefit from the creation of such set-­ups. The idea is not for there to be competition between peripheries but rather for them to cooperate and learn from each other’s practices. A good practice from one peripheral area can act as an input in the development of another, and also encourage the knowledge spiral, which would improve the absorptive capacity of the region.

Conclusion Regional development can be looked at from many different viewpoints. This chapter has discussed the forms of and preconditions for transnational learning which can be used to promote regional development. We approach regional and transnational learning with the help of a knowledge typology (know-­how, know-­ what, know-­why and know-­who) and the SECI model, according to which knowledge is created through a process of interaction between tacit and explicit knowledge. The conversion of knowledge can be supported by a specific place or ‘ba’. Transnational learning can be seen as part of an experimentalist regional strategy which emphasizes the search for new knowledge and opportunities. The preconditions for regional development in the context of transnational learning are the following: 1

2 3

4

5

6

Regions settled especially as sub-­national units exist as spaces where economic, political and social actors network in order to define, institutionalize and implement regional strategies based on their visions and understanding of the region. Regions and localities evolve and change over time in ways that affect regional and local development practices and prospects. Regional development is seen as an evolutionary process, based on development paths, which in some situations might limit development possibilities. Transnational learning can help avoid negative regional lock-­ins and open up possibilities for new development paths. Regional actor networks have the ability to create knowledge and to learn both on an individual as well as on a collective level. In order to use the knowledge and good practices of transnational learning networks regional actor networks have to be motivated to change their regional practices, for instance due to crises, or to negative lock-­ins in the local development path. Transnational learning networks emerge, for instance, around a sector-­ specific activity. Transnational learning is most effective between similar regions concerning, for example, the mode of innovation and learning based on STI and DUI. Further, it is best carried out in a small group of learning partners and with focused themes. In these groups regional actors can learn by reflecting, evaluating and translating the good practices of other countries. Regional development networks develop the region with the help of different perspectives, for instance by using the regional innovation system (RIS)

Geographical perspectives   97

7

approach. Following this example, the development network reflects and responds to the development of the RIS. With the help of inputs of transnational learning the functioning of RIS can be improved, and in a situation where it doesn’t already exist, it can be created and further modified if the regional development network acts proactively. Regional actors need to have a high absorptive capacity, i.e. the ability to acquire, assimilate, evaluate and translate the knowledge of another country and region, as well as development capacity, enabling them to transform and exploit learned practices in their own regional development practices.

I have illustrated how transnational learning inputs can nurture the knowledge spiral on a regional level. However, it is also important to recognize that knowledge is embodied in individuals and collective actors, and therefore also their personal learning capacity increases in the knowledge spiral. Through the creation of the knowledge spiral transnational learning can lead to a process of cumulative causation and produce a virtuous circle in regional development.

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3 Theory of organizational knowledge creation as a framework for transnational learning in regional development Seija Virkkala and Åge Mariussen Introduction This chapter introduces, contextualizes and evaluates the theory of organizational knowledge creation, also referred to in other chapters of this book, introduced by Nonaka and his colleagues. In this chapter, the SECI process and other elements of organizational knowledge creation theory of Nonaka and Takeuchi, such as ba, knowledge vision and knowledge assets, are discussed and adapted in explaining learning processes of regional actors and development networks. Besides the organizational knowledge creation theory the book uses two other theories: the theory of learning through difference and monitoring, which inspired a large-­scale EU experiment, the Open Method of Coordination (see Chapter 1 and Chapter 5, this volume), and the theory of policy transfer, a process in which knowledge about policies, administrative arrangements, institutions and ideas in one political system is used in the development of those spheres in another political system (Dolowitz and Marsh 2000). In Chapter 5 we use some dimensions of the framework developed by Dolowitz and Marsh (2000), such as the policy transfer continuum between voluntary transfer and coercive transfer, as well as the different degrees of policy transfer, i.e., copying, emulation, combination and inspiration, but these points are not chosen as the main analytical framework in the chapter, since in the learning transnational learning approach (the framework of this book) the main challenge is to convert the tacit knowledge of regional practices into a more explicit and general form which can be applied elsewhere. In other words the translatability of the transfer object is important. In this chapter, the theory of learning from difference, and the organizational knowledge creation theory are discussed in relation to the classical organization theory of Simon, March and Olsen, which emphasizes bounded rationality. The current volume concentrates on regional development and learning pro­ cesses of regional actors and development networks. In this chapter we focus especially on learning from good practices in other regions and countries. However, the good practices or the know-­how of regional actors is often tacit and difficult to make explicit, as tacit knowledge is sticky and difficult to transfer. For successful transnational and transregional learning efforts, it is

Organizational knowledge creation   103 important to convert the know-­how of regional actor networks into explicit knowledge which can be transferred to other regions and countries. In understanding and developing the transformation and transfer of good regional development practices, the SECI process and other concepts related to organizational knowledge creation provide a good framework. They can be used both analytically and normatively: analytically as tools in understanding the knowledge conversion process from tacit regional practices to more explicit and transferable forms of knowledge, and normatively as tools for fostering transnational learning between regions with regards to good practices. Through analyzing earlier examples of transnational learning from good regional development practices (Virkkala and Niemi 2006), we have noticed that these are mostly embedded in the regional context, i.e. institutions and history. In the report in question we attempted to solve the problem of embeddedness of regional practices through disembedding good practices with the help of narratives. After that, efforts were made to re-­embed the narratives or the transferable elements of the good practices in another region in another country. The general aim was to find a framework for regional learning, and for converting tacit knowledge into explicit knowledge. Nonaka’s and Takeuchi’s knowledge conversion theory fits well since it emphasizes exactly that. The SECI model considers tacit knowledge to be important and provides a framework for understanding the tacit-­explicit dynamics of knowledge which is central in transnational learning. It also points out that learning constitutes a process of knowledge creation. We first used the SECI model when interpreting the results of a Nordic project (Mariussen 2010). However, there are problems in applying SECI to regional development since the objectives and scope of regional development are broader, more diverse and complex than in business organizations, which are primarily profit-­driven. Our research also focuses on points somewhat different to the organizational knowledge creation theory of Nonaka and Takeuchi, and other theories of organizational learning which are interested in how an organization can learn, adapt and create knowledge. Instead we focus on regional development networks and regional and local governments, seeing them as learning organizations. We suggest that in order to be successful regional development needs transnational inputs, in other words regional development networks have to learn from other regions. Our main aim is to analyze the interaction between regional development and transnational learning networks. We use the organizational knowledge creation theory as a framework for understanding transnational learning, as this theory can be seen as a good building block in understanding and facilitating transnational learning. The chapter is divided into four sections: the first section briefly outlines the background and development of organizational learning theories in order to contextualize the organizational knowledge creation theory, which has been chosen as a potential framework for transnational learning in regional development. The second section then introduces the central elements of the organizational knowledge creation theory: the SECI model, ba and knowledge vision, as well as the critics of the theory. The third section discusses the differences between the

104   S. Virkkala and Å. Mariussen organizational knowledge creation theory, and the transnational learning approach, which is developed in this book, as well as how the elements of the organizational knowledge creation theory, such as the SECI model, ba and knowledge vision, can be used in explaining regional learning as well as transnational learning inputs in regional development. The final section summarizes the issues from the viewpoint of single-, double- and triple-­loop learning.

From individual learning to organizational learning Organizational knowledge creation and learning are areas of research that have been developed especially in the field of knowledge management, which has its theoretical roots in cognitive psychology and market structure economics. In small organizations, organizational learning could be considered synonymous with individual learning. However, as organizations grow, a clear distinction develops between individual and organizational learning. According to Argyris and Schön: Organizations are not merely collections of individuals, yet there are no organizations without such collections. Similarly, organizational learning is not merely individual learning, yet organizations learn through the experience and actions of individuals. What, then, are we to make of organizational learning? What is an organization that it may learn? (Argyris and Schön 1978: 9) Information and knowledge are often seen as interchangeable, but there is a clear distinction between the two. Information is a flow of messages, while knowledge is created when information is rooted in the beliefs and commitments of its holder (Nonaka et al. 2001). Knowledge is partly tacit, and the key to learning is the articulation of tacit knowledge and its relationship with explicit knowledge. Individual learning Organizations cannot create knowledge without individuals and the interaction that takes place within the group. In other words individual learning is the basis of organizational learning (Nonaka and Takeuchi 1995: 13). The organization has to tap into the tacit knowledge created and accumulated at the individual level, since tacit knowledge of individuals is the basis of organizational knowledge creation (Nonaka and Takeuchi 1995). Argyris and Schön (1978) join this view by suggesting that organizations learn through the experience and actions of individuals. The traditional goals for a learning process are the acquisition of knowledge (know-­what), the development of skills (know-­how) and a change in the attitudes of the individual learner. However, through introspection, a learner can also learn about his or her strengths and weaknesses as a learner (Jashapara 2011: 127).

Organizational knowledge creation   105 Current theories of individual learning come from various branches of behaviorism and cognitive psychology. Early behaviorist theories of learning were based on a stimulus-­response model of behavior. Further behavioral research in the 1950s was conducted following the idea of learning where it is connected with the acquisition of associations, conditioned reflexes and stimulus-­response bonds. Behaviorists assume that behavior is a function of its consequences and hence positive reinforcements such as praise or a reward is likely to result in the desired behavioral outcome. On the other hand negative reinforcement such as punishment can weaken certain behaviors (Jashapara 2011: 125). Cognitive psychology sees learning as changes in the levels of knowledge possession rather than as a change in the probability of response. This information-­ processing perspective lays an emphasis on problem solving. The constructivist perspective on the other hand sees learning as a process where individuals develop new ideas based on their current and past knowledge and experiences. Learning occurs when individuals engage in social activity and conversations around shared tasks and problems, and human behavior in general is constructed through observing and interacting with others. The social learning theory explains human behavior as continuous interaction between cognitive, behavioral and environmental factors. Social learning depends on the specific characteristics of the learner, such as their sensory capacities and past reinforcements; capacity to produce cognitive maps illustrating elements and linkages underlying their behavior, and motivation, including external and self-­reinforcement. The social learning theory develops Vygotsky’s idea that social interaction plays a vital role in the development of cognition. Lave and Wenger (1991) extend this notion by arguing that all learning is situated in activity, context and culture. Learners engage in a community of practice, and the social interaction within this community embodies the beliefs and behaviors to be acquired by the learners (Jashapara 2011: 124–5). According to the experiential learning theory (Kolb 1984), experience is the main source of learning and development, and concrete experiences are the basis of observations and reflections. In other words learning is a process whereby knowledge is created through the transformation of experience. Reflections and observations are assimilated and distilled into abstract concepts from which new implications for action can be drawn. These implications can serve as guidelines for creating new experiences (Barrutia and Echebarria 2011). Kolb identifies the different learning styles: 1 2 3 4

Diverging style (performing well in situations that call for the generation of ideas). Assimilating style (understanding a wide range of information and putting it into a concise, logical form). Converging style (the ability to make decisions). Accommodating style (the ability to carry out plans).

These styles are associated with observations and reflections, the formation of abstract concepts, testing the implications of a concept in new situations, and

106   S. Virkkala and Å. Mariussen concrete experience. The experiential learning theory can also be used in understanding team learning and performance. An effective team should consist of members familiar with different types of learning modes. Barrutia and Echebarria (2011) use this model in explaining the management of policy networks in the Basque Country. The studied networks were complex multi-­actor networks aiming at industrial cluster development, quality promotion and sustainable development, through which tacit and codified knowledge was created and shared. The experiential learning theory can also be useful when explaining how regional actors learn from experience and from other members of policy networks. However, the argument in this book is that learning from experience is not sufficient but regional actor networks need transnational learning in order to be successful, which can be reflected and shared among members of the network. Team learning In Nonaka’s and Takeuchi’s (1995) theory teams are considered a central unit of knowledge conversion and creation. Also according to Nonaka et al. (2000) knowledge is created through the interactions amongst individuals or between individuals and their environments, rather than by individuals operating alone. Knowledge can be amplified and crystallized at the group level through dialogue, discussion, experience sharing and observation. Teams have a central role in the knowledge-­creation process as they provide a shared context in which individuals can interact with each other (Nonaka and Takeuchi 1995: 13). Team learning can be viewed as the capacity of a group to engage appropriately in dialogue and discussion (Senge 1990). In team learning it is possible to think about complex issues and bring together the collective intelligence of the team rather than the insights of a dominant individual. It provides innovative and coordinated action, leading to the alignment of the minds of team members, and conscious awareness of the other team members and their actions (Jashapara 2011: 127–8). Furthermore, practices and skills can be shared between teams in organizations. Dialogue is at its best the free and creative exploration of complex issues involving active listening and the suspension of one’s own views. The purpose of dialogue is to go beyond one’s own understanding and to become an observer of one’s own thinking. Dialogue means letting go of power differentials between team players and treating each member equally. Discussion is complementary to dialogue and is best employed in situations of convergent thinking and decision-­ making. In discussions, different views are presented and defended and there is a search for the best views and arguments for supporting the decisions that need to be made (Senge 1990). The classic organizational theory It is important to position the theory of organizational knowledge creation within the broader field of theories of organizational knowledge and learning. On the

Organizational knowledge creation   107 one hand, we have the classical organizational theory of Simon, March and Olsen, emphasizing bounded rationality, and on the other hand there is the theory of organizational knowledge creation developed by Nonaka and his colleagues in order to confront the mainstream organizational theory promoting the classic economics view of rational choices. The mainstream organizational theory in the 1970s and 1980s emphasized information processing, choice, adaptation and the interplay between decision-­making and organizational design following the assumption that individuals adhere to a bounded rationality (March and Simon 1958; March and Olsen 1976; Simon 1991; Nonaka et al. 2006). In broader terms, one might say, the basic or classic perspective regarding knowledge in organizations is not highly different from the understanding of knowledge in certain versions of innovation system theory, such as that of Michael Porter (1990, 2003). The theory of scientific management takes the idea of the rational economic man [sic] as a point of departure, suggesting that organizations attempt to be rational, they are set up to achieve something specific, and their objectives, routines and modes of operating are codified, as is knowledge in general. Accordingly, in this assumingly rationally organized world where everything is codified, knowledge may be controlled by organizations, and this control aims at creating an organizational structure which is optimal for achieving the objectives of each organization. Scientific management saw motivation as a narrow question of control and sanctions, not positive rewards. Practical experiments showed that this was insufficient. March and Simon corrected the motivational problems encountered by this theory in their discussion of organizational equilibrium, arguing that the management is able to motivate all parts of the organization in order for them to contribute to the overall goals of the organization, by mobilizing enough resources from their contributions to reward them. In terms of cognitive rationality, they emphasize that rational decisions are based on a careful consideration of all possible alternatives. Still, in order to reach their objectives efficiently, organizations need to specialize. March and Simon distinguish between what can be seen as relevant knowledge and knowledge that is ‘nice to know’, but which is outside of the horizon of what is seen as commercially interesting. This creates a dilemma of prioritizing between the exploitation of what is inside the field of specialization, and monitoring alternative approaches through exploration, ‘boundary spanning’ and other techniques. Monitoring is expensive, and it has uncertain outcomes, however, there is a lot of knowledge outside the organization, which might become relevant. Still, keeping an eye on too many things at the same time may exhaust the limited information-­ processing capabilities at the top of the pyramid of the corporation. As the exploitation of existing knowledge in the short term may become more rewarding than the exploration for new forms of knowledge, over time organizations learn to restrict learning through monitoring, and focus more on learning through processing of what seems to be available relevant knowledge. This dilemma creates an element of bounded rationality known as myopic behavior, meaning that the firm has become short-­sighted, as there might be a lot of changing aspects

108   S. Virkkala and Å. Mariussen in its environment which it deliberately misses or overlooks. As long as the environment is stable, this might be unproblematic, but in the long run the organization may be overrun by competitors with products or forms of organization it has chosen to ignore. Under stable conditions, this is not likely to happen. But in a turbulent market environment, this is a chronic problem. In the classic organizational theory, adapting to turbulence is known as the ‘garbage can’. Inside a garbage can, chaos prevails, as solutions and problems are disconnected. Actors with problems and others with solutions meet at random, and try experimentally to make new short-­term ad hoc combinations. However, inside the garbage can, this process is characterized by fragmentation, which restricts the possibilities to create long-­term learning. These problems can be overcome through investments that open access to more knowledge, following strategies of knowledge accumulation, and aiming at increased competitiveness. Since knowledge is codified, it may be seen partly as assets which are controlled by the organization and the knowledge base, and as something which contained in pieces of information may be invested in, bought, sold, and transferred as information between organizations. Organizational learning in this context becomes a question of which is the most efficient way for organizations to invest in new, relevant knowledge assets and information. This may be done in a variety of ways, such as by investing in research and development and by recruiting skillful employees in the labor market. There is also the option of acquiring knowledge through networks. Knowledge may be bought from knowledge-­intensive businesses or consultancies, through networks between firms, between firms and knowledge institutions, such as universities, or by accessing various free or commercial sources of information. Thus, knowledge and learning become objects of investment in the financial industry. Organizational learning and the learning organization A distinction should be made between organizational learning and the learning organization. Organizational learning is a process or activities inside an organization, whereas a learning organization can be considered the end state of this process. Some authors suggest that learning organizations exist only in an ideal form (Jashapara 2011: 160–1). Senge (1990) proposed the learning organization as a practical ideal model in his book, Fifth Discipline. According to him a learning organization ‘is a place where people are continually discovering how they create their reality’ (Senge 1990: 12). In building learning organizations managers must: 1 2 3 4 5

adopt system thinking; encourage personal mastery of their own lives; bring prevailing mental models to the surface and challenge them; build a shared vision; and facilitate team learning.

Organizational knowledge creation   109 System thinking is seen as the capacity for putting pieces together and seeing wholes rather than disparate parts. It integrates the disciplines of personal mastery, mental models, shared vision and team learning, fusing them into a coherent body of theory and practice. Personal mastery means the development of our capacity to clarify what is important to us in terms of our personal vision and aims. This helps develop creative tension between our current reality and future vision. Mental model is the capacity to reflect on our internal pictures, involving balancing our skills of inquiry and advocacy as well as understanding how our mental models influence our actions. Shared vision is concerned with building a sense of commitment in a group, based on what it would really like to create. Team learning means developing our capacity for conversation and balancing dialogue. In order to discover new ideas and challenge old ones, organizations may engage people in dialogue. Managers play an important role in developing learning organizations through building shared visions that are, however, rooted firmly in personal views (Jashapara 2011: 162; Senge 1990; Nonaka and Takeuchi 1995: 45). The emphasis on mental models, team learning and shared vision in Senge’s model of the learning organization has some similarities with Nonaka’s and Takeuchi’s (1995: 45) theory of knowledge creation. However, Senge rarely uses the word knowledge and does not present any ideas regarding how knowledge can be created. He does not consider knowledge development as constituting learning. Besides, he sees organizational learning as a process of adaptive change that is influenced by past experience, focused on developing or modifying routines, and supported by organizational members (Senge 1990: 45). In response to Senge’s idealistic model of the learning organization, Garvin (1993) considered the notion of the learning organization in relation with various aspects of organizational learning. He defined a learning organization as follows: ‘A learning organization is an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights.’ The definition can be used for analyzing regional learning, i.e., learning in actor networks. According to Garvin (1993) five forms of organizational learning or activities are construed as important in this model: 1 2 3 4 5

systematic problem solving experimentation learning from past experience and mistakes learning from others transferring and sharing knowledge across the organization(s).

These forms of organizational learning can be applied in analyzing learning within regional actor networks. Regional learning can be characterized by the systematic solving of regional problems, regional experimentations especially in the form of pilot projects, learning from the regional past, transregional and transnational learning, and sharing and transferring knowledge inside the region.

110   S. Virkkala and Å. Mariussen Sharing knowledge across organizations can be compared with socialization and internalization in the SECI model. The original point of departure of Nonaka’s theory was the Japanese form of organization, what Alice Lam (2010) refers to as the J-­form. The J-­form, a large-­ scale organization, can be seen as a solution to the classic problems regarding the exploration of new forms of knowledge and the exploitation of the knowledge you already have, since it possesses superior forms of highly specialized internal knowledge assets. Increased scale could lead to increased scope of products and forms of knowledge inside the organization, as knowledge assets are made more heterogeneous and their ability to adapt to changes in the environment increases. Lately, the shortcomings of the American model of organization, Fordism, have been corrected, resulting in the emergence of modern forms of organization, which Alice Lam, with reference to Mintzberg, calls adhocracies. The former refers to an organization which is good at cumulative learning and derives its innovative capabilities from the development of organization­specific collective competences and problem solving routines. The term J-­form is used because its archetypal features are best illustrated by the ‘Japanese type’ of organizations, such as Aoki’s (1988) model of the ‘J-­firm’, and Nonaka and Takeuchi’s (1995) ‘knowledge creating companies’. Adhocracy (Mintzberg, 1979), by contrast, tends to rely more upon individual specialist expertise organized in flexible market-­based project teams capable of speedy responses to changes in knowledge and skills, and integrating new kinds of expertise to generate radical new products and pro­ cesses. Mintzberg’s term is used here to capture the dynamic, entrepreneurial and adaptive character of the kind of organization typified by Silicon Valley type companies. (Lam 2004: 18) Adhocracies rely on the existence of markets and related networks, which may provide flexible access to information and knowledge. They constitute a step in the direction of the ‘garbage can’. However, something that might prevent them from becoming garbage cans is the ability of actors within adhocracies to recreate some kind of order, by going from random ad hoc relations to systems of innovation. Policy interventions which encouraged the development of these markets for knowledge started with institutions which made it possible to privatize and commercialize knowledge through methods, such as patenting. A more generalized approach came with the National Innovation System paradigm, which was launched by the OECD in 1990, and later followed up by the EU Lisbon policies in 2000. Core issues were to promote what was seen as ‘interactive’ innovation, in other words, innovation carried out through networks and knowledge markets which were external to the firm. Thus, these policies supported the emergence of adhocracies. Another core issue in the Lisbon policies was to compensate for the market failure which resulted in a too strong focus on knowledge exploitation

Organizational knowledge creation   111 instead of exploration, and for the low investments in research and development (R&D) through targets of increased R&D investments in Europe. Within the systems of innovation literature, authors such as Michael Porter emphasize how production systems, such as value chains, may generate clusters with knowledge access and processing advantages, which may sustain innovation and adaptability. Among geographers, there has been a sustained interest in spatial proximity as a basis for accessing knowledge and information. The meeting point between these traditions has been the question of whether information inside global corporations (global pipelines) or locally available information (local buzz) are more important. The idea of regional systems of innovation emphasizes the need for networks between regionally based universities and firms. Similarly, theories of open systems of innovation emphasize that the ‘externalities’ of private investments in knowledge, which is free and available, deserve more attention as a source of innovation and economic development. Learning through difference According to its initiators, the application of the theory of learning through difference was a step toward a new architecture of experimentalist governance in the EU (Sabel and Zeitlin 2010). The theory of learning through monitoring and experimentalist governance has a perspective of knowledge as holistic and it suggests that there is a close relationship between tacit and codified knowledge, based on American pragmatism. As such, it is close to the theory of organizational knowledge creation; however, there is one crucial difference between learning from difference and organizational knowledge creation, that is the assumptions regarding the actor. This difference is crucial especially in terms of method, which will be explained below. The roots of the current theories of learning through difference lie in the debates surrounding Fordism and post-­Fordism in the 1980s (see Chapter 1, this volume). Based on observations of emerging forms of territorially based economic organization in the 1980s, such as those in the industrial districts in Northern Italy, as well as other similar forms of economic organization, Piore and Sabel argued in favor of ‘post-­Fordist’ forms of economic organization. In this model, networks of firms would co-­specialize with each other applying principles of flexible specialization as an alternative to the hierarchies of scale and scope. This was a ‘post-­Fordist’ alternative to ‘best practices’, an organizational model promoted especially in US literature at the time (Piore and Sabel 1984). Flexible specialization was in fact quite close to Mintzberg’s adhocracy. However, Sable argued that the post-­Fordist form of organization, where knowledge was generated through the collaboration between several autonomous actors instead of being coordinated hierarchically, was a new and superior form of economic organization with the potential to replace the hierarchical way. This argument was later reformulated with an emphasis on learning through monitoring others (Sabel 1992). The idea of learning through monitoring was based on research where Sabel showed that economic actors were continuously

112   S. Virkkala and Å. Mariussen monitoring the organizational strategies of their competitors within the same sector, radically assessing their own strategies, and looking for better alternatives. Further, institutions providing access to forms of information, such as indicators and procedures for benchmarking, were established collectively in various sectors. Thus Sabel identified an alternative to hierarchical coordination, where collective forms of information sharing, benchmarking, and peer review is a basic input in the formulation of organizational strategies. This means that strategies are not decided by one owner or principal actor; instead, they are decided collectively by actors who hold relevant knowledge. At the same time, Sabel did not imply that relations were random, as in the garbage can. Instead, the learning through difference approach suggests that when left to themselves, actors are able to construct institutions to govern their common knowledge resources in an optimal way, and without the application of hierarchy. The theoretical argument behind this was made with reference to pragmatic learning in the US tradition (Sabel 1992; Dorf and Sabel 1998). Crucially, the theory of pragmatic learning has a somewhat more alternative perspective on actors than the classic organizational theory of bounded rationality; pragmatic actors are not bounded by their organizational restrictions, instead, together with actors from other organizations, they are able to make collective decisions. This form of learning through difference is likely to emerge under conditions of strategic uncertainty (Sabel and Zeitlin 2010: 9). Table 3.1 summarizes the differences and similarities between the classic organization theory introduced by Simon and March, the pragmatic learning theory of Sabel and Zeitlin, and the organizational knowledge creation theory of Nonaka. Both learning through difference and Nonaka’s approach confront the classic organizational theory, and there are also many other similarities between the two. First, both approaches acknowledge the significance of the establishment, be it minimalist, of a certain organizational framework for the discursive processes. In the case of learning through difference, these frameworks include the provision of indicators of performance, which may reveal differences in standards of performance and trigger the search for a root cause analysis of shortcomings and improvements. In the case of EU regulations, it also includes the facilitation of meetings and workshops, in other words, the frameworks of a ba which may provide input to new regulations of the sector involved. The major difference, one might say, is in the perspective on the preconditions for dialogues where the best argument wins. If actors in a dialogue are jointly able to decide what the best argument is, the outcome is a strong indication that they belong to a community of expertise, or, as pointed out by Mariussen in Chapter 1, a society which shares knowledge. This draws attention to sectors where the Open Method of Coordination (OMC) failed, because national networks did not respond to the ‘naming and shaming’ based on indicators, nor did they sign up for the quest to find failures in national policies. These outcomes might suggest that this is a field of national policy where the national elite do not accept the indicator (see Chapter 1, this volume), or where the national community of

Organizational knowledge creation   113 Table 3.1 Comparison of the classic organizational theory, the pragmatic learning theory and the organizational knowledge creation theory Theories

Classic organizational theory (Simon, March, Porter)

Actors

Modification of economic Pragmatism rational man (bounded (unbounded), rationality) communitarian Codified, restricted and Shared knowledge, tacit and explicit controlled by the organization, generalizable as information Information processing, Learning through New knowledge access to knowledge, monitoring and creation through investments in difference, SECI knowledge assets institution building Fordism, advantages in Experimentalist J-form, middle-upscale and scope, multilevel down adhocracies governance Value chain clusters, Deliberation Ba, SECI garbage cans, proximities, networks Radical STI innovations Co-management of STI-DUI common incremental (resource) innovations problems Fragmentation, underRelies on collective Depends on investments in creation of multilevel coordination knowledge (market institutions, which failure) may be blocked or offset

Knowledge

Learning

Organization Networks of innovation Innovations

Weaknesses

Pragmatic learning (Sabel and Zeitlin)

Organizational knowledge creation (Nonaka et al.) Normative/cognitive

experts shares knowledge which is at odds with the best practice countries (see Chapter 4, this volume). Until the mid-­1980s, a broader concept of knowledge was developed that included both explicit aspects, such as language and documentation, and tacit aspects, such as experience and skills. Knowledge is seen to be embodied in the individual, and is therefore history dependent, context sensitive, specific and aimed at defining problems. If knowledge is embodied, a core problem of the organization theory is not organizational design or adaptation under bounded rationality, but how to transfer knowledge between individuals in the organization (Nonaka et al. 2006). According to Nonaka and Takeuchi (1995: 49–50) only a few studies in the 1980s and 1990s focused on how knowledge is created within and between businesses. Besides, while these theories focused on the acquisition, accumulation and utilization of existing knowledge, they lacked

114   S. Virkkala and Å. Mariussen information regarding the creation of new knowledge, neglecting its subjective and tacit aspects. The theory of organizational knowledge creation was a contribution of Nonaka and Takeuchi (1995) to the discussion of organizational learning. According to this theory organizations deal with uncertain environments not merely through passive adaptation, but through active interaction, and they are able to transform themselves. An organization that wishes to cope dynamically with the changing environment needs to be one that creates information and knowledge efficiently, and not merely processes them. According to Nonaka and Takeuchi (1995: 49–50) an organization recreates itself by destroying its existing knowledge system and creating new ways of thinking and doing things. In this book, we adapt this view to transnational learning. We think knowledge creation and the conversion of tacit into explicit knowledge is the key to transnational learning. Learning transnational learning is an effort of regional actors, comparable to organizational knowledge creation. To learn some facts and ways of organizing and networking is important, but the key is to develop the capacity for transnational learning.

The organizational knowledge creation theory One of the most influential theories of knowledge management has been the organizational knowledge creation theory developed first by Nonaka and Takeuchi in The Knowledge Creating Company in 1995, and explored further in a number of articles by Nonaka and his colleagues. It was a new theory of knowledge-­creation processes and mechanisms which also provided an explanation for the continuous innovations in Japanese firms, such as Honda, Canon, and Sony. These companies have been capable of innovation in order to create new knowledge, disseminate it throughout the organization, and embody it in products, services and systems. The idea is to innovate continuously, incrementally and spirally (Nonaka and Takeuchi 1995). Instead of acquiring knowledge from outside and merely using this to solve problems, organizations identify and define their specific problems and then, by actively interacting with and reshaping their environments, and the organizations themselves, develop new knowledge for solving these problems (Nonaka et al. 2001: 13). Important elements in the organizational knowledge creation theory are the definition and type of knowledge (epistemological dimension), individual-­teamorganization (ontological dimension), the SECI process of knowledge conversion through socialization, externalization, combination and internalization, ba, i.e., the context of knowledge creation, knowledge vision and knowledge assets. Tacit and explicit knowledge The cornerstone of the organizational knowledge creation theory is the distinction between explicit and tacit knowledge. The interaction of these two types of knowledge leads to a knowledge conversion process, i.e., the SECI process. Explicit and codified knowledge are communicable through a systematic set of

Organizational knowledge creation   115 codes, for example through language, patents or models (Nonaka and Takeuchi 1995: 59). Tacit knowledge is based on human understanding, i.e., people know more than what they can explicitly say. It is personal and hard to formalize, making it difficult to communicate or to share with others. Tacit knowledge is deeply rooted in individuals’ actions and experience, as well as in the ideals, values and emotions he or she embraces. Tacit knowledge is know-­how: a master craftsman, for example, develops a wealth of expertise in his fingertips after years of experience. At the same time, tacit knowledge contains an important cognitive dimension. It consists of schemata, mental models, beliefs and perceptions so deeply ingrained that we take them for granted. Polanyi’s argument regarding the importance of tacit knowledge in human cognition may correspond to the central argument of Gestalt psychology, which asserts that perception is determined in terms of the ways it is integrated into an overall pattern, or gestalt. Mental models, such as schemata, paradigms, perspectives, beliefs and viewpoints, help individuals to perceive and define their world. On the other hand the technical element of tacit knowledge includes concrete know-­how, crafts and skills. The cognitive dimension of tacit knowledge reflects our image of reality and our vision of the future (what ought to be). These implicit models shape the way we perceive the world around us. The subjective and intuitive nature of tacit knowledge makes it difficult to process or transmit the acquired knowledge in a systematic or logical manner. It is difficult to split into explicable elements, since tacit is something which combines personal interpretation, interaction, context and working practices. Tacit knowledge is embodied in the body, mind and in society. For tacit knowledge to be communicated and shared within the organization, it has to be converted into words or numbers that everyone can understand. It is precisely when this conversion takes place – from tacit to explicit, and back again into tacit – when organizational knowledge is created (Nonaka and Takeuchi 1995). Knowledge can be seen as a continuum of explicit and tacit dimensions. However, the two types of knowledge are complementary to each other, and both are crucial to knowledge creation. They interact with and convert into each other in the creative activities of human beings. Understanding the reciprocal relationship between explicit and tacit knowledge is the key to understanding the knowledge-­creation process. The interaction between the two types of knowledge is a social process between several individuals and cannot be confined to just one (Nonaka et al. 2001). Furthermore the key to knowledge creation lies in the mobilization and conversion of tacit knowledge. Knowledge creation is a dialectic process, in which contradictions are synthesized through interaction between individuals, the organization and the environment (Nonaka and Toyama 2003). Knowledge is context-­specific and relational, and through its conversion from tacit to explicit, product and process innovations are produced. Knowledge conversion also provides an enhanced understanding of what is going on in organization, or ‘justified true belief ’. This happens, for example, when a team reaches

116   S. Virkkala and Å. Mariussen an agreement on and collective understanding of the problems, solutions, tasks, and actions in the organization. The creation of new knowledge enables new strategies of action, and an enhanced capacity to act. For example, new knowledge enables improved or new definitions of problems and solutions, and a more effective task performance. For the team, shared knowledge allows group decision-­making and problem solving, drawing from shared insights, language, mental models and knowledge about expertise, problem-­solving capabilities, and specialized tasks of individual organizational members. Thus the capacity to act, define and solve problems can be explicit and/or tacit throughout the continuum. For the individual, the outcome of knowledge conversion can be the development of tacit and explicit forms of knowledge. On the other hand, at the team level, the outcome of knowledge conversion can be shared knowledge ranging from tacit to explicit. The outcome of knowledge creation can also be the creation of a new social practice (Nonaka and von Krogh 2009), which is crucial in the case of developing new regional practices based on transnational learning inputs. Individual-­group-organization Tacit knowledge possessed by individuals is the basis of organizational knowledge creation. The organization has to mobilize tacit knowledge which has been created and accumulated at the individual level. According to the SECI model the mobilized tacit knowledge is organizationally amplified through four modes of knowledge conversion, and transformed into practice at higher ontological levels. The different knowledge creating entities are individual, group, organizational and inter-­organizational. Organizational knowledge creation is a spiraling process, starting at the individual level and moving up through expanding communities of interaction, crossing sectional, departmental, divisional and organizational boundaries. In this knowledge spiral the interaction between tacit knowledge and explicit knowledge becomes larger in scale as it moves up the ontological levels. What is unique about continuous innovation is the linkage between the outside and the inside. Knowledge that is accumulated from the outside is shared widely within the organization, stored as part of the company’s knowledge base, and utilized by those engaged in developing new technologies and products. A conversion of some sort takes place, and this dual internal and external activity fuels innovation. However, knowledge can also be created with alliances and through interactive relationships with customers, universities, local communities and governments (Nonaka and Toyama 2003). The SECI process Nonaka and Takeuchi (1995) present four modes of knowledge conversion which are created when tacit and explicit knowledge interact with each other, and which constitute the engines of the knowledge-­creation process. They are

Organizational knowledge creation

117

the mechanisms by which individual knowledge gets articulated and amplified into, within and throughout the organization. Taking the first letters of the name of each type of conversion gives rise to the SECI mnemonic. According to the SECI model (Figure 3.1), knowledge is created through interaction, by convers­ ing knowledge (Nonaka and Takeuchi 1995: 62). The four modes through which knowledge is created are: 1 2 3 4

socialization: from tacit to tacit externalization: from tacit to explicit combination: from explicit to explicit internalization: from explicit to tacit.

In the first stage of socialization, tacit knowledge is created and shared between individuals in physical proximity, mainly through face-to-face commu­ nication and other direct experiences. Transferring tacit knowledge requires sharing the same experience through joint activities, spending time together, or living in the same environment. An example of socialization is traditional apprenticeship. Apprentices learn their craft by observing, imitating and practic­ ing the works of their masters (Nonaka et al. 2001: 16). Through externalization, in the process of articulating tacit knowledge in order to convert it into explicit knowledge, knowledge becomes crystallized, meaning it can be shared by others, and it also becomes the basis of new know­ ledge. Our expressions are often inadequate, inconsistent and insufficient. When

Tacit

Tacit E x te rn a liz a tio n

S o cia liza tio n

Empathizing

Articulating

Embodying

Connecting

C o m b in a tio n

In te rn a liza tio n Explicit

Explicit

Figure 3.1 The SECI process based on Nonaka et al. (2000).

118   S. Virkkala and Å. Mariussen we cannot find an adequate expression for an image through analytical methods of deduction or induction, we have to use a non-­analytical method. Tacit knowledge is expressed and translated into metaphors, concepts, diagrams, models or prototypes so that it can be understood by others. Metaphors create new ways of experiencing reality, and are a way of perceiving or intuitively understanding one thing by imagining it symbolically as something else. Using an attractive metaphor and/or analogy is highly effective in fostering direct commitment to a creative process (Nonaka and Takeuchi 1995), and therefore metaphors are a tool for creating a network of new concepts. The creative process continues as we think of similarities between concepts and feel an imbalance, inconsistency or contradiction in their association, which often leads to the discovery of a new meaning or even to the formation of a new paradigm. Dialogues also support externalization (Nonaka et al. 2001). During the third stage, explicit knowledge is increased by combining it with already existing knowledge. Through the combination process explicit knowledge is converted into more complex and systematic knowledge. The new knowledge is then connected with existing knowledge through sorting, adding, combining and categorizing. New explicit knowledge is disseminated among the organizational members through presentations and meetings, and thus processed within the organization in order to make it more usable. Middle management plays a critical role in creating new concepts through the networking of codified information and knowledge. New concepts are combined and integrate with broader concepts, such as knowledge vision, in order to generate a new meaning for the latter. In this mode, communication, diffusion and the systematization of knowledge are key. In the fourth stage, explicit knowledge is internalized and ‘conversed into’ tacit knowledge, when individuals apply the knowledge. Internalization is the process of embodying explicit knowledge in order for it to become tacit knowledge, and it is closely related to learning by doing. Explicit knowledge has to be embodied in action and practice. Through internalization, knowledge that has been created is shared throughout the organization. Internalized knowledge is used to broaden, extend and reframe organization members’ tacit knowledge (Nonaka and Takeuchi 1995). When tacit knowledge is internalized by individuals and thus converted, in the form of shared models and technical know-­how, into their tacit knowledge bases, it becomes a valuable asset. Thus the process of internalizing explicit knowledge actualizes concepts and methods concerning strategy, tactics, innovation and improvement. Documents and manuals facilitate the transferring of explicit knowledge to other people, thereby helping them experience the experiences of others indirectly. Reading or listening to a success story makes some members of organizations feel the realism and essence of the story, and thus a past experience may change into a tacit mental model. When such a mental model is shared by most members of an organization, the tacit knowledge behind it becomes part of the organizational culture (Nonaka et al. 2000). Therefore training programs, for example, help trainees to understand their organization. Explicit knowledge can be embodied through simulations or

Organizational knowledge creation   119 experiments in order to trigger a process of learning by doing, transforming the explicit knowledge into tacit knowledge (Nonaka et al. 2001: 17). This tacit knowledge accumulated at the individual level is in turn shared with others through socialization, setting off a new spiral of knowledge creation. Organizational knowledge creation is a continuous and dynamic process of interaction between tacit and explicit knowledge. This interaction is shaped by shifts between different modes of knowledge conversion, which are in turn induced by several triggers. In this knowledge spiral the interaction between tacit and explicit knowledge becomes larger in scale as it moves up the ontological levels. The four SECI stages form a spiral of knowledge creation, which combines the creators (individual, group and organization) with knowledge (tacit and explicit). The tacit knowledge accumulated at the individual level needs to be socialized with the other organizational members, thereby starting a new spiral of knowledge creation. When tacit and explicit knowledge interact an innovation emerges (Nonaka et al. 2000, 2001). The content of knowledge creation in each knowledge mode (tacit or explicit) is different. Socialization yields what can be called sympathized knowledge, such as shared mental models and technical skills. Externalization results in conceptual knowledge. Systemic knowledge is created through the combination of different explicit knowledge. Internalization produces operational knowledge about the project management, the production process, new product usage and policy implementation (Nonaka et al. 2000). Ba – the place of knowledge creation Nonaka and Konno (1998) propose the Japanese concept of ba as the key to the relationship between knowledge creation and learning. The Japanese word ba translates as place in English. It is an arena of knowledge creation and interaction. Ba enables the sharing of knowledge in physical, mental and sometimes virtual arenas, where it is created through interaction between individuals and with their environment. For knowledge to be created organizationally, the knowledge possessed by the individual needs to be shared, recreated and amplified through interaction with others, and ba is a space where such interaction takes place. Therefore the knowledge-­creating process is also a process of creating a ba, and a new boundary of interaction (Nonaka et al. 2000). Ba is not necessarily a physical space, but rather a context that harbors meaning. Nonaka and Toyama (2003) consider ba to be time and space which is shared in order to encourage the emerging of relationships among individuals and groups, leading to the creation of knowledge. It can be physical (office), virtual (email, teleconference), mental (shared experiences, ideas, ideals) or any combination of these. It can be space and time that is shared within a project team, a space for informal dialogue, for sharing experiences with customers, for interdivisional cooperation, or a space shared by virtual companies (Nonaka et al. 2001: 18–19). Different kinds of knowledge processes need different kinds of ba. Nonaka and Konno (1998) describe four bas that correspond with the stages of the SECI

120   S. Virkkala and Å. Mariussen process: these are the originating ba that supports face-­to-face communication and therefore socialization, the dialoguing/interacting ba that supports the externalization of tacit knowledge, the systematizing ba that supports combining knowledge, and the exercising ba that supports the internalization of knowledge. Nonaka and Konno (1998) also describe how to construct a ba through organizational efforts. In what follows, we first look at the definitions of the different bas introduced by Nonaka and Konno (1998) and Nonaka et al. (2000, 2001), second, we review Kostianen’s suggestions for how to use the different bas in regional development and, third, represent suggestions for how regional actors can use the different types of bas in transnational learning. The originating ba is the world where individuals share feelings, emotions, experiences and mental models. An individual sympathizes or, further, empathizes with others, removing the barrier between the self and others. The socialization process in the originating ba creates a common understanding among group members and captures knowledge through physical proximity and face-­toface contact. Face-­to-face experiences are key in the conversion of tacit knowledge. For the originating ba to emerge, care, love, trust and commitment are important elements. The originating ba is the primary ba from which the knowledge creation begins. Kostiainen (2002) has examined the SECI model as part of regional development processes. According to Kostiainen constructing and utilizing the originating ba would provide a possibility to deepen cooperation and to systematically transfer tacit knowledge to the development network. A precondition for the originating ba to emerge is a strong commitment of the network members: they have to let themselves be part of the community. However, there are many barriers that can prevent the creation of the level of trust that is needed. One of the biggest is that the members of the network often wish to promote their own interest. In addition, different types of underlying organization cultures can cause difficulties. For the successful creation of the originating ba, the core of the development network should be made to commit itself to transferring tacit knowledge. Visiting the Finnish sauna, participating in Honda’s brainstorming camps, common sport events or cultural performances may create a sense of community (Kostiainen 2002). A good way to get to know the culture of others is to work within it. Along with work, the organization’s way of acting and thinking becomes familiar, and tacit knowledge can be transferred. Exchange programs within the development network, in which employees from different organizations and different levels within the same organization experiment working in some other organization, may foster new types of socialization. A shared world can be created also in common educational visits, as in these events participants usually spend a lot of time together and thus interact more unofficially (Kostiainen 2002). In the framework of this book the originating ba is the space in which good practice is created by regional actors. The point of departure for ba is tacit knowledge about how things operate in regional development. It can relate to, for example, a way of networking, organizing the development in one sector,

Organizational knowledge creation   121 solving regional and environmental problems, generating and developing resources, or constructing institutions. A good regional practice in one area can be recognized by developers or researchers in another or in the platforms planned by transnational institutions, such as the EU’s Smart Specialization platform (see Chapter 5, this volume). The dialoguing ba is the space of externalization, and dialogues are the key to knowledge conversion. Externalization requires the expression of tacit knowledge and its translation into forms comprehensible to others, meaning converting tacit knowledge into explicit knowledge using metaphors, analogies, concepts, hypotheses or models (Nonaka et al. 2000). The dialoguing ba is more consciously constructed than the originating ba. Through dialogue, individuals’ mental models and skills are converted into common terms and concepts (Nonaka and Konno 1998). Two processes operate together here: individuals share the mental model of others but also reflect on and analyze their own (Nonaka et al. 2001). In dialogue, metaphors and tales are utilized in order to make tacit knowledge explicit, and mental models and skills are transformed into common terms and concepts. Facilitators and conceptual leaders can be used to improve the conversion process and to steer it in the right direction (Nonaka et al. 2000). According to Kostiainen (2002) tacit knowledge embedded in the development network should become explicit and exploitable in order for a region to develop. For the successful management of the interacting ba, there need to be suitable themes, and a composition of individuals that suits them. In order to raise different viewpoints, both general and specialized developers are needed in the dialoguing/interacting ba. Actors should be capable of the creative operation of metaphors, tales and allegories. Conceptual leaders often have a crucial role as the facilitators of dialogue (Kostiainen 2002). An example of the dialoguing/ interacting ba is a joint meeting or session where tacit knowledge is converted into an explicit form through metaphors and allegories. In the case of transnational learning within regional development networks, the dialoguing or interacting ba has two phases. First, it is a space where the ­recognized good practice of the sender region is explained and codified. This can be done for instance in the form of narratives written by the researchers. These narratives are stories based on interviews with the key actors of the good regional practice as well as other material. Thus the local tacit knowledge can be externalized and generalized. In the second phase, the regional actor of the receiving area evaluates the good practice story or narrative of the sender area. In this dialogue, metaphors and allegories can be used (Chapter 5, this volume). The systemizing ba is a space where the new explicit knowledge generated at the externalization stage is combined with existing information and knowledge, generating new explicit knowledge. The combination involves the conversion of explicit knowledge into a more complex set of explicit knowledge through collective and virtual interaction. The process of combination generates and systematizes explicit knowledge. Successfully constructing the systemizing ba can promote and foster new explicit knowledge (Nonaka and Konno 1998; Nonaka

122   S. Virkkala and Å. Mariussen et al. 2000). The combination of different forms of explicit knowledge can be supported by using ICT and databases, online networks, etc. Applied in the context of regional development networks, Kostiainen (2002) mentions that member organizations of development networks typically produce a lot of information, for example, statistics, and sharing this information would be a big step forward in strengthening a regional development network. Kostiainen (2002) suggests a model in which specialized developers produce information about development, opportunities and the specific needs of their area, and general developers produce compatible information about the whole region which can steer the information production of specialized developers. In the case of transnational learning in regional development, new knowledge is combined with explicit data, such as that related to solving regionally specific problems in the area receiving the good practice. The exercising ba facilitates the conversion of explicit knowledge into tacit knowledge, and the internalization of knowledge. In this phase, explicit knowledge has to be embodied in action and practice by using simulations or experiments to trigger learning by doing processes. Other working methods in the exercising ba include focused training with mentors, on-­the-job training, learning by doing, and active participation. The most essential factor is to apply new explicit knowledge in practice directly or through simulation (Nonaka and Konno 1998; Nonaka et al. 2000). Internalization and applying explicit knowledge in practice is an individualistic process compared to socialization and externalization, both being based on group work, as one of the central elements of internalization is the desire of individuals to renew and develop their own capabilities, competencies and working procedures. One of the most typical tasks of a development network is to prepare strategies for the region. One possibility for promoting the internalization of new knowledge is a common education program organized around regional strategy (Kostiainen 2002). The program can contain individually tailored educational strategies as well as common items. It could be organized, for example, around a project for implementing a certain strategy, which would then be reported and taught to all participants, therefore giving them a chance to respond. Thus, the internalization of new thought and knowledge can be promoted strongly. In the case of transnational learning the knowledge derived from good practices combined with relevant knowledge of the receiving region should be internalized by regional actors. A new good practice might emerge and become a central element of regional strategy in the receiving region, although sometimes the translated and combined elements cannot be identified by outsiders. The emerging regional strategies can be internalized by individuals through educational programs, as suggested by Kostiainen. After the internalization phase a collective socialization process leads to the improvement of regional practice in the receiving region. This can then form the basis for the creation of a new good practice (see Figure 3.2). As mentioned before, knowledge is created through interactions between individuals together with their environment, and the ba is a space where such interaction takes place. Therefore the knowledge-­creation process is also a

Organizational knowledge creation

Tacit

123

Tacit

Originating ba 2 in receiver region New and improved regional practice in receiving region

Tacit

Originating ba 1 Socialization Good practice in sender region Recognition of the good practice

Tacit

Interacting ba Externalization (from tacit to codified knowledge) Explication and generalization of good practice Evaluation of good practice in learning seminars in receiver region

Systematizing ba (cyber ba) Excercising ba Internalization o f the new explicit knowledge to new tacit knowledge by the actors in the receiving region Explicit

Combination of the generalized and explicit features of good practice of sender region with the information of the receiving region Explicit

Figure 3.2 Bas and transnational learning from good practices (based on modified N onaka et al. 2000, figure 6 page 16).

process of creating a ba. Creating a space means drawing boundaries for the ba as well as for the new interaction. The creation of a ba also involves a process of knowledge conversion (Nonaka and Toyama 2003). The ba can be seen as a conceptualization of the context of knowledge cre­ ation. The context is a space of interaction, framed by knowledge-creating activ­ ities, through which knowledge is used for its interpretation and transformation.

124   S. Virkkala and Å. Mariussen Also Hautala (2011: 42) points out that knowledge and its creation processes are intertwined with their context, in other words the place (the arena) in which they occur. The ba is widely applied also in regional studies, for example in the above-­mentioned study on urban development (Kostiainen 2002), and in studies where academic knowledge creation is analyzed as spatio-­temporal processes (Hautala 2011). The concept of ba is also used in the relational approach (Chapter 2, this volume). An organization is a configuration of various bas, where people interact with each other. The boundaries of ba are fluid and can be changed quickly. Bas have a ‘here and now’ quality, and transform as the context of participants and memberships change (Nonaka and Toyama 2003). Knowledge vision and assets An organization needs a vision that synchronizes the entire organization. A knowledge vision gives the knowledge-­creation process a direction by asking questions such as ‘What are we?’, ‘What should we create?’, ‘How can we do it?’, ‘Why are we doing this?’ and ‘Where are we going?’. In a firm, it is the task of the top manager to articulate the knowledge vision and communicate it (Nonaka et al. 2000). ‘A knowledge vision defines the field or domain that gives corporate members a mental map of the world they live in and provides a general direction regarding what kind of knowledge they ought to seek and create’ (Nonaka and Takeuchi 1995: 227). Knowledge vision can be seen as the intention of the organization, and should serve as the foundation upon which the company’s strategy is formulated. The essence of strategy lies in developing the organizational capability to acquire, create, accumulate and exploit the knowledge domain. To foster a high degree of commitment from members of the organization, a knowledge vision should be left open-­ended. Thus, the members of the organization have freedom and autonomy to set their goals. Top managers should be able to see the world from a knowledge perspective, mobilize the latent knowledge power held within their organization, and justify the knowledge created by the firm (Nonaka and Takeuchi 1995: 227–8). Knowledge vision also defines the value system that evaluates, justifies and determines the quality of the knowledge the company creates. Together with organizational norms, routines and skills, the value system determines what kind of knowledge is needed, created and retained. It also fosters the commitment of those who are involved in the knowledge creation. Organizations should foster their members’ commitment by formulating an organizational intention. Knowledge vision determines the knowledge base of organizations over the long term. Based on the vision, top management has to facilitate the knowledge-­ creation process by developing and promoting the knowledge assets of the company. Knowledge assets are firm-­specific resources that create values for the firm. They are inputs, outputs and factors that facilitate the knowledge-­creation process. There are four types of knowledge assets:

Organizational knowledge creation   125 1 2 3 4

Experiential knowledge assets consist of tacit knowledge which is shared through common experiences, such as skills and know-­how of individuals, passion and tension. Conceptual knowledge assets consist of explicit knowledge articulated through images, symbols and language. Systemic knowledge assets consist of systemized explicit knowledge, such as documents, specifications, manuals, databases, patents and licenses. Routine knowledge assets consist of tacit knowledge embedded in actions and practices, such as know-­how, organizational routines and organizational culture in daily operations (Nonaka et al. 2000: Figure 7).

Knowledge assets form the basis of the knowledge-­creation process. They are mobilized and shared in bas where tacit knowledge held by individuals is converted and amplified by the knowledge spiral, which operates through the SECI process. Top management and middle managers have to evaluate the knowledge assets available to them and establish the type of knowledge, according to the knowledge vision, that they are lacking. They can then create a strategy in order to build, maintain and utilize the needed knowledge assets. Especially middle managers are at the center of the dynamic knowledge-­creation process, since they are the leaders of the team. In team dialogues, members articulate their own thinking, sometimes with the help of metaphors or analogies, revealing hidden tacit knowledge that is otherwise hard to communicate. Middle managers are at the intersection of the vertical and horizontal flows of information, as they work as a bridge between the visionary ideals of the top and the sometimes chaotic business realities confronted by workers (Nonaka and Takeuchi 1995: 126–8). All of the three elements of organizational knowledge creation, the SECI process, the ba and knowledge assets, have to interact with each other organically. An organization creates new knowledge based on its existing knowledge assets through the SECI process that takes place in ba. The new knowledge then becomes part of the knowledge assets of the organization which are the basis for the continuation of the knowledge spiral. Knowledge assets can act as either inputs or outputs in the SECI process. Knowledge creation is synchronized, defined, justified and directed by the knowledge vision. This includes the facilitation of the SECI process and building and energizing the ba (Nonaka et al. 2000). Figure 3.3 shows how the knowledge-­creation process is coordinated. Nonaka and Takeuchi (1995) review the benefits and drawbacks of top-­down and bottom-­up organizations from the viewpoint of organizational knowledge creation. The top-­down model is suited for dealing with explicit knowledge, but not tacit knowledge. When knowledge creation is controlled from the top, the development of tacit knowledge, which might take place at the front line of the organization, is neglected. On the other hand, while the bottom-­up strategy is good at dealing with tacit knowledge, its emphasis on autonomy means that such knowledge is difficult to disseminate and share within the organization. The top-­ down model focuses on combination and internalization (from explicit to tacit) while the bottom-­up model converts the knowledge only partially, focusing on

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Leading the know ledge-creating process SECIi

Ba Moderate

Build and energize ba

In

Out

Lead SECI

Knowledge assets Justify

Develop and redefine KA

Direct

Synchronize

Know ledge vision

Figure 3.3 Leading the knowledge-creating process (Nonaka et al. 2000, figure 8).

socialization (tacit to tacit) and externalization (tacit to explicit) (Nonaka and Takeuchi 1995: 126). The implicit assumption behind the top-down model is that only top managers are able and allowed to create knowledge. Moreover, it implies that knowledge exists to be processed or implemented. In contrast, the bottom-up model assumes that knowledge is created by entrepreneurially minded employees, with very few orders and instructions coming from top management. In this model certain individuals create knowledge but there is relatively little dialogue among members of the organization (Nonaka and Takeuchi 1995: 240). Both models are limited, as each can carry out knowledge conversion only partly. Also, both models neglect the role of middle managers. In top-down man­ agement, middle managers process a lot of information, but seldom get involved in creating knowledge. In bottom-up management, on the other hand, the know­ ledge creator is the entrepreneurial individual, with middle managers playing a minimal role. Nonaka and Takeuchi (1995) suggest the middle-up-down model as a synthesis for the two models. Here knowledge is created by middle manag­ ers, who are often team leaders in a process involving a spiral interaction between the top management and employees. The model puts middle managers at the very center (Nonaka and Takeuchi 1995: 240). In coordinating the SECI process, middle managers may provide a push in terms of autonomy, creative chaos, redundancy, requisite variety, love, care, trust and commitment (Nonaka et al. 2000). Autonomy refers to individuals coming up with original ideas, which are then diffused in teams and thus become

Organizational knowledge creation   127 organizational ideas. The concept also refers to self-­organizing teams which can be cross-­functional. Creative chaos is intentional chaos introduced to the organization, which stimulates the interaction between the organization and the external environment. When faced with chaos, organization members experience a breakdown of routines, habits and cognitive frameworks. In these periods, fundamental ways of thinking and perspectives can be reconsidered (Nonaka et al. 2000). This can be seen as an effort to engage in double-­loop learning. Redundancy refers to the intentional overlapping of information. Sharing redundant information helps individuals see what others are trying to articulate and to transcend boundaries in order to offer new information from different perspectives (Nonaka et al. 2000). Redundancy of information is especially important in the concept development stage, when it is critical to articulate images rooted in tacit knowledge (Nonaka and Takeuchi 1995). Requisite variety helps the organization to maintain a balance between order and chaos. An organization’s internal diversity should match its environment in order for it to deal with the challenges posed by that environment. A flat and flexible organizational structure as well as rotation of personnel enables employees to acquire multifunctional knowledge. Fostering love, care, trust and commitment is important for an atmosphere where members can feel safe sharing their knowledge (Nonaka et al. 2000). What about regional development and the conditions enabling it? First, the autonomy of regional knowledge institutions facilitates knowledge creation, which lies at the limit between chaos and order, where creative chaos can facilitate the knowledge-­creation process. There is often a redundancy of information and an information overload in different regions since actors, i.e., regional organizations, produce a lot of information. However, there can be some institutional thickness within the knowledge-­creating institutions. Another important aspect for enhancing regional development is requisite variety, which is similar to regional level diversity. One possible strategy for achieving variety is to combine existing knowledge bases with new elements, with the help of regional development platforms, for example (Harmaakorpi 2006). An encouraging atmosphere is important for regional development, as well as the commitment to common strategies. Kostiainen (2002) emphasizes the role of trust in enabling more open discussions, searching for new viewpoints, and questioning old operation models. Increasing trust should be a continuous effort in regional development networks. Critics of the theory of organizational knowledge creation The organizational knowledge creation theory has been criticized from many directions. First, the SECI process and the respective ba are seen to be too complex to describe and operate in practice. Still, from both the organizational and regional development view learning and knowledge conversion are issues that are too important to be left to occur spontaneously. In order to design knowledge conversion areas, all the processes by which knowledge is converted need to be supported within the region (Harmaakorpi 2004: 89).

128   S. Virkkala and Å. Mariussen Second, the distinction between tacit and explicit knowledge has been criticized, since, it is argued, tacitness exists in all knowing (Polanyi 1966). Nonaka and von Krogh (2009) responded to critics by stating that tacit and explicit knowledge can be seen together as a continuum, not as divided entities, and only a part of tacit knowledge is codified. As a matter of fact, in knowledge management studies this idea of explicit and tacit knowledge is common (Hautala 2011). However, if tacit and explicit knowledge exist simultaneously, and cannot be separated, the dynamics of knowledge creation, which is also the base of innovation, cannot be described and analyzed. Third, the SECI process is criticized because it separates knowledge from the knower. Nonaka and Takeuchi consider knowledge a specific entity possessed by individuals and groups, distinguishable from the learning processes that pulsate the dynamics of knowledge (Amin and Cohendet 2004: 8). According to Nonaka and Konno (1998) and Nonaka and von Krogh (2009: 640) knowledge is created through the interaction between individuals from different backgrounds, who therefore bring different knowledge and interests to the process. The truth, understood as shared beliefs, results from processes where people justify their beliefs inside the organization (see Chapter 1, this volume). This concept of truth relates to justified beliefs that correspond with a pragmatist epistemology. Fourth, the four bas are seen to divide knowledge quite strictly into either tacit or explicit, as they restrict each arena to supporting only one stage of knowledge creation (Hautala 2011: 42). According to Amin and Cohendet (2004: 94–5) it is impossible and also meaningless to separate explicit knowledge from tacit knowledge as one is needed to instantiate the other. Therefore, particular spaces or bas can be separated as spaces of tacit and explicit knowledge only for heuristic purposes, not as concrete spaces that exist in sequential steps in the knowledge conversion process, as conceptualized by Nonaka and Konno (1998). For example the office is a meeting point for a variety of knowledge forms, and not a sequencing site nor a privileged location of the originating or interacting ba (Amin and Cohendet 2004: 94–5). Placing activities in any one of the four arenas is tempting as it creates the possibility to suggest detailed ways of managing ba. According to critics, however, this is an impossible task (Hautala 2011: 42). Hautala’s solution is to analyze bas as contexts of knowledge creation without specifying them according to the stages of the SECI process. However, Harmaakorpi (2006) argues that the successful creation of ba is possible. One of the limitations of the SECI model in transnational learning in regional development is that the knowledge conversion process and ba place the tacit knowledge of individuals at the center, problematizing its application to collective entities, i.e., networks and actors (Harmaakorpi 2004: 89). In the study of regional development, collective formations are a central element, even though individual actors are also considered important in the learning process. Also, interaction and interdependencies across individual, team and organizational levels are difficult to describe.

Organizational knowledge creation   129

The organizational knowledge creation theory and the learning transnational learning approach The process of globalization has increased policy transfers. Within policy transfer a distinction can be made between the transfer of ideas, concepts, attitudes and programs, and their implementation (Evans and Davies 1999). Knowledge about local and regional development covers a complicated spectrum. It is abstract and conceptual on the one hand, and concrete and practical on the other (Chien and Ho 2011). The abstract and conceptual dimension refers to the ideas, principles, ideology and philosophies behind regional and local development. In regional development abstract and conceptual knowledge is contextual, and therefore it is difficult for outsiders to fully understand it. This is one of the reasons why frameworks and methods for codifying and translating regional development practices are needed. In the following section we will first look at different types of organizations, and then describe the learning transnational learning approach, which will be contrasted with the theory of organizational knowledge creation. The relationship between organizational learning, regional learning and transnational learning The nature of organizational learning depends on the definition that is given to the organization. Organizations can be political entities, business, social or cultural organizations. In order to limit the field of the book we will only consider political and economic organizations as well as knowledge institutions, while still acknowledging the importance of other types of organizations. Table 3.2 describes political, economic and knowledge organizations, such as firms and local governments, as learning agents at the regional and transnational level. Especially regional networks of firms have been analyzed broadly in literature on localized learning (Malmberg and Maskell 1999). Regional development networks have the task of coordinating development efforts especially within the regional economy, consisting of firms, networks of firms and regional innovation systems, as well as the triple helix, which is the configuration between the government, academia/higher education institutions and businesses. Regional development networks often consist of regional and local governments and other regional actors (see Chapter 2, this volume), and any of these learning agents can receive, reflect on and translate important transnational inputs. Transnational learning platforms are the context in which transnational learning of regional actors occurs (see Chapter 1 and Chapter 5, this volume). A lot of transnational learning takes place also within business organizations, especially in multinational companies, as well as in global production networks and value chains. Knowledge institutes – or their individual researchers – are also organized internationally in epistemic communities, for example the Regional Studies Association is an international research community focusing on the issues, theories and methods of regional development.

130   S. Virkkala and Å. Mariussen Table 3.2 Political, economic and knowledge organizations, and regional and transnational learning Level of organizing Type of organization

Organizational

Regional

Transnational

Political

Economic/business

Local and regional government →  ↓ Firm

Knowledge institution

University/HEI

Regional development EU platforms    network OECD, WH ← Regional partnerships  ↓ Networks of firms Multinational Regional innovation corporations    system Global value Industrial districts chains Localized learning Regional triple helix Community of   researchers/ science

Similarities and differences between the organizational knowledge creation theory and the learning transnational learning approach The learning transnational learning approach can be described with the help of the framework provided by the organizational knowledge creation theory (Table 3.3), as both approaches emphasize the importance of tacit knowledge. For Nonaka and his colleagues the tacit knowledge of individuals is the basis of innovation. Similarly in the learning transnational learning approach, the starting point is the identification of tacit good practice generated by regional actors. This good practice is then codified into explicit form and transferred into another context, where it is translated. The emphasis on know-­how, i.e., tacit practices and knowledge conversion, are common in both approaches. However, the learning transnational learning approach emphasizes collective learning whereas the point of departure for Nonaka is the tacit knowledge of the individual members of organizations, which is later shared, articulated and amplified in the organization. However, also for Nonaka the basic unit of knowledge creation is a team or group within the organization. The point of reference for the organizational knowledge creation theory has been big organizations that have a clear leadership and a hierarchical structure enabling a level of control in the knowledge-­creation process. On the contrary, regional actor networks are loose policy networks that lack clear leadership, potentially making it more difficult for the knowledge spiral to function. Still, according to Harmaakorpi (2004: 91; 2006), Kostiainen (2002) and Nonaka and Toyama (2003), the organizational knowledge creation theory can also be applied in the analysis of regional development and regional actor networks, as knowledge creation in them does not differ essentially from knowledge creation

Organizational knowledge creation   131 carried out in networks within and between larger modern firms. Both modern Japanese firms and regional development networks have to overcome the functional division of labor. Big companies often have a specialized structure: product division, marketing, R&D, etc., and organizational knowledge creation based on SECI, bas, knowledge assets and knowledge vision can be seen as a tool for breaking down this functional division of structure. Similarly, actors in regional development networks might represent diverse administrative sectors, and collective learning processes can be used to try and break down these sectoral divisions. The knowledge vision of Nonaka et al. (2000) can be compared with the regional development vision and strategies as both define and direct the future activities of regional actors. It is important for regional actors to aim at building a common vision regarding the region, and its development needs and objectives, as this increases regional innovativeness. For synchronizing itself in creating and managing knowledge conversion, also regional development networks need a common vision. This is especially important in regional multi-­actor networks where actors come from very different backgrounds. Acknowledging a common vision gives a direction to the knowledge-­creation process, and defines the value system that evaluates, justifies and determines the quality of knowledge that the network creates (Harmaakorpi 2004). However, the process for preparing the strategy is different since the selection of regional development strategies is made in democratically elected bodies and their societal objectives are common (see Chapter 2, this volume), unlike in large companies. With transnational learning inputs regions can solve regional problems, develop unused resources, change priorities, and they can even give impetus for changing a region’s development path. The basic unit of knowledge creation and conversion for Nonaka is the team acting within an organization. By contrast, in our approach it is the regional actor network as well as the transnational learning network. The basic unit of knowledge conversion in Nonaka’s approach is the tacit knowledge of individuals which is shared by the team and externalized. There are four different processes of tacit and explicit knowledge creation (the SECI model). We also follow the SECI model, but with one modification: in our modification of the SECI the externalization phase occurs in another region than the combination, internalization and socialization phases. Tacit knowledge resulting in good practice in the sender region is externalized with the help of good practice analysis (see Chapter 5, this volume), and explicit knowledge is combined with other types of knowledge and finally internalized by the actors in the receiving region. Basic bas in the learning transnational learning approach are focus group meetings and transnational platforms. For example in some Nordic projects (PLIP, LUBAT) the focus group meetings, created by local actors and researchers, act as ba. Transnational platforms, such as the Smart Specialization platform, are horizontal meeting points for regional actors from different EU countries (Chapter 5, this volume), and they can be seen as contexts of transnational knowledge creation as well as learning networks (Chapter 2, this volume). An example of a virtual

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S. Virkkala andÄ. Mariussen

BOTNIA-ATLANTICA Institute Figure 3.4 Botnia-Atlantica Institute facilitates long-term transnational learning process betw een three Nordic regions.

ba is the Botnia-Atlantica Institute (2012) which facilitates long-term trans­ national learning processes between three Nordic regions, and develops methods of transnational learning on the Internet as well as in seminars and conferences (see Figure 3.4). In the organizational knowledge creation theory, all members in the organiza­ tion are learning, even if the basic unit of knowledge creation and conversion is just a team. In the learning transnational learning approach, both regional actor networks as a whole, and the individual actors within the networks, are seen to be learning. The main facilitators of learning in Nonaka’s approach are the middle managers, who act as team leaders, as they construct and energize bas and intermediate the knowledge vision coming from top managers. The main facilitators in our approach of learning transnational learning are transfer agents, such as regional development agencies, governments, researchers and knowledge-intensive business organizations. As such they can also be part of the regional development network.

Summary: single-, double- and triple-loop learning Organizational learning is a combination of cognition and behavioral develop­ ment. The behavioral notion refers to the single-loop learning process in which the central features of organizations are maintained. Argyris and Schön (1978) use the term ‘theory-in-use’ to describe the pictures or representations that agents build of their learning systems. However, such pictures are always incom­ plete, and the learning process partly involves the agents’ endeavor to complete the picture (Clark and Tracey 2004) and correct errors within a given systems of rules. Given any set of problems, this means that an organization is likely to act following its traditional ways and patterns. In contrast, the higher cognitive level of double-loop learning is where current organizational norms and assumptions are questioned in order to establish a new set of norms (Jashapara 2011: 130-1) and rebuild the existing perspectives, interpretation frameworks and decision premises. In order to learn and change individuals must continually question and examine, both informally and explicitly, the existing norms and assumptions

Middle manager

Tacit-explicit-tacit

Group-organization-inter-organizational

Experiential, conceptual systemic, routine Originating, dialoguing, systemizing, exercising Middle-up-down-management

Facilitator of learning

Knowledge conversion

Knowledge spiral

Knowledge assets

Organizational structure

Ba

Knowledge vision Individual-group-organization Team Product and process innovations

Objectives Basic unit Unit of knowledge creation Motivation for knowledge creation

Organizational knowledge creation theory of Nonaka et al.

Dialoguing ba: focus group meetings of good practices Platforms of regional strategies Networking without a leading actor Networking with the regional government as leading actor

Regional strategy Regional actor network Regional actor network and transnational learning network Regional development Regional renewal Coping in crises Researchers Regional development agencies Smart specialization platform Tacit knowledge in another region as an input in regional development Regional network-regional actor Learning transnational learning Regional development platform

Learning transnational learning approach introduced in this book

Table 3.3  Similarities and differences between the organizational learning theory of Nonaka et al. and the learning transnational learning approach

134   S. Virkkala and Å. Mariussen which constitute their ‘theory-­in-use’, and the relationship between these elements in response to new information, circumstances and insights. Reflexivity, by which we mean the continual framing and reframing of assumptions and norms, is the cornerstone of intelligent behavior (Clark and Tracey 2004: 106). In Chapter 1, with reference to Anthony Giddens, the questioning of the structural contexts of action is seen as part of the learning process of society, called structuration. Actors may not just improve their performances within the context of whatever roles or work descriptions the name on the door to their office implies, they may also question the way they receive information, the contexts under which they are set to perform what they are doing, and why they are doing it in the first place. In this chapter, with reference to the classical organizational theory of Simon, March and Olsen, we have seen that the dilemma between efficiency, or becoming more efficient in what we have always done, and the exploration for alternative options, is deeply embedded in modern forms of organization. Seen from this perspective, single-­loop and double-­loop learning can be compared with exploration and exploitation. Exploration behavior (double-­loop learning) occurs when organizations engage in risk taking, and play, experiment, discover and innovate with ideas. In contrast, exploitation behavior (single-­loop learning) is concerned with the refinement of existing processes and it emphasizes efficiency goals. Both strategies are important for an organization, depending on the context. If efficiency is the driving force in the competitive environment, single-­loop or exploitation behavior becomes important. As exploration behavior requires risk taking and experimentation, its outcomes can be less certain and have much longer time horizons (Jashapara 2011: 131). Modern organizations try to overcome this dilemma in a variety of ways, for example, as briefly mentioned in this chapter with reference to Alice Lam, through the construction of M-­form organizations. In literature on organizational learning, this is known as the distinction between what Bateson refers to as learning 1 and learning 2, and what Argyris and Schön refer to as single-­ loop and double-­loop learning (Bateson 1973; Argyris and Schön 1978; Tosey et al. 2011). In Chapter 2 of this book, Virkkala refers to this as absorptive and developmental capacities. A region with a partnership that is trying to reflect upon and improve the absorptive capacities of their region may reach double-­loop learning. The ‘learning through difference’ approach argued by Sabel and Zeitlin is a method for going into double-­loop in transnational policy learning. By enabling national policy actors to compare and peer review each other the Open Method of Coordination created double learning loops in several European policy sectors, which jointly created frameworks for better performance. Similarly, Nonaka and Takeuchi (1995: 46) argued that instead of a difficult task, double-­ loop learning is a daily activity for an organization, as they continuously create new knowledge by reconstructing existing perspectives, frameworks and premises. The capacity for double-­loop learning is built into the knowledge-­ creating organization. At the individual level, as pointed out by Bateson (1973), almost anyone can learn to learn better, in other words, reach the double loop.

Organizational knowledge creation   135 But once you are in a double-­loop trajectory, and increase the speed, strange things start to happen; based on discussion by Mariussen in Chapter 1 of this volume, going into the third loop means that you leave the shared knowledge of the society you operate in, and start to reflect upon the structural context which formed this particular form of knowledge. This may be experienced as a threat to the ontological security system, as suggested by Giddens. Normally, this structural context of our codified shared knowledge is hidden from reflection, as it is tacit knowledge. According to a recent article, uncontrolled attempts to go into the triple loop may be dangerous. It uses as an example the case of the Copenhagen Summit on Climate Change, in December 2009 (Tosey et al. 2011: 13). The political context of the conference was the deadlock in global policies, dominated by the idea that the reduction of CO2 emissions to a level which may prevent global warming is an impossible task for humanity. As a sustainable climate is seen as a common good, the question of who should pay for it arises. The hypothesis is that if some countries pay, others are likely to be free-­riders, and therefore the result is that nobody pays. Inspired by ‘triple-­loop’ organizational consultants, the Danish organizers tried to create a breakthrough where all the partners could engage in a transformative discourse where the structural conditions which prevented a breakthrough could be overcome. However, it is difficult for world leaders to make transformative decisions in global conferences, because they have to provide explanations for their actions when they come back to their home political arena. What the Copenhagen conference achieved, according to Tosey et al. (2011), was at best first loop learning. By opening up tacit knowledge in a confident atmosphere, recombining it with other forms of knowledge, and then applying it in practice, the SECI process offers an organized and safe formula for moving from the second to the third loop. The transformation from tacit into explicit knowledge and back into tacit knowledge through SECI is a triple loop. We will return to this discussion in Chapter 5, in methods for transnational learning.

References Amin, A. and Cohendet, P. (2004) Architectures of Knowledge: Firms, Capabilities, and Communities. Oxford: Oxford University Press. Argyris, C. and Schön, D. (1978) Organizational Learning: A Theory of Action Perspective. Cambridge: Cambridge University Press. Barrutia, J. and Echebarria, C. (2011) ‘An evolutionary view of policy network management’, European Planning Studies 19(3): 379–401. Bateson, G. (1973) Steps to an Ecology of Mind: Collected Essays in Anthropology, Psychiatry, Evolution and Epistemology. London: Paladin, Granada. Botnia-­Atlantica Institute (2012) Front-­page. Online. Available at: www.ba-­institute.fi/ (accessed 20 July 2012). Chien, S.-S. and Ho, B. (2011) ‘Globalization and the local government learning process in post-­Mao China: a transnational perspective’, Global Networks 11(3): 315–33.

136   S. Virkkala and Å. Mariussen Clark, G. and Tracey, P. (2004) Global Competitiveness and Innovation: An Agent-­ Centred Perspective. Hampshire: Palgrave Macmillan. Dolowitz, D. and Marsh, D. (2000) ‘Learning from abroad: the role of policy transfer in contemporary policy-­making’, Governance: An International Journal of Policy and Administration 13(1): 5–24. Dorf, M. and Sabel, C. (1998) ‘A constitution of democratic experimentalism’, Columbia Law Review 98(2): 267–473. Evans, M. and Davies, J. (1999) ‘Understanding policy transfer: a multi-­level, multi-­ disciplinary perspective’, Public Administration 77(2): 361–85. Garvin, D.A. (1993) ‘Building a learning organization’, Harvard Business Review 71(4): 78–81. Harmaakorpi, V. (2004) Building a Competitive Regional Innovation Environment – the Regional Development Platform Method as a Tool for Regional Innovation Policy, Academic Dissertation, Helsinki University of Technology, Lahti Center, Doctoral Dissertation series. Online. Available at: HTTP://lib.tkk.fi/Diss/2004/isbn9512270110/ isbn9512270110.pdf (accessed 20 July 2012). Harmaakorpi, V. (2006) ‘Regional development platform method as a tool for regional innovation policy’, European Planning Studies 14(8): 1093–112. Hautala, J. (2011) Academic Knowledge Creation as a Spatio-­Temporal Process: The Case of International Research Groups in Finland, Universitatis Ouluensis A 584. Jashapara, A. (2011) Knowledge Management: An Integrated Approach, 2nd edn. Harlow: Prentice Hall. Kolb, D.A. (1984) Experiential Learning: Experiences as the Source of Learning and Development. Harlow: Prentice-­Hall. Kostiainen, Juha (2002) ‘Learning and the “ba” in the development network of an urban region’, European Planning Studies 10(5): 613–31. Lam, A. (2004) Organizational Innovation, Brunel: Brunel University, Brunel Research in Enterprise, Innovation, Sustainability, and Ethics, working paper no. 1. Lam, A. (2010) ‘Innovative organizations: structure, learning and adaptation’, in Innovation: Perspectives for the 21st Century, Madrid: BBVA, pp. 163–75. Lave, J. and Wenger, E. (1991) Situated Learning-­Legitimate Peripheral Participation. Cambridge: Cambridge University Press. Malmberg, A. and Maskell, P. (1999) ‘Localised learning and industrial competitiveness’, Cambridge Journal of Economics 23(2): 167–85. March, J.G. and Olsen, J.P. (1976) Ambiguity and Choice in Organization. Oslo: Universitetsforlaget. March, J.G. and Simon, H.A. (1958) Organizations. New York: John Wiley & Sons. Mariussen, Å. (2010) Regional mobilisering genom jämförelse och lärande, kommuner, turister, potatis och mjölk, Working Papers in Demography and Rural Studies 6. Online. Available at: www.abo.fi/ruralpublications (accessed 20 July 2012). Nonaka, I. and Konno, N. (1998) ‘The concept of “Ba”: building a foundation for knowledge creation’, California Management Review 40(3): 40–54. Nonaka, I. and Takeuchi, H. (1995) The Knowledge-­Creating Company: How Japanese Companies Create the Dynamics of Innovation. Oxford: Oxford University Press. Nonaka, I. and Toyama, R. (2003) ‘The knowledge-­creating theory revisited: knowledge creation as synthesizing process’, Knowledge Management Research & Practice 1: 2–10. Nonaka, I. and von Krogh, G. (2009) ‘Tacit knowledge and knowledge conversion: controversy and advancement in organizational knowledge creation theory’, Perspective, Organization Science 20(3): 635–52.

Organizational knowledge creation   137 Nonaka, I., Konno, N. and Toyama, R. (2001) ‘Emergence of “Ba”: a conceptual framework for the continuous and self-­transcending process of knowledge creation’, in I. Nonaka and T. Nishiguchi (eds) Knowledge Emergence, Social, Technical and Evolutionary Dimension of Knowledge Creation. Oxford: Oxford University Press, pp. 13–29. Nonaka, I., Toyama, R. and Konno, N. (2000) ‘SECI, Ba and leadership: a unified model of dynamic knowledge creation’, Long Range Planning 33: 5–34. Nonaka, I., von Krogh, G. and Voelpel, S. (2006) ‘Organizational knowledge creation theory: evolutionary paths and future advances’, Organization Studies 27: 1179. Piore, M. and Sabel, C. (1984) The Second Industrial Divide. New York: Basic Books. Polanyi, M. (1966) The Tacit Dimension. New York: Doubleday. Porter, M. (1990) The Competitive Advantage of Nations. New York: Free Press. Porter, M. (2003) ‘Locations, clusters and company strategy’, in G.L. Clark, M. Feldman and M. Gertler (eds) The Oxford Handbook of Economic Geography. Oxford: Oxford University Press, pp. 253–74. Sabel, C. (1992) Learning by Monitoring: The Institutions of Economic Development, Working Paper 102, New York: Colombia University School of Law. Sabel, C. and Zeitlin, J. (2010) ‘Learning from difference: the new architecture of experimentalist governance in the EU’, in C. Sabel and J. Zeitlin (eds) Experimentalist Governance in the European Union: Towards a New Architecture. Oxford: Oxford University Press, pp. 1–28. Senge, P.M. (1990) The Fifth Discipline: The Art and Practice of the Learning Organization. New York: Doubleday Currency. Simon, H.A. (1991) ‘Bounded rationality and organizational learning’, Organizational Science 2: 125–34. Tosey, P., Visser, M. and Saunders, M. (2011) ‘The origins and conceptualisations of “triple-­loop” learning: a critical review’, Management Learning, 1–17. Virkkala, S. and Niemi, K. (2006) Peripheral Localities and Innovation Policies, Learning from Good Practices between the Nordic Countries, Nordic Innovation Centre. Online. Available at: www.nordicinnovation.org/Publications/peripheral-­localities-and­i nnovation-policies-­l earning-from-­g ood-practices-­b etween-the-­n ordic-countries/ (accessed 20 May 2012).

4 Is transnational learning possible? Åge Mariussen and Seija Virkkala

The paradox of transnational learning is that it might seem an easy solution, but in practice, it is complicated, as stated by Hassink and Hülz (2010). Learning from best-­practice initiatives and lessons from successful regions is very popular but the varying regional contexts and histories as well as increasing interregional competition seem to be the main barriers to learning. The current chapter discusses this paradox and a possible solution to it. The complicating factors were explained by Mariussen in Chapter 1 of this volume. In this chapter, evidence of the paradox from Hassink and Hülz and others studying regional development is discussed. Following some of Jessop’s (2008) ideas, a part of the solution was suggested in Chapter 1. In this chapter, some of the basic theoretical components for solving the paradox and for making transnational learning possible are discussed more broadly, through four steps: 1 2 3 4

moving from indicators to root cause analysis; discovering emergence; building ‘ant hills’ (see below); and translating the object of transfer.

Finally, in order to find a solution for the paradox one must move away from the inductive-­deductive approaches of geographers to studying and comparing regional development, and to abduction, which is the true logic of innovation.

The paradox of transnational learning In Chapter 1 of this volume, with reference to Giddens and Jessop, Mariussen found that transnational learning relies on emergent structures. Emergent structures are the result of interactions of lower level components in the social system which forms new complex patterns or a new order in the structure (WordIQ 2012). The existence of preconditions for emergence cannot be taken for granted. This explains the paradox of transnational learning in promoting regional development. Regionalization and decentralization are trends in regional development, rural development and innovation policy, not only in Europe but also in

Is transnational learning possible?   139 the United States and East Asia. Regions increasingly reflect upon their development in the context of others. In Europe, the main argument in favor of interregional learning processes has been the institutional diversity of the continent: the idea that European regions should benefit from the strengths and diversity of regions and nations within the continent. Differences in national and regional economic performance motivate comparative studies in an attempt to locate the sources of these differences and achievements related to them (Chapter 7, this volume; Johnson 1992). The challenge with regards to policy is identifying learning opportunities when these arise (Dodgson and Bessant 1996; Hassink and Hülz 2010). Hassink and Hülz (2010) point to the paradoxical contrast between on the one hand the popularity of regional benchmarking and learning from regional development strategies of others, and on the other hand the critical voices identifying problems of transferability across national borders. The answer to the Hassink and Hülz paradox is that change is possible, but only when external elements may be integrated in processes characterized as emergence. Emergence is not coordinated on a top-­down basis or through a single event or rule, and the outcome of an emerging structural form or order cannot be planned in advance. Instead it is a structural form which grows out of micro-­ level interaction. For this to take place, the structure needs a certain level of complexity. A system capable of generating emergence relies on accumulative knowledge creation processes, where there are several SECI loops and knowledge spirals (see Chapter 3, this volume). In Chapter 1 of this volume Mariussen suggested that the search process might take place between actor level interactions, the structural level, and intermediate modalities. The actor level interaction generates new suggestions which are assessed at the structural level. The new solutions are then tested in practice on the level of intermediate modalities, for instance in different regions. In order to succeed, this process has to embrace complexity, rather than simplify the procedure. A case in point is the Open Method of Coordination (OMC) process in the EU, initiated in Lisbon in 2000. The OMC to a large extent relied on a comparative analysis driven by indicators, which were supplied by EU expert groups. The core idea was to apply the ‘learning through monitoring’ approach, developed by Charles Sabel (1994). Learning through monitoring relies upon certain steps. First, there is a need for indicators benchmarking the performance of one’s own region, compared with regions in other countries. In the case of OMC, these indicators covered a wide range of policy sectors and dimensions. Second, providing these indicators show that there is a problem in one’s own performance, it should lead to the search for the root causes of the problems that are preventing better achievement. Subsequently, the identification of the root problem may pave the way to the discovery of a solution, which is then implemented as a changed practice (Sabel and Zeitlin 2003, 2008). The OMC explicitly promotes benchmarking activities as a key means of analyzing economic and social development across the EU and for tracking its progress within the sector. The EU and OECD have created their own database for

140   Å. Mariussen and S. Virkkala offering quantitative indicators and reports to their members. Benchmarking provides knowledge in order to define, assess and adjust strategies. Basic characteristics are comparisons between different units (regions), the identification of best practices and the ranking of performance, as well as the integration of the results into learning processes in order to identify causes, prerequisites and barriers to the transfer of best practices, and for facilitating change toward best practices. Accordingly, the basic objectives of benchmarking are the availability of information, comparison and guidelines for bringing about strategic change (Wink 2010). Many benchmarking studies compare regions that have emerged under different conditions, for example in relation to agglomeration density, proximity to other regions and structures of qualifications. However, performance indicators are problematic. The actual impact of benchmarking studies on transnational learning depends on their implementation in processes of regional change. Only if regional decision-­makers in firms, positions of policy-­making, and associations, are aware that changes are needed and that experiences from other regions might help to structure this process of change, will the benchmarking information find an addressee (Hassink 2005). Many programs encourage regions to follow benchmarking studies without taking into account whether core decision-­makers in the region are actually convinced by the result. Consequently the impact is often restricted to formal recommendations concerning a change of instruments, meaning a simple imitation of an instrument without consideration of the regional differences. The institutional dimension is often excluded from the adjustments, as idealized organizational settings or best practice models are transferred between the consulted regions. As a consequence, the implementation of proposed strategies is hindered by institutional structures (Wink 2010). Therefore, simple imitations of best practices cause disappointing results for regions striving to catch up. According to Huggins (2010) regional benchmarking is a relatively new and still evolving phenomenon. He points out that benchmarking exercises can contribute to policy-­making in three broad ways: delineating and monitoring regional economic development and its progress; facilitating the exchange and gathering of knowledge on regional practices and policies; and promoting the image and attractiveness of regional economies. Lundvall and Tomlinson (2002) discuss systemic benchmarking, whereby practices and the relations that operate between them are compared using a variety of analytical tools and methodologies. The aim is not to search for a single best-­ practice model, but to improve a system’s performance by contemplating the successful features of another system (Huggins 2010). Benchmarking, obviously, has to be combined with something more subtle, an analysis of the root causes of differences. However, incentives to undertake such analysis, and to follow it up, may often be lacking. Accordingly, doubts have been expressed, in particular by economic geographers, concerning the possibilities of these processes. It could be questioned whether the lack of success is caused by a lack of willingness to implement suitable interregional organizations for learning, or by the general impossibility of interregional

Is transnational learning possible?   141 learning (Gertler et al. 2000; Dodgson and Bessant 1996; Wink 2010). The point of departure of these doubts is the idiosyncrasies of regional economic structure, institutions and cultures (Hospers 2006; Hassink and Hülz 2010). As Landabaso and Reid point out: Most (concepts) are based on the analysis of success stories . . . and offer few hints how to translate the factors (often intangible) underlying the success of specific regions to other less fortunate regions lagging in terms of economic development or undergoing a structural decline in their industrial structures. Often the recommendations made are of a tautological or nebulous nature, providing only broad guidelines on . . . what type of broad approach should be favored. (Landabaso and Reid 1999: 22) Asheim (1997) differentiates between a specific and a general level of knowledge transfer: ‘The more important the specific factors are, the more difficult it is to transfer experiences from one region to another . . . the most specific socio-­ cultural factors . . . cannot be “repeated” in another regions’ (quoted from Hassink and Hülz 2010). To export best-­practice policies from one region to another is not only difficult to achieve, due to the specificity of regional contexts, but also results in the imitation of policies that are unsuitable when combined with the policies of the receiving region (Asheim 2002; Hospers 2006; Wink 2010). Tödtling and Trippl (2005) have argued that whilst many regional innovation policies have been shaped by good practice derived from well-­performing regions, there is no ideal model for innovation policy, as innovation activities differ between different types of areas with respect to their preconditions for innovation, networking and innovation barriers. Hospers (2006) suggests that adopting best practice in regional policy is at best limited, as the very conditions that explain the success of a particular region are determined by its culture, history and institutional set-­ up, in other words, by unique factors which cannot be copied (Hospers 2006; Wink 2010; Klofsten et al. 2010). A crucial form of network which facilitates learning through distance is communities of practice (Brown and Duguid 1991), consisting of experts who share the knowledge of a specific field of expertise. These actors’ networks often refer to a relatively small number of individual experts from a few different regions, who exchange their experiences and look for common aspects within their institutional pathways. The umbrella organization for these mutual interactions can include a high number of regions, although the actual interaction is normally restricted to fewer contacts. Individual experts are typically public servants from regional governing bodies as well as representatives from single firms, or politicians. The intensive way of interacting opens up opportunities for developing cognitive proximity despite differences between regional institutional and cultural settings. Therefore incentives for this interaction are mutual benefits, gained through cooperation and organization between communities, acting similarly to

142   Å. Mariussen and S. Virkkala exclusive clubs, with a strong emphasis on reputation and required contributions (Wink 2010). At the European level the following types of networks are found: •

• •

Mutual learning within a joint European network organization where actors cooperate in order to gain access to similar institutions in other regions (business incubator networks, regional development agency networks or innovation center networks). Mutual learning within transregional projects dealing with a specific joint objective (e.g., INTERREG projects that deal with a wide range of topics from knowledge transfer to water management; see Chapter 6). Mutual learning within regional networks which emerged particularly in order to improve the exchanging of experiences through programs such as European Regions of Knowledge, which is a part of the EU Framework Programs of research (Wink 2010).

The main challenge, however, remains the diffusion of knowledge beyond the network itself. First, the willingness to contribute good ‘experimental knowledge’ to the network depends on the similarity of institutional needs within the different regions, the exclusiveness of these benefits, and the prevention of free-­ rider incentives by the network members. The experiences from the mutual learning platform within the European innovative regions network also draw attention to the importance of awareness and motivation within the regions. Second, the learning experiences have to be framed within a general institutional context. Here, the European integration processes with increasing levels of harmonization of general institutional contexts is crucial. The formal harmonization, however, has to be integrated into practical implementation, which is still missing due to incumbent national and regional institutional routines. In INTERREG projects the institutional framework is still dominated by domestic routines and single case agreements, without the option of using institutional solutions for other transregional cooperation activities (Wink 2010). A serious limitation in several of these networking strategies, however, relates on the one hand to the relation between single or a few expert actors participating in transnational networks at the regional level and on the other hand to the internal regional development coalitions and partnerships. If the development of joint solutions is restricted to individual specialists, the possibilities of transferring the experiences to other actors in the region are limited. Consequently, the transnational network might be restricted to a specific segment of problems and might provide only low marginal benefits with time, as all activities are restricted to the personal contacts of these specialists. Therefore, actual transnational institutional learning networks are likely to have an effect on only a few regions in specific situations with clear – similar or complementary – urgent needs. In particular, economically lagging regions might face barriers with regards to integration into networks consisting of more developed regions if the mutual benefits are not sufficiently obvious for all partners. A related limiting restriction to this

Is transnational learning possible?   143 form of transnational learning between regions is the complexity of learning inside the region itself (Sabel 1996; Bathelt et al. 2004; Huggins 2010). Regional development strategies are usually undertaken through a policy network. This consists of a wide range of stakeholder groups within a region that have a position, formal or informal, in the policy-­making process. The process is often based on widespread consultation and engagement with a broad spectrum of regional institutions, which may present differing or conflicting interests. The stakeholders are a crucial source of localized and regionalized learning, bringing with them a wealth of experience concerning specific regional issues and problems. The complexity of this process tends to lead to drawing the attention of regional development institutions, networks and coalitions to processes inside the region itself, rather than to a ‘learn from others’ attitude within transnational networks (Huggins 2010).

From indicators to root causes If we want to find out what it would have taken to really make OMC work, one point of departure is to return to the basic steps of learning through monitoring referred to above. In this context, an example might be helpful. This is illustrated through a recent SITRA report on educational policies written by Sabel et al. (2010). The interesting thing about this report is that it actually goes through the steps which might have turned the indicator-­based OMC operative on the ground. It does that by moving from the findings related to differences in a set of metrics, in this case the PISA indicators, demonstrating a better performance among Finnish school children compared to other European countries, to an analysis of the root causes of these differences. This consisted of comparing countries with a relatively weak performance, such as in this case Denmark, with those that demonstrated strong results. On a more general level, the report discusses a number of ad hoc macro-­level explanations to these differences, such as national commitment to values of equality, the qualification and education of teachers, and qualities of the national curriculum. These macro-­level explanations cannot be seen to describe root causes, since they do not adequately explain the reasons behind the stark differences in the PISA performance of Finland compared with other countries, such as Denmark, with substantially lower PISA scores. Looking closer at the PISA data, it becomes obvious that a core explanation lies in the extraordinarily good performance of the lowest quintile of the Finnish children, as compared to other countries. The reason for this discovery is the methods of individualized testing of Finnish school children. The tests, which start in kindergarten, function as an early-­detection system of individual learning problems. They are then linked to a well-­developed system for individualized special education, solving the learning problems and helping children to profit from ordinary education. This identification of learning problems as individual and the related application of resources on an individual basis (through special education) is clearly different from  the Danish approach, where method development is focused specifically on

144   Å. Mariussen and S. Virkkala classroom teaching methods. These methods are developed and shared between schools through national projects and reform programs. Methods of learning in the Danish context rely heavily upon the tacit expert skills of teachers, without the kind of codified monitoring of the individual behavior of children in Finland, where data is obtained through regularized and formalized testing procedures. It goes without saying that the implications of the PISA differences in terms of economic development are substantial. Danish children with learning problems who are not given the opportunity to develop through childhood education in the same way as Finnish children are more likely to experience a lack of or obstructed education followed by labor market problems. In this respect, the Finnish system, where more children are helped to obtain a good education, is an important contribution to regional and economic development. The SITRA report demonstrates that the roots of these achievements lie in Finnish educational policies, and draws attention to the policies which have led to the design of the current institutional system, providing tests, and distributing special education. Development pro­ cesses are of course unique and non-­reproducible. And yet at the same time, by focusing on the micro-­level methods of implementation, it becomes possible to make an account of a generalizable and successful method which, one might think, could be adapted and used in some form also by others. If this is the case, educational policies in countries with lower PISA scores, such as Denmark, could potentially be improved through a shift from a focus on classroom teaching methods to individualized testing and special education. Again, this outcome would have to rely upon the existence of emergent structural forms in Danish schools and among teachers.

Emergence As discussed by Mariussen in Chapter 1 of this volume, Jessop (2008) regards states as relations between sets of actors producing specific long-­term strategies. These long-­term relations or alliances form structures which are visible as patterns of selectivity. Empirically, this can be observed in the ways in which suggestions of change are evaluated. The structure emerges as selection mechanisms, where a suggestion for change which is consistent with the overall strategy might be accepted and selected, while others are excluded. This selection mechanism is apparent in the ways in which states, or more broadly speaking national systems, use power. So how do these selection mechanisms or structures work? According to Jessop: Structures emerge in specific places and at specific times, operate on one or more specific scales, and with specific temporal horizons of action, have their own specific ways of articulating and interweaving their various spatial and temporal horizons of action, develop their own specific capacities to stretch social relations and/or to compress events in space and time, and, in consequence, have their own specific spatial and temporal rhythms. (Jessop 2008: 45–6)

Is transnational learning possible?   145 Jessop also stresses that structures (selection mechanisms) have specific ways of understanding the complex context within which they operate, they have their own ‘imaginaries’ which provides the basis for the ‘lived experience’ of a complex world (Jessop 2008: 239). These imaginaries, for instance ‘hegemonic visions’, are crucial in constituting the ways in which actors understand the world around them and their role (or their ‘construal’) in it. In his approach, the challenge is to examine how a given structure may privilege some actors, some identities, some strategies, some spatial and temporal horizons, some actions over others; and the ways, if any, in which actors (individual and/or collective) take account of this differential privileging through ‘strategic-­context’ analysis when choosing a course of action. (Jessop 2008: 236) Structures accordingly consist of actors, which may operate at different levels, at the regional or local level. Jessop’s theory of the state is produced as part of a wider theory of society, where the state is not just national institutions, but also ‘present’ at the micro level as the values and norms actors follow (Jessop 2008: 79). Thus, Jessop uses a method of analysis where micro-­level phenomena, such as the selection or rejection of a given ‘good practice’ in a process of transfer from a region in one country to one in the context of another, may be related to wider structural properties of the national systems of the two countries. This structure of the national system explains patterns of selection and path dependencies. Following Jessop, the Danish school system would be likely to choose and accept suggestions for change only when they are consistent with the overall strategy of Danish pedagogical practices, and exclude others. The structural selectivity of the Danish system is likely to be reflected upon by the actor suggesting the changes. This means that in order to be accepted by the Danish structure, suggestions inspired by good Finnish achievements should be formulated in a way which is consistent with Danish practices. In other words they have to be ‘strategically calculated’ in the context of the Danish structure. But at the same time, one might think, several ‘strategically calculated’ suggestions of change might perhaps initiate a series of incremental changes which through time transform the structure itself. And what about actors with alternative long-­term strategies, who are consistently trying to offset the system and change the hegemonic vision underpinning the strategy of the core actors/gatekeepers? This is the point of departure for the ant hill theory of Czarniawska. She does not explicitly link her ideas to the state theory of Jessop. Instead, she takes the micro-­level Actor Network (ANTs) as a point of departure.

ANT hills The existing practices of educational systems may be seen as patterns of collective action, justified by a corresponding norm (Czarniawska 2009). As pointed

146   Å. Mariussen and S. Virkkala out by Czarniawska, these kinds of institutionalized trajectories have been described in the ANT or actor network theories of Michael Callon (1980) and Bruno Latour (2005). ANT theory refers to the generalized symmetries of mutual influences between artifacts, micro-­level actors and macro-­level institutional arrangements and structures, which create a stable actor-­system (or an ‘actant’) capable of reproducing itself. All these factors tend to be mutually adjusted to each other, and make up an internally homogenous entity, a structure which produces consistent outcomes. By discussing the structure as an ‘actant’, actor network theory emphasizes the mechanisms of structural integration, symmetries and mutual influences around a given set of networks, rather than the gatekeeper function of selection at the border which is focused on by Jessop. With reference to the previous example, the Finnish and Danish education systems may be regarded as two different actants. They have different, but yet internally symmetric, methods of classroom teaching, technologies of testing, teacher skills, teacher education systems, laws, curriculums, mutual expectations between parents and teachers and so on. Thus, they consistently produce distinctly different output scores in the PISA indicators. Anyone expecting a rapid Danish adjustment following the PISA indicator, say, as a result of policy intervention, would be confronting these internal Danish symmetries of mutually reinforcing influences between the different components of the Danish ‘actant’. Accordingly, an ‘actant’ is likely to reproduce itself and not be transformed through policy learning interventions, say, PISA indicators. For these reasons, Czarniawska is critical of the idea of ‘institutional entrepreneurship’. Institutions simply do not change as a result of a single entrepreneurial actor, although, one might say, entrepreneurial actors often try to influence, remove or transform institutions. Instead Czarniawska proposes the following typology of actors trying to influence institutions: 1 2 3

Institutions may be ignored by actors following strategies of change which are disruptive in relation to existing institutional complementarities. Actors may introduce new practices, and hope they may diffuse and thus become institutionalized. Actors may set up formal organizations, hoping they may become institutions.

There is, however, a fourth alternative: innovation through diffusion. Despite the self-­preserving dynamics of integration of the actant, or the gatekeepers of the state structures analyzed by Jessop, components may be transformed and new designs imported from elsewhere, as well as adapted and used by actors in ways which incrementally change the existing actant structure. Czarniawska (2009) and Djelic and Quack (2010) refer to this process of combined diffusion and change as ‘translations’. A translation means that the object is not just diffused between different actants in different countries, but it is also changed and adapted to fit into a new context. According to Jessop, the action is ‘strategically calculated’.

Is transnational learning possible?   147 One hypothetical example of such a ‘translation’ could be, say, introducing a Finnish-­style individual child test procedure in Denmark, whilst maintaining the belief in, and basic components of, the Danish classroom-­focused approach. Notice here that diffusion through translation does not mean a frontal assault on the order of the existing actant, say, by ignoring classroom practices in disruptive ways (alternative 1 above), setting up completely new practices (alternative 2) or establishing new organizations, such as in the case of the above-­mentioned example of schools using Finnish practices and principles of teaching inside Denmark (alternative 3). On the contrary, it would just mean an adjustment, accommodated within the existing Danish educational actor network. The element which is diffused would have to be translated to fit into the context of the Danish structure/ANT. The beauty about this strategy of diffusion through micro-­level translation across borders, in other words transnational learning, is that it is easier to achieve than top-­down large-­scale reforms. Several arguments may be made in favor of this statement. First, a successful strategy does not require a powerful and agile actor, or an entrepreneurial hero, which is often depicted as the creator-­actor of new institutional innovations. In the case of the Danish school system, such an actor might have been, say, an existing institution with resources, intellectual convictions and a strategic oversight enabling it to set up Finnish-­style schools, and argue convincingly for their superiority. Another powerful entrepreneurial hero might have been a strong ministry led by a strong minister, reforming the school system from above. The problem with this kind of strategy is, of course, that the above-­mentioned types of actors are often stopped by the stabilizing forces of the existing actant. The reform-­oriented ministry would be opposed by teachers, professors in pedagogics, and institutions training teachers who believe in the superiority of the practices and theories they have been following for the last decades. Whereas experimental schools with alternative pedagogics may easily be set up in countries like Denmark, attempts to use their results to transform the hegemonic view of the national school system are more far-­fetched. This is why Czarniawska argues that stories of entrepreneurial heroes changing institutional complementarities should not be taken at face value. The reality of institutional change, or learning, tends to be much more complex, where actors occupy more modest roles. In describing the modesty of actors Czarniawska applies the metaphor of ants building ant hills, where, while doing so, they are likely to find additional building materials scattered around (see Figure 4.1). They then select what seems to them to be appropriate, bring it to their ant nest, and apply it as best they can. In this metaphor, entrepreneurial heroism does not come as a result of strong actors making big decisions, but rather as a result of gradual processes of transformation, where influential actors are able to generate concerted actions, say, by creating networks where successful building material is discovered and applied, and where other actors may follow. In short, institutions, according to Czarniawska are not pyramids created by an all-­powerful pharaoh. They are instead ant nests, evolving as a result of broad collaboration between several actors, who jointly find the seemingly appropriate solutions to

148   Å. Mariussen and S. Virkkala

Figure 4.1  Several small coordinated steps may lead to big changes (Photo: Seija Virkkala).

problems by providing new collective solutions. This approach to change is somewhat different from the selection mechanism of Jessop. Ants may slip through the gates of the nest and apply their findings as they see fit. In practice, as we will see below, the metaphorical ant nests may also, as anticipated by Jessop, have guardians who reject elements they regard as alien. In other words, successful translation seems to rely upon certain specifics in the receiving ant nest. At the very least, there should be a need for change. To rephrase this in relation to transnational learning, one might say that translators have to take two related contexts into consideration, the ‘nest’ where the translators themselves come from, including their own potential needs for improvement, as well as the solutions to these needs which they discover outside. Unlike powerful entrepreneurial heroes, translators may be seen as much more humble creatures, as they simply discover something somewhere, pick it up and take it home for further scrutiny. Second, in doing so, the translator may utilize the power of the existing institutional arrangements and achievements elsewhere, remembering to point out that these are indeed ideas from elsewhere, in other words alternative solutions to local problems, which are already practiced elsewhere. And third, these processes of transferring ideas may, of course, be supported by institutions in their own right. In fact, there are already very powerful transnational institutions set up to enable ants to build successful ‘ant nests’. By way

Is transnational learning possible?   149 of introduction, two types of institutions are worth mentioning. First, we are referring to global institutions and communities of science and education. These powerful institutions and communities are closely related to two mega success stories of the twentieth century; industrial modernization and economic growth. In the context of economic theories of growth, the idea that long-­term growth depends on a high level of investments in science, technology and mass education, has for a long time been a broadly accepted doctrine. Through building universities, and sophisticated systems of education, the US economy was able to out-­compete the British economy, win World War II, and establish its position as an economic and political world leader in the twentieth century. At the end of the century, this competitive achievement was replicated by the Asian economies, first by Japan, and more recently, in the twenty-­first century, by China. Similarly, within different countries, the modernization and strengthening of regional economies is often explained with reference to the development of regional universities, diffusing, and indeed also ‘translating’, generalized knowledge to meet regional demands for development and economic competitiveness. Second, within the context of the broader macro-­story of modernization, we have seen the development of private companies on a global scale, specializing in transferring solutions to new places. This is partly visible in the extensions of large accountancy firms, which develop their own branches for consultancy, selling and often also implementing their advice regarding ‘best practices’ to industrial and public actors. Indeed, in looking at the diffusion of US ‘best case’ industrial practices in the twentieth century within Europe, these private consultancies often proved to be crucial facilitators of diffusion of industrial methods and modern forms of organization. Today, this method is used by large globalized industrial actors, who increasingly develop different forms of global matrix organizations, where global horizontal branches focus on the discovery, development and transfer of solutions between different regional business units, specializing in the needs of their regionalized operations. The global flows of knowledge and innovation, including forms of organization and technology, are, as we all know, powerful, not least because the global economy again and again seems to reward those who are able to successfully assimilate and adapt to them. This leaves us with a paradox. Above we have demonstrated that these global flows of knowledge also help construct actor networks or ANTs which attain a fixed form and are able to reproduce. Now, if the global flows of knowledge were too powerful, one might think that they would sweep away the ants, or at least destabilize them. This, we may add, most certainly is the case where new practices or solutions destroy old forms of knowledge and replace them with something new, the way craft-­based industrial forms of organization were replaced or sometimes transformed by modern forms of organization. On the other hand, if the flows are weak, the ant may be expected to assimilate or reject them. Craft-­based industries have retained their basic organizational principles, whilst adopting features of Fordism, as in the case of the industrial districts of Northern Italy. Similarly, the ‘flows’ of PISA indicators did not destabilize or change fundamentally the Danish educational

150   Å. Mariussen and S. Virkkala system. A more general question is whether these flows actually lead to convergence. As pointed out by Djelic (2008), two of the fathers of the actor-­network theory, Callon and Latour, have somewhat different opinions in this respect. Callon emphasizes the homologizing impacts of global flows, as they seem to reinforce the internal consistency of the anthill. Latour, on the other hand, is not so certain about the results of translation. According to him: the spread in time and space of anything – claims, orders, artefacts, goods – is in the hands of people; each of these people may act in many different ways, letting the token drop, or modifying it, or deflecting it, or betraying it, or adding to it, or appropriating it. (Latour 1986: 267) This way of understanding translation was adopted in organization studies by Czarniawska and Sevón (1996, 2005) in an attempt to understand the continuous circulation of management ideas and practices. Following their perspective, management ideas are translated into objects (models, books, transparencies), sent to new places, translated into new kinds of objects, and then sometimes into actions, which, if repeated, might stabilize and be appropriated by institutions as rules of industrial organization. These rules in turn can then be described and summarized as abstract ideas by actors in order for them to legitimize their strategies. Based on this point of departure, Djelic goes into a discussion of what is actually being transferred.

Translations Translation, according to Djelic (2008), is not merely linguistic, but also a generalized operation, taking many different forms. It may involve displacing something, or the act of substitution; it always involves transformation. Consequently, the component to be translated – be it knowledge, people or things – has an uncertain identity. Each act of translation changes the translator as well as what is being translated. The concept of translation, according to Djelic, works exactly because it is polysemous: although it is usually associated with language, it also means transformation and transference in general. It draws attention to the fact that something which is moved from one place to another cannot emerge unchanged: to set something in a new place or another point in time is to construct it anew. Thus, translation according to Djelic is a concept that immediately evokes symbolic associations, while at the same time being stubbornly material: only a thing can be moved from one place to another and from one point in time to another. Ideas must materialize, at least in somebody’s head; symbols must be inscribed. A practice or an institution cannot travel; it must be simplified and abstracted into an idea, or at least approximated in a narrative permitting a vicarious experience, therefore converted into words or images. Neither can words and images travel until they have materialized, until they are embodied or objectified. Thus she concludes with the following definition: first, translation is about

Is transnational learning possible?   151 the construction of an identifiable and attractively ‘packaged’ form or idea. The construction of this package may build from and upon a local ‘object’ or experience. Translation is about ‘mediation’, local adaptation and transformation understood as constructions embedded in time, involving actors and networks, i.e., taking the structures of existing ant hills into consideration (Djelic 2008). By focusing on ‘translation’ we emphasize that transnational learning is an explorative process. As such, the fundamental operations first have to do with the codification of two forms of practices in two different countries. As a point of departure, these practices are embedded in complex webs of institutions, structures and infrastructures, in short, actor networks with tacit systemic properties and functions. Both these actor networks have to be codified and analyzed. Second, based on the analysis of these two sets of codified information, and in order for transnational learning to take place, the construction of a ‘package’ to be transferred between the two networks is necessary. This package is a conceptualized idea of a solution in one country, which fits a problem in another. Third, in the process of transferring the package, these analytical elements, the codified practices of the sender and the codified analysis of the receiver, are ‘brought alive’ through discussions of them carried out in the context of a practical setting. Here, they are related to the actor networks where they were constructed in the first place. The package has to be evaluated in the context of the receiving actor network, meaning it has to go through a process of screening and selection. This involves a process of reconstruction in order for it to fit into the new practical setting where it is being introduced. This strategy of translation means that the entire process must activate two actor networks in two different countries, as well as a team dedicated to the construction of the package and coordination of the process, in this case, as we will see in the following chapters, the researchers. Let us briefly compare this explorative and experimental strategy with the point of departure of our discussion, the fixed theory where ‘the package’ is predefined and standardized as a development model, a ‘best case’ receipt, to be copied by others. This is the difference between an explorative and a hypothetic-­deductive method. Applying a hypothetic-­deductive method means describing the theory behind best practice. Furthermore, based on this pre-­given theory, a fixed hypothesis, or scientifically based recommendation, the best case model, is applied. This way of predefining the best case is not without merits. First, considering the aforementioned understanding of development as consisting of the expansion and hegemony of scientific knowledge which characterized the twentieth century, scientifically based prescriptions of ‘best practice’ were at the core of the diffusion of modernity. This process was promoted through university systems and other educational institutions, as well as through private consultancies. Since these models could be defined with the authority of science, as pre-­ given prescriptions, they could also be applied more easily in practice, as top-­down policies generated through an appropriate administrative system. The need for ‘translations’ discussed in this chapter means that these flows of knowledge supported by the alliance between science and administration no longer

152   Å. Mariussen and S. Virkkala root out resistance from existing actor networks. Instead, knowledge can be questioned, scrutinized, found to be unclear or irrelevant, and often rejected. Our alternative is experimentalist, relying on the creation of networks which can facilitate transnational learning through arguments, and not through administrative prescriptions. Importantly perhaps, within the processes through which these networks are constructed, the relation between research, which is no longer confined to a separate phase of the process, and the actual implementation of the policy, where research results are evaluated, questioned and scrutinized, is blurred.

Induction, deduction – abduction! The logic of innovation which consists of discovering an empty place in a structure and trying to fit something into it is also referred to as abduction, as described by Peirce (Burch 2010). Abduction has to do with symbols, but it also relates to a method of scientific inquiry, which may be contrasted with the induction and deduction of testable hypotheses. Inductive methods mean that an empirical material is explored, and a new concept is invented to classify or give a name to what has been found. Translated into industrial practices, we are talking about codification of tacit knowledge. Once we dispose of the concepts for describing what is going on, it is possible to operate it, to deduct hypotheses of relations between factors, and possibilities to change these relations. In moving from induction to hypothetical-­deductive methods, by specifying clear definitions, and using them to generate verifiable hypothesis, we lock concepts into fixed positions. In science, this kind of locking of certain concepts based on a new understanding may open up a very productive period for formulating and testing hypotheses. Further, an established paradigm with clearly defined parameters may open up a trajectory where products may be refined and improved. There is a stage between induction and hypothetic deductive methodologies, however. This stage is abduction, the core logic of innovation. Abduction refers to the experimental repositioning of a symbol. An example could be taking (or abducting) a concept which refers to a small-­scale practice out of this limited context and hypothetically situating it within a different and larger context or practice. If this works in a lab, it might also work in practice. Further, if it works in one country, it may also work in another. If we combine these technologies and actors in a new way, we may create a new product (and a new network). Abduction is not based on the strict requirements of hypothesis testing as it does not take place within the strict definitions of a mature technological paradigm. Instead, it is based on a hunch, an intuition, a best-­guess of what might work. Abduction starts with a weak hypothesis (Burch 2010). The implications of this discussion in terms of methods for transnational learning are discussed in the following chapters.

Is transnational learning possible?   153

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5 Methodologies and methods of transnational learning Åge Mariussen and Seija Virkkala

Introduction Most of the time, cognitive learning (see Chapter 1, this volume) is likely to be enabled and restricted by spatial (see Chapter 2, this volume) and organizational (see Chapter 3, this volume) frameworks, and lock-­in mechanisms, which create trajectories. Attempts at transnational learning are often motivated by visions that break with some of these spatial and organizational limitations, sometimes with reference to emergent (Chapter 1) institutional phenomena or megatrends driven by globalization. The examples used in this volume are liberalization (NPM), multilevel governance in Europe (OMC, Smart Specialization), global communities defending the common interests of humanity (World Heritage), and Nordic values (see Chapters 1, 6, 8 and 13, this volume). The special case of Nordic learning is discussed more comprehensively in Chapter 8. This chapter shows how some of these forms of transnational learning may be analyzed within the parameters defined by SECI (see Chapter 3, this volume). The argument is that new knowledge creation facilitated through the analytical and organizational tools of SECI has a potential to change trajectories usually locked in by spatial and organizational restrictions. Accordingly, in the discussion on methods (see below), the chapter refers to approaches and tools that are based on SECI, which may be useful in organizing, monitoring and evaluating processes of transnational learning. In doing so, we draw upon some of the concepts introduced by Mariussen and Virkkala in Chapter 4 of this volume, such as translation and abduction. Finally, in the discussion on the practical application of the outcomes of transnational learning and innovation, the topic of emergence, introduced in Chapter 1, is reopened, from the point of departure of theories of institutional change. It is argued that continued work in this direction enables the development of analytical and methodological tools which may be used to explore empirically how transnational learning can change trajectories (see below).

Methodological preliminaries In literature on policy transfer a distinction has been made between voluntary policy transfers, coercive transfers, and mixtures between these two extremes,

156   Å. Mariussen and S. Virkkala such as policy transfer as conditionality for support (Dolowitz and Marsh 2000). For example, transnational learning may be forced upon a country through armies of occupation. But, alas, Bonaparte is dead. The Red Army or the US Army may have clear visions regarding ‘regime change’ or similar objectives, but as we have seen lately, without local support combined with huge investments from the occupying force, boots on the ground are not likely to make lasting impacts. In countries with broken economies, reforms may be required by external helpers, such as the IMF, as conditions for support. In these cases, the external helper may have a clear vision and give authoritative advice, a model which is to be transferred. But the efficiency of these efforts depends upon cooperation with internal actor networks, something which should not be taken for granted. As Latour (2005) points out, the earth is flat. Most of the time, transnational learning is voluntary and horizontal. This does not mean, however, that there is no such thing as powerful institutions. A crucial question is, as Latour poses it, ‘Where are the structural effects actually being produced?’ (2005: 175). In the absence of top-­down coercion, what we have as a point of departure is various forms of cooperation, which, seen from a local or regional perspective, have to build on some kind of motivation. As we will see below, these sources of motivation are important ‘drivers’ in processes of transnational learning, and they are also important in understanding the dynamics of the cognitive, organizational and spatial processes involved in them. Policy transfer literature from the 1990s focused to a large degree on what Mariussen in Chapter 1 of this volume refers to as ‘hard globalization’, or Americanization, based on the normative hegemony of the US/UK neo-­liberal economies. The world was ‘flat’, but in this flat world, the United States was the hegemonic provider of best practice. In other words, models had a standardized form. Core actors in this period were the OECD, national governments, as well as accountancy corporations diversifying from management consulting to government consulting, such as PricewaterhouseCoopers, KPMG and Arthur Anderson (Stone 2004). The outcomes of these forms of policy transfers varied between copying, emulation, mixtures of the two, and/or inspiration (Dolowitz and Marsh 2000). However, the original aim of policy transfers sometimes failed because they were uninformed, incomplete or inappropriate (Dolowitz and Marsh 2000). The case presented by Hyyryläinen in Chapter 6 of this volume is New Public Management (NPM). NPM-­style policy transfers may be contrasted both with more contemporary processes of learning within the multilevel governance system in Europe, such as ‘learning through difference’ in the Open Method of Coordination (OMC), as well as with Smart Specialization (S3). Other important forms of transnational learning are driven by transnational communities supported by global institutions, which are motivated by a common interest in humanity. An extraordinarily successful case is World Heritage (WH), based on the voluntary participation of national governments that identify sites which should be protected, because they are a part, not just of the local or national heritage, but of the common ‘world heritage’ of humanity. In this chapter we will briefly mention experiences

Methods of transnational learning   157 regarding learning municipal organization and regional innovation system development between Nordic countries. In these cases, learning is supported by Nordic institutions, promoting the rather heterodox phenomenon called Nordic values. Nordic learning is experimental, with no obvious points of coordination and no hegemonic countries as points of reference. The discussion on Nordic learning is continued by Mariussen in Chapter 8. Assuming that there is a level of motivation, the question of how to carry out transnational learning arises. In approaching this question, we can draw from the discussions from Chapters 1, 2 and 3 of this volume. In sociology, geography and organizational theory there are somewhat different understandings of knowledge and learning. Whereas in organizational theory, knowledge is seen as assets and pieces of information, which may be objects of investment and administrative control, the sociologists referred to in Chapter 1 tend to see knowledge as shared and contextual beliefs. Shared knowledge can be dynamic, and it may accumulate strength, but it can also be fragile and, due to its contextual character, its existence and relevance as knowledge, it is only reproduced by social processes, which recreate ‘sharing’ and shared beliefs, or ‘truths’. At the same time, shared knowledge is crucial to the ways in which societies work and reproduce themselves, or follow trajectories of development. Shared beliefs, assumed to be ‘true’, may be seen as the ‘operation system’ which determines or predicts how society evolves. New knowledge is more easily absorbed if we can relate it to something we already know, as knowledge is the precondition for cumulative learning. In all types of societies, there are structural mechanisms protecting shared knowledge, and thus the continuity of the society. This is discussed more specifically by Mariussen in Chapter 1 of this volume, where we describe the structuration theory (Giddens) and the selection mechanisms (SRA) of Jessop, which explain how the trajectory of national societal development is maintained through a process whereby only the external elements which fit together with the strategy already in place are selected. Similarly, actor networks or ANTs form ‘black boxes’ where the divisions of labour between different components of the network are taken for granted. The balance between knowledge protection and learning is fragile. If barriers protecting existing knowledge are removed, the truth may be destroyed, and cumulative learning may give way to uncertainty. This uncertainty is discussed in Chapter 1 with reference to Giddens’ idea of globalization as ‘Juggernaut’, a monster creating chaos. Uncertainty following the opening-­up of knowledge protection mechanisms is why the coordinated process of knowledge creation, explained by Nonaka through the SECI model, should start with the sharing of knowledge in a relaxed and friendly atmosphere. This friendly atmosphere is the socialization or originating ba, where actors are motivated to participate in the transformation of their knowledge and ways of working. This need for friendliness to promote openness and dialogue is drawn upon, as we will see below, in ‘peer review’, both in the somewhat heavy-­ handed way in which the OECD makes peer review based evaluations of countries and their economies, and in the way in which peer review is applied in the Open Method of Coordination and Smart Specialization in the EU.

158   Å. Mariussen and S. Virkkala Knowledge protection enables cumulative learning, but it may at the same time lead to a lock-­in, and prevent learning. In societies where shared knowledge is based on religion or conservative ideologies, knowledge protection may be open and institutionalized. Existing knowledge may be defended with reference to holy and authorized texts, such as the Koran, the Bible, or the core books of Marxism-­Leninism. These texts may have institutions explicitly set up as guardians of faith, to protect societies and their core knowledge against learning. Even democratic, modern societies may have constitutions that are based on ‘eternal’ principles, which cannot be broken without violating the constitution. But in most modern societies, where hegemonic belief is based on the ideas of European Enlightenment, there are also strong values indicating that knowledge protection can only be legitimized as a precondition for cumulative learning. This is because in modern societies, transparency, criticism and dialogue are generally accepted as the road to further modernization. In this situation, paradoxically, lock-­ins are generally not accepted, yet, they exist everywhere. In other words lock-­ins have gone underground in modern societies, they have become tacit. With regards to regional development, tacit knowledge (which is transferred, for instance, through patterns of interaction, and which often prevents cooperation between universities and local industries) reproduces path dependency in regional economies and innovation systems. The existence of tacit knowledge leads to a routinized innovation system which is governed by lock-­ins, turning it into a black box. These lock-­in mechanisms are often unintended, as actors reproducing them may be unaware of their existence. Furthermore, they are usually not documented in written texts, and are therefore hidden from the outside view. The first empirical indication of a regional development lock-­in is the path dependency (Harmaakorpi 2006) of the regional economy. A lock-­in is empirically observable in a development trajectory where new or surprising outcomes do not take place, because the relations between actors in the regional innovation system are stable. Grabher defines regional innovation system lock-­ ins as functional, cognitive and political (Grabher 1993, quoted in Harmaakorpi 2006). This point is illustrated with reference to different levels of learning discussed by Virkkala and Mariussen in Chapter 3 of this volume. A region with a stable specialization in one or a few sectors might be able to learn through loop 1 (continuing with already established strategies more efficiently). More innovative regions with sophisticated absorptive and developmental capacities and regional innovation systems are likely to be able to do a loop 2, that is, diversify into new industries, which are related to their path. However, particularly in successful and highly innovative cases, there is a danger of path dependency, and therefore a sophisticated regional knowledge base needs a high level of knowledge protection. Path dependencies can sometimes also be seen as the institutionalization of successful regional development partnerships and their innovation systems. The reason for this is, as pointed out above, that positive feedback mechanisms generated through successful cumulative learning experiences and innovation provide incentives which give the innovation system a stable structure. A successful innovation system may become a black box,

Methods of transnational learning   159 locking the development path of the region into a trajectory. At that point, the organizational mechanisms of bounded rationality and lock-­in discussed in Chapter 3 start to operate, and exploitation becomes more important than exploration. The SECI process of knowledge conversion presented by Virkkala and Mariussen in Chapter 3 of this volume is an organized way of attempting to unlock black boxes by opening up tacit knowledge for analysis, peer review and other forms of external scrutiny and evaluation. This is also referred to as cognitive learning. Once tacit mechanisms are converted into a codified analysis, they become exposed and vulnerable to criticism, as new and better procedures may be discovered through their comparison with others. This is new knowledge creation, which might lead to a leap from learning in loop 1 to loop 2 or even 3, as discussed by Argyris and Schön (1978). As we have seen above, this movement away from protected tacit forms of knowledge (socialization) to codification (explication) where knowledge becomes ‘plastic’ and vulnerable creates uncertainty. However, in facilitating SECI as a coordinated process, this uncertainty is controlled; SECI encourages moving from tacit to explicit knowledge, and recombining the resulting knowledge with other forms of knowledge (learning), and implementing and socializing it within a new practice. Thus, SECI overcomes the dilemma that often forms between too much knowledge protection and too much learning, and it may be used to offset the mechanisms creating a lock-­in in regional development. In developing the SECI theory and the idea of knowledge-­creating organizations, applied in knowledge management literature referred to in Chapter 3, Nonaka combined sociology with organizational theory. Tacit mechanisms blocking learning is a well-­known phenomenon in geography and in different parts of the broader field of organizational theories. In the classic organizational theory, referred to in Chapter 3 of this volume by Virkkala and Mariussen, knowledge was at first seen as something that is embodied in humans. Furthermore, humans and their knowledge are seen to be potentially controlled by organizations. These organizational administrative mechanisms are seen as restrictive, as they define objectives with clear implications as to what is relevant and what is irrelevant to the operations of the organization. The top sections of the hierarchy decide what kind of knowledge is relevant and legitimate, and the vision of the leadership is biased toward the exploitation of solid existing knowledge rather than of uncertain new knowledge. Within this theory organizations possess bounded rationality, as they focus on efficiency rather than effectiveness, developing myopic visions. An alternative to the idea of the restrictive and restricted organization in the organizational theory is learning organizations (see Chapter 3), such as adhocracies, which may thrive in dynamic and open innovation systems. The organizational theory sees knowledge as assets and information, which might not just be organizationally controlled, but also exchanged as objects in markets, networks, and other information-­sharing systems. By turning knowledge into markets some of the administrative boundaries restricting it are removed, and knowledge

160   Å. Mariussen and S. Virkkala recombinations may be achieved through projects linking different adhocracies within innovation systems. Similarly in geography, as analysed by Virkkala in Chapter 2 of this volume, learning is seen as restricted by distance and enabled by proximity. Distances are covered by spatial patterns of flows of codified knowledge, combined with places, where interactive learning, including tacit knowledge processing and knowledge recombinations, is possible. In geography, shared knowledge and innovation systems are seen as spatially embedded. Spatially embedded co-­ location, co-­optation and co-­evolution (Carayannis et al. 2008) may make radical changes of strategy difficult, leading to lock-­ins. In looking at learning and knowledge on the regional level, one might say that regional development partnerships and innovation systems suffer from lock-­in problems created both by the spatial patterns discussed by Virkkala in Chapter 2 of this volume as well as by the organizational mechanisms of bounded rationality discussed by Virkkala and Mariussen in Chapter 3. Cognitive learning is embedded in organizational and spatial networks which restrict learning and new knowledge creation, confining cognitive learning to specific trajectories, and thus creating paths and lock-­ins. The restrictive mechanisms creating cognitive, political and functional lock-­ins are mostly tacit. It is important, however, that the word ‘restriction’ should not be equalled with ‘peripheral’, as also modern and highly successful industrial clusters may develop lock-­ins based on the tactics which created their success in the first place. Even if these clusters maintain a high level of innovation within their trajectory, due to their success they will not engage with exploring and detecting more radical shifts in their markets. One case in point is the success story of Nokia in Finland in the 1990s, where Nokia invested in research and development (R&D) and production facilities with high proximity to Finnish technological universities. These triple helix clusters, characterized, in this case, by close relations between Nokia, regional institutions and universities enabled a highly competitive strategy which was used for the better part of two decades. However, when the focus of the mobile phone industry shifted to smartphones, driven by the success of the iPhone, Nokia was not able to follow, because its main clusters were specialized in an outdated operative system (Symbian). The current attempt to turn Nokia around has resulted in the shift in the direction of the US model of organization described by Alice Lam as adhocracy (see Virkkala and Mariussen, Chapter 3 and below), combined with access to global innovation systems, in the case of Nokia through its alliance with Microsoft. The shift also meant that the cognitive learning process quite literally took a new direction, with a new operative system supported by a new set of networks of suppliers. This cognitive shift had deep implications with regards to the organizational structures and spatial patterns inside Nokia; the old innovation system was reflected upon, and a new direction was set. Going into learning loop 3 means to critically evaluate the ways in which the current innovation system and other practices work, and to be open to change when it comes to what kind of knowledge is seen as

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Dimensions/ restricting or enabling

Learning loop 1-2 (lock-in)

Learning loop 2 -3

Spatial

Restricting spatial structures

Regional dynam ics and change

Organizational

Restricting organizational structures (bounded rationalities)

Enabling organizational structures

Cognitive

Cognitive learning (lock-in)

New knowledge creation

Figure 5.1 Restricting and enabling processes o f learning loops.

relevant. It is a way of breaking out of spatial, organizational and societal lockins. This discussion is summarized in Figure 5.1. In the case of learning loop 1 or 2, cognitive learning is restricted by spatial and organizational barriers. Breaking out of this restriction starts by opening up the process of cognitive learning for new external knowledge. This can be done through organizational facilitation. The knowledge conversion process of SECI enables a company to expose the tacit mechanisms restricting development, and invent new combinations. A distinction can be made between a lock-in (where only loop 1 and 2 learning is possible), breaking out, enabling loop 2, and new knowledge creation, where learning may go into loop 3, and lead to the creation of new innovation systems. The related societal, organizational and spatial structures, discussed in Chap­ ters 1, 2 and 3, are outlined in Table 5.1. As pointed out by Virkkala and Mariussen in Chapter 3 of this volume, knowledge conversion leading to new knowledge creation relies on a combination of cognitive and administrative (political and functional) steps in the SECI process. For Nonaka, SECI starts with a knowledge vision. First, the corporate leader­ ship (top) considers a proposal for a strategy of innovation coming from its middle management (middle-up). The top then issues a generalized commitment,

Organizational and    spatial structures

Emergence Dialogues Peer reviews Transnational learning through    difference

Learning loop 2 Knowledge externalization Abduction Translation Ant hills

Learning loop 3 Recombination new knowledge (path) creation

Bounded rationalities Myopic behavior Garbage cans RIS lock-ins Low absorptive capacity

Learning organizations Open systems of innovation Absorptive capacity generation

Knowledge-creating organizations Regional development    platforms

← →

Narrow selection mechanisms Routines Traditions

Society/cognitive    learning

tacit

Learning loop 1 Socialization protecting lock-in

Dimensions

Table 5.1  Cognitive learning, organizational and spatial structures, learning loops

explicit

Methods of transnational learning   163 a vision, which opens up the process, gives normative approval, and legitimizes the allocation of resources (up-­down). At the same time, this acceptance from the top opens up the organizational units involved (down), including the knowledge resources (both tacit and codified) of the corporation, for the horizontal process of knowledge sharing and socializing. In practice this potential is realized through the setting up of a ba, supported by the middle management. Thus, importantly, the knowledge vision also creates the preconditions for emergence, as it sets the structure in motion. There is an external goal, a vision that functions outside the current routines, procedures and tacit practices. This motion in a new direction, the vision or what Harmaakorpi, with reference to regional development strategies, refers to as ‘the core process of futurizing’, and imagination, can start a process which might open up the tacit knowledge of the black boxes. In other words, the SECI process, described by Mariussen and Virkkala in Chapters 1, 2 and 3 in this volume, is set in motion. Emergence refers to an ongoing process of development, in which an expectation, a feeling that something is missing, prevails. This empty point is where the external element, the result of transnational learning, should be directed, as there it may fulfill a need. Emergence may be discovered by transnational communities of activism, who are arguing in favor of new and better solutions to local and global problems. In the case of Nokia, it was a speech, given by the new CEO, recruited from Microsoft. Second, local actors are likely to evaluate a suggestion of improvement based on external experiences, from the point of departure of the logic of their ongoing practices. Local practices might be highly successful, or for a variety of reasons, they may seem to be highly successful, without actually being so. Successful or perceived successful networks may, as we saw in Chapter 1, become black boxes. There should be some kind of regional development coalition or partnership which is able to ask and seek answers to difficult questions, open up black boxes, and make way for new priorities and strategies. Third, as we saw in Chapter 4 with reference to the ant hill theory, in overcoming the resistance caused by black boxes, the external element has to be able to adapt to the new context in the receiving region in a different country through a translation of itself. In other words there must be support for the process of transnational learning itself which is able to overcome the dangers of fragmentation and isolation between the transnational project and the regional development strategy. As we saw in Chapter 1, with reference to Bob Jessop, there is also the issue of the strategy of the national elite, who are likely to assess the proposed external element from the point of departure of their own strategy, and select only what is seen as consistent with it for further use.

Globalization and transnational learning We may now return to our discussion in Chapter 1, of forms of globalization and related strategies of transnational learning (see Table 5.2). In Chapter 1 we made a distinction between ‘hard’ globalization, multilevel governance, learning through global communities, and Nordic learning.

Cases

New Public Management

Open Method of Coordination

Smart Specialization

World Heritage

Municipal organization Regional development

Mode of globalization

Hard globalization

Lisbon policies, multilevel governance

Post-Lisbon, multilevel governance

Global communities and institutions

Nordic learning

Table 5.2  Modes and strategies of transnational learning Vision – emergence

Theory of development

States, consultancies, Modernization, increased Principal agent, transaction OECD committees, public sector productivity cost theory policy-makers EU platform, national level EU Lisbon policies, Experimentalist governance network contacts competition with United National systems of States innovation EU platform, regional The European economic Related varieties institutions and crisis/Agenda 2020 Regional systems of partnerships innovation Global institution, states, Protection of cultural and History, archeology, natural regions national heritage, science regional development as a side effect Bottom-up, regional and ‘The Swedish model’, Welfare state theory, national level, Nordic Danish flexicurity, innovation system theory institutions Finnish innovation systems

Main actors enabling translation

Methods of transnational learning   165 New Public Management In the case of ‘hard globalization’ discussed by Mariussen in Chapter 1 of this volume, diffusion is driven by normative influences coming from a global hegemonic power, which is regarded as superior, and which accordingly provides the model for ‘modernization’ and ‘best practices’. Americanization was facilitated by powerful transnational institutions, such as the OECD, working together with transnational consultancies, often integrated in US accountancy corporations. The business idea of these consultancies was to produce best practice models, which could be standardized and transferred. The shared vision of modernization through the adaptation of US forms of organization opened up possibilities for horizontal cooperation inside the transnational community which believed in the master story. The hegemonic model was implemented by the OECD, which set up ‘platforms’, transnational institutions and committees, often combined with national peer reviews. National peer reviews were understood as evaluations of nations, undertaken by committees of international experts, and combined with sequences of horizontal discussions on analysis and recommendations. One of the first was a peer review in Japan, undertaken in the early 1960s. Initially, as pointed out by Bob Jessop, learning through the OECD relied to a large extent upon a normative neo-­liberal approach, which was backed up by neo-­liberal transnational networks, think-­tanks and institutions, combined with communities of politicians, policy-­makers, experts and administrators. Learning from others may also be chosen by national and regional policy-­ makers, following the wake-­up call of an externally imposed economic shock, which demonstrates that the economy is not working the way it should. The economic turbulence in the United States and Europe in the 1980s initiated a new wave of policy diffusion and transfers, in a quest to solve economic problems. In Nordic countries, the liberalization of financial industries led to a bank crisis, and in order to tackle the problems that followed, the productivity of the public sector came under scrutiny. The solutions were policy reforms, aimed at increased productivity and competitiveness. In Eastern Europe, the transition following the downfall of the Iron Curtain led to a similar demand for neo-­liberal public sector reforms. The flow of neo-­liberal ideas and models was not just based on ideology, such as Reaganomics and Thatcherism, but also a broader intellectual movement inclined toward neo-­liberalism. In Nordic countries, the productivity of the powerful public sectors providing welfare state services was put on the table during the 1987–1990 crisis. Reforms in the direction of NPM and other neo-­liberal solutions were embraced by unions and politicians defending the welfare state, as a strategy to prove that Nordic economies could become globally competitive and at the same time maintain a welfare state system with a high level of sophisticated public services, including a social safety net, available for all citizens. The unions and social democratic parties defending these ideas also supported the privatization of state-­owned industries (Mariussen et al. 1996), and other reforms in the labor market, where

166   Å. Mariussen and S. Virkkala employment security was removed in return for labor market policies and instruments which gave the unemployed easy access to education, skill upgrading and new jobs, as in the Danish model of flexicurity (Kristensen 2009). This configuration of factors; the neo-­liberal policy networks, transnational institutions, the hegemonic position of neo-­liberal national business systems, and the symbolic capital of NPM as the best practice solution, opened up the strategic selection mechanisms of national elites in favor of NPM. An analysis of the diffusion and influence of NPM on public sector reforms setting up agencies is presented by Hyyryläinen (see Chapter 6, this volume). The result in the case of NPM was a rapid diffusion of new, related organizational forms initiated through transnational communities. Scientifically, the NPM reforms were based on the Public Choice and Principal Agent Theories as well as the transaction cost theory. However, it was not diffused only as a scientific paradigm, but instead through transnational networks of policy-­makers. According to Hyyryläinen, practitioner-­basedness was an essential precondition in order for NPM to have a global impact. It made transnational learning possible in a completely different way to any other research-­driven development until then (Chapter 6, this volume). The focus on diffusion through communities of policy-­makers was coordinated by the OECD through a string of transnational committees (starting with TECO in the 1980s, later PUMA in the 1990, and more recently SIGMA and GOV), which provided information and guidance to practitioners on how to draft legislations for the organization and functioning of the state administration. This type of coordination also included seminars and conferences which created micro-­level ‘peer pressure’, including the production and sharing of information and analysis, ‘naming and shaming’ of winners and losers, and the collective development of joint transnational standards based on OECD indicators, carried out by policy-­makers in various countries. When it comes to the content of these reforms, Hyyryläinen describes the ‘rise and fall’ of a specific form of NPM policy; agencies. In practice, depending on the national preconditions, ‘agencification’ took place in several different ways, and under several different names. One of the areas where ‘agencification’ succeeded was regional development agencies or RDAs (Bellini et al. 2012). In the middle of the 1990s, the ‘model RDA’ was described in the following way: 1 2 3

They were based in the region, at a ‘hands off ’ distance from government offices, and closely linked to regional partners. They supported regional firms through ‘soft’ policies, such as networking and clustering. They could address complex problems through the integration of several policy areas.

However, the swift diffusion of the agency model led to problems, opening up possibilities for backlashes and ‘agency bonfires’, as agencies were replaced with other solutions. But in some situations agencies were also able to reinvent

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themselves. Smart Specialization approach is multi-scalar and multi-actor, and as such poses a challenge to the agency model (Dahlström et al. 2012). The RDA model can deliver fast and explicit results, and, according to Dahlström et al. (see Figure 5.2) this reliance on explicit indicators and fast results may con­ stitute a form of path dependency and make it hard for regional development agencies to relate to the requirements of quadruple helix knowledge dynamics in Smart Specialization. Other criticism against agencies has been that codifying functions and defining indicators have destroyed some important qualities of the previous forms of administration, organized as a ‘Weberian’ public sector. The recent ‘big society’ reform in the UK is another example of a situation that con­ cluded in ‘agency bonfires’.

Tacit

Tacit Externalization

Socialization

Critical evaluation of agencies

Operating agencies

Socialization

Integration

Combination

Reforms

Agency bonfires

Tacit

Tacit

Socialization

Externalization

Public sector administration

Codification o f functions and indicators of performance

Combination Integration State implementation of agencies

Application of the agency model through external consultancies

Explicit

Figure 5.2 Agencies and agency bonfires as a SECI process.

Explicit

168   Å. Mariussen and S. Virkkala Seen in retrospect one might ask whether the reaction against agencies was caused by a somewhat too rapid externalization in the first circle, when the functions of the public sector administration were codified and the indicators of performance set up. A frequent criticism of this kind of reorganization is that new models are approached too uncritically, creating ‘fashions’ of organizational solutions that come from abroad, in this case the UK, and as weaknesses are revealed, they are rejected too quickly. In positioning this kind of process in the SECI model it is possible to apply a long-­term perspective on the processes of transfer or transnational learning, which might open up possibilities for cumulative learning. Open Method of Coordination The Open Method of Coordination was part of the Lisbon policies of 2000. Here, the EU tried to design a set of policies which could enhance transnational learning between member states. The motive was to compete with the leading economic power of the time, the United States. The Open Method of Coordination (OMC) was seen as an attempt to learn from the ways in which states in the United States learn from each other. The OMC aimed to be a ‘means of spreading best practice and achieving greater convergence towards the main EU goals’ (European Union 2004). In terms of theories of learning, it was based on learning through monitoring, also referred to as learning through difference, developed by Charles Sabel. Mainstream economic and innovation studies see learning as rational adaptation to global markets, and thus they overlook the limits of rationality identified in the organizational theory. Taking these limits into consideration, a pragmatist approach explains path-­breaking economic development through inter-­firm learning by monitoring (Sabel 1992), benchmarking through indicators, and agreeing upon new routines. The OMC set down a framework for pragmatic deliberations in multilevel governance systems, where actors can look for and find new solutions, and thus change their routines (Sabel 2006). More specifically, the steps of the OMC were: 1 2 3 4

Establishment of framework goals and metrics at an EU level. Elaboration of plans to reach the goals by national level units. Reporting, monitoring and peer review of results. Recursive revision of goals, metrics and procedures in the light of experiences.

The core element was the recursive approach to goals and operational methods, meaning that results were continuously reviewed, monitored and peer reviewed. This was, in other words, a sequence of bas (see Chapter 3, this volume). The aim of peer review is to perform a number of distinct governance functions, such as assessing the comparative effectiveness of different national and subnational implementation

Methods of transnational learning   169 approaches, opening up opportunities for civil society actors to hold governments accountable at national and EU levels, identifying areas where new forms of national or transnational capacity building are required, and/or contributing to the redefinition of common policy objectives. (Sabel and Zeitlin 2010: 3) This begs the question of how the national selection system, described by Mariussen in Chapter 1 of this volume, and SRA would work. In the case of the OMC, a particular burden, as pointed out by Scharpf (1998, 2002), was the different and competing national models in Europe, specifically models that we in Chapter 1 refer to as the US-­UK neo-­liberal model, and on the other hand the German model. Scharpf pointed out that areas which were seen as the core of each national model, and not open to national policy change, such as social policy, macro-­economic employment policy, and labor relations, was likely to be kept outside of EU coordination. These sectors are crucial when it comes to the structure of national innovation systems. Sabel and Zeitlin (2010: 3) identify successful patterns of decision-­making in 13 policy sectors, from regulations of telecommunications to pensions. According to Sabel and Zeitlin: Although experimentalism conforms neither to traditional canons of input nor output legitimacy, the greater policy space it offers to nations and regions in pursuing broadly shared goals makes it arguably not only more effective but also more legitimate than competing forms of transnational governance. Yet the very polyarchy and diversity that make experimentalist governance attractive under such conditions can also make it difficult to get a transnational regime off the ground. Thus, too many participants with sharply different perspectives may make it hard to reach an initial agreement on common framework goals. Conversely, a single powerful player may be able to veto other proposed solutions even if he cannot impose his own. (Sabel and Zeitlin 2010) The selection mechanisms allow the development of multilevel governance in some policy areas, while keeping others under national control. One of the areas where the OMC has had a more limited effect is national innovation policy. This illustrates the lock-­in of national innovation systems, in other words that national governments tend to protect the core of their national models. In an assessment of the impacts of experimentalist governance on EU cohesion policies, Mendez (2011) found that the coordinative discourses initiated by the Lisbon policies ‘appear to have contributed to the creation of new organizational platforms’, but at the same time that the harder procedural requirements and strategic reporting have been key contributing factors (Mendez 2011: 532). The debate on the actual effectiveness and outcomes of peer review as a mechanism of coordination is ongoing, and reflects different ideas of learning. In parts of the evaluation literature, for example, ‘learning’ is seen as the outcome of a

170   Å. Mariussen and S. Virkkala formalized evaluation and monitoring procedure. The OMC version of learning and evaluation through peer review was to a large extent a tacit process, in which participants learned from each other in various ways, contributing to changes in national policies. This form of learning comes close to what we refer to as SECI, in which the OMC space would be considered ba. However, the causal chains leading from OMC deliberations (E–C in SECI) to policy implementation at the national level (I–C in SECI), were not coordinated, nor documented. In many cases, changes in national policy were not referred to as results of the OMC, but rather they were seen as changes emerging from within national systems. An alternative perspective refers to the explicit coordination between cognitive learning and organizational implementation which was present in the OMC as EU regulations and standards. Some researchers argue that this ‘hard’ side of the OMC, its link to EU decision-­making processes, and ‘the shadow of hierarchy’ implicit in ‘naming and shaming’, based on European level indicators, may have prevented the cognitive process of learning. This linkage with the multilevel EU system, which was at the core of the OMC, was not present in the classic OECD approach, where there was no explicit connection between the analysis in the OECD report and national policy implementation (Groenendijk 2009). Thus, it was possible for the OECD to go further in terms of cognitive learning processes. Similarly, Kröger (2009) argues that with the OMC horizontal learning was blocked in a number of ways. At the macro level, in dialogues between states, core concepts such as ‘social inclusion’ were compromised due to widely different national approaches to social policy in the dominating countries. Furthermore ‘Political guidelines and recommendations seem to stand in contrast with open-­ended learning processes as do quantified targets which do not favor mutual trust relationships, but competition and bargaining’ (Kröger 2009: 7). Also, Kröger correctly points out that lessons learned through peer reviews and other consultations and negotiations between experts are not necessarily implemented in practice. These and other arguments in the debate quite correctly identify several of the paradoxes which always follow any attempt to coordinate a cognitive process of learning leading to organizational implementation. Seen in relation to the SECI process, the intention with the OMC is illustrated in Figure 5.3. Smart Specialization The OMC experiences with peer review were continued in the Smart Specialization initiative, which was introduced as part of the Horizon 2020 policies. In Smart Specialization the issue is not coordination between national policies, but rather the challenge of breaking up regional innovation system lock-­ins, and creating a new strategy for European growth. Thus, the Smart Specialization approach bypasses ‘the shadow of hierarchy’ problem which is present in the OMC. The global economic crisis which was initiated in the American housing market in 2008 has also hit the European economy hard. Moving outwards from

Methods o f transnational learning

Tacit

171

Tacit Externalization

Socialization

Following up and monitoring progress

Lisbon policy convergence Changes in national policies

Internalization

Combination

Multilevel governance

Recursive iterations of reviews

Tacit

Tacit Socialization National participation and reporting

Externalization European level indicators and national reports

Internalization

Combination

National selection mechanisms

Peer reviews, deliberations

Explicit

Explicit

Figure 5.3 Open M ethod o f Coordination as a SECI process.

the core financial industries it continued into the ‘old’ periphery in the Europe of 12; Greece, Ireland, Spain and Portugal, with Italy as an additional member. In these countries, the private and public sector debt, accumulated through the demand-driven growth leading up to the 2008 crisis, led to severe problems for the states and financial industries. Debt problems created both in the private sector, as in Spain, and in the public sector, as in the case of Greece, led to the possibility of a sovereign default of one, or possibly several, Eurozone countries. The result of such an outcome would have been a financial crisis in the core Eurozone countries, France and Germany, who are the creditors of many South-

172   Å. Mariussen and S. Virkkala ern European countries. It also opened up the possibility for a breakup of the monetary cooperation linked to the euro, and a collapse of the currency. This extraordinary situation led to a completely new form of EU policy coordination, aimed at saving the euro through giving support to the peripheral countries. Aid, in the form of credit, came with strict budgetary conditions attached. The conditions for receiving aid were austerity measures implemented in the form of deep cuts in private and public spending. In turn, the mobilization of resources for this support led to problems in the core countries in Europe, such as Germany and France. During the summer of 2012, Europe went into recession, with rapidly rising unemployment in peripheral economies. The austerity measures introduced in countries struggling under high debt problems makes it evident that the classical Keynesian demand-­driven policies cannot be applied to deliver growth. An obvious alternative is to generate growth through innovation and other measures, which would enhance the global market competitiveness of peripheral countries. The Europe 2020 strategy was launched in June 2010. It has three priorities: smart, sustainable and inclusive growth. Accordingly, the issue of coordination between science policy, where the Framework Programs are prominent, EU regional policy, where the Structural Funds are crucial, and EU social policy, has been on the table of the Commission for a while. The way the issue of coordination is approached, however, is not self-­evident. One option could be to go in the direction of a science policy approach to growth, with emphasis on excellence, and simply put the resources of the Structural Funds at the disposal of the Agenda 2020 program. However, there are two major arguments against such a move. First, it is clear that the abilities of institutions in large European metropolitan areas that are commonly funded by science policy, i.e. universities and research institutions, to contribute to economic development, should not be taken for granted. Universities, one might suspect, may in several cases score high on science policy indicators, without contributing to the economy of the regions where they are located, or for that matter to the European economy at large. In confronting these issues, the Regional System of Innovation approach (RIS) is an obvious point of departure. RIS encourages a focus on the contributions of research to regional economic development, and to the coordination between research institutions, regional policy institutions and industry (triple helix). If the EU wants money spent on science to contribute to economic development, the RIS is an important strategy to take into consideration. Second, in a situation where European convergence seems to suffer large setbacks, and when it comes to social integration, focusing only on high-­tech growth clusters in Germany, France and other core European regions would not make sense. The EU simply cannot allow peripheral regions to continue to fall even further behind. Accordingly, merging these sectors means emphasizing regional innovation systems or RIS within the cohesion policy instrument, the Structural Funds. All regions are invited on board the Smart Specialization platform, including the peripheral regions. The Smart Specialization strategy (S3) was launched as a

Methods of transnational learning   173 platform in 2011 and it is coordinated by the Institute of Prospective Technology Studies (IPTS), located in Seville, Spain. A ‘platform’ in this context refers to a framework of cooperation between regions, facilitated, by the IPTS and the Commission, in order to develop strategies for regions which sign up as members. The procedure is simple enough; European regions may sign up to be members of the platform, and in doing so, they commit themselves to developing a Smart Specialization strategy. This strategy is a condition for receiving Structural Fund support. To assist the regions, IPTS and OECD have developed a ‘RIS 3 Guide’ (European Commission 2012), which outlines a set of general principles for how plans should be developed, and what a Smart Specialization strategy is. This framework is made open and flexible, in order to enable the creation of programs which are based on local conditions. There is a balance between top-­down (hard decisions on priorities) and bottom-­up guidelines of mobilization which usually pull in the direction of diversification. The steps are: 1 2 3 4 5 6

Analysis of the national/regional context and potential for innovation. Setting up of a well-­functioning and inclusive governance structure. Production of a shared vision of the future of the country/region. Selection of a limited number of priorities. Establishment of suitable policy mixes. Integration of monitoring and evaluation policies.

The platform, importantly, is a general framework: ‘Consistently, this guide is to be interpreted as the “trunk” establishing the skeleton structure from which a number of “branches” may develop and grow’ (European Commission 2012: 5). The framework for the regional strategy of innovation is related varieties, combined with an emphasis on entrepreneurial discovery and ‘key enabling technologies’. This shared framework enables comparison between regional strategies. Based on OECD experiences, the platform organizes conferences where regions are invited to present their strategies, and be ‘peer reviewed’ by policy-­ makers and specialist planners working with the same type of plans. The idea behind the platform is to help regions to transform themselves. The challenge for Smart Specialization is not that it is linked to new forms of EU regulations or changes in national policies, but rather that it is up against the lock-­in mechanisms of regional innovation systems. The World Heritage The Convention Concerning the Protection of World Natural and Cultural Heritage was set up in 1972 in order to protect certain places with valuable natural or cultural heritages against destruction and neglect. The protection provided by the convention takes as a point of departure a scientifically based World Heritage List. The World Heritage Convention text states in clear terms why this

174   Å. Mariussen and S. Virkkala institution was established. The natural and cultural heritage of the world was threatened ‘not only by the natural causes of decay, but also by changing social and economic conditions which aggravate the situation with even more formidable phenomena of damage and destruction’ (UNESCO 1972: 1). It was the damage and destruction related to the Aswan Dam project which led to the formation of the Committee. The Convention points out that because protection at the national level is too weak there is a need for a new form of global governance. This new form of governance is supposed to be conducted on behalf of ‘the international community’, in this case represented by the UNESCO Intergovernmental Committee, in cooperation with national partners. The main task on a global level is to define, in a centralized manner, the World Heritage Sites, based on scientific criteria. These definitions and sites are then included in the World Heritage List of areas to be protected by national partners. In the 1972 Convention, the local or regional community is not given an active role in the governance of the heritage. However, it is required that the national partners give the heritage a ‘function in the life of the (local) community’. The national partners are also encouraged to integrate protective measures in local planning, and to set up one or more services for the protection, conservation and presentation of the heritage with an appropriate staff equipped with adequate resources. However, as pointed out by Drost in 1996, paradoxically this List created a new threat, as it was used by tourists to identify destinations for their travels. The paradox of tourism and sustainability in relation to the World Heritage was formulated by Drost in the following way: By generating revenue and drawing world attention to their importance, tourism can be a positive force for the preservation of World Heritage. However, the unprecedented growth of tourism creates a number of concerns over the environmental and cultural identity of these destination areas and has led to a re-­examination of tourism development in the light of the increasingly popular concept of sustainable tourism. (Drost 1996: 479) Thus, inclusion of a site on the World Heritage List could speed up the process of destruction by increasing the inflow of tourists beyond a sustainable level. Accordingly, in 2001, the World Heritage Committee instituted a ‘World Heritage Tourism Program’, focusing on ‘sustainable tourism’. In 2002, the program was followed up with a Practical Manual for World Heritage Site Managers (UNESCO World Heritage Centre 2002), which was based on a broad summary of experiences and insights from different World Heritage Sites. The World Heritage has been a success. There is strong competition between regions and countries for their sites to be included on the World Heritage List. However, this has created tension inside the Committee between representatives from different countries, i.e. politicians who want their candidates to be included, and the experts responsible for the scientific evaluation and decision-­making. The obvious danger is that too many could be included, that the value of the

Methods of transnational learning   175 brand name becomes inflated, and that the scientific criteria are weakened. The Committee giving access to the World Heritage List may exclude sites which are not managed properly. At the same time, beyond the threat of exclusion, the committee does not dispose of instruments for interfering in the ways in which the state takes care of its sites. In areas where states fail, like Afghanistan and North Africa, this has had negative impacts, as sites have been destroyed by Al Qaida. It is feared that in some cases, the inclusion of a site on the World Heritage List may have made Al Qaida more aware of these sites, and of the support they enjoyed from Christian countries, leading to the organization targeting some of these sites. If we look at the ways in which World Heritage protection is practiced in regions that appear on the World Heritage List, such as the Kvarken World Heritage Site, it is obvious that both national and regional actors use sources of transnational governance, such as EU programs (Leader, Interreg) and Nordic institutions, with other principles and methods of promoting regional development through tourism. This has also led to the emergence of networks of cooperation between researchers in different parts of the world, who are studying and comparing ways in which locals cope with the challenges of globalization (see Chapter 12, this volume). An interesting aspect of World Heritage in the context of our discussion is that it performs a cognitive learning process where a natural area or an old building is reclassified as part of the common heritage of humanity. This process has a strong center, the World Heritage Committee, and the national governments acts as its ‘middle management’, with the responsibility of having to propose a Site, and to implement the protective measures, once the Site has been designated. Research into the local processes following such a move indicates that there may be several different local interpretations of what the Site actually is (see Chapter 12, this volume). However, with the exception of the black box of Al Qaida, locals are generally either supportive or at least accepting of the decisions made by the World Heritage Committee. In many cases, this has led to enhanced economic development on the regional level. This is a successful ­middle–up–down process of transnational learning, an abduction where a Site is repositioned into a completely new context which is defined at the global level, but that has deep implications for the locals. Therefore, one might add, this success rests to a large extent upon the symbolic capital of the World Heritage List in the global tourist market. In the format of the SECI model, the cognitive process described above may be understood as two sequential bas (see Figure 5.4). Nordic cooperation In several cross-­border regions, transnational learning is institutionalized. However, an exchange of ideas may also take place in more loosely structured regional networks between different countries which recognize each other as struggling with similar challenges with regards to development. In Nordic cooperation, institutions facilitating transnational learning are well established,

Tacit

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responsibility

program

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Tacit

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Figure 5.4 W o rld Heritage Site process as a SECI model.

Combination Inclusion in the List

Methods of transnational learning   177 including communities of experts with ‘stocks of shared knowledge’, and close ties between transnational, national and regional policy networks. A case in point is networks and institutions focusing on municipal organization and spatial planning in Nordic countries, supported by Nordic institutions. The vision underlying several of these strategies is often based on values closely related to Nordic welfare societies, as well as shared identities based on a common history and culture. Nordic cooperation is discussed by Mariussen more in depth in Chapter 8. Successful transnational learning We may now answer Latour’s question, mentioned in the introduction to this chapter, of where structural effects are actually produced. Structural and institutional changes start with the creation of motivation, a vision which says that the present state of affairs is not sufficient. Motivation based on a shared vision unlocks the existing system, and creates the emergence (see Mariussen, Chapter 1 of this volume and above) which opens up the existing structure for new knowledge creation, in other words, cognitive learning. The idea of a shared vision flies in the face of existing institutional and organizational tensions, lock-­ins and conflicts. Accordingly a crucial issue in the initial stage is to shape an institutional and organizational framework capable of moving from the vision to initiating, supporting and protecting the cognitive learning process. SECI starts with socialization, explication and combination. In the case of World Heritage, the highly visible successful cases inspire followers. In several cases there is an explicit and easily observable causal connection between having a vision of becoming World Heritage, a successfully performed proposal process, inclusion in the World Heritage List, and a successful outcome in terms of national and local pride and economic input produced by tourism. The cognitive learning process related to the analysis of the Site which underpins the application and reviewing process carried out by the global Committee, is explicit, well regulated and crucial to the outcome, which is a conceptual redefinition of the Site, based on clear and codified criteria of evaluation. What has remained outside the regulations of the Convention is the local learning process, where challenges related to Site protection and tourism must be solved. Accordingly, the basic global–local institutional structure grows additional layers, as illustrated by Georg and Svels in Chapter 12 of this volume, within which supportive transnational communities of sociologists study how locals come to terms with this process, and how conflicts on the ground between tourism entrepreneurs and site protection are solved, through the promotion of ‘sustainable tourism’. In the case of New Public Management, there was a powerful and hegemonic neo-­liberal call for making the public sector more modern and efficient, which encouraged national policy-­makers to make swift and wide-­ranging reforms. Core decision-­makers were highly motivated, and capable of supporting and

178   Å. Mariussen and S. Virkkala implementing the reform process, assisted by the OECD and various other helpers. However, critics have questioned whether these reforms were really based on a thorough understanding of the qualities and operational knowledge of the old regime of bureaucratic public management. This relates to the initial move from socialization to externalization, where the knowledge of the old system of delivering public services is supposedly analyzed and brought into the process. Critics say that there is little cumulative learning involved in a process where first agencies are introduced, and once their initial flaws come to the surface, replaced with something else. On the other hand, it has also been pointed out that the existing agencies, in particular regional development agencies, have a considerable ability to correct mistakes and redefine themselves in order to meet new challenges. In the case of the OMC, motivation has been more divided. The Lisbon agenda from 2000 aimed at, and succeeded in creating, EU level policy convergence in several policy sectors in which the Commission did not actually have competence. On the other hand, within the EU there are several competing national models that protect themselves against too much convergence on core issues. A strong argument in favor of the OMC was that the process was designed to work its way through several iterations of peer reviewing and debates, and that this long-­term process leads to the creation of new national policies that produce institutional change, convergence toward the Lisbon objectives, and a new form of coordination and multilevel governance in Europe, which could not have been reached in other ways. After the phase of externalization and combination, in other words new knowledge creation, comes the integration of knowledge into practice. When we apply the SECI perspective to the chain of events, we discover that the longer term impact of most of these processes is institutional change, which transform spatial structures. The World Heritage Sites are included in a global institutional order which seeks to protect natural and cultural heritage, and at the same time to encourage economic development through increased tourism. The OMC as a process was an explicit step in the direction of a new institutional order in Europe, based on multilevel governance. NPM, on the other hand, enabled a new form of regional organization; regional development agencies. Seen in relation to spatial and organizational lock-­ins, and conflicting institutional arrangements, interests and values, the core issue in the cases referred to in Table 5.3 is how to enable a type of coordination which puts the cognitive process ‘in the driving seat’. In successful cases of transnational learning, the cognitive processes of new knowledge creation are enabled through adequate organizational coordination and institutional protection. This takes place in the initial ‘breakthrough’, in the slower process of cumulative learning leading to institutionalization, where new practices become routines, and in maneuvers aimed at correcting the course of development by avoiding fallacies and maintaining a longer term cumulative learning process. The methodological framework which makes it possible to analyze, coordinate and monitor these challenges and protect the cumulative learning process is SECI, presented by

Global protection and development of the Sites Contract between the WH Committee and the state Global level definition of the Site, based on a proposal from the state National and local learning regarding site protection and sustainable tourism

Spatial

Cognitive

Organizational

World Heritage

Dimensions

Common criteria, indicators, convergence on Lisbon objectives Peer reviews and deliberations

European convergence on Lisbon objectives Multilevel governance

OMC

Table 5.3 Spatial, organizational and cognitive dimensions of transnational learning processes

Redefining public services from being the responsibility of a hierarchical public sector to that of a ‘hands-off’ agency

Global convergence toward neo-liberal forms of organization Agencies

NPM

180   Å. Mariussen and S. Virkkala Virkkala and Mariussen in Chapter 3 of this volume. Below we will discuss some of the tools of this method, and in the final section of this chapter, we will return to a more general discussion of the preconditions of cumulative learning, with reference to the different ways SECI may drive institutional and structural change.

Methods In the context of the SECI model we can now define transnational learning through a process which combines the cognitive and organizational requirements of transnational learning through knowledge conversion. This happens through abduction (based on good practice analysis and comparative analysis), translation (combination), selection (internalization) and absorption (socialization), which are combined through the SECI process. Originating ba is the region receiving the new good practice, in which local actors begin to assess their existing norms of behavior, making an analysis of their regional practices, perhaps through peer reviews carried out by critical friends from other regions. Abduction in this context refers to the process by which actors in one region search for new elements and good practices from other regions (see Chapter 4 in this volume for broader discussion). It occurs in the interacting ba, in the space where good practice created by the actors in the sender region is formed as an archetype, and which is then evaluated by regional actors in the receiving region. In the systematizing ba the archetype is translated through combining its generalized elements with information which is specific to the receiving region. In the exercising ba the archetype is evaluated, selected and justified, and the new explicit knowledge becomes internalized by actors in the receiving region. After that the new and improved regional practice is absorbed and socialized in the receiving region (see Figure 5.5). The second round of the knowledge spiral starts with a new originating ba. Since tacit knowledge held by individuals is the basis of organizational knowledge creation, it seems natural to start the process of transnational learning by focusing on tacit knowledge. Tacit knowledge cannot be communicated or passed onto others easily, since it is acquired primarily through experience and not easily expressed in words (Nonaka and Takeuchi 1995: 85). However, with the help of good practice analysis some of the tacit knowledge of experts can be made explicit. We will first present the method for analyzing good practices and then the tools for their comparison, both being essential parts of abduction. After that we will examine the process of the translation of good practices, and finally the internalization of the translated new knowledge. Abduction: good practice analysis and focus group meetings In political and management studies, there is a lot of literature on best practices. However, instead of the notion of best practice, we use the concept good practice in order to emphasize the context of the practice. What is good practice in one

Methods o f transnational learning

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region with the information

by the actors in the receiving region Explicit

held within the receiving region Explicit

Figure 5.5 The cognitive and organizational requirem ents o f transnational learning.

place cannot be described as such everywhere, though some of its elements might fit in another locality. Good practice analysis is a way of thinking, ori­ ented toward constant learning, feedbacks and reflection on what works, what doesn’t, and why (Vesely 2011). A good practice analysis can be constructed by researchers, through combining several sources of information. Interviews with key actors are the main source of the story or narrative of good practice. Finally

182   Å. Mariussen and S. Virkkala researchers may present a complete success story, explaining what the regional actors have achieved and why. However, some local actors may be highly conscious of their achievements, and in these instances, we should be more questioning of the story of good practice. Also, the informants may not necessarily have a complete overview of the unique institutional and structural context which explains why they are doing what they are doing in the first place. For instance, national institutions are easily taken for granted. One possible solution to this problem could be to ‘deconstruct’ these local success stories, and seek independent verification. In order to test a hypothesis regarding the transferability of good practices, they must be reported in a way which is understandable to another group of equally practically oriented people, in other words the focus group members, in the receiving country. Here, the new practices are confronted with another set of internalized operational knowledge, which is the knowledge enabling the corresponding, perhaps not such a good practice in the receiving region of the other country. We might expect a tension between these two practices, which is why transfer should take place in a specific field, in this case, the focus group meeting. What we are referring to as a good practice story is a somewhat generalized or abstract analysis of what caused a certain good achievement in the first place. This corresponds with what Nonaka and Takeuchi refer to as an archetype. The archetype is a concept which should be created through a case study, and then justified, rejected or modified in a focus group meeting (Nonaka and Takeuchi 1995: 85–7). In some cases, the archetype and the good practice may be identical, but an archetype can also be a modification, taking the abstract spirit of the good practice, and incorporating it into the specific institutional and geographical context of the receiving country. The definitions of good practice emphasize functionality (what works and generates learning), processes (how to achieve the objectives of an activity), or innovativeness and transformability (new approaches, procedures and practices) (Vesely 2011). We define a good practice in regional or local development through the following dimensions: 1 2 3

4

A good practice within local or regional development policy is a separate entity (unit, process, sector, network, etc.) which can be separated from its context. A good practice is innovative, i.e., it brings something new to the locality and its development. A good practice has content, which is neither too general nor too specific. An entrepreneurial spirit, for example, is too general for our purpose. On the other hand, the business conducted by an individual firm as such is too specific. Instead, the concept should be contextualized and related to the locality and local development policy. A good practice is an entity which can be compared, at least to some degree, with other good practices.

Methods of transnational learning   183 5 6 7

8

A good practice has something from which actors in other regions can learn. It has some degree of transferability. It is possible to repeat a good practice, or at least some elements of it. A good practice has some kind of a measured or expected outcome which improves the wellbeing of the inhabitants or the sustainability of the locality, and increases the innovativeness of firms or the learning capability of the locality. A good practice has a formal structure. It is organized and certain actors are involved in it.

A good practice can be defined as locally anchored, consisting of something extraordinary, an achievement which is expected to have a potential for telling others something, giving them new ideas which they might use in practice. Good practice can be, for example, local competence-­building strategies (Chapter 9, this volume) or regional networking strategies of actors in tourism (Chapter 11, this volume). Good practices can be looked for, identified and analyzed in a report that is then presented at a focus group meeting. This ‘good practice report’ can include the following points: • • • •

The contribution of a good practice to local/regional development. The context of the good practice: which global, national, local factors enabled the achievement? The good practice story: what were the chains of events/actions/strategies/ programs/policies/methods which resulted in the achievement? A hypothesis regarding transferability: we think this achievement is possible in the context of another country!

Constructing good practice stories as narratives can be based, for example, on the ‘learning history methodology’ (Mariussen 2010; Virkkala and Niemi 2006). In this methodology the idea is to show not just what people have done, but also what they were thinking, what assumptions they had made, how they reached their decisions, what others thought about their actions, and how they expected to move forward. The method includes reflective interviews with the core group of people behind an achievement, the distillation of the data, and writing an overview of the process behind the achievement (Massachusetts Institute for Technology 2012). The empirical data needed for the analysis of a good practice can be gathered through interviews and from secondary sources. The analysis includes a weak hypothesis (why the good practice?), the context of the good practice, the structure of institutions, practices and organizations enabling it, the process behind it, its impacts, and its transferable elements – what can others learn from the good practice? Narrative is a means of analyzing, presenting and organizing qualitative data in order to make it intelligible. It is a spoken or written account of connected events, a story. Locating events within a meaningful story is one way of explaining them, and narratives are the principal means whereby humans make their experiences

184   Å. Mariussen and S. Virkkala meaningful both to themselves and to others (Polkingthorne 1988). Narratives are used in explaining sequences of specific events over time, and in organizing events and actions in a coherent whole by showing the connections between them and the ways in which these linkages combine to produce end results or consequences. Specific events and actions in a sequence lead to a certain outcome, in the context of this chapter, for example, to good practice (Thomas 2004: 224–6). A key element of a narrative is its plot or organizing theme, which functions as the story line or organizing principle that gives meaning and significance to events by showing how they are related to each other. Plots are not themselves part of the data but are introduced by the analyst; their status is akin to that of theories. They organize the chains of evidence and reasoning in support of an explanation while also showing why alternative explanations are unsatisfactory. Stories can be fragmented, flowing, emerging and networking. Boje (2001) introduces some methods which can be used in non-­linear story-­telling, when stories are fragmented and ­polyphonic. Narrative explanation can never be final because new information may emerge that changes the understanding of events. A particularly important aspect of narratives, based on the learning history methodology, is the identification of critical incidents. By ‘critical incident’ we mean an event which uncovers, illustrates or lays bare some key relationships in relation to a good practice and the actor network producing it. A critical incident normally consists of one of the activities of the actor network which had some transformative effect, in other words an event leading to change, where it might be possible to relate something within the nature of the actor network to the outcomes (effects) of their activities. A critical incident can be, for instance, a decision to start operating a certain good practice. It can also be a story of how a particular decision, made on a higher level, say, a national decision to finance a project, was taken in a way which decisively influenced, for instance, the microlevel of a firm, or economic development on a regional level. Critical incident analysis allows us to substantiate the actor network ‘histories’ and make intersections between different levels of analysis. However, information on critical incidents should be cross-­checked using data from a number of different sources (documents and multiple informants). In the case of more formal partnerships, examining a critical incident allows us to comment on the nature and dynamics of those partnerships under different conditions, and to assess the relationship, if one exists, between partnership arrangements and program performance. Good practices in local and regional development are to some degree the result of unique historical, local and regional conditions. The relevant properties of localities are local entrepreneurship, locally embedded networks, local culture, local skills relevant to new ways of exploiting local resources, and local and regional policy-­makers, for example. They can be conditioned by local history and nature, or by a local knowledge base, which may be social, cultural or craft-­ based. In addition, a firm’s interaction with its locality can vary, as innovative firms can be either isolated from or embedded into a local production system, and they can act as driving forces in wider local development processes. Good practices in local and regional development policies can also result from nationally

Methods of transnational learning   185 unique conditions and policy systems, such as national innovation systems and national policy instruments. A good practice analysis can be carried out by examining the following phases: 1  Phase: the weak hypothesis The weak hypothesis is a description of an idea that some actors started by carrying out certain actions, which were locally anchored and had certain favorable outcomes and results. This is the initial description of a good practice. It is important to determine the boundaries of a good practice in order to differentiate between the good practice and its context. A good practice description can be characterized as a ‘weak theory’, the initial, weakly substantiated version of the story, consisting of a cause and effects. 2  Phase: creating the story of good practice In the second phase the story is substantiated by gathering new data related to it from different perspectives and told by different actors. In order to capture the different perspectives of good practice, and to avoid preconceptions about the story, it is important to try and find a great diversity of perceptions and interpretations concerning the process generating good practice. A favorable outcome or outcomes may have many causes. Knowledge used in substantiation can be abstracted from observable data, interpretations, attributions and generalizations. In cases where the receiving area is familiar, it is possible to substantiate the story through interaction with the actors from the area receiving the good practice, and the perspectives and interests of the receiving area can be included in the data-­gathering of the good practice. The ways good practices work do not only depend on the mechanism but also the context in which they exist has to be taken into account. Information about the receiving context helps us to verify to what extent good practice is independent of, and on the other hand embedded in, its context (Vesely 2011: 115). The data is gathered through interviews as well as by gathering different documents and other secondary sources related to the good practice and its role in local development. First, however, the relevant actors in relation to the good practice should be identified. The interviews should deal both with the actors in the context of the good practice and with those outside of it, as it is important to include perspectives from every significant point of view. Also researchers should try and be perceptive of the interests of the receiving policy-­makers, as they may, for instance, have an interest in specific data on support levels or policy programs. Thus we can generate a ‘thick’ description, close to the ‘empirical realities’ of what has been going on and why, and at the same time emphasize the aspects relevant to the receiving areas. This also means clarifying how the outcome of the good practice is explained within different sectors, as well as in its specific regional and national context. After gathering all the relevant data a story of thick description can be written. The story is meant to describe the factors leading to success, the process and

186   Å. Mariussen and S. Virkkala structure of the good practice, and its inner and outer context, etc. It should consist of narrative accounts of outcomes and explanations regarding the dynamics of the case. In other words a clarification as to what caused a series of events or phenomena to unfold and end the way they did. The narrative is based on the plots or themes of the story, and it consists of interpretations of events and causal mechanisms of the good practice. 3  Phase: analysis of the story The thicker story of a good practice is embedded in a unique context, which can never be completely replicated anywhere else in the world. Instead, the analysis of the story may help us to identify elements of the original story, which are more or less abstract. This act of abstraction is dis-­embedding, which means that the ‘core’ of elements which appear to be relevant to others is extracted. In this phase factors and mechanisms that can explain changes at the local and national level are identified, as well as to what extent the good practice is locally embedded. The aim is to answer the question of what is the role of situational factors in the operation of a good practice? The result of this phase is a description of the abstracted elements of the thicker story of a good practice. 4  Phase: ba as focus group meetings The dis-­embedded elements of a good practice can be applied in practice within other contexts, creating a movement from the abstract to the concrete which is re-­embedding. Re-­embedding is a translation that has been conducted between the historical and situational contingencies of a successful experiment and those of the context where similar ideas and actions are put into force. To what extent are the abstractions generated through dis-­embedding useful in redirecting the attention of actors who are embedded in other contexts? The answer to this question depends on the outcome – when we confront practitioners with our findings in focus group meetings. In focus group meetings, an atmosphere is created where two sets of operational knowledge, the abstract elements of the good practice and the knowledge of the actors in the receiving area, are considered equal, positive and ‘sympathetic’ toward each other (field building). In a peer group atmosphere, decisions are expected to be made based on mutual consensus, applying the principle of ‘direct democracy’, where externally determined authority relations between participants, and between participants and researchers, are explicitly disregarded, through certain rules of the game that are established in the meeting. 5  Phase: rewriting the experiences The idea is that after the focus group meeting researchers include their own insights to these dialogues and rewrite the major findings into reports that aim to be inclusive and multi-­voiced.

Methods of transnational learning   187 Abduction: evaluation of good practices Abduction starts from the realization that our information is incomplete. With this information a weak hypothesis is developed through a logic which is akin to intuition or guessing. 1 2 3 4

We know that practice P1 works well in region A, and we have a preliminary understanding of why it works so well, in other words the causal chain which creates this desired outcome described in the good practice analysis. We know that there are certain similarities between region A and region B. We observe that this practice is not applied in region B. Instead, region B has another practice, P2, with another outcome, which seems to be less optimal. In this situation we may make a guess, regarding whether P1 can be transferred from region A to region B. This guess is a weak hypothesis.

Abduction means that we hypothetically take the practice P1 from region A, make a good practice analysis according to the above-­mentioned principles, and after that try to understand how it may be applied in region B. If the regions A and B are similar in all other aspects which are relative to P1, we might find that B can simply copy P1. If region A has a hegemonic position, say, it is broadly recognized as the ‘Silicone Valley’ of these types of regions, there might be a strong political motivation to copy P1 in region B. In this situation the selection mechanism of region B may be wide open to P1. If, in addition, A and B turn out to be similar when it comes to crucial institutional and structural preconditions in making P1 work, B is also likely to be able to apply a copy of P1 in practice. If so, the absorptive capacity of region B exists, and the full circle of the SECI process may be completed. The outcome is a copy of P1 in region B. To describe this process in more detail, first, there is another practice, P2, in region B. Even though P2 may be inferior when it comes to regional development outputs, compared to P1, it might be hard to document that this is the case. Second, there are institutional arrangements in place in region B which are likely to be supportive of P2. For example, there might be job descriptions, job contracts and other institutional arrangements which are mobilized to defend P2. The institutional arrangements which have to be in place to support P1 might not be available in region B. Further, the institutional leaders (know-­who) of region B may join up to prevent the implementation of P1. Still, it is worth questioning whether region B should copy A in the first place. All in all, there are likely to be obstacles when it comes to the selection (know-­who) and absorption (know-­how) of good practices. Translation of good practices At this point, the transfer project is likely to run into difficulties. For example, one may simply be forced to realize that there is no point in proceeding, and that

188   Å. Mariussen and S. Virkkala perhaps another direction would be more adequate. After all, the idea of abducting P1 was a weak hypothesis that has since been rejected. Also, the question arises whether it was wrong to start comparing A and B in the first place. Maybe B should look into practices in other regions? If, however, there is evidence of the contrary, we may continue. Several strategies are possible. 1

2

3

First, the functions of P1 and P2 can be studied, compared and analyzed closer. Why, in fact, is it assumed that P1 is better than P2? This relates to the root cause analysis discussed by Mariussen and Virkkala in Chapter 4 of this volume. Second, one might start to question the kinds of actions that are actually possible in region B, given its institutional makeup and the ways its leadership works. What are the preconditions for development inside region B? At this point we should take the emergence of B into consideration. Third, one may start to look at P1 itself. Given the fact that P1 is an appropriate solution to a problem in the context of region A, and that P2 is considered a bad solution for B, how can B, given its institutional makeup, develop not P1 but rather something better than P2?

Justification is similar to a screening process, and it involves the process of determining if the newly created concepts are truly worthwhile for the organization and society (Nonaka and Takeuchi 1995: 86). The case study interviews, the good practice report, and the dialogue in the focus group regarding this report, may be seen as phases toward creating new conceptual knowledge of the cases. Through externalization the new conceptual knowledge may be used to discuss new combinations and recombinations of existing systems, or archetypes. The justified concept is converted into something tangible or concrete, namely, an archetype. An archetype can be thought of as a prototype in the case of a new product development process. In the case of a service or organizational innovation, an archetype could be thought of as a model operating mechanism. In either case, it is built by combining newly created explicit knowledge with existing explicit knowledge. (Nonaka and Takeuchi 1995: 87) This is the point where one can start to translate P1. We know that P1 works well under the conditions of A, but it cannot be copied by B. A translation may end up as a modified version, say, a hybrid between P1 and P2, taking the local conditions of B into consideration. This, according to Nonaka and Takeuchi, is the process of creating something new, or reconstructing an archetype. A useful tool in the reconstruction of the good practice is metaphors, described as: ‘two thoughts of different things . . . supported by a single word, or phrase, whose meaning is a resultant of their interaction,’ (Richards, 1936, p.  93

Methods of transnational learning   189 quoted by Nonaka and Takeuchi) we can continuously relate concepts that are far apart in our mind, even relate abstract concepts to concrete ones. This creative, cognitive process continues as inconsistence, or contradictions in their associations, thus often leading to the discovery of new meaning or even the formation of a new paradigm. (Nonaka and Takeuchi 1995: 67) This process of translation must take into consideration what we have learnt about the ability of B to select and absorb new solutions. What, one might ask, can B actually absorb and use? In other words what is the know-­how of B? Is there something which might be done in B which may point in the direction of a solution to the problem of a dysfunctional P2? By asking questions like this, we move away from just translating P1 to engaging in a more incremental long-­term process of building new institutions in B. Instead of transferring P1, we may separate P1 into different components and stages, and start by transferring the preconditions for P1. This is the ant hill approach, discussed Mariussen and Virkkala in Chapter 4 of this volume. An ant hill strategy would start with identifying pathways into B, through the mechanisms of selection and absorption which B already possesses. If successful, these paths become reinforced. In following these openings, or ant paths, it is possible to start to construct what might become the institutional preconditions for a new solution. Outcomes: internalization After the new practice has been formed incrementally, it should be integrated and justified as part of the regional development structure. This is done through processes of internalization, when the practice becomes embodied by the actors of the receiving region. Nonaka and Konno (1998) describe this phase as exercising ba. In this phase, the new explicit knowledge, which can be a new archetype, has to be embodied in action and practice through simulations or experiments, in order to trigger learning by doing. It is an individualistic process, and a central element is the desire of the individual to renew and develop their own competencies and working procedures (see Chapter 3, this volume). The once abstract, codified idea now becomes a concrete, tacit praxis. In this process of internalization, the new practice is connected to the regional system and it becomes part of the new context. In order to function, the new praxis must be integrated into the institutional configurations of the receiving regions. It must find its place, develop links to other parts of the system, and make itself useful in the new context. At this point, we return back to the beginning of the cycle, the question of the ongoing process of development or ‘emergence’ which set the entire sequence of transnational learning in motion. This begs the question as to what type of institutional change or emergence are we actually referring to. In Chapter 1, we referred to Giddens’ analysis of globalization as a Juggernaut, which rips up stable societies. On the other hand,

190   Å. Mariussen and S. Virkkala a focus on emergence, with reference to Bob Jessop, allows for gradual institutional change. In order to explain the mechanisms of institutional change we apply a typology inspired by recent contributions from historical institutionalists (Streeck and Thelen 2005; Thelen 2009). Historical institutionalists have studied the influence of internal and external factors on change and stability. Generally, the theory of historical institutionalism presents an explanation for how the relationship between the institution and actors relates to gradual change within the institution. Within this approach institutions are seen as instruments actors use to negotiate the complexity of the world. In Chapter 1 of this volume, Mariussen discusses this from the point of departure of the structuration theory of Giddens. Streeck, Mahoney and Thelen provide a somewhat broader perspective with regards to these ideas. Institutions are building blocks of social order, and they can be seen as social regimes that provide sets of rules stipulating expected behavior, and discouraging behavior deemed to be undesirable. However, those who control the institutions don’t have perfect control over the rules themselves (Streeck and Thelen 2005: 16–19). Instead, institutions are distributional instruments that are charged with power implications, distributing power and other resources unequally. This asymmetric distribution of resources causes internal tensions, as actors struggle over the meaning, application and enforcement of institutional rules, resulting in either compliance or non-­compliance with the rules. The creation of an institution might reflect the motivation of actors with particular resources, but also conflicts among actors with different resources and interests. The institution ends up being a reflection of the institutional preferences of the actors within it (Mahoney and Thelen 2010). Streeck and Thelen (2005: 8) distinguish between processes of change, which may be incremental or abrupt, and the results of change, which reflect either continuity or discontinuity. Change is often endogenous and it is produced by the behavior that an institution generates itself (Streeck and Thelen 2005). Steeck and Thelen focus on transformative change as it relates to a process of an accumulation of gradual and incremental change, and argue that instead of ‘big shocks’ it is often a number of smaller events that lead to major historical discontinuities. Mahoney and Thelen (2010) argue that change occurs when problems of rule interpretation and enforcement give actors within an institution an opportunity to implement these rules in new ways. Those who benefit from the existing set-­up may be interested in continuity, whereas those with diverging interests favor change. Efforts to maintain an already established institution are manifested as an ongoing mobilization of support for the institution. Change may imply a shift in the power balance. Institutional change (see Table 5.4), according to Mahoney and Thelen, can be classified according to two broad dimensions. First, there is the ability of the defenders of the status quo to veto change. Second, there is the question of discretion when it comes to the interpretation of what this change actually means, and accordingly, how it should be enforced in practice.

Methods of transnational learning   191 Table 5.4  Typology of institutional change

Strong veto possibilities Weak veto possibilities

Low level of discretion

High level of discretion

Layering Displacement

Drift Conversion

There are four possibilities when it comes to implementing the good practice against resistance (based on Mahoney and Thelen 2010: 19). Following this classification, Streeck and Thelen (2005) point out that institutional change can be divided into five gradual but nevertheless transformative modes: displacement, layering, drift, conversion and exhaustion. Displacement means the removal of existing rules and the introduction of new ones, in a situation where resistance is broken down, and implementation is explicit and transparent. In this phase new models emerge, diffuse and call into question existing, previously taken-­for-granted organizational models and practices. Some institutional arrangements may support the dominant logic of action, but these coexist with other arrangements, created at different points in time, which might embody conflicting and even contradictory logic. New institutional arrangements are often introduced by actors that can be considered losers in the existing one. The emergence of new institutional arrangements can happen through a radical shift or a slowly evolving process where new arrangements are presented, which compete with existing ones, rather than replacing them directly. This displacement-­effect might come as a result of a successful process of transnational learning, as in the case of New Public Management and World Heritage, for example. Layering means the introduction of new rules on top of or alongside existing ones, without actually replacing the institution. In other words the existing institutions are revised or combined with new ones. Layering often happens when defenders of the status quo prevent a complete turnover of the institution but are not against the introduction of amendments and modifications. Layering involves the active combining of amendments, additions or revisions with an existing set of institutions. The actual mechanism for change is differential growth; the introduction of new elements that set in motion certain dynamics through which, over time, the old system is crowded out. Layering may also mean new complementarities between the new institution and the old. An example of layering is when a program for ‘sustainable tourism’ was introduced in relation to World Heritage Sites, complemented with networks of sociologists studying the ways in which locals had adapted to World Heritage status. If actors decide to accept and promote this action, support from abroad in developing the new rules may be welcomed. A program of sustainable tourism may strengthen the local support for protection, or undermine it, as has been the case in regions where tourism has simply acted to draw the attention of Al Qaida, for example.

192   Å. Mariussen and S. Virkkala Drift refers to the changed impact of existing rules due to shifts in the environment. In these cases the existing institution is successfully defended, but its basis of existence is eroded. If actors choose not to respond to changes in the external context the impact of the institution within that context changes. Institutions require active maintenance, and in order to remain as they are they need to be refocused in response to changes in their political and economic environment. Conversion is the fourth mode of change. Different from layering and drift, here institutions are not so much amended or allowed to decay, but instead they are redirected toward new goals, functions or purposes. Redirection can come about as a result of new environmental challenges, or through changes in power relations. Actors intentionally exploit the inherent ambiguities of the institution, and thus they can direct the institution toward new goals and functions. This means that new elites may come to power and organize the shift from within the institution in the direction of their preferred interests (Mahoney and Thelen 2010). One example of this is the OMC process, which may be seen as the construction of a multilevel governance system and policy convergence from within. Exhaustion means institutional breakdown, rather than change. With exhaustion the collapse is gradual rather than abrupt. Different from institutional drift, in which institutions may retain their formal integrity, institutional exhaustion is a process in which behaviors initially allowed under the existing rules operate to undermine the very same behaviors. The integration of new rules or praxis from abroad may act as a response to these gradual processes of exhaustion, as it may provide important stimuli for institutional change in the region. The typology of institutional changes can be applied in selecting and justifying the archetype in the receiving region. The new archetype can be integrated into the local system through the displacement of the rules of the earlier practice in a layered manner, attaching the new archetype to the existing practice, or as a result of conversion, where old rules are reinterpreted and enacted in a new way. As illustrated in the above discussion, this may be seen as a full SECI circle. This introduces the question, what comes next? Will the new element stay, or will it be subjected to the same waves of change which brought it in the first place? In the previous discussion, we have seen how a full circle of SECI, resulting in the successful case of transnational learning, may lead to another circle. In successful OMC cases, institutional change is the result of repetition, as the first round of peer reviews leads to the next round. Indeed, this reiteration of ‘soft’ policy, such as peer reviews, was part of the strategy of displacement, which gradually turned the multilevel governance system into a more and more centralized one within the policy sector. Similarly, in the case of World Heritage, with the introduction of ‘sustainable tourism’, the layering strategy may be seen as a necessary step toward preventing criticism and the unintentional destruction of the Sites the List aims to protect. In some of the agency bonfire cases, on the other hand, the second round of SECI process led to displacement (a completely new solution), exhaustion or conversion, away from the original agency model.

Methods o f transnational learning

193

More generally, these processes, with sequences of SECI, may at least in some cases be regarded as cumulative learning. As discussed in the introduction to this chapter, cumulative learning takes place within certain parameters, where the basic knowledge which was present from the start is protected. This model can be referred to as the staircase (see Figure 5.6), where new solutions become stronger while old knowledge is also respected.

Expansion of explicit know ledge

Point of consensus

Synthesis process

E

s

C

Conflicting perspectives

I

Figure 5.6 Knowledge spiral: from conflicting perspectives to consensus and knowledge creation (based on N onaka and Konno 1998).

194   Å. Mariussen and S. Virkkala

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6 New Public Management as a global community promoting transnational learning Agencification as an example Esa Hyyryläinen The current author’s most important work in relation to the theme of this volume is a comparison of public management reforms in the 1980s and 1990s in Finland, the United Kingdom, the Republic of Ireland, and in the Netherlands (Hyyryläinen 1999). The basis of the study, the author’s doctoral dissertation, was the assumption that public management reforms are to some extent an indication that different countries are trying to learn from the experience of others. Whether or not countries converge or diverge through the reforms they conduct was also a key area of interest in the research. In fact, significant similarities between how different countries reform their public management were found. Further, it became obvious that reforms that at first appeared to be similar were in fact different due to different political, social and cultural contexts. Therefore the question about convergence or divergence remained for the most part unanswered. The study also made a further discovery, which in fact should have been emphasized more; the whole landscape of institutional learning within countries had started to change. Learning from neighbouring countries has always been the easiest option as the links with them are stronger than with distant countries, and this has clearly had an effect on how countries organize their public management (Ahonen et al. 2006). For instance, Finland has a long history of learning from Sweden with regards to conducting societal reforms (Karvonen 1981). The same kind of link explains the noticeable similarities in relation to societal reforms between the British and Irish governments. Learning from distant countries is easier than ever, and obtaining different types of information internationally is not a major problem anymore. Another change in the landscape of learning is that some international organizations have become major actors in actively transferring ideas to their member states. In relation to the ‘pull’ there is also a ‘push’ in learning from others. As a matter of fact, countries are increasingly learning together in this emerging landscape, with the learning taking place through representatives in different formal and informal networks (e.g. Howlett and Joshi-­Koop 2011). This kind of learning is deep-­rooted in European integration (Nedergaard 2005), and EU’s Open Method of Coordination, for example, is based on this model. Policies and practices become harmonized because different countries search for or create usable models together (Nedergaard 2005).

New Public Management   197 In Europe, the UK became the main provider of models for public management reforms during the 1980s and 1990s. The UK has a distinctive type of parliamentary system (the Westminster model), in which majority governments cannot be stopped as long as backbenchers are kept in line with the party leaders. Thus the UK was probably the easiest place in Europe to conduct high-­priority public management reforms, and due to the reforms that were carried out by two consecutive Conservative cabinets, the cabinet of Margaret Thatcher, followed by that of John Major, it assumed a leading role in providing models to other countries. Both were eager to bring the British public sector into modernity as smaller in size, more efficient in its activities, and more customer-­oriented in its approach. New Public Management (NPM) was their main toolbox in trying to accomplish this (e.g. Hood 1991, 2007; Peters 2011). Several public management-­related reform ideas were first launched in the UK, from which they then spread into other countries. This chapter concentrates on the emergence and diffusion of those ideas and specifically on agencification, the diffusion of a ‘British’ or NPM-­type of government agency to other countries. Agency was not entirely new as a model of state administration, as several countries had agencies long before the NPM era, and the UK in fact looked for a model in the Swedish central agencies. What was new was how the idea of agency was portrayed, argued and shared internationally. The idea of agencification must be described in relation to the international NPM movement in order for it to be understood. Analysing these components is the main goal of this chapter, as it will help to describe the preconditions for learning from and with others in conducting public management reforms. In the case of NPM-­ideas generally, and with agencification specifically, learning was strongly linked to the emergence of a global community of practitioners and researchers. The actual transnational learning took place in formal and informal networks of different actors within this community. This contribution will emphasize the broader context for transnational learning and describe the overall setting for how issues and actors come together in order for learning to become possible in public management reforms.

NPM as an idea for public management reform The NPM movement as a whole began in the Anglo-­Saxon countries. In Europe the case of the United Kingdom in this sense is obvious, as both the Thatcher and Major governments introduced NPM-­related policies. A similar process also occurred in other Anglo-­Saxon countries, and the United States was the first of these to carry out similar reforms, in this case under the influence of ‘Reagan­ omics’, although later Al Gore tried to ‘re-­invent the government’ during the Clinton administration. Similar reforms were presented in Australia under the governments of Hawke and Keating, in Canada under the leadership of Mulroney, and in New Zealand under the Labour Party government led by Prime Minister Lange. Already by the end of the1990s the world had witnessed the heyday of NPM. Even though not all countries were equally involved in the reform movement it

198   E. Hyyryläinen created, more or less all were to some extent influenced by ideas related to it. By the end of the 1990s Allen Schick had already warned third world countries about the negative consequences of following the western world in using NPM as the guiding principle for public management reforms (Schick 1998). Schick’s warning specifically related to the situation in New Zealand, the case he knew best. The main emphasis of the New Zealand model was on ‘new contractualism’, which was justified with arguments drawn from New Institutional Economics. New Zealand managed to create a government by contract, where ministers acted as purchasers and government departments as suppliers. The same model was then followed throughout the government. One of the problematic consequences of contractualism in New Zealand was the weakening of the traditional values of public service, personal responsibility and professionalism (Schick 1998: 126). Further, Schick was worried that it would introduce a checklist approach to accountability, where if a certain action was not specified as a responsibility in the ‘contract’, public managers would not consider themselves responsible for it. Therefore what was previously beneficial for the whole government became a benefit for just one part of it. Schick can be seen as ahead of his time in his criticism, as he spoke in favour of a ‘whole-­ofgovernment’ approach before this idea had actually been incorporated by governments that had been reformed according to the ideas of NPM. Hood and Jackson (1991: 178) see NPM as neologism, ‘a convenient but imprecise shorthand term to denote a philosophy of administration which came to dominate the agenda of public administration in the 1980s in the UK, New Zealand and Australia’. We now know, however, that this domination exceeded both the temporal and geographical limits of this statement. After the early 1990s NPM has continued to be the guiding principle for reforms in the abovementioned countries, as well as in several others. It has crossed national and cultural as well as policy boundaries. In several governments throughout the world it has influenced activities at all levels of the government. NPM was broadly characterized by advocating a shift from policy development to a more autonomous hands-­on management model, from large monopoly organizations to disaggregated budgets, internal markets and some form of competition, from rule-­based bureaucracy and welfare sector professionalism to emphasizing cost-­cutting and efficiency, from an emphasis on input and process to outputs and results in accountability and control arrangements, and the increased separation of public provision from the actual delivery of public policies by the private sector (Hood 1991; Hood and Jackson 1991). On an ideological level NPM was clearly an amalgamation of managerialism and New Institutional Economics, i.e. Public Choice, Principal-­Agent Theory and Transaction-­Cost Economics. The managerialism stream of NPM emphasizes effective management, well-­functioning organizations and a cautious use of resources, as the core of rationality in public administration. The New Institutional Economics-­stream on the other hand gave the idea of contractualism as the new basis for public policy delivery. Public Choice specifically led to emphasizing competition and rivalry wherever it was possible, the Principal-­Agent

New Public Management   199 Theory showed the possibilities and constraints related to the guidance of rational actors, and Transaction-­Cost Economics emphasized identifying costs as broadly as possible. The abovementioned characteristics were, and are, essential components of NPM (Hyyryläinen 2004: 173–6).

The emergence of a global community to promote NPM As a doctrine NPM was not primarily a research-­driven venture, but more a practitioner-­based one. A good indication of this, as pointed out by Hood and Jackson (1991: 179), is a specific official document that acts as a landmark of NPM ideas. This specific document is called Government Management, a treatise which was produced by the New Zealand Treasury in 1987. However, equal importance with regards to the development of NPM ideas could easily be given to several UK government documents published during the Thatcher and Major governments as these also helped to make NPM more concrete and easier to embrace in other countries. Practitioner-­basedness was an essential precondition in order for NPM to have a global impact. It made transnational learning possible in a completely different way to any other research-­driven development until then. NPM ideas were largely shared in places where practitioners from different countries met regularly and where they got information about reforms that had been made in other countries. Those ideas were regularly on the agendas of, for example, the World Bank, International Monetary Fund, United Nations, European Union, etc. On a global level the most important organization with regards to public management reforms has been the OECD. Its Public Management Committee (PUMA), which was established in 1990 on the basis of an earlier committee (TECO) that had a slightly different agenda, became the main international arena for public management reformers during the 1990s (Pal 2009: 1062). Since 1992 SIGMA (Support for Improvement in Governance and Management), a joint project between the OECD and the European Union, has had a similar role with regards to the reforms of candidate countries for EU membership. A disclaimer on the cover of a SIGMA paper catches the practitioner-­orientation of OECD well: The main purpose of this paper is to provide orientations based on a comparative approach to policy makers on drafting legislation on the organisation and functioning of the state administration. It is therefore written in a practice oriented way, although it nevertheless attempts to draw some generalization. (SIGMA 2007) PUMA’s work is currently continued by a broader Directorate for Public Governance and Territorial Development (GOV), though it does not have the same level of enthusiasm or momentum that PUMA had during the 1990s. Still, the main idea of GOV, and the procedures it follows in order to facilitate transnational learning,

200   E. Hyyryläinen follow along the same lines with PUMA. GOV has a Secretariat and two committees, the Public Governance Committee (PGC), the actual successor of PUMA, and the Territorial Development Policy Committee (TDPC), which provides an international forum for the exchange of ideas and experiences in the field of regional policy. PGC’s main Working Parties and Networks are listed below (OECD 2012; see also Pal 2009): • •

• •

The Working Party of Senior Public Officials (SBO) focuses on effectiveness and efficiency of resource allocation. The Working Party on Human Resources Management brings together senior management officials to compare experiences and to find tools to enhance the capacities of public services. The main issues are leadership, building professionalism, civil service ethics, training and development, performance management and knowledge management. The Working Party on Regulatory Management and Reform (REG) unites officials responsible for cross-­cutting and horizontal regulatory reform policies. The Network of Senior Officials from Centres of Government advances the exchange of ideas among peers, discusses broad governance issues and provides the PGC with views on ongoing and future activities.

The TDPC was established in 1999 and it currently has three Working Parties (Pal 2009: 1067–68; OECD 2012): •

•

•

The Working Party on Territorial Policy in Urban Areas is responsible for the task of promoting urban policies, which integrate the economic, social and environmental spheres. Although this Working Party is relatively young, the OECD has had an urban policy programme since 1979. The Working Party on Territorial Policy on Rural Areas carries out the tasks that were previously the responsibility of the Rural Development Programme. Its tasks are similar in rural development to those of the previous Working Party in urban policies. The Working Party on Territorial Indicators provides comparable statistics and indicators on demographic, economic, social, institutional and environmental developments.

GOV also organizes ad hoc specialist meetings and international symposia which provide opportunities for practitioners and researchers to meet and exchange experiences about public management reforms. The results of the work of the Secretariat, committees, working parties and networks are often provided in the form of ‘best practices’. They are disseminated through country reports, analytical reports, policy briefs and newsletters (OECD 2012). SIGMA is still active under the umbrella of GOV. It provides access to networks of experienced public administrators to government officials from European Union candidate countries, from potential candidate countries, and also

New Public Management   201 from countries covered by the European Neighbourhood Policy. Membership in the networks allows them to get comparative information and technical knowledge about ‘best practices’ in different public sector activities. SIGMA also provides assistance to these countries in the form of training seminars and workshops for public officials, takes part in organizing regional conferences on public management issues, and distributes information about available seminars and training sessions. For instance, in the final number of SIGMA’s bimonthly newsletter, Public Management Forum, beneficiaries of SIGMA received information about conferences which were held during the year 2001: the conference of the European Institute of Public Administration (EIPA) in Maastricht on successful accession negotiations with the European Union, the Global Forum conference of the United Nations Public Administration Programme (UNPAN) on e-­Government in Naples, the International Research Symposium on Public Management (IRSPM) on public–private partnerships in Barcelona, the conference of the Network of Institutes and Schools of Public Administration in Central and Eastern Europe (NISPAcee) on public–private partnerships in Jurmala, Latvia, and the International Anti-­Corruption Conference in Prague, which was hosted by the Czech government and Czech Transparency International (SIGMA 2000). The results of SIGMA activities are disseminated through assessment reports, SIGMA reports, meeting documents and public procurement briefs (SIGMA 2012; see Pal 2009). Sahlin-­Andersson (2000) makes an interesting distinction between nationally, internationally and transnationally formed public management reforms. Since public management reforms share many similarities, the question mainly concerns the way in which they are portrayed. Those reforms which are ‘national’ are portrayed mainly with reference to a specific context and national particularities. ‘International’ reforms, on the other hand, are mainly imitated reforms, where one country follows the model of another. As discussed earlier, these types of reforms are most common when public management reforms. PUMA/ GOV has been a good channel through which to obtain the information that is needed for the imitation of reforms. For the thematic of this book, ‘transnational’ reforms are the most important type of reform in Sahlin-­Andersson’s classifications. With these reforms international organizations, like the OECD, act as ‘mediators and editors of NPM ideas’ (Sahlin-­Andersson 2000: 15). Since these reforms cut across and transcend national boundaries, they can be seen as transnationally constructed reforms. This last type of reform is a rather new one, as international organizations adopted a new, more active role in public management reforms only mainly during the 1990s. One significant driving component behind this kind of development was a stronger inclusion of the public sector into economic and financial development projects. Particularly within the OECD a well-­functioning public sector has been seen as an important precondition for having a good economy and therefore developing the public sector has been on the OECD and its member states’ agendas. This has led to the broadening of OECD activities (Sahlin-­Andersson 2000: 21–2), while also increasing their geographical scope.

202   E. Hyyryläinen The OECD has seen its role as an international policy-­oriented promoter of ideas and ‘best practices’ (Sahlin-­Andersson 2000). All this has thoroughly changed the conventional patterns of reforming in public management. Countries are no longer just learning from each other but institutions like PUMA/GOV are ‘teaching’ them to learn. Since there has been such strong faith in NPM ideas, and no real alternative, NPM has been at the core of teaching and learning within the OECD.

Transnational learning and the influence of the OECD Pertti Alasuutari (2011: 152–4) looks critically at the broader influence of the OECD in the adoption of trajectories of different member states. He describes four plausible reasons to encourage public officials to adopt ideas in the networks OECD provides, including micro, ideological, ontological and formative levels of OECD influence. The transnational learning described in this contribution falls largely into micro-­level influence. During meetings and training sessions the OECD forms a community of people from different countries and thus creates ‘peer pressure’ on those who are responsible for policy formation in their respective countries. One motivating factor for this is that the initiative for specific projects often comes from the member countries themselves. In other words, at least a substantive number of member countries’ representatives have already agreed that a particular theme is important challenge for future research and development. When the members are then given information about the situation in countries and agree on the future goals and means by which to pursue them, representatives of different countries are committed to advance the organizations’ recommendations in their own countries. (Alasuutari 2011: 153) This is accompanied by other forms of influence. Ideological influence is linked to how the representatives of member states see the OECD as part of their reality. ‘The OECD obviously has a good image as an elite club of countries that are “modern”, or socially and economically advanced’, writes Alasuutari (2011; see also Pal 2009: 1060–1), and the expectation is that a country would want to be included rather than excluded from that elite group. Ontological influence refers to ability to affect public officials’ notions of reality, which happens when the OECD creates the criteria and indicators by which different countries are described, assessed and compared. For example, in the field of education OECD’s PISA study is a good example. It has specified the notion of good schools. Also formative influence is linked to this type of development. For Alasuutari this specifically means convergence, ‘because of the same concepts and indicators used in assessing state of affairs, and due to harmonized standards, rules and practices, similar dynamics of social change take place in OECD countries’ (2011: 154).

New Public Management   203 The OECD wields influence primarily because of its use of soft policy instruments (Pal 2009: 1064). These include information, naming and shaming, and setting standards. The OECD also uses certain harder policy instruments. In the area of PUMA/GOV these have been utilized only in two situations; once in relation to specific recommendations about ethics and the second time in the assessment of the quality of government regulation. At least during the 1990s the momentum existed and the audience was receptive to softer forms of influence, and therefore these were preferred over the harder instruments. At that time many western countries had problems stabilizing their state budgets, while Central and Eastern European countries were reshaping their governmental and societal systems after a long period of socialism. All this created room for the OECD to adopt an advocacy role in relation to its member states (Pal 2009: 1064, 1070).

The impetus for transnational learning in NPM-­centred public management reforms What were the broader forces and problems, which created room specifically for the spread of NPM ideas? Mathiasen (2007: 647–50) points out six major socio-­ economic drivers which created pressure for change in public administration: the economic globalization of trade and the movement of capital, as well as concerns of international assistance organizations over effective public management, national fiscal problems, and citizen discontent with regards to the size, effectiveness and cost of their government. He also names as important factors the transformation of former authoritarian states (primarily former socialist countries), the interest of nongovernmental organizations and public interest groups in ‘democratization’ and ‘subsidiarity’, and Total Quality Management (TQM) as an international administrative trend. The key challenge related to economic globalization is the need for institutions to keep up with the pace of economic policies and to avoid institutional failure. This has been called the ‘invisible infrastructure’. A well-­functioning system of national public administration is an essential part of a strong economy, and therefore governments have no other option but to reform their public administration system. Furthermore, in many countries citizens and new right politicians remained critical of the idea of a ‘big government’, and therefore reforming public management was high on their political agenda. A significant group of countries in need of reform were former socialist countries as their former system provided an inadequate basis, for instance, for a future as members of the European Union. Therefore they provided good grounds for creating something new. Further, processes of democratization and subsidiarity in these countries also require effective public management. Issues that closely affect citizens should be taken care of effectively at the level of government that best corresponds with them, and as close to the citizens as possible. Finally, TQM also created room for the acceptance of NPM ideas as it was used alongside NPM in an effort to do ‘less with more’ and to improve the quality of public policy delivery at the same time (Mathiasen 2007).

204   E. Hyyryläinen These drivers were responded to in several different ways throughout the world (Mathiasen 2007: 651–8). The development that occurred was not the same in all countries but instead different contexts led to different directions being taken (Kickert 2008). The directions were multiple, since also parallel NPM-­related ideas were adopted in different countries. For instance Ferlie et al. (1996) found four quite different NPM models already during the 1990s. They were called the efficiency drive (NPM Model 1), downsizing and decentralization (NPM Model 2), in search of excellence (NPM Model 3) and public service orientation (NPM Model 4) (Ferlie et al. 1996: 10–15). After this phase more models and trends have appeared within the NPM. For instance researchers from Continental Europe have claimed that their adopted version of NPM is different from the original Anglo-­Saxon version (e.g. Kickert 1997; Proeller and Schedler 2007). Pollitt and Bouckaert (2004) describe Continental European states along with Nordic countries, for example, as neo-­ Weberian. This classification is based on possessing a mixture of traditional bureaucratic features and some new components, mainly drawn from Anglo-­ Saxon NPM ideas. The name Weberian refers here to Max Weber’s ideal-­type rational/legal bureaucracy as the basic or the traditional model for describing public administration (Pollitt and Bouckaert 2004: 62). Pollitt and Bouckaert’s study (2004) is a good example of a different response to reform drivers (Mathiasen 2007: 653). Public management reforms were also accelerated by the results from comparative research. There are numerous descriptions and classifications of NPM-­related reforms in different countries, and while the academic community has produced a part of these, it has not been the only source of information, as respective governments and international organizations have provided more than their fair share. Various PUMA reports have been most useful in comparative public management reform studies, as they have helped point out what to look for in different countries. SIGMA reports have been equally useful when studying reforms in former socialist countries. Another response to reform drivers is the developments in the subfields of public management (Mathiasen 2007: 654–5). Basically all subfields of public management, such as regulation, taxation, budgeting, financial management, auditing and human resource management, have become international. They have also been organized internationally into formal and informal professional networks. Accountants have their International Federation of Accountants, members of audit institutions have the International Organization of Supreme Audit Institutions, officials responsible for budgeting in the state administration have the OECD Senior Budget Officials group, Parliamentary Budget Officials group and Financial Management and Accountability Officials group, etc. These professional networks provide a big part of the foundation for promoting NPM in a global community. Policy fields and public sector activities like the postal service, telecommunications, air traffic control, police and public safety, fisheries, immigration, atomic energy and health have become internationally more and more regulated

New Public Management   205 (Mathiasen 2007: 655). The purpose of this is to harmonize regulatory practices among participating countries, with strong links to globalization. The free movement of capital, labour and services is easier if regulatory frameworks in different countries are harmonized. As a consequence, all institutions involved in this kind of activity act as mediators and channels for sharing the same ideas. Agencification in governments The development of agencies can be seen as one of the major consequences of the first generation of NPM reforms during the 1980s and 1990s. They were put together to allow more managerial autonomy for public managers, done under the broad assumption that task specialization increases efficiency gains (Hood 1991; Lægreid and Verhoest 2010: 1). Most commonly this process created autonomy in relation to the governing ministry or minister, and thus autonomy meant a level of distance from the political system. ‘At arm’s length’ was a common catchphrase to describe this situation. The message of this catchphrase was clear; in order to do something autonomously, organizations needed distance from the factors that delimit the autonomous management of their activities. Agencification is discussed here mainly at the level of central governments, though the same development took place approximately at all levels within governments. The emergence of regional development agencies (RDAs) is a good example of this, the establishment of which is described by Danson et al. (1998: 14). RDAs were put together because a position outside the mainstream of government apparatus appears to make possible to pursue public policies without evoking the ghosts of interventionism or state dirigisme, and so to make it easier to adopt a long-­term perspective, while the distance from government frequently generates an operating environment more closely attuned to the needs of enterprise. (Danson et al. 1998) At first agencification within the central government led to quangos, quasi-­ autonomous nongovernmental organizations (Pliatsky 1992) and Next Step agencies, as they were referred to in the UK. Now they are globally mainly spoken of as executive agencies, though on an international level they have been discussed also in terms of non-­departmental public bodies, fringe bodies, non-­ majoritarian institutions, quasi-­autonomous public organizations, quasi-­ government and distributed governance (Wettenhall 2005; Christensen and Lægreid 2006a; Roness 2007; Lægreid and Verhoest 2010; Verhoest et al. 2010; Kosar 2011). As far as Verhoest et al. (2010) are concerned, hybrid organizations are also an example of agencification. In a sense they could, similarly to all quangos and agencies, be seen as hybrids, as they have mixed features drawn from public bureaucracies and other sources, mainly private commercial activity, this being the basic understanding of hybridity in public management research (Karré 2011;

206   E. Hyyryläinen Billis 2010; Hyyryläinen and Viinamäki 2012). Then again, all hybrids are not quangos or agencies, and therefore these concepts cannot always be used as synonyms. What then are agencies? What features characterize them as organizational and administrative arrangements? Talbot et al. (2000: 5; see also Pollitt et al. 2001) offer a good definitional description of agency, which is also of use here. According to them an agency is an organization that: • • • • •

is at arm’s length from the core of central ministries; carries out public tasks (providing services, regulating activities, etc.) at a national level; staffed mainly by public servants; financed by the state budget; and subjective to public/administrative law procedures at least to some extent.

Talbot et al. exclude organizations that are governed entirely under private law. This definitional decision is somewhat problematic, as for instance, after a university reform a few years back, all Finnish universities were removed from state administration (Ministry of Finance 2010: 13–15). Now two Finnish universities are governed under private law, while all others are under public law. However, in reality the private universities are as much agencies as the public law-­ governed universities. All universities function at arm’s length from the Ministry of Education and Culture, and as they are financed mainly by the state budget, also most activities are still governed under public law. Nonetheless, the staff members are no longer civil servants nor public servants but contracted under private law. Senior members of staff get their pensions from the public sector employees’ pension fund whereas those of the younger members have already been transferred into private hands. Finnish universities do not qualify as agencies if the list of Talbot et al. is taken literally, but taking it literally is not advisable (Pollitt et al. 2001). If organizations demonstrate most features mentioned in the list, they should be understood as agencies. An agency represents a structure that is autonomous from the governing ministry. But what then is a ministry? First, not all countries refer to their ministries with this title, and government department is a rather common synonym. Still, there are also ministries that are called neither ministries nor government departments, such as the British Home Office. Second, not all ministries are comparable on every level albeit a list of typical features of a ministry can be compiled. According to Laking (2005: 9) a typical ministry ‘1) has no separate corporate status; 2) is predominantly funded from the taxes; 3) is subject to general provisions of civil service and public finance law; and 4) is headed by the member of government’. Agencies are different from each other in how their relationship with the governing ministry is organized. The OECD (see Laking 2002, 2005) distinguishes three main types; the first type is an agency which has no separate legal identity, but is differentiated from the ministry and can therefore organize its internal

New Public Management   207 g­ overnance differently from the ministry. The second type is an agency which has a separate legal identity under public law, and can therefore organize its internal and external governance differently from the ministry. The third type is an agency which has its own governing board either under public law or as a corporation, trust, or some other organization under private law. This kind of agency usually has more room to organize itself and its activities compared to the other two types. Ministerial guidance of this type of agency is possible only indirectly. The choice of agency model always comes with positive and negative consequences. Distance from the governing ministry allows agencies to look for the most functional solutions, in other words solutions that best suit the type of activities the agency is carrying out, as well as the specific environmental conditions in which they are functioning. SIGMA (2007: 16–21) has listed major reasons for setting up autonomous units. According to SIGMA agencification takes place in different countries because there is a need to: • • • • • • • •

Search for efficiency through creating separate bodies with differentiated governance structures. Allow specialization through the differentiation of policy-­making and execution, and through the differentiation of regulatory activities and the delivery of services. Foster trust of the public and specific stakeholders of agencies through matching the complexity of regulated sectors in public management. Respond to international obligations, e.g. international treaties which require countries to act in certain ways. Respond to constitutional requirements if there are any due to the traditions of certain countries. Respond to the contingencies of party politics which might be a problem for policy continuity. Escape administrative law constraints which might hinder the promotion of younger and inexperienced members of staff to top management positions. Find coherence between function, form and managerial autonomy and to find the most suitable solution to a given country in relation to available foreign ‘best practices’ and its internal needs.

Increased managerial autonomy also opens the door to possible problems. Typical critical points are the loss of political control over the operations of agencies, loss of political accountability, avoidance of general governmental rules for staffing and budgets, increased exposure to financial and employment risks, and increased opportunities for political patronage and corruption (Laking 2005: 8).

Agencification and the NPM The story of quangos and Next Step agencies in the UK could be said to have started from a previous reform, the Financial Management Initiative (FMI) at the

208   E. Hyyryläinen .

time of the Thatcher government. The FMI raised three major management issues (The Prime Minister 1994: 12; Metcalfe and Richards 1988: 183; Zifcak 1994: 28); first, managers should have a clear picture of their goals, resources, and guidelines on how to use resources to achieve expected results. Second, managers should be made accountable for the results of their respective units. Third, managers should have access to the information they need to accept that accountability. The common idea of the FMI emphasized that the public sector should think of budgets and activities similarly to how it is done in the private sector. In this sense the FMI was among the first reforms to show the way towards what has been described as NPM ever since. The FMI also changed structures inside public organizations and it was the driving force behind splitting large-­scale public organizations internally into smaller accountable units. According to Ferlie et al. (1996) the quest for managerial autonomy in state organizations can be seen as part of a trend that encourages downsizing and decentralization (NPM Model 2). This NPM model came as a consequence of the argument that the era of large, vertically integrated bureaucratic organizations was largely over. Ferlie et al. (1996: 12) connect this model to various organizational developments that reflect a shift from Fordism to post-­Fordism in the production side of public and private organizations. These include organizational unbundling and downsizing, a search for greater organizational flexibility, a move from a high degree of standardization to specific solutions, increased decentralization of strategic and budgetary responsibility, increased contracting out, and a split between a small strategic core and a large operational periphery. This NPM model was characterized by seven parallel developments (Ferlie et al. 1996: 13): • • • • • • •

An extension of the early stress on market-­mindedness to more elaborate and developed quasi-­markets that acted as mechanisms for allocating resources within the public sector. A move from a type of management based on hierarchy and command to various forms of contract management. A move from a ‘command and control’ style management associated with the efficiency drive of the ‘neo-­Taylorian’ NPM Model 1 to a new style based more on network or strategic alliances. A split between a small strategic core and contracted-­out non-­strategic functions. De-­layering and downsizing in organizational levels and in the number of state-­employed staff. A split between purchasing and providing organizations. An attempt to move away from standardized services to more flexible and diverging services and service systems.

As part of these developments the number of agencies and similar arrangements went up rapidly. For instance, in the UK 74 per cent of government staff were employed in agencies by the end of John Major’s term in office (Greenwood et al.

New Public Management   209 2002: 33). In 2000 the corresponding figure was 78 per cent (Greenwood et al. 2002). At that time Next Step agencies were clearly the norm within state administration in the UK. The apparent reason for the rapid development was the fact that some 95 per cent of civil servants were actually concerned with the delivery of public policies even if this was not much emphasized in the skills and training of senior civil servants prior to agencification. Ministers in charge of respective policy sectors were also overloaded with other concerns. What was also missing at that time was the emphasis on what could and should be achieved with resources, as prior to agencification governmental units had relatively few pressures to improve their performance. Altogether the British Civil Service had become too big and too diverse to be managed as a single entity (Efficiency Unit 1988). It is not easy to find a common factor for Next Step agencies as they were in charge of several different kinds of activities within the British government. Various Next Step agencies were for instance inspecting vehicles, running conference centres, taking care of prisons, providing IT and other specialist services, issuing driver’s licences, passports and paying out social security benefits. The size of agencies also varied a lot. In the year 2000 the biggest Next Step agency, the Social Security Benefits Agency, employed over 69,000 people, and the smallest, the Debt Management Office, just 30 (Greenwood et al. 2002: 34). In several other governments the history of agencies and agencification is very similar to the UK in the sense that they also created agencies. A recent study of Verhoest et al. (2012) is a good example of this. In their study 29 countries and the European Union are said to follow a similar pattern. However, when the question is raised as to why this was the case, we face a rather complicated question. It would be easy to say that as a model had already been created in the UK, there was pressure to follow that model, and though to some extent this would be true, it would not be so completely. For instance Lafarge (2012), in his analysis of developments in France, claims that the situation is more complex. According to him, links to NPM were actually not as important as the internal reasons for reforming public management in France. ‘It is only incidental that these current developments bring the French executive bodies closer to the executive-­agency model’ (2012: 108). Walter Kickert (1997) describes the situation with a similar message though this time related to the reorganization of the Dutch Ministry of Education and Sciences that took place in the early 1990s. According to Kickert this reform was neither a business-­like attempt to increase efficiency and ‘value for money’, nor an attempt to increase client- or market-­orientation in the activities of the ministry. Even the aspect of reorganization which looks most similar to Anglo-­Saxon ‘new public management’ – the separation between policy-­preparation and execution and the establishment of the autonomous executive agencies at arm’s length from the policy-­making which resembles the British ‘Next Steps’ agencies, is, in fact, markedly different. (Kickert 1997: 746)

210   E. Hyyryläinen Kickert also points out that real management and governing problems soon overshadowed the separation of policy formulation and policy execution and put an emphasis on the complicated relations between the ministry and the agencies (Kickert 1997). This in fact led to an attempt to clarify these relations in the Dutch government in the late 1990s (OECD 1999). Basically the governing of agencies is carried out with the use of performance contracting and it can be described as a learning process, and for instance Pyper (1995: 76–7) claims that at least in the early stages of agencification in the UK contracts between ministries and agencies were habitually renegotiated. This often meant less autonomy for the agencies. Thus the whole process was about mixing two cultures together. Apparently the main problem often lay with the ministries which had difficulties stepping from being more or less ‘all-­inclusive’ in their respective policy sectors, into their new role as the strategic core. The context for agencification in Finland was somewhat specific. Several Finnish ministries were not ‘all-­inclusive’ in their policy sectors since Finland had central agencies which took care of a field that was related to broader issues than just the execution of public policies. This significant role of central agencies was a major part of the administrative legacy of the Swedish rule in Finland (SIGMA 2007: 14). As a result of this tradition of agencification Finland introduced a reform, which can be seen as a step towards de-­agencification. The governing role of central agencies along with ministries was mostly abolished during the early 1990s. Some central agencies became executive agencies as for instance in the UK and the Netherlands, while others became public enterprises providing specialist services. Some kept their former, now somewhat misleading name, while others got new ones to describe the change they went through. After all the changes ministries were closer to being strategic cores in their respective policy sectors even if some variations remained (Hyyryläinen 1999: 207–8; Salminen et al. 2012).

Common features of NPM-­type agencies Despite all counter-­forces created by specific national contexts for governance and public management, the fact is that there is a common ground for agencies within all governments. This common ground is (at least with reservations) connected to the global impact of NPM either directly from government to government or indirectly through international organizations. For the most part different agencies are comparable since there is a sufficient level of similarity between governments in relation to the models they used in organizing their state administration. In reality agencies come in many shapes and sizes, and appear at all levels of governmental activity, and therefore a better system of classification is needed. OECD (Laking 2002 and 2005) managed to describe three agency models, which were named as departmental agencies, public law administrations and private law bodies, which was a good start. It is possible to speak about agencies or executive agencies instead of departmental agencies, and quangos instead of

New Public Management   211 public law administrations. With stronger reservations it would also be possible to speak about private law bodies in terms of hybrid organizations. Nevertheless, in the end this would probably lead to conceptual problems since the terms agencies, quangos and hybrids are used rather carelessly in research and in the everyday reality of different governments. A better solution to this problem is the classificatory exercise of the international Comparative Research into Current Trends of Public Organization (CRIPO) research group (Van Thiel 2012). This was based on describing 25 possible tasks and six possible models for putting up organizations to take care of these tasks. In the classification of organizations the first model was that of ministry/government department (Type 0). The two last ones were the executions of tasks by regional or local bodies and/or governments, i.e. counties, provinces, regions and municipalities (Type 4) or using other arrangements like the contracting-­out of governmental activities (Type 5). Types 1, 2 and 3 in this system of classification are of greatest interest here as they are actual agencies. Type 1 stands for semi-­autonomous units or bodies, which do not have legal independence but that do have some managerial autonomy. The definition is equivalent to the OECD (see Laking 2002 and 2005) definition of departmental agencies. Examples of this type are Next Steps agencies in the UK, ‘Agentschappen’ in the Netherlands and state agencies in Nordic countries. Type 2 stands for legally independent, statutes based bodies, with managerial autonomy. This definition comes very close to the OECD definition of public law administration, the main difference lying in the subtypes. The CRIPO classification of agencies also includes some private-­law bodies in this type. Actual examples of this type are non-­departmental public bodies (NDPBs) in the UK, ‘zelfstandigebestuursorganen’ (ZBOs) in the Netherlands and statutory bodies or authorities in Ireland. Type 3 is close to the OECD definition of private law bodies and stands for private organizations and those private-­law based organizations which are established by the government for a specific purpose. This type includes commercial companies, state-­owned companies and government foundations (Van Thiel 2012). The CRIPO classification of agency tasks is also informative. It recognizes 25 tasks which are divided into six broad categories. The first class is called ‘registration’ and it includes statistics, drivers’ licences, vehicle registration, meteorology and land register. Type 1 agencies were widely used to take care of these tasks in different countries. The second class is ‘security’, and includes prosecution, prisons, police, intelligence and immigration. In this class also Type 1 agencies are in a strong role in several countries. The class for ‘education’ consists of universities, museums and broadcasting. In this class Type 1 and 2 agencies have a big role in numerous countries. The class for ‘payments’ include unemployment, taxes, EU subsidies, student loans and development aid. Here again Type 1 agencies commonly have a significant role. The category for ‘caretaking’ specifically includes housing, the employment office and hospitals. Agencies do not have a very significant role in this category of activities, which is firmly in the hands of regional and local governments. Finally, the CRIPO

212   E. Hyyryläinen classification for ‘infrastructure’ stands for railways, airports, forestry and road maintenance. In this class Type 3 agencies are a major player (Van Thiel 2012: 24–5; see Laking 2002 and 2005). Any task- or function-­based classification of agencies would bump into problems at a regional level. For instance, some RDAs are single-­function while others are multi-­function agencies. A pattern can be detected as large Western European countries favour multi-­function agencies while in smaller Western European countries one can find both types. In Central and Eastern Europe the pattern is not as clear but it seems that multi-­function agencies are already being used in some countries (Halkier et al. 1998: 347–9).

De-­agencification next With regards to governments ‘the autonomization of the state is now long past its peak for first generation NPM reformers with the long-­term results indicating both backtracking and reinvention’ (Halligan 2006: 162). At the moment the development of agencies at least in the UK is clearly going in the opposite direction. With the implementation of a public management reform that the press has called ‘the bonfire of quangos’, close to 200 organizations were completely abolished or merged into other governmental structures (Guardian 14 October 2010). This kind of development takes place in other countries as well and a similar process has already taken place in Ireland, for instance (MacCarthaigh and Boyle 2012). Finland had its own ‘bonfire’ already during the 1990s when central agencies lost their traditionally strong position in the government (Hyyryläinen 1999). Nevertheless, government organizations are immortal also in Finland similarly to Kaufman’s findings in his landmark study of the US federal government (Kaufman 1976). Some former central agencies still function within the government as NPM-­type agencies while others now continue their activities as part of ministries. There is a wave of re-­agencification taking place at the moment in Finland. For instance in 2009 the National Public Health Institute and the National Research and Development Centre for Welfare and Health became the new National Institute for Health and Welfare (Ministry of Finance 2010: 12–13). These merged together agencies were established during the central agency reorganization of the 1990s. The possibility of a similar process of the mergers of agencies is presently being discussed in the government. It might not be justified to refer to this as a ‘bonfire’, however, it may be an indication of a new trend in Finnish public management. De-­agencification is an attempt to solve a problem that NPM-­related ideas have created. First-­generation NPM reforms lead to fragmentation and a severe lack of coordination, and there has later been an attempt to solve this with ‘the whole-­of-government approach’ (Christensen and Lægreid 2006b). Rethinking the position of semi-­autonomous government organizations is part of the approach, and it also appears to be one of the key themes of second-­generation NPM public management reforms. John Halligan calls this the reassertion of the centre (Halligan 2006).

New Public Management   213

Conclusions This chapter has described the process of agencification within the context of NPM going global, to show how countries can benefit from internationally created opportunities in order to learn transnationally when conducting public management reforms. Actual transnational learning takes place in places where people from different countries regularly gather around a common theme as representatives of their respective countries. The main preconditions for transnational learning in these situations are the regularity of contacts of different actors, and a theme or themes to give a rational incentive for this regularity of contacts. As the title of this contribution suggests, NPM is seen here as a major factor for providing themes and places for transnational learning. In this sense NPM has promoted transnational learning in public management reforms. The regularity precondition for transnational learning is linked to various levels of organizing that again is connected to NPM as a global phenomenon. As a movement for reform NPM was initiated in the Anglo-­Saxon world. What first were high­priority reforms for national public management systems in the political agenda of certain countries slowly became a global public management reform movement affecting all countries. To some extent this was brought by countries’ conventional practice of using foreign models in their own reforms. Neigbouring countries have always been a source for models but now connections between countries far away from each other have increased. Further, this change has not only occurred at the top levels of governments but more and more throughout the whole government. Through these contacts leading countries in Europe, such as the UK, were encouraging other countries to follow their route in reforming public management. There was also a new element in the situation. Some international organizations like the OECD started to ‘push’ their member states to reform their public management. A well-­functioning public sector was seen more as a requirement for strong economies. This intensified role of international organizations created plenty of places for public officials to meet regularly. Some 40,000 public officials from around the world visit the OECD each year and participate in its activities (Pal 2009: 1078). Over the years PUMA/GOV and SIGMA have provided their members with plenty of material related to experiences regarding reforms within other countries. NPM was on the agenda of several other governmental and nongovernmental international organizations, which has to an extent created peer pressure for transnational learning. The thematic precondition of transnational learning in public management reforms is related to the key ideas of NPM. In this study the question of interest relates to the ideas connected to the first generation of NPM reforms. The overall emphasis of NPM during 1980s and 1990s was on increasing efficiency, downsizing and decentralization. Under the broad assumption that task specialization increases efficiency, several countries followed the direction the UK had taken in establishing government agencies in order to allow greater managerial autonomy. Managerial autonomy was created by increasing the distance between agencies and their political governing by ministries and ministers.

214   E. Hyyryläinen Different countries have been using variations of three main agency models which the OECD and SIGMA, for example, promoted effectively through their widely circulated publications. In research and practice these are often spoken of in terms of agencies, quangos, and to some extent hybrid organizations. The OECD called them departmental agencies, public law administrations and private law bodies. In the CRIPO research project roughly similar agencies were called agencies Type 1, 2 and 3. The main difference between the first two types is in legal personality, which public law administrations (Type 2) have while departmental agencies (Type 1) do not. In this sense public law administrations have more room for managerial autonomy. Private law bodies (Type 3) have even better possibilities to carry out actions as they please since in their case political governing is only indirect. Examples of the three main types of agencies are easy to find in most western countries. The question of interest mainly concerns the specific reasons for why agencification takes place in a country. Researchers from some countries are eager to deny that the existence of agencies in their country was the outcome of adopting the idea from another country or from an international trend in public management. Even if they can point out several factors which speak for particularity in their respective countries, it is easy to point out others which emphasize commonality of developments in the public management of these countries. Therefore it can be suggested, and following the descriptions of this contribution, preconditions for transnational learning exist in all countries where top public officials and leading scholars are closely connected to the global community.

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New Public Management   217 Pyper, R. (1995) The British Civil Service, London: Prentice-­Hall, Harvester Wheatsheaf. Roness, P.G. (2007) ‘Types of state organizations: doctrines and changes beyond new public management’, in T. Christensen and P. Lægreid (eds) Transcending New Public Management: The Transformation of Public Sector Reforms, Aldershot: Ashgate, pp. 65–88. Sahlin-­Andersson, K. (2000) National, International and Transnational Constructions of New Public Management, Stockholm: Score Rapportserie 2000: 4. Salminen, A., Viinamäki O.-P. and Jokisuu J. (2012) ‘Finland’, in K. Verhoest, S. van Thiel, G. Bouckaert and P. Lægreid (eds) Government Agencies: Practices and Lessons from 30 Countries, Houndmills: Palgrave Macmillan, pp. 223–33. Schick, A. (1998) ‘Why most developing countries should not try New Zealand reforms’, The World Bank Research Observer 13(1): 123–31. SIGMA (2000) Public Management Forum VI(4). SIGMA (2007) Organizing The Central State Administration: Policies and Instruments. SIGMA Paper No. 43, Paris: Organization for Economic Co-­operation and Development. SIGMA (2012) Support for Improvement in Governance and Management. Online. Available at: www.sigmaweb.org (accessed 20 June 2012). Talbot, C., Pollitt, C., Bathgate, K., Caulfield, J., Reilly, A. and Smullen, A. (2000) ‘The idea of an agency: researching the agencification of the (public service) world’, paper presented at the American Political Studies Association Conference, Washington, DC, August 2000. Van Thiel, S. (2012) ‘Comparing agencies across countries’, in K. Verhoest, S. van Thiel, G. Bouckaert and P. Lægreid (eds) Government Agencies: Practices and Lessons from 30 Countries, Houndmills: Palgrave Macmillan, pp. 18–26. Verhoest, K., Van Thiel, S., Bouckaert, G. and Lægreid, P. (eds.) (2012) Government Agencies: Practices and Lessons from 30 Countries, Houndmills: Palgrave Macmillan. Verhoest, K., Roness, P.G., Verschure, B., Rubecksen, K. and MacCarthaigh M. (2010) Autonomy and Control of State Agencies: Comparing States and Agencies, Houndmills: Palgrave Macmillan. Wettenhall, R. (2005) ‘Agencies and neo-­departmental public bodies: the hard and soft lenses of agencification theory’, Public Management Review 7(4): 615–35. Zifcak, S. (1994) New Managerialism: Administrative Reform in Whitehall and Canberra, Buckingham: Open University Press.

7 Discovering the process perspective Unfolding the potential of transnational learning in INTERREG Verena Hachmann Financed by the EU or other institutions such as the Nordic Council of Ministers, a broad variety of cooperation projects allows involved actors to learn from experiences and knowledge in other contexts and beyond national borders. This phenomenon of ‘transnational learning’ has not yet received much attention in research and thus suffers from a lack of conceptualization. Still, with its complexity and diversity as well as with the multifaceted opportunities to access related experience in other countries, it is a fascinating research field. Transnational learning can avoid ‘reinventing the wheel’ when actors learn from advancements already made and in place elsewhere. At the same time, transnational learning opens up new perspectives when being confronted with different framework conditions, which may lead to very different perceptions of and solutions for common challenges. This chapter explores the phenomenon of ‘transnational learning’ and the options it offers. With the example of the EU’s INTERREG B programmes, it looks for evidence of transnational learning in transnational projects and critically examines the concept of transnational learning and barriers identified in relevant literature. What is largely missing in transnational learning research is the consideration of transnational learning as a process, in which learning is not only the outcome, but where it can also be conceived as the explanatory variable for certain outcomes. This chapter introduces a process perspective to the concept of transnational learning by distinguishing two major processes of knowledge development: the transfer of existing knowledge between partners and the common development of new transnational knowledge. Both are distinct processes that require different preconditions and are faced with different limitations. The chapter largely builds on a PhD research project on transnational learning in transnational INTERREG projects and discusses the findings from four case studies with respect to the conditions and limitations of transnational knowledge transfer and the development of joint transnational knowledge.

Transnational learning as a research topic The increasing interdependencies of countries in the general economic and political sphere, but also areas such as environment, transport or research together

Discovering the process perspective   219 with the political aim of European integration supports processes of transnationalization in the EU and beyond. Europe-­wide problems call for integrative and common approaches beyond national borders. There are numerous examples for Member State cooperation, of which the ‘Method for Open Coordination’ is one of the best known. Moreover, the EU and other institutions run dedicated programmes that allow projects to discover and solve joint challenges, to develop concerted strategies and to implement measures that benefit more than one country. Examples of such programmes include the Research Framework Programme, promoting networking in R&D organizations, the INTERREG programmes, supporting cooperation on issues of regional development, the URBACT programme, promoting exchange in the field of sustainable urban development, and the LIFE LONG LEARNING programme, supporting joint activities in the educational field. The Nordic countries maintain their own funding programmes in various thematic areas, including research, innovation or energy matters. However, transnational learning through European and similar cooperation programmes is faced with a paradox: on the one hand, the manifold options for cooperation create a vast platform for knowledge exchange between various actors and for tangible transfer of policy concepts, strategies, institutions, technical solutions or general ideas. On the other hand, cooperation programmes have been criticized as not delivering the results they were expected to deliver. In practice, a considerable learning potential is created, where actors are able to take over solutions developed elsewhere, but that are of interest to their own local situation. This process can potentially speed up innovation processes Europe-­wide, as regions build on concepts and solutions already in existence and that have proven successful elsewhere. Moreover, with respect to learning opportunities, transnational cooperation can go beyond exchange and transfer processes of already existing knowledge and not only learn from each other, but can involve processes where partners jointly work on completely new concepts and measures and thereby also learn with each other. However, these options need to be used in order to create an added value. The reality of many cooperation projects shows that it takes good planning and skills to utilize the opportunities that lie in transnational learning, but also that this aspect is often not paid much attention to. In the context of INTERREG, for example, transnational cooperation has been criticized for rather uneven learning results and impacts (Dühr and Nadin 2007). Behind this critique lies a complicating aspect: the difficulty to measure the results of cooperation projects, which often are of intangible and ‘soft’ nature (e.g. strategies, plans, etc.). Thus, learning effects cannot always be found in ‘hard’ documentation and as learning is a process, documents themselves might not be adequate means to capture learning processes. This calls for a re-­thinking of evaluation methods to meet the specific nature of learning effects. Hence, finding only limited learning effects, while encountering difficulties in measuring ‘soft’ factors and acknowledging the long-­term nature of learning effects leads to a situation that obscures whether there is a lack of learning effects or whether these could not be measured.

220   V. Hachmann The cornerstones of learning in transnational cooperation programmes What many programmes have in common is that the architecture of transnational cooperation is the partnership, a specific form of network. The programmes emphasize collaboration between countries and regions, encouraging actors from different spheres to work on joint projects, e.g. from local and regional administration, politics, universities or technology centres. The inter-­ organizational model of the partnership is seen as an appropriate organizational form to exploit endogenous potentials promoting innovation and adaptation. Learning takes place by exchanging ideas and information, discourses as well as socialization processes that are discussed and exchanged in processes of, for example, benchmarking, knowledge sharing, peer review, lesson-­ drawing and joint actions. These processes aim at identifying a European dimension of problems, ‘a comparison of situations in all the countries, allowing for the sharing of some common representations, opening the way to a common perception of problems, and enlarging the choice of possible responses, thanks to the exchange of “good practices” ’ (Bruno et al. 2006: 533). Based on this, actions can be agreed upon by the participating actors rather than being imposed from above and thus generate European integration and internalization processes within the existing political contexts at domestic level (Knill and Lehmkuhl 1999: 14). In the understanding of many cooperation programmes, the diversity of European regions is seen as an important resource for transnational partnerships and as their added value, a unique innovation potential. Although the expectations towards results and benefits of individual projects and programmes are diverse, the innovation potential of cooperation always seems to play a role: different regional and national policies, institutional constellations, experiences with relevant models and instruments, and the general differences between project actors are understood to increase the innovativeness and creativity of projects. Consequently, transnational cooperation is able to lead to very dynamic situations of mutual learning that could not necessarily be achieved by single actors and regions. Joint analyses also allow to assess the suitability of individual concepts and instruments under diverse framework conditions. Although the focus of learning is often on concepts and instruments (also called ‘know-­about’ by Lubatkin et al. 2001), transnational cooperation also allows learning how to do things (also called ‘know-­how’ by Lubatkin et al. 2001). While more simple learning processes through interregional knowledge transfer allow adapting and improving individual measures within existing organizational frames and systems, systemic learning makes the questioning of existing systems and strategic and structural changes possible. This differentiation is connected to the concept of ‘single loop learning’ and ‘double loop learning’ (Argyris and Schön 1978).

Discovering the process perspective   221

Theories of transnational learning There is no single theoretical model that is able to cover all relevant aspects of learning processes in transnational cooperation projects, but a variety of theoretical contributions are helpful to understand different aspects and parts of the process of transnational learning. These include concepts of (inter-)organizational knowledge creation (e.g. Nonaka and Takeuchi 1995), project-­based organizations (e.g. Lundin and Söderholm 1995; Scarborough et al. 2004), policy transfer and diffusion (e.g. Rose 1993; Wolman and Page 2002) and concepts of de-­contextualization and ‘translation’ of case-­based knowledge in the form of ‘best practice’ (e.g. Potter 2004; Sahlin-­Andersson 1996; Czarniawska and Sevón 1996). For the purpose of this chapter, they are used to conceptualize the two processes of knowledge transfer and creation. The chapter follows a process perspective on transnational learning in projects. Focusing on processes highlights that there are two main learning-­related developments: partners transfer existing knowledge (learning from each other, ‘exploitation’) and partners jointly develop new knowledge by working together on joint tasks (learning with each other, ‘exploration’). Moreover, there is also the transfer of transnational learning results beyond the project realm to the involved organizations and regions (‘organizational learning’). However, the chapter primarily focuses on transnational learning in projects rather than from projects. By both conceptualizing transnational cooperation as a process and distinguishing different process types can be identified. While the exchange of existing experiences and knowledge is more or less an inevitable process in a cooperative setting, the development of new common knowledge requires partners to have common objectives and transnational working structures. The two processes require different preconditions, follow different mechanisms, are faced by different types of barriers and lead to very different results. The transfer of existing knowledge Many international projects are limited to the transfer of existing knowledge, e.g. many cooperation projects transferring knowledge from ‘Western’ to Eastern Europe. Even in cooperation programmes where projects are supposed to go beyond transfer processes, many do not do so (e.g. INTERREG B). In many transnational projects, the focus lies on learning from best practice examples by benefiting from the diversity of approaches, policies and solutions of various regions and countries (Ahlke et al. 2007: 25). Taking over tried and tested concepts from elsewhere avoids the ‘re-­inventing the wheel’ syndrome and can speed up innovation processes. From a processual perspective, particularly the exchange on experiences with intra-­regional learning processes offers a considerable learning potential for other regions. In the following, the transfer of existing knowledge is further conceptualized and relevant preconditions identified in literature discussed.

222   V. Hachmann Transnational learning between regions is faced with larger complexities than intra-­regional learning due to the often very different framework conditions. In spite of common challenges that governments face in Europe, there are profoundly ingrained differences between countries in terms of administrative and political structures and cultures. To simply imitate the success of one region is hardly possible and to develop a generally applicable success formula is unfeasable because of strongly varying regional conditions and contexts. Thus, what has led to a success in one region can often not be duplicated in another. This means that transferring existing experience and knowledge in transnational settings is particularly challenged by transferability problems. Moreover, if the innovative power of regions is built on endogenous strengths and capacities, it is by nature difficult to imitate, as it is based on regional uniqueness. Regions that base their ‘innovativeness’ on the imitation of other more successful regions are at a disadvantage as instruments and concepts that have been copied once can be copied again and thus quickly lose their competitive advantages (Klaerding et al. 2009). In many of these cases, regions that copy approaches from other regions are occupied with catching-­up to processes that have long been run through elsewhere, as for example in cases of knowledge transfer from Western to Eastern Europe. A useful theory strand to better understand processes of transfer and their barriers is the concept of ‘policy transfer’ or ‘policy diffusion’ (e.g. Stone 2004; Dolowitz and Marsh 2000; Rose 1993). Barriers can, for example, include insufficient information on the transfer object or insufficient information paid to national differences (Dolowitz and Marsh 2000). The term ‘transplantation’ used by Mamadouh et al. (2002) is quite useful in this respect as the body analogy points to risks of the transplantation being rejected in the host body. This challenging interface between learning results and their implementation is also recognized by Stone (2004) and linked to actors’ learning skills, by arguing that ‘certain actors may have a greater capacity for learning whereas others may adopt lessons for symbolic purposes or as a strategic device to secure political support rather than as a result of improved understanding’. In effect, this means that there might be a transfer of knowledge, but not of practice (Stone 2004: 549). Literature points to the fact that various knowledge characteristics influence transferability, such as complexity and ambiguity (Salk and Simonin 2008). Consequently, although imitation plays a certain role in the discussion on transnational learning processes and particularly in the context of transferring ‘best practices’, it represents a rather limited and less innovative form of learning. Therefore, processes of ‘translation’ and adaptation are required. However, it is largely left open by both theory and practice how experiences and good examples from other regions can be ‘translated’. The factors that account for the success of a measure or a concept in one region often remain intangible and thus describable. Transferring implicit knowledge that is little codified is faced with particular challenges. Therefore, knowledge needs to be turned from implicit into explicit knowledge as far as this is possible, a process of social interaction (Nonaka and Takeuchi 1995). Nonaka and Takeuchi’s model of organizational

Discovering the process perspective   223 knowledge development (SECI) helps to understand how the tacit knowledge of one region, for example, can be transferred to other regions by turning it into explicit knowledge. At the heart of this process, Nonaka and Takeuchi argue, is group interaction (for a more detailed discussion of the SECI model see Chapter 3, this volume). Thus, the mostly case-­based knowledge from ‘best practice’ examples that is often linked to specific external conditions, needs to be generalized and turned into de-­contextualized knowledge (Potter 2004). This kind of knowledge may then make it possible to use good examples as a source for inspiration for other projects and programmes. However, at the same time, de-­contextualized knowledge creates new barriers. Sahlin-­Andersson (1996) looks at how ideas are shaped and reshaped in diffusion processes and how they travel. She describes this travelling process as one of editing, which again is a process of translation. ‘Translation’ is an operation that always involves transformation. Sahlin-­Andersson identifies the usage of ‘context-­free prototypes’ as one of the main challenges for transfer of knowledge and ideas. This is related to the fact that actors in transfer processes often lack first-­hand knowledge about the organizations they imitate. Thus, a thorough analysis of the functioning and purpose of institutions from other countries is helpful as are adaptations of the concepts and instruments to own regional conditions (Hassink and Lagendijk 2001). In order to be implemented, ‘prototypes’ also require adaptation and modification in the regional context of the ‘receiving’ region. This is when the new, foreign elements are mixed with existing regional elements (Czarniawska and Sevón 1996). On the other hand, De Jong and Mamadouh warn that ‘transplants derived from other traditions may work, but creating mixité should be done with caution’ (2002: 20f.). Explicit, generalized knowledge also needs to be applicable to concrete situations; otherwise it is of little practical use for the receiver in a learning process (Hassink and Lagendijk 2001). This means that the process is one of continuous processing and editing and one in which for every new application the history of earlier experiences is newly formulated in the light of regional conditions and institutional requirements. This involves evaluation, selection and reconstruction processes to fit to the different framework of the place where it is introduced. Wolman and Page (2002) call attention to the fact that the interpretation of information is not a neutral process, but that ‘shared problems’ may have a very different significance in different countries, not only because of economic and social differences, but because of the way such problems are evaluated and analysed. The recipients of knowledge have to assess the relevance and validity of the information they receive in order to find out if they can generalize it within their own conditions. The users of new knowledge then also need to be able to make use of it. Recipients interpret and translate the experiences presented by others, and if this takes place in a discursive and cooperative way, such translations might enrich the source of knowledge with new ways of interpreting their experiences.

224   V. Hachmann Producing new transnational knowledge Some transnational programmes (such as INTERREG B) expect that project partners work together on issues that cannot, by their nature, be satisfactorily tackled within one country. It is expected that the exchange of existing knowledge is only the starting point for deeper forms of cooperation, where partners work jointly on the development of solutions and policy options. The development of new, common knowledge in transnational projects is often a much more complex process than the transfer of existing knowledge as it depends on a strong joint working approach, including joint objectives, joint and cooperative tasks and methods. Thus, this process does not run by itself, but depends on actors’ skills and learning processes. Nonaka and Takeuchi’s model of knowledge generation (1995) also helps to conceptualize generative learning and help project partners to support their own learning processes. New knowledge can be created when the knowledge bases of group members interact and a spiral is set in motion, where knowledge is shared and made explicit, combined in new ways and finally internalized. The abstraction and generalization of individual knowledge are related to the second and third steps of the SECI model. Tacit knowledge is articulated into explicit concepts by dialogue, collective reflecting and concept-­building, so-­called externalization. This process is supported by reasoning, communication methods and collective reflection. The combination mode includes group processes and combines knowledge to produce new knowledge, processes that are related to sorting, adding and categorizing knowledge. ‘Reflection’ and ‘conceptualization’ are also at the heart of the interpretation of new experience in the models for knowledge generalization by Crossan et al. (1999), Engeström (1999) and Kolb (1984). In terms of the content, new knowledge in transnational projects can often be found in produced studies, concepts, strategies and plans and sometimes joint agreements. If projects go beyond the ‘planning stage’, new knowledge can also be manifested in implemented measures on the ground. Knowledge can be related to given frameworks (such as EU or national regulations) and concerned with how these can be best implemented, but it can also be of a more bottom-­up character and concerned with agenda-­setting and policy-­making (such as projects developing new policy agendas for the participating regions). New knowledge can be related to various types of project knowledge: there can be new technical knowledge, but also systemic knowledge about new relationships and roles, or strategic knowledge including reflexive cognitive pro­ cesses that generate new insights (Child 2001). At a minimum, this knowledge exists only at the level of the individual participants, but it can also be derived in group discussions, which have the potential to reach a transnational reflexivity and become joint property of the partnership. This knowledge only develops due to transnational cooperation, it did not exist before and is thus not transferred, but developed, a process of learning with each other.

Discovering the process perspective   225

Learning in transnational cooperation on regional development – the INTERREG programmes This chapter focuses on transnational learning processes in the framework of the EU’s INTERREG B programmes, which are part of the mainstream European programmes for regional development. INTERREG supports cooperation on regional development issues in three strands: cross-­border (strand A), transnational (strand B) and interregional (strand C). Transnational INTERREG projects usually involve actors from more than three countries. INTERREG B projects are strategic networks and involve an exchange of information and experience as a first step towards transnational solutions for transnational problems. The transnational INTERREG programmes were originally introduced as an experimental field for multilateral cross-­national cooperation in 1996 and developed into a funding programme for innovative transnational projects for spatial development around the year 2000. With the current funding period (2007–13), INTERREG B became a mainstream objective of the Structural Funds (Objective 3) with increased political weight. Cooperation in INTERREG B is based on joint programmes in 13 transnational cooperation areas (e.g. Baltic Sea Region, North Sea Region). Each of these cooperation areas has specific features and challenges to deal with. The INTERREG programmes are part of the European Regional Development Fund (ERDF ) and as such regulated by the European Council Regulation on the general provisions of the European Regional Development Fund (European Council 2006a) and the Regulation by the European Parliament and the European Council on the European Regional Development Fund (European Parliament and European Council 2006). Their funding priorities are set out in the Community Strategic Guidelines on Cohesion (European Council 2006b). Partnerships apply for funding in a bidding process in one of the application rounds. Applications are assessed by the Joint Technical Secretariats and decided upon by the transnational Steering or Monitoring Committees consisting of national and regional representatives from the participating Member States (plus non-­EU countries such as Norway and Switzerland). Most INTERREG B programmes focus funding on the areas of ‘regional innovation policies’, ‘environmental development’, ‘transport and accessibility issues’ and ‘sustainable urban and regional development’. The general starting point for INTERREG B projects is to identify common challenges, a common framework for action and common tools. During the evolution of the transnational INTERREG programmes since 1996, attention towards the implementation of the projects has been increasing. Today it is expected that transnational cooperation goes well beyond exchange processes: projects need to demonstrate a ‘tangible’ added value of working together and also implement identified solutions on the ground. By this, transnational cooperation projects have the potential to transcend exchange and transfer processes of existing practices (learning from each other) and to make use of the creative potential of inter-­organizational, inter-­cultural and interdisci-

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plinary partnerships. Thereby, they may evoke the development of new and innovative practices (learning with each other). Thus, all projects need to prove that they are of transnational character, which does not only refer to the topic addressed, but also to the partnership, the way projects operate and are managed, as well as to the investments made. Although in some cases, senders and receiv­ ers of ideas, concepts and strategies can be identified, policy transfer in INTERREG B projects takes place in a multilateral setting, where actors can take on both sending and receiving roles in the same time with respect to different issues. In some cases, a complex network of sending and receiving processes may emerge within one project. As in many other European cooperation programmes, learning processes in transnational INTERREG projects involve organizations from different coun­ tries, each embedded in its special socio-cultural, economic and legal situation, and are thus particularly complex (van Bueren et al. 2002: 269). Still, INTERREG B projects can be of a higher diversity than those of other cooperation pro­ grammes due to also being of interdisciplinary and multi-level nature, often involving actors from differing professional and institutional backgrounds working at local, regional, national or transnational level. They always involve individuals as the agents of learning, but there is also the level of the partnership that learns and accrues a collective memory and capacity that is larger than the sum of individual learning. Collective learning processes involve the sharing of experience and ideas between individual partners in the project, the collective incorporation of the knowledge gained through individual research and compet­ ence development into collective capacity building and, on this shared basis, into

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2013

Figure 7.1 Transition o f activities in the transnational INTERREG programmes (Byrith 2009).

Discovering the process perspective   227 collective decisions and initiatives (Kissling-­Näf and Knoepfel 1998; Nonaka and Takeuchi 1995). Mariussen and Virkkala (this volume) refer to these collective processes as the ‘Formation of transnational communities’. Another level of learning is that of organizational learning, as several organizations are indirectly involved by their representatives. Organizational learning is particularly confronted with the challenge of knowledge transfer between the project and the involved home organizations. Due to the fact that INTERREG B projects often develop a momentum of their own when running over around three years, they are likely to build up ‘learning barriers’ (Scarborough et al. 2004) towards the home organizations. Evidence for learning in transnational INTERREG projects In general, studies on INTERREG B have focused on the output-­side of transnational projects and the question of results and effects. As Dühr and Nadin (2007) argue, evaluations conducted during the 2000–6 funding period showed that the general expectations towards transnational INTERREG projects have not been matched by reality and that results and impacts have remained uneven. Part of the reason for this, it is argued, is that transnational INTERREG cooperation does not provide the means for large infrastructure investments, but only for more ‘soft’ measures such as strategies or plans. In general, researchers argue that causal relationships between learning, policy outcomes and change are not easy to make and that although INTERREG increases opportunities for transfer and policy impact, they do not always take place (Colomb 2007; Dühr et al. 2010). With respect to the learning agents of transnational INTERREG projects, several studies conclude that most learning takes place at the ‘micro level’ of the individuals and their regional partnerships involved, while there is a lack of organizational learning (Böhme et al. 2003; Lähteenmäki-Smith and Dubois 2006). In terms of identifiable outcomes and effects, studies on INTERREG B found that learning processes in transnational INTERREG projects concentrate on potential changes in the participating regions and institutions: changes of routines, management structures and policy styles, the development of new policy concepts or changed conceptualizations of them, changes to applied procedures and methods, or changes to the way regional partnerships with other actors are set up (Lähteenmäki-Smith and Dubois 2006; Janin Rivolin and Faludi 2005; Pedrazzini 2005; Zaucha and Szydarowski 2005; Böhme et al. 2003). However, individual and organizational learning results are of very different nature and the existence of individual learning results does not necessarily imply that these are directly transferable into organizational learning. Assessments of effects need to take into account if valuable and transferable project results were achieved, whether they could be implemented and whether they were reflected at the different levels (individual, group, organization). The modifications identified can be related to changes in the framework for instruments as well as to changes of the instruments themselves or even to

228   V. Hachmann p­ ragmatic shifts of the framework, the instruments and the hierarchy of objectives (Hall 1993). However, several authors emphasize the limitations of these changes: Zaucha and Szydarowksi (2005), for example, acknowledge that planning statements ‘rarely go beyond the scope of guidelines and do not cause immediate investment decisions’ (2005: 739). In terms of effects, they conclude that although the exchange of experience seemed valuable for project partners, effects do not show directly and are of a more inspirational character (2005: 732). Similarly, Dabinett (2006) sees INTERREG B mainly as a source for creativity and inspiration. Dühr and Nadin (2007) report that ‘learning’ has been widely acknowledged by project participants as an important effect of INTERREG B, but could not identify any particular learning effects in their study. Moreover, many projects have rather indirect and long-­term impacts that often go well beyond the original project objectives (Hübner and Stellfeldt-­Koch 2009). Limitations of the research into transnational learning Studies on learning in transnational cooperation in the framework of INTERREG B have been characterized by certain limitations: besides a lack of empirical data on the achievements of INTERREG B projects, there seems to be a considerable lack of an adequate conceptualization of ‘transnational learning’ and an assessment framework for the evaluation of often rather ‘soft’, intangible, long-­term and indirect project results does not yet exist. Although the general tenor in INTERREG B-­related research is rather sceptical about the results and effects of transnational projects, many studies recognize that the assessment of INTERREG outcomes and effects is very difficult as many of them remain of an intangible nature and that the money value for projects is thus difficult to quantify (Dühr et al. 2010; Bachtler and Polverari 2007; Giannakourou 2005). Colomb (2007: 353) links this to the ‘scarcity of primary materials upon which academic researchers can build their empirical analysis and an adequate conceptual frame’ which are due to the strong quantitative focus of programme monitoring and evaluation. She identifies the difficulty to identify causal links between learning in projects and changed practices in organizations and to demonstrate that a certain aspect would not have been existent without transnational cooperation, together with the long-­term nature of learning as the main challenges in assessing the extent of learning in INTERREG (Colomb 2007: 364f.). Lähteenmäki-Smith and Dubois (2006: 1) confirm that the nature of mutual learning, innovation and diffusion of good practices requires ‘new, more interaction- and process-­oriented tools for evaluation’. Moreover, there is also a considerable lack of conceptualization of ‘transnational learning’ in general. If ‘learning’ is related to the general process of producing new knowledge and project results or if it is only an ‘indirect’ effect of cooperation, if ‘learning’ should only be seen as the result of cooperation or if learning processes are responsible for certain results are still open questions. While many of the studies treat the development of project results as a learning processes,

Discovering the process perspective   229 the official INTERREG III evaluation (Panteia and Partners 2010) treats ‘learning’ as an ‘indirect effect’ of transnational cooperation and on a closer look understands the term only in respect to individual and organizational learning, but not in relation to learning in projects. Still, most of the relevant studies conducted so far treat ‘learning’ only as the dependent variable in INTERREG projects. Conceptualizations about what influences that a project does or does not achieve valuable results have been very much focused on structural aspects of projects, but have less taken into account process aspects. The lack of conceptualization of how to evaluate INTERREG results and effects (Colomb 2007: 348) is thus accompanied by a lack of conceptualization of influencing factors and project processes. Barriers to transnational knowledge transfer and learning Some of the studies mentioned above identify possible reasons to explain why the expectations towards INTERREG B have not been met and why the effects of the programmes have been limited. One reason identified is that projects’ starting point is often partners’ own local and regional issues rather than transnational ones (Dühr and Nadin 2007). This implies that effects on a transnational scale are not necessarily the objective of those who participate. Even in today’s INTERREG IV B projects, common and transnational actions are still hard to find as many projects are mainly based on the concept of individual pilot projects. Table 7.1 summarizes other identified influencing factors on knowledge transfer and learning processes. As can be seen, some studies take cooperation processes into account by, for example, conceptualizing different degrees of cooperation intensity (Colomb 2007) or cooperation depth (Panteia and Partners 2010) and link these to different degrees of mutual learning. According to Colomb (2007: 358), the intensity of cooperation can range from a low intensity based on the mere exchange of experience over a medium intensity based on the pooling of resources to tackle a common problem to a high intensity based on the joint realization of a transnational investment or a spatial strategy. She concludes that higher intensities are less likely in projects that focus on ‘common issues’ instead of ‘transnational issues’.

Opening up the ‘black box’ of transnational learning – the process perspective The following presents the findings of a PhD research project on transnational learning in INTERREG B projects. This project looked into the cooperation and learning process of four transnational INTERREG projects in the Northwest-­ Europe programme area. Interviews were conducted with several of the project participants and available project documentation, including projects’ reporting to the Joint Technical Secretariat, was analysed. Of these projects, three were already finalized projects, while one was studied over a period of 2.5 years in a participatory observation.

Working methods and tasks

Strategy

Communication

if partners can focus on truly transnational issues, learning is likely to be focused on Böhme et al. 2003; Lähteenmäki-Smith and joint solutions; if they focus only on ‘common issues’, learning is more likely to Dubois 2006; Colomb 2007 be concentrated on the partners’ own regions

Topics and objectives

Lähteenmäki-Smith and Dubois 2006 Böhme et al. 2003: 73

Colomb 2007; Dühr and Nadin 2007 Panteia and Partners 2010 Lähteenmäki-Smith and Dubois 2006 Bachtler and Polverari 2007; Colomb 2007; Dühr and Nadin 2007

Bachtler and Polverari 2007; Panteia and Partners 2010 Lähteenmäki-Smith and Dubois 2006

Panteia and Partners 2010

Dühr et al. 2010; Panteia and Partners 2010

transnational working methods, i.e. structured working processes and joint working Panteia and Partners 2010 truly joint actions Panteia and Partners 2010 Panteia and Partners 2010 project defined on the basis of a shared problem diagnosis on programme level, partner inputs in complementary manner, joint analysis of needs and required activities leads to homogeneous expectations

styles of leadership and management, commitment pilot projects often reduce a project’s transnational dimension

professional differences cause communication problems (administrative, political and professional style and culture) management and patterns of communication between partners cultural aspects different understanding of concepts different domestic settings and frameworks

Language barriers

expertise in transnational working, e.g. language, communication as a barrier to transnational learning different educational and professional backgrounds to share competence and skills

Expertise

Panteia and Partners 2010: 102 Panteia and Partners 2010 Dühr and Nadin 2007: 385 Dühr and Nadin 2007: 389 Böhme et al. 2003: 67 Böhme et al. 2003: 9

Partnership

Colomb 2007; Dühr and Nadin 2007 Lähteenmäki-Smith and Dubois 2006 Lähteenmäki-Smith and Dubois 2006

Source

geography of partnership spatial closeness between partners similarities between institutional structures, spatial patterns and development challenges ‘institutional stability’ of partner organizations involvement of different political levels and sectors type of organization conscious choice of partners homogeneous versus heterogeneous groups communality, shared strong interest

Project-internal influencing factors on knowledge transfer and learning in INTERREG B projects

Table 7.1 Influencing factors on knowledge transfer and learning in INTERREG B projects identified in literature

Discovering the process perspective   231 The four case studies dealt with a variety of cooperation topics. While the ongoing project was rather research-­based and focused on questions of pharmaceutical residues in waste water, the three finalized projects had more mixed partner-­structures. They dealt with issues of sustainable forest management, participatory approaches to water management and accessible urban landscapes. Three projects worked with pilot projects, in which direct local and/or regional investments were made. The four case studies can be divided into two groups: those working with issues related to natural science (‘natural science group’) and those working with issues related to social and spatial development (‘social science group’). The study also included a small survey of 51 approved INTERREG IVB Northwest-­Europe projects and aimed at identifying common project strategies and planned results, based on projects’ applications. Knowledge transfer: conditions and obstacles The case studies showed that in the case of transfer of existing knowledge, the following preconditions need to be in place: • • • •

existence of sender and receiver of knowledge; awareness of the relevant partners of their ‘transfer role’; willingness of partners to perform their ‘transfer role’; the transfer object needs to be transferable.

Although it sounds simple, it is not always the case: both senders and receivers of relevant knowledge need to be in place. At least one partner needs to possess knowledge of interest and relevance to transnational partners and at least one partner needs to not yet possess this knowledge. Second, relevant partners need to be aware of the fact that they either possess knowledge of relevance to other partners or that they lack knowledge and experience that others have. Especially the latter requires a rather self-­critical perspective as well as the ability to identify valuable knowledge and those partners in possession of it. Third, although the realization of these potential ‘transfer roles’ is important, it is ultimately the partners’ willingness to perform these roles that determines if a transfer takes place or not. Finally, even if the transfer subjects are ready for the transfer, the transfer object itself needs to be of a nature that allows it to be transferred in a transnational context. In the reality of INTERREG B projects, many examples can be found where one or more of the mentioned preconditions were not in place. In the four cases studies, not many examples for successful transfer of knowledge and experiences could be found. During the participant observation, knowledge transfer could be observed on many occasions. However, this was connected to the transferability of the mainly natural science knowledge and of the specific transfer object (e.g. measuring methods). In the other projects, only one reported on an attempt to transfer a direct copy of a simulation game for

232   V. Hachmann participation in water management from the Netherlands to Germany. Due to the differences in the societal framework conditions (e.g. willingness of public stakeholders to participate), but also a lack of awareness of the challenges of a direct copy and of options to adapt the transfer object in the receiving country, this transfer was unsuccessful. The obstacles to knowledge transfer in the case studies were partly partner-­ specific, e.g. when partners lacked awareness for their potential ‘transfer role’ and/or little attention was paid by the partner to the project’s transfer potentials. In other cases, the lack of transfer attempts was based on a general feeling that the framework conditions of partners were too different. The latter was both influenced by the diversity of partners, but also by the type of knowledge dealt with and how strongly relevant knowledge was contextualized. A general impression was that with respect to the relationship between knowledge characteristics and knowledge transferability, INTERREG projects do not seem well placed for knowledge transfer. A potentially high degree of tacitness, ambiguity and complexity of many of the topics seriously limit the transfer of knowledge between partners. Other obstacles were more project-­specific, e.g. when projects included a portfolio of pilot projects, which did not really fit each other. If pilot projects are not designed in a comparable or complementary way but rather represent a bundle of highly specialized issues, transferability problems increase. Moreover, if projects attempt to transfer experiences made in their pilot projects, they need to take into account that much of the knowledge developed in pilot projects is of experiential character and thus requires reflection and generalization before it can be transferred. Literature also points to the fact that different ‘transfer objects’ are of different transferability and that particularly technologies, operating rules and know-­ how are more easily to transfer then ideas, programmes or institutions. In the case studies, transfer attempts were focused on technologies, operating rules or rules of procedure, know-­how and very concrete instruments, which were all comparably easy to transfer. Helpful characteristics of the transfer objects seem to have been concreteness, standardization and joint planning. Natural science facts that can be abstracted and more often verified made transfer easier compared to social science issues that are more context-­dependent. It can be concluded that – although transnational challenges do not make transfer impossible – they require more effort, coordinated assessments of experiences and joint communicative processes of sense-­making and de-­contextualization as far as possible. The analysis of the survey showed that only a few projects consciously address their transfer potential at the application stage. Only nine projects looked into the identification of partners that may possess relevant experience of value to other partners. The identification of a transfer potential can also indicate a certain awareness of a transfer potential that may ease its use. However, the INTERREG B programmes do not require applicants to address their inherent knowledge transfer potential directly. The transfer of existing knowledge in projects is not in the focus of the programmes, but programmes concentrate more on

Discovering the process perspective   233 the production of transferable knowledge by projects to be used by other actors in similar settings after the projects’ end. Moreover, as many projects do not address their inherent transfer options consciously, if knowledge transfer takes place, it often happens rather coincidentally and as a side-­effect. Finally, knowledge transfer processes cannot be easily planned, as they depend on individual partners being aware and willing to perform their potential ‘transfer role’ and on externally influenced transferability aspects of the transfer object(s). A conscious use of transnational projects’ transfer potential also requires the employment of specific methods that prepare and support knowledge transfer. The survey of 51 INTERREG IV B projects did not suggest that projects give much thought to transfer methods. Conceptualizing methods can prepare partners to take on their potential ‘transfer roles’ by making the ‘senders’ of knowledge aware of the value of their knowledge to others and how this information needs to be processed to raise its attractiveness and usability to others. The obvious differences of partners’ framework conditions can easily lead to situations where potential ‘receivers’ of knowledge are discouraged from transfer as they cannot see the relevance to their own situation. In some cases, and as found in the case studies, this results in superficial differences obscuring transfer options. In other cases, framework conditions may be more substantial, but the significance of differences unlocks only when these are addressed and are not easy to judge at a first glance. If project partners are conscious about the different aspects, they can use them to better understand their own transfer processes and learn about how increase their quality. Taking them into account while cooperating can thus finally help to make transnational learning processes more successful. Developing new transnational knowledge: conditions and barriers The development of new knowledge does not involve as clear-­cut roles for partners as the transfer of existing knowledge. The research project showed that their role for knowledge development can depend less on structural conditions (e.g. existing expertise) and more on partners’ actual integration and participation in the project. The survey of the applications of 51 INTERREG IV B approved NWE projects indicated that around half of the projects aim at producing results that have the potential of being truly new and transnational and that can result in new transnational knowledge. These projects aim at producing joint ‘toolkits’, guidebooks, position papers, business concepts, standards or training modules. However, as could later be observed in two of the case studies, the reality of project life can include considerable challenges that may prevent projects from producing their envisaged results. Both projects had difficulties in achieving parts of the planned results and in particular those results that would have constituted new transnational knowledge. Following this initial impression on the relevance projects attach to joint knowledge development from the survey, the analysis went deeper into actual

234   V. Hachmann project processes. The case studies were analysed with the help of parameters including partner and partnership structure, topics, project strategies including partner integration, cooperation objectives and methods used to find out about the reasons for the limited use of the transnational potential. Moreover, the analysis also included the organization of pilot projects and of transnational knowledge processing. The joint development of new knowledge is based on pre-­existing knowledge, possessed by partners themselves or retrieved from external sources. Additionally, pilot projects allow partners to make new experiences and thereby offer the possibility to both (I) develop new knowledge at the individual level and to (II) jointly assess the experiences from the pilot project portfolio to develop new transnational knowledge. The research project showed that the potential of developing new transnational knowledge is best tapped if all of the following knowledge sources are used: 1 2 3 4

use existing experiences to contribute to the proceedings of the project; gather and make use of additional relevant knowledge from external sources; make use of the knowledge potential represented by the practical implementation of pilot projects in general; and bring together the experiences from pilot projects in joint assessment exercises.

Although some of these points may sound rather simple and obvious, the case studies showed that the reality of INTERREG can be far from an efficient use of knowledge sources. All steps require intense communication and partners’ participation in the project tasks. They also require that the partners actually work towards a common direction and, related to this, do not only work individually but in a truly cooperative way so that contributions link up to each other and produce joint results. In addition to the relevance of transnational topics as identified by e.g. Colomb (2007) or Dühr and Nadin (2007), also the existence of transnational objectives and working methods influences how a project develops and thus how well it is able to feature relevant learning processes. Making sense of the experiences gained from an array of different pilot projects is a rather complex process that requires a comparable assessment scheme for all pilot projects and thus the ability to de-­contextualize and abstract the findings for more generalized results. This step can be extremely challenging and the case studies showed that ‘later’ phases of learning cycles (reflection) did not always take place. When it comes to pilot projects and their ability to contribute to the project’s learning process, one relevant precondition is thus a ‘strategic fit’ of pilot projects in relation to each other and the project in general. This ‘fit’ can be ensured by pilot projects being comparable or complementary to each other, for example. In terms of knowledge types and thematic focus, the ‘natural science group’ found it generally easier to generate new knowledge, while the ‘social science

Discovering the process perspective   235 group’ encountered challenges that led to a rather limited production of new knowledge. Looking at project strategies, it became clear that both projects of the ‘social science group’ lacked clarity of their objectives, either because there were too many objectives, incoherent objectives or because the objectives were of a very general and superficial character. Moreover, some partners only participated in order to implement planned investments. Project objectives are also a starting point for defining relevant tasks and methods and can affect the division of labour between partners, the choice of pilot projects and the project’s transnational logic. Thus, unclear objectives are of little guidance to the overall project process. Neither of the two projects had put thought into appropriate methods for transnational knowledge processing. A lack of ‘strategic fit’ of single project elements (e.g. studies, work packages, activities, pilot projects) and thus of logical and timely progression through the project posed an additional barrier to knowledge development and learning. Another important parameter was the actual participation and integration of project partners. This varied from a clear division of labour with a balanced participation to projects where some partners were not well integrated or where there was a lack of joint activities. Poorly integrated partners had more difficulties to feed their knowledge into the project, but it was also more difficult to involve them in joint agreements and decision-­making. This was a lost opportunity particularly in one of the projects, where those partners with decision-­making power (governmental organizations) were much less involved in the project. To sum up, a variety of structural parameters influencing processes of knowledge development and learning could be identified, which include for example: 1 2 3 4 5 6

knowledge characteristics (e.g. natural science versus social science); clarity of objectives, partners’ identification with the overall objectives, including a ‘leading question’ to be answered with the project; identification of relevant tasks and methods that clarify how the objectives can be achieved; ‘strategic fit’ of the individual project activities (e.g. studies, joint measures, pilot projects); ‘strategic fit’ of pilot projects; adequate integration of project partners in project tasks.

Additionally, the organization of the general exchange between project partners, the organization of the exchange of experiences from practical pilot projects, the organization of transnational feedback between partners and the organization of the transnational knowledge processing process played a role for how well the options for transnational learning could be used. A conscious planning of these factors helps to increase the quality of transnational learning both before the project starts and during cooperation processes.

236   V. Hachmann Beyond the project: the impact of project results on the participating organizations In order to have an impact at local and regional level, knowledge transfer pro­ cesses do not only have to have taken place, but they also need to be followed up by processes of organizational learning and ‘lesson-­drawing’ (Rose 1993) at the level of the local and regional institutions involved to make sure that their learning is transferred into the practice of their organizations (Hachmann 2008). This is where ‘organizational learning’ comes into play, which requires that project partners transfer new knowledge into their own organization’s structures. Organizational learning is also a process in itself and depends both on this initial transfer beyond the direct project, but also on organizations’ ability to pick up the knowledge and integrate it into their existing routines. Transnational learning that involves individual, group and organizational learning has a process perspective that helps to better understand limited effects of transnational projects. There can be a lack of organizational learning due to a general lack of learning processes in the projects. Organizational learning can also be hindered because the results of learning processes are not transferred to the relevant organizations or because these are not able to make use of them due to, for example, too large ‘learning boundaries’ beyond the project (Scarborough et al. 2004). One useful theory strand that can help to better conceptualize organizational learning processes as a result of transnational projects is that of ‘project-­based organizations’ or ‘temporary organizations’ (e.g. Gibbons et al. 1994; Packendorff 1995; Hobday 2000; Maaninen-­Olsson et al. 2008; Janowicz-­Panjaitan et al. 2009). While the advantage of project-­based organizations is that they are much better suited to enhance innovation, as they are less inward-­looking than traditional forms of organizations, one of their main drawbacks is that much of the knowledge generated in the project activities is embedded in the tacit experiences of group members (Di Vicenzo and Mascia 2008: 3). Knowledge can thus become difficult to be consolidated and spread outside the single project and knowledge accumulated in the course of a project is at risk of being dispersed as soon as the project is dissolved (Di Vicenzo and Mascia 2008). As Bakker and Janowicz-­Panjaitan (2009: 135) argue, the very character of temporary organizations is contrary to long-­term planning and, therefore, their prevalent present-­ time focus renders the issue of ‘knowledge sedimentation’ less relevant for their members than for members of permanent organizations. ‘Knowledge sedimentation’ is related to the preservation of knowledge for use after the temporary organization ceases to exist. These difficulties of organizations to benefit from project-­based learning have been highlighted by a variety of authors (cf. Scarborough et al. 2004; Keegan and Turner 2001; Sahlin-­Andersson 2002). It can be described as the paradox of project-­based learning: while individual projects may offer an environment conducive to learning, they might also create strong barriers to the continuity of learning beyond the project boundaries (Ayas and Zenuik 2001: 70; Sydow et al. 2004: 1476ff.). Scarborough et al. (2004: 1583) explain this with the systemic effect of ‘learning boundaries’, which are created

Discovering the process perspective   237 when learning – generated by overcoming knowledge boundaries – produces new shared practices at project level, which then in turn reinforce the division between project practices and practices elsewhere in the organization, thereby limiting the transfer of learning from the project to the rest of the organization.

Conclusions INTERREG B projects, as many other transnational cooperation projects, are linked to processes of innovation, to finding new ways of dealing with common challenges, testing these in real-­life situations and transferring innovative approaches to actors and regions where they have not yet been implemented. Thereby, besides cooperation and implementation processes, they all involve processes of knowledge transfer and development and thus of lesson-­drawing and learning. Assessments of INTERREG projects and their outputs and results with a focus on the 2000–6 funding period have, however, only found limited learning effects so far. Still, the assessments themselves were characterized by several limitations: the higher-­than-average dependence of many planning-­related issues (which were in the focus of the 2000–6 funding period) to national and regional framework conditions may particularly limit the transferability of planning topics compared to those of other disciplines. Moreover, a lack of empirical data on projects’ achievements and a lack of conceptual assessment frameworks for the often ‘softer’, intangible and long-­term nature of many results of transnational cooperation limit the existence of results and effects. Although summarized versions of project applications are in the public domain, it is not without difficulty to assess project results. A general lack of conceptualization of the term ‘transnational learning’ as a direct or indirect effect of cooperation and with a limited perspective of learning as the dependent variable can be identified. The lack of conceptualization of how to evaluate INTERREG results and effects is accompanied by a lack of conceptualization of influencing factors and project processes. Barriers and limits to transnational learning have been identified with respect to structural factors, such as the composition of project partners or the choice of cooperation topics. This chapter argues that to understand transnational learning and thus to make ‘learning transnational learning’ possible, it is indispensable to include a process perspective. This emphasizes that there are two distinct processes related to transnational learning: the transfer of existing knowledge and the production of new common knowledge. Both processes have different supporting conditions and face different barriers. Knowledge transfer essentially needs two parties (one sending and one receiving party), but can constitute a multilateral setting with parties changing roles, who – in the case of an emerging transfer interest – can decide rather spontaneously to transfer relevant knowledge. The development of new knowledge depends on a planned and organized process. It requires the involvement of all partners and demands a mutual reflection process in which experience (e.g. from pilot projects) is turned into more explicit forms of knowledge.

238   V. Hachmann It needs to be taken into account that the following conditions characterize transnational learning in the context of project work: (I) project work means working in a group and thus that cooperation and social aspects play a major role and (II) projects with pilot projects are not a ‘dry run’. They are about making real-­life experience in pilot projects and thus have an ‘experience focus’, they transcend knowledge transfer and add the dimension of knowledge creation. Learning how to make the most of transnational cooperation and thus to enhance transnational learning thus means to take into account the following: • • •

•

as a result of the ‘experience focus’, a considerable share of transnational learning results are of intangible and tacit nature and thus difficult to codify and to assess (particularly relevant for knowledge creation); due to their social character and the share of uncodified knowledge, exchange between partners is highly relevant and should be taken seriously in order to tap tacit knowledge bases; even less of a self-­organizing process, and more demanding than exchange, reflection is required to externalize knowledge as far as possible (both relevant for knowledge transfer and creation); reflection can be supported by reasoning and communication methods; finally, it is important to not lose sight of the project dimension, if joint results are to be produced; this requires that individual reflections and insights are abstracted into a joint result (may be less relevant for knowledge transfer, but highly relevant for knowledge creation).

Knowledge transfer is mainly challenged by the degree of transferability, which is caused by e.g. differing framework conditions and by the complexity and ambiguity of knowledge (Salk and Simonin 2008). In order for knowledge to be adapted and ‘translated’ by other actors in other settings, literature points to making tangible knowledge explicit (Nonaka and Takeuchi 1995), to de-­ contextualizing (Potter 2004) and re-­contextualizing it (Hassink and Lagendijk 2001). The reality of INTERREG B (as shown in the survey of 51 projects) shows that knowledge transfer has a somewhat ad hoc nature, is often not planned as such, usually no specific transfer methods are applied and transfer is rather understood as a side-­effect of transnational cooperation. This lack of a conscious approach to transfer options in INTERREG B projects led to many missed chances. In order to enhance the transfer of existing knowledge, there needs to be a sender and receiver of knowledge, an awareness among the relevant partners of their ‘transfer role’, their willingness to perform their ‘transfer role’, and a certain transferability of the transfer object. The development of new knowledge can be based on different knowledge sources (partners’ existing knowledge or external sources, practical experience in pilot projects) and thus depends on how well a project makes use of them. With respect to the development of new transnational knowledge, the case studies show the relevance of a variety of structural parameters that may

Discovering the process perspective   239 i­nfluence processes of knowledge development and learning, including knowledge characteristics, clarity of objectives, partners’ identification with the overall objectives, identification of relevant tasks and methods that clarify how the objectives can be achieved, ‘strategic fit’ of pilot projects, and an adequate integration of project partners in project tasks. Additionally, the analysis of the cooperation and learning processes taking place in the projects also revealed parameters that lie in the process itself. These include the organization of the general exchange between project partners, the organization of the exchange of experiences from practical pilot projects, the organization of transnational feedback between partners and the organization of the transnational knowledge processing process. Finally, organizational learning requires ‘project learning’ to have taken place so that there is a learning object that can be transferred into the home organizations.

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242   V. Hachmann Potter, P. (2004) Generalizing from the Unique: Bridging the Gap between Local Learning and Transnational Learning in European Urban Research and Evaluation, KNi papers 01/04. Cologne. Rose, R. (1993) Lesson-­Drawing in Public Policy: A Guide to Learning across Time and Space, Chatham: Chatham House Publishers. Sahlin-­Andersson, K. (1996) ‘Imitating by editing success: the construction of organizational fields’, in B. Czarniawska and G. Sevón (eds) Translating Organizational Change, Berlin: de Gruyter, pp. 69–92. Sahlin-­Andersson, K. (2002) ‘Project management as boundary work’, in K. Sahlin-­ Andersson and A. Söderholm (eds) Beyond Project Management: New Perspectives on the Temporary-­Permanent Dilemma, Copenhagen: Copenhagen Business School, pp. 241–60. Salk, J.E. and Simonin, B.L. (2008) ‘Beyond alliances: towards a meta-­theory of collaborative learning’, in M. Easterby-­Smith and M.A. Lyles (eds) The Blackwell Handbook of Organisational Learning and Knowledge Management, Oxford: Blackwell, pp. 253–77. Scarborough, H., Swan, J., Laurent, S., Bresnen, M., Edelman, L. and Newell, S. (2004) ‘Project-­based learning and the role of learning boundaries’, Organization Studies 25: 1579–600. Stone, D. (2004) ‘Transfer agents and global networks in the “transnationalization” of policy’, Journal of European Public Policy 11(3): 545–66. Sydow, J., Lindkvist, L. and de Felippi, R. (2004) ‘Project-­based organizations, embeddedness and repositories of knowledge: editorial’, Organization Studies 25(9): 1475–89. van Bueren, E., Bougrain, F. and Knorr-­Siedow, T. (2002) ‘Sustainable neighbourhood rehabilitation in Europe: from simple toolbox to multilateral learning’, in M. De Jong, K. Lalenis and V.D. Mamadouh (eds) The Theory and Practice of Institutional Transplantation: Experiences with the Transfer of Policy Institutions – An Introduction to Institutional Transplantation, Dordrecht: Kluwer Academic Publishers, pp. 263–80. Wolman, H. and Page, E. (2002) ‘Policy transfer among local governments: an information-­theory approach’, Governance 15(4): 477–501. Zaucha, J. and Szydarowski, W. (2005) ‘Transnational co-­operation and its contribution to spatial development and EU enlargement: the case of INTERREG IIIB in Northern Poland’, Informationen zur Raumentwicklung, 11/12/2005: 731–40.

Part II

Nordic attempts at transnational learning

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8 Nordic learning Introduction to Part II Åge Mariussen

Introduction In the previous chapters we have seen how transnational learning relies on the ability of actors to translate external elements into something which fits together with emergent networks in the receiving country. These networks are likely to be located within a process of development, which is kept in motion by strategies of the national elite. In this chapter, we discuss the preliminary outcomes of experiments in Nordic learning, presented in other chapters in Part II. These findings are seen from the point of departure of two questions; first, what is the national strategy? And second, to what extent does this national strategy enable local or regional actors to follow experimental strategies on their own? The answer to this question is different in the West and in the East.

Be happy – stay competitive! In far-­reaching Nordic history, there are clear institutional differences between the two old kingdoms, Denmark and Sweden. These differences, referred to by Stein Rokkan (Flora et al. 1999) as the East–West divide, were reinforced by failed attempts to build a Nordic state through several wars. Swedes refused to be ruled from Copenhagen, and Danes never accepted the Swedish king. Instead of conquering each other, Danes and Swedes turned to the rest of the world. The kingdoms of Denmark and Sweden both have histories as empires. Whereas the Danish empire was sea-­based, and built on its control over Norway, Iceland, Greenland, the Faroe Islands, and beyond, the Swedish empire was land-­based, and wars were waged in what is today known as Germany, Finland, Russia, and other areas from the coast of the Baltic Sea deep into Turkey. Being the center in a sea-­based empire, Copenhagen, like London, developed a way of making decisions which was inherited from the Roman empire, based on codified directives from the king. These directives were distributed as letters from the king by captains of sailing ships who would deliver these letters to the colonies. In areas left outside the scope of the directives, locals had to make their own decisions, which, one might say, opened up possibilities for horizontal coordination. In the land-­based empire of Sweden, on the other hand, communication was based on

246   Å. Mariussen horse-­driven carriages. This enabled the use of sophisticated early Weberian mechanisms of hierarchical vertical coordination which included codified systems of monitoring the economy of the taxpayers, designed to extract a maximum sustainable amount of taxes to finance the king’s army. Decisions were not only based on Roman style codified top-­down directives, but they also included deliberative ­vertical–horizontal coordination, where orders from the king could be interpreted and negotiated with local administrative officials in meetings. In these negotiations, one important topic was the potential for local development which could increase the tax base. Drawing closer to the positive influence of the Reformation and Enlightenment, the Swedish state adopted an early, proactive approach to developing even some countries in the periphery, such as Finland. As the East–West divide today seems to be of less importance, a different dynamic has become significant. What used to be sprawling, spatially extended and heterogeneous empires have successfully transformed themselves into small, well-­ integrated national societies. Former Danish colonies, such as Norway and Iceland, have gained independence and created nation states with identities of their own. A former part of Sweden which was later controlled by Russia has invented a completely new national identity as Finland. This process of differentiation, formed through the creation of new borders and combined with the configuration and integration of national societies, is ongoing; Greenland has recently gained independence from Denmark, and groups of islands like the Åland Islands and the Faroe Islands have sophisticated local autonomy. This institutional conversion from two empires to several small states led to a long-­term process which still continues: national societal integration (see Chapter 5, this volume). And yet, at the same time, small-­scale national societal integration seems to go hand in hand with a continuous outward-­looking approach. Nordic societies are innovative and reform-­oriented, and they don’t usually turn into unchangeable and taken-­for-granted structures, or ‘black boxes’. Instead, there is an ongoing need to ‘change in order to preserve’. We believe that the basis of the (Nordic) model is a combination of collective risk sharing and openness to globalization. There is a mutually supportive interaction between these two elements: collective risk sharing helps make globalization acceptable to citizens, by facilitating adjustments that allow the economy to benefit from changing markets and to raise productivity and incomes. While having large public sectors, the Nordics are also embracing the market economy and actions to foster competition. Underpinning this virtuous interaction of security and flexibility is the widespread feeling of trust – among citizens and in public institutions – and a sense of fairness related to the egalitarian ambitions of the welfare state (education, social policy). (Andersen et al. 2007: 14) Small nations with open economies have to analyze what global changes mean to them. In short, they have to adapt and learn, in a different, faster and more profound way than larger countries.

Nordic learning   247 There is also an additional problem; the Nordic model is fundamentally different from the neo-­liberal model of the hegemonic countries in the West, the United States and UK. In a neo-­liberal society it is often assumed that happiness is an individual pursuit, and individuals seeking happiness have to assume the risks involved themselves. The state in these settings is scaled back in order to open the space for the individual. The result of this seems to be increasing social differences, leading to disintegration and growing sections of the population living in poverty. In small Nordic states, however, the point of departure is that happiness is a collective good which depends on the welfare state’s ability to provide a social safety net and a high level of public services for all citizens in all parts of the country. As we will see below, the services provided by the welfare state is carried out by local institutions, specifically the municipalities. In this context, the welfare state enables individuals to live rich lives, as the risks they take when they innovate are shared. This, together with the dominant ‘learning organization’ model, has created a Nordic micro-­level innovation system (see Chapter 3, this volume). The Nordic model is considered unbelievable by neo-­liberal critics, who base their critique strongly on the level of taxation which, according to them, is too high. The sustainability of welfare relies upon a globally competitive national economy, providing state incomes from taxes. The tension between the Nordic model and the hegemonic, neo-­liberal model creates a permanent state of emergence (see Chapter 1, this volume) within Nordic countries, and in order to protect their model, transnational learning has to go into permanent overdrive. In particular during the period of US hegemony, discussions regarding the ‘crisis of the Nordic welfare state’ have been on the agenda. Some consider the Nordic model a problem, not a solution. These discussions reached their peak in the 1990s crisis, when the model was severely tested by the global market. Some critics claim that the Nordic model was de facto abolished through the reforms which followed. However, it can also be argued that these reforms brought changes that were necessary in order to preserve, or defend, the core strategy. The reproduction of the common belief in the Nordic model (or the shared Nordic truth) relies upon a continuous loop of positive feedback between welfare and competitiveness. This self-­reinforcing process has to prove that it can sustain global market competitiveness. So far, it has been a success. Following several well-­known global indicators, the success story of the Nordic model is highly visible: Nordic countries, together with some other small countries, such as Holland, are characterized by a unique combination of factors relating to their success, such as high levels of GDP/capita, productivity, innovation, learning organizations, social integration and happiness, as well as a high standard of living, fertility rate, employment rate and level of welfare (Kristensen and Lilja 2009; Danson and de Souza 2012). The root cause of this success story is the self-­reinforcing loop which starts with a welfare state that absorbs the risks involved in modern life of its citizens, and by doing so, accepts an external threat to itself as a state. By absorbing risks, the state enables its citizens to take more risks, innovate and live autonomous

Â. Mariussen

248

lives with changing careers, where they may accumulate skills and competences. Individuals enjoy autonomous work in learning organizations, not in hierarchies with strict descriptions of positions. These learning organizations consisting of autonomous workers, again, boost innovation, productivity and the GDP. Finally, this secures the welfare state, because it generates a productive economy with a tax base which can pay for the welfare. In terms of economic achievements, there is a clear correlation at the Euro­ pean level, as illustrated below, between GDP/capita and learning organizations (Figure 8.1 is based on Mariussen 2008). The market learning indicator in this analysis is based on the Fourth European Working Conditions Survey. The aggregated statistics, in other words, are based on a sample of interviews with individuals. Nordic individuals, to a larger extent than individuals in other European coun­ tries, experience that their work is carried out in direct interaction with the cus­ tomer, and not the boss. They learn new things, apply their own new ideas, and receive paid training to upgrade their skills. These findings are consistent with theories of experimentalist learning developed by Charles Sabel and Peer Hull Kristensen (Kristensen 2009a, 2009b). These may be contrasted with work within hierarchical organizations, where role definitions, tasks and responsibil­ ities are defined by the boss. These forms of work organization, as pointed out by Kristensen, go hand in hand with the fast application of new technologies and new products, based on customer demand. Work relations are flexible, and open to projects based on new ideas (Kristensen 2009a). This outcome relies on a process where the welfare state assumes the risks, and enables individuals to be flexible, innovative and entrepreneurial.

50,00

40,00

30,00

20,00-

10,00

.00-2 ,0 0 0 0 0

-1 ,00000

0,00000

1,00000

2,00000

M arket learning

Figure 8.1 Market learning and GDP/capita, European countries (Mariussen 2008).

Nordic learning

249

As it is the state that ultimately absorbs the risks, a high demand on produc­ tivity and innovation is created. The result is the differentiation between (1) a stable core (the integration - productivity strategy), and (2) a set of related insti­ tutional layers which protect this strategy (such as labor relations, municipalities and innovation systems). The outer layers of institutions are exposed to conver­ sion (see Chapter 5, this volume), whereas the core layers are more protected from change. The core relation which guarantees the spatial distribution of welfare and the spatial integration of the nation is the link between the central welfare state and the local municipalities. Nordic municipalities have a political life of their own, with a democratically elected board, local political autonomy, and a right to tax their own population. In terms of social differences, the relations between unions and employer organizations are central, as unions restrict demands for wages that are too high, combined with policies promoting reasonable minimum wages, and creating possibilities for flexible industrial dynamism and innovation. There is an ongoing effort to increase productivity in welfare state production, which explains rapid processes of reorganization, as new models, such as agencies, come to be considered interesting (see Chapter 6, this volume). This includes the spatial system of welfare state provision, meaning the organization of the muni­ cipal sector (see Chapter 13, this volume). The safety net of the welfare state is crucial in enabling new and more flexible work contracts, and accordingly, more rapid processes of economic adaptation. In some Nordic countries, however, this has led to the deregulation of labor contracts, as protection against firing has

•conversion/ discontinuity

outer, adaptive layers

inner, protective layers

• public sector organizational reform s (m arket-hierarchy) • regional developm ent agencies

•continuity, evolution, conversion • syste m s o f innovation •la b o r relations • m unicipalities

•continuity

core strategy

Figure 8.2 Nordic institutional complementarities.

•co m p e titive n e ss • universal w elfare (social and spatial)

250   Å. Mariussen been removed, and labor markets have become more flexible. In the case of Danish flexicurity, labor flexibility has been combined with new strategies of regional labor market regulations, where, for example, the unemployed have increased access to education, improving their possibilities for finding new jobs. Differences between Nordic countries are particularly pronounced when it comes to innovation systems. Nordic countries consist of small, open economies, which are exposed to the shifting winds of the world economy. Given their small size, they have developed different economic specializations, with an orientation towards different markets, different industrial sectors, and accordingly different innovation systems (Mariussen 2005; Mariussen and Uhlin 2006). In relating these forms of learning to Virkkala’s and Mariussen’s discussion concerning Argyris and Schön (1978; Chapter 3, this volume), as well as to the typology of institutional evolution discussed by Mariussen and Virkkala (Chapter 5, this volume), we can draw up the typology presented in Table 8.1. At the central level, Nordic countries monitor each other in terms of the benchmarks of the welfare state strategy. In the outer layers, both the public and private sector are open for ‘fads and fashions’ generated by the Anglo-­Saxon model. As the case of New Public Management presented by Hyyryläinen (Chapter 6, this volume) illustrates, this may sometimes result in discontinuity.

Attempts to learn The chapters in Part II of this book are related to learning in what we have referred to as the ‘protective layers’, loop 2 and 3 (see Figure 8.2). In these case studies, the East–West dimension is resurfacing. As we will see below, this distinction is far from clear-­cut. In studying Nordic partnerships Östhol and Svensson (2002) conclude that the West–East dimension is not as important as before. Table 8.1  Typology of Nordic learning Learning

Innovation strategy

Institutional dynamics

Examples

Loop 1

Improving our current activities Developing varieties related to our current activities Reconfiguring the knowledge base and innovation system Doing something completely different, applying new rules

Continuity

Learning between policy-makers

Loop 2 Loop 3 Loop 4

Evolution, layering Layering, conversion Discontinuity

Nordic countries learning from each other Nordic countries learning from the Anglo-Saxon model (New Public Management, Chapter 6)

Nordic learning   251 Indeed, as pointed out by Kristensen and Lilja (2009), and discussed by Virkkala (Chapter 9, this volume), there is a convergence between good practice regional innovation systems in Denmark (south west) and Finland (north east). Some of the other chapters in Part II of this book point in a different direction. In the cases of tourism (see Chapter 11 and Chapter 12, this volume) and industrial restructuring (Chapter 10, this volume), we find that the combination of local fragmentation and national coordination of innovation systems lead to local fragmentation. These cases suggest that the eastern dimension is still alive in Finland. Kenneth Nordberg (Chapter 10, this volume) discusses some experiences of restructuring in the industrial town of Kaskö, a small municipality in Finland. Regional structures are weakly developed in Finland and innovation policy is dominated by organizations on the national level (see below). The Kaskö case illustrates a situation where local actors are not able to compensate for or prevent industrial restructuring leading to higher unemployment. This is contrasted with similar industrial towns in Norway, where institutional conditions as well as legislation create possibilities for more proactive local responses to industrial restructuring. Nordberg also draws attention to the ongoing efforts between Norway and Finland to engage in learning, based on the SECI method (Table 8.2). Here, through a sequence of several bas, an effort is made to identify elements which may be transferred through a process of investigation, starting with comparative case studies, and developing into an analysis of different national level rules concerning local restructuring. Dieter Müller and Ulrika Åkerlund (Chapter 11, this volume) discuss successful destination development in Northern Sweden, with the case of Gold of Lapland as their point of departure. The preconditions for autonomous local actor strategies in creating local entrepreneurial networks for driving destination development seem to be better developed in Sweden than in Finland. While the trajectory for tourism in Sweden has clearly been based on a high level of local entrepreneurial coordination and self-­organization, enabling the development of sophisticated destination development institutions, the strategy of local actors in Finland has been more focused on the conference market. Not even gaining World Heritage status has led to new offensives in the development of tourism. Table 8.2  Case studies Industry

Tourism

Municipalities

East

Nokia, Finland (this chapter) Kaskö, Finland

Swedish municipal    reform 1970

West

Oulu South, Finland Skive, Denmark

World Heritage    Kvarken, Finland Tourism in Vasa,    Finland Tourism in Sweden

Yläkemijoki, Finland

252   Å. Mariussen Both in tourism and industrial restructuring, the Finnish cases suffered from a lack of attention from a proactive state. In the absence of state level strategies, there was simply no emergent receiver at the local level. This is surprising, since the initiatives in Sweden were based on EU financing mechanisms which were also available in Finland. The findings are consistent with the evolution of Finnish innovation policy discussed below. Accordingly, both in tourism and industrial development, it has become obvious that the combination of a weakly developed regional administrative system and a selective central level strategy restricts the potential for local actors to find new solutions together. One of the solutions to this problem is seen to be ongoing municipal reform by the government. In the discussion of municipal reform in Vaasa, local actors in Finland tried to learn municipal organization from Umeå in Sweden. However, as discussed by Mariussen in Chapter 1 of this volume, transferring Swedish models to Finland relied upon central level decisions. The municipal organization of Yläkemijoki in Finland, where local actors were enabled to find new solutions, offers an example of an alternative situation. In the struggle to defend the strategy of ‘happiness and welfare’ in the face of global economic competitiveness, the welfare state has a crucial ally, the municipalities. A major reason for why Nordic economies may be able to explore global opportunities much more efficiently than other economies may reside in their constitutions, which tend to hand over major responsibilities to local levels both through the division of labour among state, regions and municipalities and among the local and central levels of unions and employers’ associations. . . . Both functionally and politically, local empowerment of this kind helped make the construction of the Social Democratic welfare state possible. First, the resulting infrastructure gave local governments the administrative, legal, and fiscal capacities to pursue the universalistic, egalitarian aspirations of the welfare state. Second, in conjunction with the strong national system of local parties that had emerged across the country . . . empowered local government provided a vehicle to mobilize local support for the welfare state. National legislators in the coalitions of Social Democratic and Agrarian parties that passed welfare legislation could trust the political leadership in the local governments to carry out new welfare-­related policies. (Kristensen 2009a: 47) In terms of trans-­Nordic learning of municipal organization, Katajamäki and Mariussen (Chapter 13, this volume) point to two different outcomes. In the case of Vaasa – Umeå, the outcome was that the Swedish model of local democracy within the framework of large municipalities did not fit as a solution to the problems of municipal organization in the Vaasa region. The Swedish model is based

Nordic learning   253 on local neighborhood councils (or sub-­municipal district administration) appointed by the municipal board, based on the principle of party representation. In the Vaasa region, cleavages within party politics and language are overlapping, creating complex maps in the political landscape. The main line of division is between the Swedish-­speaking localities where a liberal party for Swedish language rights (SFP) has a majority, and rural localities governed by the agrarian center party (Keskusta), dominated by Finnish-­speaking voters. In this context, local actors who evaluated the relevance of the Umeå model in Vaasa quickly concluded that a system of local democracy, meaning that different localities would have boards appointed by the central municipal board, based on the political representation of parties, would not have worked in the larger Vaasa region. Yläkemijoki, by contrast, represents a successful case of transnational learning, where the above-­mentioned problems were solved. In Yläkemijoki, local representatives were selected outside the party system all together, based on participation in local bottom-­up mobilization groups that were developed within the framework of national rural policies. In the framework of the overall methodology of transnational learning presented in this volume, this outcome illustrates the significance of the relation between two phases in the SECI process: (1) translation and (2) know-­who. By translating the Swedish model Yläkemijoki managed to come up with a solution which could be applied in Finland, specifically by connecting the implementation of the model to an emergent set of actors, and mobilizing it through rural policies. The configuration of the relation between the state and the local institutions, which together make up the welfare state project, may, as pointed out by Jessop (2008), be seen in relation to the strategies of the elite, as well as to the relationship between different actors and institutions within it. In a broader context, the above-­mentioned findings illustrate some deeper structural differences between Sweden and Finland. In the case of Sweden, the driving force behind the institutional conversion from authoritarian and autocratic rule of the king to democracy and welfare state was the development and strengthening of a new layer, the representative party system, which is organized through the parliament and functions on a national level. This system was constituted through the institutionalization of strong national parties, which fought for and created democracy. This has given the parties a strong position as institutions in Swedish political life. In other words Swedes vote for parties, and party programs, not people. In this centrally initiated twentieth-­century project, modernization and welfare were seen as top-­down processes. Regions were planned and developed through the setting up of cities at the junctures between roads, rivers, railroads and harbors. Universities became strong regional centers managing flows of knowledge, and modern welfare state services, directing them from the capital into other parts of the country. The result of this process was a spatial structure where the core cities with universities were considered legitimate regional centers. In the period of Swedish hegemony between the 1950s and 1960s, when Sweden was considered the best welfare state in the world, it was based on this

254   Å. Mariussen spatial structure. The expansion and modernization of the welfare state led to the municipal reform between 1952 and 1974, when 2,498 municipalities became reduced to 278. Within these larger units, legitimacy could no longer be based on local identities and spatial proximity between politicians and voters. Instead, local legitimacy became increasingly based on indirect democracy and representation through parties. This institutional conversion enabled the withering away of local identity as the basis of political legitimacy. Within the framework of the 278 municipalities, the municipal hierarchy made it possible for all citizens to access high quality services. The institutional conversion was balanced by a process of layering, the creation of local councils, which were elected by the central council. The successful translation and implementation of the Swedish local council model in Yläkemijoki was based on ‘know-­who’, the discovery of legitimate mechanisms for appointing local boards outside the party system. This begs the question of why regional governing institutions in Finland have such a weak position while in Sweden their position is much stronger (Table 8.3). The roots of this difference go back to Tsar Alexander. Due to Russia engaging in war against Napoleon, Tsar Alexander was rewarded with the then Swedish area called Finland. Under Tsar Alexander, Finland had wide-­reaching autonomy, which enabled the development of the Finnish language, as well as modern democratic institutions, primarily the Finnish state, which, accordingly, was constituted independently from the Swedish state. In this setting, identities were local, connected to the village and the community of the church, rather than to the larger regional landscape (Paasi 1995). As the result of a municipal law of 1865, every congregation was given the right to form a municipality (Leinamo and Siirilä 2009). In this context, attempts to develop strong regional institutions failed. This is why the current form of institutional organization, based on the regional council, is weak. These regional cases are contextualized by national innovation systems, which enable regional actors to innovate to varying degrees.

Innovation systems In the post-­World War II years, Finland and Sweden were closely linked, with Sweden as the successful and hegemonic country with a sophisticated welfare state, and Finland as a fast learner, catching up. Denmark, in the west, had a somewhat different point of departure. There industrialization started with the food industry and agriculture. Agriculture provided craft skills and access to continental consumer markets, and this was combined with institutions of knowledge sharing and the integration of tacit and codified knowledge. Following the democratic Grundvig tradition of popular, higher level education combining theory and practice, the ‘Folkehøyskole’, a system of popular schools for practical and theoretical education related to agriculture and rural industries, was set up. This became the institutional framework for not just the food sector, but also for the education system more generally, shaping the national systems of learning and

Tourism

Industry

Municipal organization

Kaskö, national Gold of Lapland

Kaskö, regional

→ →   → ongoing →

Know-how Integration and change

Yläkemijoki Kaskö, local

Know-what and know- Know-who why Evaluation and Translation and selection abduction

→

Know-how Socialization

Vasa

Table 8.3  SECI sequences in case studies

256   Å. Mariussen innovation as a whole. As food production became modernized, a formidable cluster of related sectors, among them mechanical industries, evolved. Even though this cluster has resulted in several other strong export industries, food is still the most important export sector. Other examples today are electronics, machinery and medical instruments. The success of the Danish economy is based on wide-­ranging craft-­based networks, which have become powerful instruments for collective learning and knowledge sharing. Within this context, firms become fairly open systems, which are forced to compete in order to access the best skilled workforce around. The firm boss has the role of facilitator, whereas operators are crucial in the learning process. Danish firms are also not slowed down by labor market regulations protecting employer rights. Instead, mobility is enabled by a welfare state, which removes the risk of being unemployed by offering generous welfare state benefits. The importance of agriculture in Denmark in the west was comparable with the importance of iron, ore and forestry in Sweden in the east. Evolving from being specialized in the extraction of raw materials, such as steel, today Sweden has a highly diversified export base, with up to nine strong manufacturing sectors with net export surplus. This heterogeneity reflects a technology-­driven industrial economy, with a high input of research and development (R&D) in product development and in the improvement of several important industrial sectors. Like Germany, Sweden combines a high input of R&D with a low output in terms of new products. This is indicative of well-­developed sector innovation systems with a high use of R&D in product upgrading. Swedish corporations share many similarities with advanced German firms; they have sophisticated and advanced knowledge bases, highly developed industrial organizations, owners with a deep interest in and commitment to technological development, knowledge-­driven strategies, and a superb capability for solving complex problems of technological development, often through development coalitions between raw material processors and their sophisticated suppliers. During the 1990s, Sweden demonstrated a high capacity for new path creation in the areas of biotechnology and information technology. Through a strong emphasis on new path creation and intramural R&D investments, Swedish corporations tend to upgrade employer skills, rather than enhance labor market mobility. The Swedish tradition is a combination of formalized, deep and long-­term industrial networks, called ‘development blocks’, combined with university–industry networking, and more recently, innovation policies coordinated by a specifically dedicated agency, VINNOVA. Through cross-­sector relations and contacts VINNOVA selects networks, funds R&D and constructs new innovation systems. The result of the combination of R&D-­intensive strategies and market learning is a fairly high level of R&D investments. In order to gain a better understanding of the case of Finland, it is necessary to take a look at its geopolitical situation after World War II, when Finland gained a special position in relation to the Soviet Union. Finland was part of the Free World – while also having access to the planned economy of the east at the same time.

Nordic learning   257 As part of the process of promoting national independence from the Soviet Union, Finland looked to OECD policies in general and Swedish policies and institution-­building in particular. The make-­up of major Finnish institutions was copied from Sweden, and the result was a layering of three strong national level institutions. First, the Finnish National Fund for Research and Development (SITRA) was established in 1967 to support R&D in private firms. Second, the Science Policy Council (later called the Science and Technology Policy Council) was established in 1973. Third, the National Technology Agency (TEKES) was established in 1983, based on national consensus regarding the necessity for technological development between politicians, industrialists and trade unions (Lemola 2002). The long-­term focus of these institutions was to increase investments in R&D in various parts of the innovation system, and in particular in private industries. Thus, strengthened by their access to Western technologies and Western-­style technology policy, Finland developed electronic industries and other highly innovative sectors, and supplied the Soviet market. The result was long-­term growth of the mechanical and electrical equipment industries. In the latter half of the 1980s, Finnish R&D investments continued to grow. This was the background to the shock generated in the global market in 1990, when the Soviet market disappeared. At this point in time, Finnish corporations were already experienced in using R&D to recapture market shares, and as they realized they had to turn to the Western market, this capacity was taken advantage of. The idea of the National Innovation System policy (NIS) emerged in the OECD in the late 1980s – and was adopted by the EU in the Lisbon Treaty. NIS used to be a policy framework, linking input (R&D and other kinds of knowledge) with new innovative products and other indicators measuring competitiveness (output). It provided a line of arguments for supporting national innovation policies promoting R&D investments. Finnish delegates, such as the Nokia manager Ormala, were active in promoting NIS in the OECD group at the end of the 1980s. In 1990, Mr. Ormala was well aware of the new product he was about to introduce on the market, the hand-­held mobile phone. However, he needed support in order to develop the technologies, institutions and economic actors needed for turning the wireless phone into a full blown operational technology system accessible to a broad consumer market. The NIS policy paradigm provided the solution. In 1990, following the NIS paradigm, the Science and Technology Policy Council, a core institution using R&D policy, became a core element in national policy-­making, directly linked to the president. This institutional framework put all institutions and sectors in a position where they were working for the same objective, the NIS. It enabled a concentration of national resources on NIS policies, promoting R&D investments. Combined with the unfolding Nokia success story, NIS became hegemonic in Finland. The swift translation of this approach in order for it to fit into the heart of the policy-­making process in Finland is explained by Moen and Lilja (2005) with reference to the capacity for horizontal coordination and decision-­making in

258   Å. Mariussen Finland. Moen and Lilja explain Finland’s success as related to the forms of inter­sector coordination, where technology and innovation policy became paradigmatic through discursive institutions, mobilizing cross-­sector elites. Such factors helped to override the rigidities of the institutional complementarities of neo-­ corporatism. Instead, it was found that cross-­sector ties facilitated the relocation of horizontal coordination. The later phases of the exploitation of the new paradigm are described by Moen and Lilja as characterized by the evolution of an assembly system using sub-­contractors, national and global networks, and engaging in the development of smaller internal divisions. In 2003 an attempt was made to create an ‘extended enterprise’ – organizing broad global sector coalitions. The Finnish success story of the 1990s helped to develop NIS as a platform in the 2000 Lisbon policies. In the 1990s, the broader global growth of ICT was also emerging in several other European countries. Growth in the ICT clusters in Europe increased as US companies invested in Europe, exploiting labor markets with highly skilled young ICT experts. Through the Lisbon process in 2000, NIS became hegemonic in EU innovation policies, aimed at supporting European high-­tech competitiveness in the face of US competition. However, in the Pro-­ Act conference, in Tampere, Finland, in March 2006, in the closing words of the plenary session, Mr. Ormala stated that the question of how to promote innovation is more complex than NIS seems to suggest. The point Mr. Ormala was making was, quite understandably, related to globalization. In the current phase of development of the ICT technology national innovation systems are not able to deliver the ideas or technologies that new Nokia products need in order to become globally successful. As pointed out by Lundvall (2006), another NIS founder in Tampere, certain distortions have come to haunt NIS. For example, too little attention has been given to the analysis of organizational learning, and too much attention to easy-­to-measure indicators of R&D, patents, etc. The Lisbon policies were polices of convergence, where all member countries and industrial sectors were supposed to be benchmarked and climb the same ladder of increasing R&D investments. In the case of NIS, this ladder was GERD, an indicator measuring public and private R&D investments and their share of GDP, with 3 per cent as the overall objective, set in Barcelona. In the latter part of the 1990s, private and public R&D investments also started to speed up in low cost countries, such as China, India and several others. In particular China demonstrated a strong ability to learn how to manufacture electronics. Accordingly, foreign direct investments (FDIs) which during the 1990s were directed at European countries, now started to pour into Asia. Furthermore, after 2000, not just electronic manufacturing but also R&D was moving east. The mobile phone industry has moved into a phase characterized by continued product innovations, but also, importantly, of cost-­cutting and efficiency enhancing measures, where scale and efficiency of production have become more and more important in making mobile phones economically accessible to an increasingly growing market. NOKIA started to cut back its domestic investments in R&D, and focus on ‘riding the paradigm’ (Doz and Kosonen 2008).

Nordic learning   259 At the Pro-­Act conference in Tampere in 2006 the representative of the Minister of Trade and Industry mentioned the relocation of manufacturing and internationalization of research as an unexpected problem, which undermined the strategy of national innovation system building. These challenges had not been anticipated 15 years earlier, when the NIS paradigm was founded. Six years after the Pro-­Act conference, in 2012, Nokia got a new CEO with a background in Microsoft. Stephen Elop presented the following statement to his employees in the ‘burning platform’ memo: And the truly perplexing aspect is that we’re not even fighting with the right weapons. We are still too often trying to approach each price range on a device-­to-device basis. The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-­based services, unified communications and many other things. Our competitors are not taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyze or join an ecosystem. (Elop 2012) The strategy of Elop and Nokia was obviously to go into learning loop 3. As discussed by Mariussen and Virkkala in Chapter 5, this move may be dangerous. The irony is that Finland started with an attempt to copy Sweden, and is now, as pointed out by Kristensen (2009b), converging toward Denmark: Thus Finland has over the last decade, with support from the EU-­regional funds, created a regionally distributed system of vocational training centres that could be used as tools for gradual regional transformations and become tools for active labour market policies in the future. Simultaneously Denmark, with its Administrative Structural Reform merging municipalities and establishing five regions in place of many more counties, have set up regional Growth Forums intended to initiate R&D projects and collaboration among universities, training institutions, and regional business communities. The latter could become a locally initiated way of getting some of the Finish system, but without running the risk of binding it to the Finnish form of centralized initiative and coordination. (Kristensen 2009b: 329) Two cases that illustrate the East–West convergence are discussed by Virkkala in Chapter 9. Another similar case of local actors discovering new solutions is discussed by Katajamäki and Mariussen in Chapter 13, with reference to the locality of Yläkemijoki. The successful case of transnational learning relates to rural development policies, which encourage strategies for local mobilization.

260   Å. Mariussen

References Andersen, T.M., Holmström, B., Honkapohja, S., Korkman, S., Söderström, H.T. and Vartiainen, J. (2007) The Nordic Model: Embracing Globalization and Sharing Risks, Helsinki: Taloustieto. Argyris, C. and Schön, D. (1978) Organizational Learning: A Theory of Action Perspective, Cambridge: Cambridge University Press. Danson, M. and de Souza, P. (2012) ‘Nations and regions in northern Europe’, in M. Danson and P. de Souza (eds) Regional Development in Northern Europe, Oxford and New York: Routledge, pp. 98–117. Doz, Y. and Kosonen, M. (2008) Fast Strategy: How Strategic Agility Will Help You Stay Ahead of the Game, Harlow: Wharton School Publishing. Elop, S. (2012) Nokia CEO in the ‘burning platform’ memo. Flora, P., Kuhnle, S. and Urwin, D. (eds) (1999) State Formation, Nation-­Building and Mass Politics in Europe: The Theory of Stein Rokkan Comparative European Policies, Oxford: Oxford University Press. Jessop, B. (2008) State Power, Cambridge and Malden: Polity Press. Kristensen, P.H. (2009a) ‘The co-­evolution of experimentalist business systems and enabling welfare states: Nordic countries in transition’, in P.H. Kristensen and K. Lilja (eds) New Modes of Globalizing: Experimentalist Forms of Economic Organization and Enabling Welfare Institutions. Lessons from the Nordic Countries and Slovenia, Helsinki: Helsinki School of Economics, Publications B-­100, pp. 7–53. Kristensen, P.H. (2009b) ‘Conclusion: developing comprehensive, enabling welfare states for offensive experimentalist business’, in P.H. Kristensen and K. Lilja (eds) New Modes of Globalizing: Experimentalist Forms of Economic Organization and Enabling Welfare Institutions. Lessons from the Nordic Countries and Slovenia, Helsinki: Helsinki School of Economics, Publications B-­100, pp. 296–337. Kristensen, P.H. and Lilja, K. (eds) (2009) New Modes of Globalizing: Experimentalist Forms of Economic Organization and Enabling Welfare Institutions: Lessons from the Nordic Countries and Slovenia, final report of the project ‘Transnational learning through local experimenting (Translearn)’, EU-­funded 6th Framework program, Copenhagen and Helsinki, February 2009. Leinamo, K. and Siirilä, H. (2009) ‘Kommunernas samarbete i Finland – generella synpunkter och praktiska exempel’, in A. Lidström and H. Katajamäki (eds) Kan Kommunerna lära av varandra över Kvarken: Exemplen kommundelsnämnder och kommunsamarbete. Forskningsrapporter I statsvetenskap vid Umeå universitet 2009: 1. Lemola, T. (2002) ‘Convergence of national science and technology policies: the case of Finland’, Research Policy 31: 1481–90. Lundvall, B.Å. (2006) ‘Innovation pressure – rethinking competitiveness, policy and the globalized economy’, a key note speech in the international conference of Finnish research programme ProACT on innovation, Tampere, March 15–17, 2006. Mariussen, Å. (ed.) (2005) Nordic Business and Innovation Systems, Nordregio report. Stockholm: Nordregio. Mariussen, Å. (2008) ‘Specialization and heterogeneity in small national economies: the Nordic Countries’, in E. Carayannis, A. Kaloudis and Å. Mariussen (eds) Diversity in the Knowledge Economy and Society, Cheltenham: Edward Elgar, pp. 245–63. Mariussen, Å. and Uhlin, Å. (eds) (2006) Trans-­national Practices: System Thinking in Policy Making, Stockholm: Nordregio. Moen, E. and Lilja, K. (2005) ‘Change in coordinated market economies: the case of

Nordic learning   261 Nokia and Finland’, in G. Morgan, R. Whitley and E. Moen (eds) Changing Capitalisms?, Oxford: Oxford University Press, pp. 352–79. Östhol, A. and Svensson, B. (eds) (2002) Partnership Responses – Regional Governance in the Nordic States, Nordregio Report 2002: 6, Stockholm: Nordregio. Paasi, A. (1995) Territories, Boundaries and Consciousness: The Changing Geographies of the Finnish-­Russian Border, Chichester: John Wiley.

9 Industrial development and competence building Learning across converging trajectories Seija Virkkala Introduction The previous chapter pointed out that an important characteristic of the Nordic model has been the combination of collective risk sharing and the international openness of the business sector. The sustainability of welfare and inclusion relies upon a globally competitive national economy providing state incomes from taxes. In the Nordic model, there is a positive feedback loop between welfare and competitiveness. At the same time, small nations with open economies like the Nordic countries have to analyze what global changes mean to them. Peripheral areas within these countries have to adapt to the challenges of globalization by developing regional/peripheral innovation systems and competence building. This chapter focuses on educational institutions and their role in industrial development, especially in peripheral regions. Analyzing eight different higher education institutes (HEI), ranging from small university colleges to large national universities, in different types of regions within five Nordic countries, Lindqvist et al. (2012) found considerable differences in their strategies and roles regarding regional development. This demonstrates that while HEIs have an impact on regional development in all types of regions, their exact role in relation to this varies, and therefore specific measures have to be adapted in relation to the different regional conditions. This chapter discusses good practices in the context of Finnish and Danish educational institutes promoting competence building and regional development. Although these cases are positioned differently with regards to the national educational system, their impact on regional development is similar. The examined good practices of competence building, and the regions are: • •

Innovative cooperation between Centria Ylivieska and the SMEs in Oulu South, Finland. The Skive Technical Institute and competence-­building activities within the furniture industry in Midwest Jutland, Denmark.

Both are educational institutes that have to deal with local development, and they cooperate closely with local firms. Both deal with knowledge and competence building among firms in the regions in question, but the ways this is done

Industrial development   263 are different. Although both have many educational programs, the main focus in this chapter is on the woodworking sector in Oulu South, and furniture manufacturing in Midwest Jutland. The Finnish case is a research and development unit of an educational institute (university of applied sciences), while the Danish case, the Skive Technical Institute, does not engage in research and development outside of the education sphere. In the Finnish case the emphasis is on engineering and technological development, while in the Danish case more importance is given to educational programs related to innovation and design, aimed at improving the furniture industry. Despite differences between the two cases, when it comes to the regional and national context, as well as institutional activities and focus, the aims of the two can broadly speaking be viewed as parallel. Both institutes aim to enhance the innovation ability of SMEs in their respective areas. The research questions are: • • • •

How do these educational institutes cooperate with small firms in their respective areas, and especially what is their impact on the regional development path (socialization, externalization)? To what degree are these two cases/good practices embedded in their respective contexts, especially in relation to regional innovation modes (externalization)? What are the differences and similarities between the cases (abduction)? What can they learn from each other (translation and evaluation)?

The cases have been examined according to the principles of good practice analysis introduced by Mariussen and Virkkala in Chapter 5 of this volume. The research questions will be examined in the framework of the SECI process, presented by Mariussen and Virkkala in Chapters 3 and 5 of this volume. A good practice report is an explicit or codified form of tacit knowledge in which the core mechanisms behind the good results are extracted from their context and presented as an archetype. This archetype can then be evaluated in a learning seminar in another region and country, and translated into the context of the receiving region. The explicit knowledge from another region, and the archetype that it forms, can then be combined with the local elements of the receiving region. According to the SECI process in this phase one form of explicit knowledge is combined with another. The last phase of the SECI process consists of the internalization of the new explicit knowledge by the individuals and actors in the receiving region. The role of educational institutes in regional development will be examined with reference to the innovation modes they use, i.e. whether their innovation system is based on the Science, Technology and Innovation (STI) mode, the Doing, Using and Interacting (DUI) innovation mode, or a combination of the two. The role of educational institutes varies depending on these circumstances. In the third subsection, after the Finnish and Danish good practices have been presented, the similarities and differences between the two will be discussed. This phase can be called abduction since the comparison helps us to understand

264   S. Virkkala how these practices can be applied in the other region, i.e. the Finnish case in Midwest Jutland and the Danish case in Oulu South. Finally, the transnational learning potential of each case will be examined through the evaluation and translation of the good practices. In this chapter the translation will be made by using an analytical framework consisting of different innovation modes. The description of the Skive Technical Institute is based on Lindegaard’s observations (2006a and 2012), and that of Centria Ylivieska on those of Niemi and Virkkala (2006a) and Virkkala et al. (2012). The two good practices in question have been analyzed in the PLIP project (Peripheral Localities and Innovation Policies, see Virkkala and Niemi 2006) in 2006, and partly updated in 2012.

Educational institutes and regional development Learning and knowledge creation are often seen as the principal drivers of regional development, and educational institutes and universities are considered key actors in a knowledge-­based economy. Literature on the topic focuses especially on the role of higher educational institutes (HEIs) and universities in regional innovation systems, since knowledge creation and dissemination has traditionally been carried out by them. According to Goddard and Vallance (2011) emphasizing the role of universities in the regional knowledge economy implies a focus in regional development policy thinking on development as an endogenous process. Attention has also been given to the wider contribution of universities to regional, cultural and community development (Lindqvist et al. 2012: 9). The role of educational institutes can be analyzed with the help of innovation modes, which describe the basic knowledge input needed for the creation of knowledge and innovation processes within a region. The literature on educational institutes and regional development seems to emphasize especially the Science, Technology and Innovation (STI) mode of innovation, based on the production and use of codified scientific and technical knowledge. A lot of research has focused on the position of universities as producers of scientific knowledge, ‘knowledge factories’, from which knowledge flows and can be commercialized as spin-­offs in new start-­ups, or used in existing local firms (see, for example, Uyarra 2010). Only a few studies consider the Doing, Using and Interacting (DUI) innovation mode important with regards to educational institutes’ engagement in regional development, even though innovation in most regions in the EU is more about knowledge absorption through education, training and business services than about knowledge generation through scientific effort (Grillo and Landabaso 2010). The DUI relies on informal processes of learning and competence building, as well as on experience-­based know-­how. The DUI mode of innovation is a user or market-­driven model based on competence building, and it produces mostly incremental innovations. In the DUI mode knowledge is acquired for the most part on the job, as employees face ongoing changes and are therefore confronted with new problems. The DUI learning mode refers to ‘know-­how’ and

Industrial development   265 ‘know-­who’ which are tacit (Jensen et al. 2007). Knowledge that is crucial in innovation processes within the DUI mode is formed through a combination of the employees’ education and work-­life experience. The knowledge base is developed by individuals and workers’ teams through in-­house problem-­solving, carried out, for example, when firms cooperate with customers who are facing new problems, and when suppliers engage in innovation activity (Jensen et al. 2007). The STI mode gives high priority to the production of ‘know-­why’ and it is important in firms where analytical, science and technology based knowledge dominates, as it focuses on the ways firms use and further develop science and technology. In the STI mode both knowledge inputs and outputs generated through innovation processes, such as scientific articles and patent descriptions, are usually codified. According to Jensen et al. (2007) combining the two modes of innovation is highly useful not only at the firm level, but it often produces a higher economic performance also at the regional level. Generally, learning is effective when new elements are combined with the existing knowledge structure. In industrial districts characterized by DUI/STI, learning and innovation is based on experience, apprenticeship and problem solving, as in the DUI mode, but this is combined with science and technology, which are applied widely in the production system (see Table 2.6). Regional and local development can have endogenous or exogenous sources and the role of educational institutes varies respectively. The territorial approach emphasizes the importance of endogenous sources of development, i.e., locally produced knowledge and local competences are considered important for regional growth, and intraregional networks are seen as a principal instrument for learning. Regional and local development depends on the ability of educational institutes to upgrade local competences and to produce economic knowledge that responds to the needs of local clusters and firms. The role of higher educational institutes (HEIs) has been emphasized especially in the regional innovation system approach and in the notion of triple helix. The triple helix approach sees HEIs as catalysts of interaction and negotiation among three spheres: universities, industry and government (Etzkowitz and Leydesdorff 1997; Etzkowitz 2000). The triple helix model emphasizes collaboration between these three institutional spheres and innovation is seen as an outcome of their interaction. Each institutional sphere has its traditional function, as well as a specific role in relation to the other spheres (Etzkowitz et al. 2008; Lindqvist et al. 2012). Universities and educational institutes can be generative and proactive and take on a leadership role in the triple helix, adopting some of the traditional roles of industrial formations and the government. HEIs contribute to industry in a number of ways, for example, by enabling entrepreneurs to create firms and by circulating personnel across the different helices, and thus they have a leading role in regional innovation. In a triple helix, industry and regional governance institutions may have different roles. In the industry-­led model of triple helix, HEIs cooperate with industry in product and process

266   S. Virkkala innovation. On the other hand, in the government-­led model of triple helix, HEIs assist the development of existing industries and the creation of new industries at the request of the government (Lindqvist et al. 2012). According to the exogenous approach an individual region cannot provide all necessary knowledge bases for knowledge acquisition, but also global links are needed. One aspect of globalization has been the growing importance of globally dispersed knowledge, which is transferred even between distant regions (Malecki 2010; Asheim 2012). Due to the growing importance of globally dispersed knowledge innovation systems are no longer regional, but instead they have become global-­regional. Universities and other HEIs can be members in regional actor networks as well as transnational learning networks, and they often act as junctions in global-­regional innovation systems. The knowledge acquired in transnational learning networks should then be captured and adapted to regional needs. This means that also HEIs need the capacity to combine external resources and influences with local needs in teaching, research and other activities articulated by regional actors through regional development strategies (Charles 2006; Benneworth and Hospers 2007). Educational institutes can trigger local development by enhancing human skills and learning capabilities. Further, due to multiplier effects they can be drivers of cumulative causative development in regions. When there is a high level of human skills there is also a higher incentive to establish new firms, and thus increase employment in the region. A region with a cluster of firms rooted in a particular technological paradigm or industrial sector can be in danger of decline if the paradigm is superseded by other technologies and products. In such a situation, a possible solution is that regional actor networks try to be proactive in renewing the industrial base by exploring new ways of developing and utilizing knowledge, in order to create a new development path (Lindqvist et al. 2012). A new development path can be created endogenously: HEIs can for instance carry out research and implement educational programs in new sectors which do not respond to any demands of the existing actors or clusters (Table 9.1). Further, educational institutes can encourage staff and students to start a business in a new sector. Academic spin-­offs are an important mechanism for diffusing new research and innovation within the local economy. The creation of firms can be facilitated from within education institutes. A new development path can also be created through regional actor networks engaging in transnational learning. Here educational institutes can have an important role as transfer agents, as they can participate in transnational learning networks and thus have a wide international contact network. One way of exploring the prospects for a new development path is to use external inputs, which can be, for example, good practices from other regions. This requires the externalization (disembedding) of the good practice of the other region, its evaluation and translation, as well as the combination of the original elements of the good practice with elements in the new region. Finally, the new knowledge must be internalized by individuals participating in the regional actor networks,

Industrial development   267 Table 9.1 Role of educational institutes: endogenous vs. exogenous development, stability vs. change Development path (time)/ space

Endogenous development

Exogenous development

Strengthening existing development path

Reproduction, competence building Educational institute is integrated in regional learning network Regional triple helix New local knowledge creation and competence building generating elements for new development path

Regional educational institute gathers globally dispersed knowledge reproducing and strengthening existing development path Transnational learning inputs provide elements for new development paths through SECI process

Seeking new development path Breaking the existing development path

as well as shared more broadly in the group of regional actors. This process of knowledge conversion is called the SECI process. However, in order to use the externally gained and internally converted (tacit-­explicit-tacit) knowledge in regional development actors need to possess both absorptive and development capacity, meaning the ability to gain new external knowledge and use it in local development operations. In this chapter, the focus will be on comparing the role of educational institutes in the development of two different peripheral regions, as well as exploring their learning potential. This will be done using the SECI framework, used in this book as the main approach with regards to learning transnational learning. The analytical base for comparing the two cases focuses on local modes of innovation, which are related to regional development paths as well as to endogenous and exogenous development sources. However, in order to compare and explore the learning potential of the two cases a good practice analysis is also needed. The good practice reports used in this chapter have been made by researchers participating in the process (Lindegaard 2006a; Niemi and Virkkala 2006a).

Externalization of good practices related to competence building and industrial development Innovative cooperation between Centria Ylivieska and the SMEs in Oulu South The partners identified in the good practice report are Centria Ylivieska Research and Development, which belongs to Centria University of Applied Sciences, and small and medium size enterprises (SMEs) in Oulu South. The region of Oulu South is located in the southern part of northern Ostrobothnia, about 100 km south of the city of Oulu which is the regional capital of northern Finland. Oulu

268   S. Virkkala South lacks a clear regional center, but is instead a networking unit formed by three equally large sub-­regions. Ylivieska is the biggest city in the area with 14,000 inhabitants. The population of Oulu South has declined since 1995: 87,500 inhabitants in 2005, with the population density being 7.8 per km2. It is an agricultural and forestry area with hardly any process industries. Instead, a certain number of small machine workshops have evolved in the region. The service sector (including trade) is smaller than the national average in Oulu South: 54.2 percent of employment is in the service sector, compared to the corresponding figure of 63.6 percent in Finland (Virkkala 2007; Jokela et al. 2010). While only a relatively small proportion of the population has participated in higher education, the proportion of people with a secondary-­level education is relatively high. This analysis is based on interviews carried out in 2006, with some small updates from 2012. Centria University of Applied Sciences operates in western Finland on the Ostrobothnian plain, in the cities of Kokkola, Pietarsaari and Ylivieska. Its mission is to improve the educational level and skills of the region’s population and to enhance the possibilities of individuals to succeed in a changing environment, and their readiness for continued learning. Centria Research and Development (R&D) Ylivieska is one of the regional units of Centria R&D. The SMEs in Oulu South consist of companies operating mostly in electronics, electro-­ mechanics, woodworking and engineering, with woodworking being the sector of special interest in this chapter. The cooperation in relation to innovation activities between Centria R&D Ylivieska and SMEs in Oulu South was selected as a good practice case based on results from innovation studies carried out in the area (Niemi and Virkkala 2006a; Virkkala 2007). Centria was the most important public sector partner for the firms interviewed, and almost all of them had engaged in cooperation with it (Niemi and Virkkala 2006a). The Ylivieska Unit of the Centria University of Applied Sciences offers education in the fields of technology, social services, humanities, education and tourism. The unit’s staff consists of 100 people, and more than 1,000 students. The dominant subjects are, for example, electrical engineering, information technology, media technology and industrial management. Centria R&D Ylivieska carries out research and development, provides related services (testing services, laboratory services, etc.), and arranges follow-­up education, its main customers being manufacturing firms in Oulu South. Centria R&D Ylivieska’s mission is to create the appropriate conditions in order to encourage the development of firms and communities in the region. It utilizes the knowledge of its staff and teachers, the facilities of its modern laboratories, and the ingenuity of its students, to complement the input made by experts. This innovative cooperation improves both teachers’ and students’ local knowledge as well as local labor relations. Centria R&D Ylivieska’s staff consists of between 50 and 60 persons, and its total returns in 2010 were three million euros (Centria Ylivieska 2011). Centria R&D Ylivieska plays an essential role in regional development, especially concerning the industrial sectors corresponding to the fields of technology taught at the Ylivieska Unit of Centria. The work done in Centria can be seen

Industrial development   269 reflected in practice in the activities of many local firms, but it also has a central role in different development programs and in the innovation systems of Oulu South as a whole; for example, Centria Ylivieska is the most important actor especially regarding woodworking technology in the region, aiming to contribute to the processing of more wood in the region. The woodworking laboratory and the equipment for surface treatment at Centria Ylivieska have played a central role in research projects focused mainly on firms in Oulu South. From the viewpoint of firms, the proximity of testing equipment is important. (Niemi and Virkkala 2006a). Centria Ylivieska combines education with innovation by actively trying to create jobs for its students by means of innovative cooperation. These attempts have been mostly successful. Centria develops technological knowledge and equipment that corresponds to the needs of local enterprises, which is of benefit to the manufacturing sector in the region. By involving teachers and students in different development projects Centria combines its research and development activities with its educational ones. The volume and scope of the unit’s service activities relative to the volume of education and the number of students are among the highest in the country, among UAS. The personnel of Centria R&D Ylivieska work in teams, which are made up of staff from both the education programs and the R&D unit. Following the principle of learning by doing the aim is to involve students in projects as much as possible (Niemi and Virkkala 2006a). Centria R&D Ylivieska’s partners in innovative cooperation are mainly expanding firms, which are geared toward developing their knowledge. They get to know about development possibilities through the Centria staff, and personal trust between participants is a strong element in the resulting cooperation. Centria R&D Ylivieska operates with other local developers in a network aimed at improving knowledge and competence in the area. Knowledge generated in one sector is utilized in order to develop another, and thus technologies are transferred from one sector to another. Techniques developed for the electronics and electro-­mechanics industries can be exploited in woodworking and engineering, for example. Quality systems, production processes, machine vision systems etc. were developed rapidly in the electronics industry about ten years ago, and now Centria is transferring these systems to woodworking firms, for example (Niemi and Virkkala 2006a; Virkkala 2007). Forms of innovative cooperation The innovative cooperation practised by Centria R&D consists of education, standard services, development projects and applied research. Centria R&D offers education and training in fields of special know-­how for the employees and management of firms. Training is an essential part of most innovation processes, as a means of introducing new knowledge into firms. In the early stage of introducing a new system there is a lot of extra work to be done in order to make the process operate smoothly. Training is a means of lowering thresholds, of

270   S. Virkkala facilitating innovation processes and making them more effective. The standard services offered by Centria R&D Ylivieska include measuring services, testing services, surface treatment services and machining services. These often function as support services for firms’ product development projects, which can be used for concretizing ideas generated within the firm. Development projects arise almost without exception from the needs of a firm, which then becomes a partner in cooperation. These projects, in which Centria implements a certain product, production method or form of production automation, in connection with information systems, for example, are carried out entirely on the firm’s terms and with the finances it has acquired. Projects in the field of applied research are aimed at generating new knowledge in the region, and it is common for several firms to participate. It is usually a teacher who leads the team, and when the project ends, the teacher goes back to teaching, meaning that research and development projects underpin teaching. Applied research projects in the fields of production automation and robotics have been carried out at Centria for a long time. This has included the development of user-­friendly automation and robotics to serve the needs of small production series, which can be considered challenging work. Testing has become an increasingly significant part of the product development process, and it is integrated already in the planning process (Niemi and Virkkala 2006a). Impacts Centria R&D’s impacts can be seen in the availability of skilled employees, in its numerous innovative cooperation projects with firms, and more generally in the development of the innovativeness of the region. Educational programs can be seen as an engine for the activities of Centria R&D, as they distribute the generated knowledge to firms in the region in a variety of ways, thus contributing to regional development. The R&D unit also improves knowledge within the educational activities. In this way, Centria is engaged in promoting the employment of its students in local firms, and a high proportion of students who qualify at Centria Ylivieska get a job in the region. Many of them are employed by local firms, implying a significant contribution to regional development. Many firms consider the proximity of testing and other services important. For example, the facilities for testing doors and windows support the operations of firms in that field, and enable their development (Niemi and Virkkala 2006a). With the help of Centria local firms have been able to improve their competitiveness by rationalizing production, acquiring further training, implementing innovations and possessing skillful employees. Further, they have increased their revenues, jobs have been maintained, and new jobs have been generated. Thus the economy of the region has developed together with Centria. Still, although there is clarity that Centria has contributed to the growth of the woodworking sector, for example, it is difficult to estimate the exact extent of its role in creating this success. The preconditions for the innovation cooperation between Centria Ylivieska and SMEs have been:

Industrial development   271 • • • • • •

a high commitment to business development in Oulu South; long-­term planning and purposeful development of the selected sectors and fields of expertise; continuing foresight regarding the needs of local firms; networking and partnerships with other actors in Oulu South; social proximity and mutual dependence with respect to SMEs in Oulu South; and specialization in branches, sectors and technologies relevant to the SMEs of Oulu South.

What is there to learn elsewhere? What can be learned from this good practice is the general proactive attitude and behavior necessary for a regional development agency, like Centria R&D Ylivieska, to achieve economic development in its region. Proactivity in this case means that Centria R&D Ylivieska takes initiative in innovative cooperation, and by supplying them with technologies, facilities, new ways of acting, etc., activates the SMEs and their desire for innovation. In addition, the smaller efforts of Centria, relating to education, support, knowledge production and transferring knowledge to relevant sectors, contribute to the construction of an innovative milieu (Niemi and Virkkala 2006a). The relationship between Centria’s R&D unit and the local SMEs is close, and it seems to be easy for the SMEs to contact the organization. The high level of trust stems from common aims and history. Confidential relationships with firms are indeed one prerequisite for success, and the gaining of such relationships is a process which is up to individuals. In other words this trust must be earned, and without it good results are not achieved (Niemi and Virkkala 2006a). The forms of innovative cooperation or bridging functions implemented by Centria Ylivieska can be abstracted as elements of good practice. The forms of innovative cooperation in this case include education, standard services, development projects and applied research, and bridging functions are embedded in these forms of cooperation. First, Centria modifies the explicit knowledge which is already available but present in a complex and theoretical form, so that it is possible for the SMEs to apply it. Second, Centria acts as a transfer unit between educational institutes, R&D units, etc. outside the region and the SMEs. Third, Centria transfers knowledge between sectors in Oulu South, and fourth, it ensures that the development and implementation of a pilot project in a firm enhances the competence of both the Centria project staff and the respective firm. Thus the skills and knowledge gained can be used elsewhere and in other projects (Niemi and Virkkala 2006a). The innovative cooperation that takes place between Centria Ylivieska and the SMEs promotes a favorable cycle of education, R&D and business development, in which the innovation capability of the SMEs is developed and promoted, leading to business development and growth. As a result the SMEs recruit more staff, especially among the students whom they already know from

272

S. Virkkala Impacts in Oulu South

Innovative cooperation O ther know ledge institutes Education

SM E s in Oulu South

University

C entria Ylivieska

Applied research

+ R ecognizing

projects

innovation needs

Developm ent

+ D evelopm ent

+ Jobs

projects

activities

+ Innovation

o f Applied Sciences (CO U)

+ Growth of firms

Students teachers

+ New firm s

Facilities: laboratories Knowledge

+ M ore innovation cooperation

projects

ability Services: testing

+ Skilled staff

etc.

S tudents qualifying

+

People

Equipm ent, prototypes etc.

Inform ation, knowledge

M ultiplier im pacts

Figure 9.1 The cycle o f innovative cooperation betw een Centria Ylivieska and SMEs in Oulu South (Niemi and V irkkala 2006: 48).

cooperation projects and who already have experience on the job. The former students working in the SMEs are then ready to ask Centria for more services, and be favorably disposed toward working in cooperation with it. The more skilled staff and contacts with Centria the firms have, the more likely it is that they ask Centria for more services (Figure 9.1 vicious cycle). This cycle of good practice supports the innovation capabilities of the SMEs, which in turn consti­ tute a precondition for the success of the northern periphery under conditions of global competition (Niemi and Virkkala 2006a). Innovation and regional policy in Finland can be interpreted according to the general framework of the STI innovation mode. Also Centria Ylivieska and the regional network of firms surrounding it is clearly embedded in the Science, Technology and Innovation mode. Industrial development is based on research and development inputs. The educational and research institutes of Centria produce codified knowledge and technology, and the local SMEs search, select and apply this knowledge. The Skive Technical Institute and competence-building activities within the furniture industry in Midwest Jutland The partners in the Danish good practice case are the Skive Technical Institute, located in Midwest Jutland in the city of Skive, and the furniture production and woodworking industry in the same area. The Skive Technical Institute and furni­ ture cluster have a longer history of co-evolution than Centria and the Oulu

Industrial development   273 South SMEs in the Finnish case. There are furniture and woodworking industries all over Denmark, but an important part of it is located within a 100 km radius of the city of Skive (Lindegaard 2006a). As a matter of fact, the organizational characteristics of the furniture cluster in Midwest Jutland are similar to the flexible specialization of Italian industrial districts (Kristensen 1992). In order to understand the role of the Skive Technical Institute in competence building in the furniture cluster in Midwest Jutland, first it is necessary to examine the evolution of this cluster. The craft tradition in Midwest Jutland facilitates the flexibility, quality and capacity for innovation of the furniture cluster. The broadly trained workers are capable of redirecting their skills to suit the market. Other factors reinforcing the furniture districts and Danish industrial districts generally are: a well-­developed local service infrastructure, close family ties, and people’s craft identity. A typical situation would be one where a number of carpenters and cabinet-­makers faced with a lack of work in building and construction started to use their infrastructures, equipment and machinery to carry out jobs through subcontracts with other furniture makers, gradually moving into the business with their own product (Kristensen 1992: 150). Industrialization has worked selectively in favor of the furniture industry in the region. Vocational training institutions, such as the Skive Technical Institute, helped orient the regional population toward a particular industry (Kristensen 1992). Today, however, the fact that Midwest Jutland contains a network of small furniture businesses has itself become an important factor in the continuous development of the Skive Technical Institute. The Skive Technical Institute has a long record in educating cabinet-­makers in Denmark in close interaction with the private sector and industrial and labor organizations. Local business services have also played a supportive role in strengthening the furniture industry. The Skive Cabinet Makers Guild has played a central role in the development of the furniture industry in the area (Lindegaard 2006a). While the wood and furniture industry plays an important economic role in the middle and western parts of Jutland, at the same time the area is characterized by low levels of education and formal skills, and a relatively low level of research and development activities (Lindegaard 2006a). The activities of the furniture cluster in Midwest Jutland provide an example of the DUI mode of innovation, which is typically found in craft-­based industrial districts. Within this framework of development highly specialized tacit knowledge is created and applied in the industry, creating a development path, leading to local economic growth. Using the Skive Technical Institute’s educational programs in innovation and design within the furniture industry At the Skive Technical Institute, educational projects are carried out in cooperation with local furniture manufacturers and a number of local and national education and governmental institutions. The Production Technologist program has a

274   S. Virkkala long tradition of delivering skilled technologists to the furniture industry in the region and is therefore closely connected with it (Lindegaard 2012). The program consists of two years of study, with specialization in plastics, metal, wood and furniture. Emphasis is given to practical knowledge on materials, process management and logistics with company contacts, a mentor arrangement between each student and a company, and project work at the company. The education of production technologists is built around a ‘value chain’ conception of the different elements of manufacturing. These elements are: design, construction, purchase, management and operation of production, logistics, and sales and marketing. The education of production technologists integrates all other phases except sales and marketing. Design and innovation are integrated in a practical way to the traditional elements of competence building for production technologists (Lindegaard 2006a). In its educational program, the Skive Technical Institute emphasizes the importance of practical skills and training in innovation work for production technologist students entering the wood and furniture industry. Through these activities students gain a broader awareness of the importance of design and innovation for competitiveness in the industry, creating a stronger knowledge base and networks for knowledge dissemination. The Development Centre for Furniture, the UMT (Udviklingscenter for Möbler og Trae) started at the Skive Technical Institute in 2001, and, in 2006 it was relocated to the city of Herning in Midwest Jutland where it continued to function as a regional technology center. The UMT supports innovation of the firms in order to maintain and improve the competitiveness of the furniture cluster. This is done by encouraging development projects, cross-­sectoral cooperation and dialogue. In 2009, an innovation network Innonet Lifestyle – Interior & Clothing was set up to promote innovation and growth in companies in the housing and clothing sectors. The idea is that the sectors work together, inspire each other and bring consumers’ lifestyle dreams to life. The network functions under the Danish Ministry of Science, Innovation and Higher Education. A number of relevant knowledge and research institutions are members of this network (Development Centre UMT 2012; Innonet Lifestyle – Interior & Clothing 2012). Interaction between firms and the Skive Technical Institute is a core element in competence building for innovation in the furniture industry of Midwest Jutland. The knowledge flows in this interaction consist of tacit and skill-­based knowledge, embodied in the individuals who start from the school and end up working for the firms. The upscaling of these knowledge flows is due to the funding provided by local, regional and national authorities to the Development Centre and to the Skive Technical Institute (Lindegaard 2012). What can be learned elsewhere? The Danish case of good practice can be summarized according to Lindegaard (2006a) as follows:

Industrial development   275 • •

•

The educational institute is considered important to Danish good practice, since it provides an important means of knowledge creation and dissemination for medium-­sized manufacturers. The Danish good practice consists of educational programs promoting woodworking professions and furniture within the Skive Technical Institute. By participating in product development on the spot and transferring embodied knowledge in vocational training, the Skive Technical Institute engages in the development of new product concepts as well as product and process optimization in private companies. It acts as a bridge between national technology institutes and local firms. With the education of the young generation of skilled workers, knowledge moves into the companies with the qualified students. In the Danish good practice, on-­the-job training and project work are integrated in teaching programs together with state-­of-the-­art skills in technology and development. The educational programs bring together handicraft and technology students with design students, in order to develop new furniture prototypes and a mutual understanding with regards to design processes, and the processing of wood in manufacturing.

The educational programs in the Skive Technical Institute related to wood professions and furniture can be described as good practice for mature and user-­ driven industries. It plays an important role due to its geographical proximity as well as their possible function bridging the gap between knowledge, research and technical expertise. The Danish case study indicates that the promotion of proximity in space, localized learning and embodied knowledge transfer in the furniture cluster has led to inter-­cluster organizational and cognitive proximity with other sectors in the region, for instance textiles with regards to innovation in design and materials (Lindegaard 2012).

Comparing good practices – abduction The Danish business system, based on entrepreneurship, and the user-­driven innovation system, both reflected in the operation of the Skive Technical Institute, follow the DUI mode of innovation, while the Finnish science and technology-­driven innovation system, and the national policy of cluster development, form an adequate setting for innovative cooperation between Centria Ylivieska and the SMEs. The Skive Technical Institute is embedded in a long craft-­based tradition in the furniture sector, which is being reproduced and renewed by it (Lindegaard 2012), whereas Oulu South is a region of primary production that has gone through rapid industrialization and shifted into the knowledge-­based economy, with Centria Ylivieska and its R&D unit being the driving force behind this process. In both cases the educational institutes have acted as the driving force for change, as there is a favorable cycle of education, innovation projects and business development through innovation activities in both regions (Virkkala et al. 2006).

276   S. Virkkala Central elements of the Danish good practice are the integration of teaching in production and design as well as close cooperation between the educational programs and business development, together with the embodiment of new knowledge and crafts in individuals. On the other hand the Finnish Centria Ylivieska has co-­evolved with regional manufacturing SMEs and built laboratory facilities in order to respond to the needs of these firms. Central activities within the innovation cooperation in the Finnish case are applied research, development projects, continuing education and the supplying of services. Centria is also engaged in transferring knowledge and new models between sectors (Virkkala et al. 2006; Lindegaard 2006b; Niemi and Virkkala 2006b). The Danish and Finnish institutes have some elements in common, such as working in social and geographical proximity with local firms, developing sectors/ clusters in their areas proactively, networking and bridging functions between SMEs and other knowledge institutions, and having some level of cross-­sectoral character, though in different ways. In the Finnish case the educational institution has a separate and relatively large unit for R&D activities and innovative cooperation, whereas in the case of the Skive Technical Institute the innovation cooperation is embodied in former students and educational programs (Table 9.2). In the Oulu South case national policies are not determining, although the activities of Centria Ylivieska have received both national and EU-­level funding for projects. By contrast the good practice in Midwest Jutland case grew out of a local effort to move the industry forward, combined with participation in the Regional Growth Environment program at a national level (Virkkala et al. 2006). In both cases, development has been based on endogenous potential, even though the growth impulse in some sectors in Oulu South stemmed from outsourcing processes in large national or international firms. In the Danish case the roots of endogenous industrial development reach further back in time, and innovation has for a long time been education driven. These good practices are examples of regional bottom-­up initiatives, which are born at a regional, rather than national, level. The development path, i.e., specialization in specific industrial sectors, such as wood and furniture, has been reinforced and reproduced by the educational institutes in Oulu South and Midwest Jutland. Further, the development of the endogenous potential of the target regions has been a central activity of the educational institutes. As well as reinforcing the regional development path endogenous development can also contribute to its renewal or changes, including introducing elements that lead to the beginning of a new path. The furniture cluster in Midwest Jutland is exporting its products, but for the woodworking sector in Oulu South the national markets are important. Centria Ylivieska has been active in export-­ oriented sectors, as well as in founding new sectors, such as the ICT sector. However it has been a difficult process, and there have been efforts to combine ICT with other sectors, such as woodworking (Jokela et al. 2010). Transnational learning is crucial when it comes to the renewal of the regional development path and the creation of possible new development paths (see Table 9.3).

Industrial development   277 Table 9.2 Differences and similarities between good practices in Oulu South, Finland and Midwest Jutland, Denmark Differences/similarities

Finland/Oulu South

Denmark/Midwest Jutland

Regional structure

Sparsely populated area with small cities Standards services Training Development projects Projects of applied research Modification of explicit knowledge to fit needs of SMEs Transfer knowledge from outside region Transfer knowledge between sectors Research and development unit as part of educational institute (university of applied sciences)

Small cities near each other

Educational programs

Technology based

Proximity between educational institutes and local SMEs Innovation mode

Cognitive, organizational, social, geographical

Value chain approach, craft, design Cognitive, organizational, social, geographical

STI

DUI

Educational institute – SMEs Bridging function

Research and development

Knowledge embodied in people Apprenticeship Transfer knowledge to firms Cooperation in the innovation network

Development center of the cluster in Herning networking with research institutes

Table 9.3 Oulu South and Midwest Jutland: the role of educational institutes with regards to sources of development and the regional development path

Reproducing development path

Changing and renewing development path

New development path

Endogenous

Exogenous

Main activities of Centria and the Skive Technical Institute Endogenous potential important Combining furniture with textile, lifestyle in Midwest Jutland ICT in wood work and machinery in Oulu South Future potential?

External knowledge International markets especially furniture cluster Transnational learning potential

ICT in Oulu South

278   S. Virkkala

Evaluation and translation of the good practices Centria Ylivieska and the Skive Technical Institute are relatively similar organizations, which could mean that there is room for learning between them with regards to activities for enhancing innovation and development in the manufacturing sector. In order to explore the transnational learning potential between Oulu South and Midwest Jutland (or Salling-­Mors area), learning seminars were organized by Finnish and Danish researchers as part of the PLIP project (Peripheral Localities and Innovation Policies), carried out by the Nordic Innovation Center in Skive and in Ylivieska in 2006. The assumption behind the project was that the learning of the Danish and Finnish good practices could take place in a benchmarking fashion between actors, since the practices are similar to an extent, yet different. Learning from the Finnish Centria Ylivieska case in Skive A workshop was organized in Skive, in which 11 participants, representing all the key areas in business development, with an emphasis on the furniture industry, education, training and innovation as well as entrepreneurship and international marketing, took part. The local participants took special interest in the activities and work of the research and development unit, which acts as an intermediary organization between businesses and education (Lindegaard 2006b). The local participants in the workshop saw developing the furniture sector in Midwest Jutland as a difficult task, as the firms are under tough competitive pressure from the national and international market, especially for pine wood furniture. The businesses need enhanced capabilities for design and innovation. The pressure derived from the threat that production could be outsourced to low-­ income countries is counterbalanced by initiatives promoting exporting to new markets, e.g., China. Bottlenecks are found in the area of knowledge and competencies as well as in the future supply of skilled labor, especially in relation to the question of how to attract young people into the crafts (Lindegaard 2006b). The workshop discussions focused on the elements of the Finnish good practice that were of special interest to the Danish participants regarding their local institutional set-­up. The Danish workshop participants were especially interested in strategies and visions related to the role of technical education and training in regional business development, including factors such as collaboration with businesses, the bridging role of educational institutions between businesses and research, and the co-­evolution of an applied science research center with development projects and local businesses (SMEs). Participants were also interested in the impacts of education and training on the growth of the manufacturing sector in the region, including mechanisms for the application of knowledge and process technology across industrial sectors (process automation and control in wood and electronics), and research projects involving teachers (1–2 years on a part-­time basis) as a way to disseminate new knowledge through education and training (Lindegaard 2006b).

Industrial development   279 The workshop also included a discussion regarding the relevance of providing laboratory facilities for businesses to test and control their development activities. In the Danish context this kind of local service was lacking and it could prove useful for the Danish furniture industry. As a general conclusion, it seems possible to transfer and use the Centria Ylivieska good practices of research and development services for SMEs in the development of the emergent STI mode of innovation in competence building and knowledge dissemination within the furniture industry in Midwest Jutland. However, funds are needed in order to build a research organization like Centria Ylivieska, for tasks such as carrying out specific innovation projects together with individual businesses. Some kind of national, regional or sector based ‘applied research and innovation fund’ could be a way forward. The participation of teachers in research activities would also need both financial support and possible changes in the way the staff is organized in the Skive Technical Institute. The participants present at the workshop particularly emphasized the importance of education and R&D services to the furniture industry (Lindegaard 2006b). Learning from the Danish Skive Technical Institute case in Ylivieska A workshop was also held in Oulu South, which was attended by the key actors in the developing woodworking industry, especially in terms of innovation cooperation and education in the region, in Skive. Elements which were of specific interest to participants were the curriculum of Skive Technical Institute and its practical approach to innovation (Niemi and Virkkala 2006b). The practical approach to innovation of the Skive Technical Institute was considered particularly interesting, and the idea that it could be used more in vocational training in Oulu South, too. The point was made that practical knowledge could be more closely combined with technological and theoretical knowledge both in industry and in education schemes. Another point of interest for application in Oulu South was the mentorship system. In following up these events, there have been attempts to implement this in Oulu South, but the problem has been the limited time resources of the companies involved (Niemi and Virkkala 2006b). Comparison between the two cases was seen to be useful in helping participants to recognize their strengths and possibilities. Many elements of the Skive Technical Institute case are applicable in Oulu South, for example, a practical approach to innovation in vocational training could be developed there. Also, regarding the interest over the mentorship system, a support scheme could be developed in order to encourage its creation (Niemi and Virkkala 2006b).

Exploring learning potential and innovation modes The learning potential of these two cases could be contained particularly in the converging of the two innovation modes, where DUI could assimilate more elements of STI, and vice versa.

280   S. Virkkala According to Jensen et al. (2007) both the DUI mode and STI mode tend to increase a firm’s innovative performance. However, according to the empirical results of a cluster analysis by Jensen et al. (2007), firms adopting mixed strategies, in other words when the two modes are combined, tend to perform significantly better than those relying predominantly on just one of the modes. The two modes of learning can be made to co-­exist and complement each other even if they are somewhat contradictory, since the STI mode emphasizes generalized codification while the DUI mode tends to thrive on the basis of implicit and local codes. Combining more codified knowledge and technology in the DUI innovation mode might result in the renewal of the regional development path, or emergence. When the general DUI innovation mode consists of more elements of codified knowledge, research and technology, it can be defined as the DUI/STI mode of innovation. On the other hand the STI mode of innovation, used in the case of Oulu South, for example, could benefit from the more organizational elements of the DUI mode, in this case craft skills and user-­driven innovation especially. Combining some of the elements of the DUI mode of innovation with the STI mode, described as the STI/DUI innovation mode, would increase the STI mode’s competitiveness. In the context of the SECI model and in the approach of learning transnational learning, the emerging new innovation modes DUI/STI and STI/DUI can be defined as new archetypes. Exploring the learning potential present in the comparison and the construction of new archetypes makes it possible to evaluate and perhaps even internalize these new archetypes. By applying the new innovation mode archetypes it is possible to influence development paths: either by renewing them or creating elements necessary for the emergence of a new path. The SECI process can help transform a development path based on DUI to one based on DUI/STI, and one based on STI, to STI/DUI. This means that there can be convergence of innovation modes, also in relation to regional development paths (see Table 9.4). If these new archetypes, the DUI/STI and STI/DUI, were analyzed more carefully and case-­specifically, they could have implications more generally, increasing the learning potential of many other regions in the EU. Table 9.4  Innovation modes and converging development paths: building new archetypes Innovation mode

Development path

DUI

Skive Technical Institute    and Midwest Jutland

DUI/STI STI/DUI STI

 ↓ Convergence? ↑  Centria Ylivieska and    Oulu South

Change of development path

More elements of research, technology and codified knowledge More elements of design, user-driven innovation and craft skills

Industrial development   281

Conclusion Both Centria Ylivieska and the Skive Technical Institute are key actors when it comes to responding to the challenges of globalization by upgrading the skills of local people in specialized niches. The Skive good practice has some common elements with the good practices of Centria Ylivieska, the main common denominator being their orientation toward enterprises. Innovative cooperation between Centria Ylivieska and the SMEs in Oulu South is mostly based on the activities of the research and development unit within Centria Ylivieska. There seems to be a good match between Centria Ylivieska and Skive Technical Institute in terms of competence building. Also, the local actors participating in the workshops in Ylivieska and Skive demonstrated a strong ability to abstract and learn new information. Some of the elements of the good practices were considered particularly interesting, and are at least partly transferable, e.g., the mentorship system of linking students with businesses at the Skive Technical Institute, and the participation of teachers in research projects at Centria. The good practices in both Oulu South and in Midwest Jutland have been able to trigger innovation in the SMEs in their locality, even though the innovation modes that were used are different. The educational institutes Centria Ylivieska and Skive Technical Institute have also created cumulative causation effects: competence buiding/new technology – innovation – entrepreneurship in a specialized sector. The good practices in Oulu South and Midwest Jutland can be seen as place based development in which the education sector and industries develop simultaneously, reinforcing each other and contributing to regional development (Barca 2009). In the research project that this chapter draws from both the Finnish and Danish educational institutes belong to a regional actor network developing the region. The good practice analysis made by Finnish and Danish researchers externalized the tacit knowledge in a codified form, i.e., written in reports. The good practices from the other country were evaluated in learning seminars or focus group meetings built according to the principles of the interacting ba, organized by researchers. In these seminars the learning potential of the foreign good practice was explored by actors in each region. In this chapter the key findings from the good practice analysis as well as the results of the learning seminars reported in the ‘Peripheral Regional and Innovation Policies’ report (Virkkala and Niemi 2006) have been contextualized analytically according to two different innovation modes. In the framework of the SECI process the two regions present different archetypes: the Skive Technical Institute and furniture cluster in Midwest Jutland the DUI innovation mode, and Centria Ylivieska and Oulu South the STI innovation mode. Based on the abduction, evaluation and translation of the good practices in the receiving country (i.e., Skive Technical Institute and furniture cluster in Oulu South and Centria Ylivieska R&D in Skive), new archetypes, the DUI/STI and STI/DUI, were found. These new archetypes would increase the learning potential in both regions. The furniture cluster in Midwest Jutland now has new elements of the

Tacit

Tacit

Socialization

Abduction

Originating ba

Interacting ba Good practice analysis of cooperation between Skive Technical Institute and SMEs Midwest Jutland Construction of archetype based on DUI innovation mode Evaluation of good practice

Good practice: Innovation cooperation between Centria Ylivieska and SM Es in Oulu South based on STI innovation m ode

Evaluating, selecting and justifying the archetype Exercising ba

Translating the archetype System atizing ba

Internalization o f new explicit knowledge/archetype as new tacit knowledge by actors in Oulu

Com bination of features of DUI of Skive Technical Institute with innovation mode in Oulu South produces STI/DUI innovation

South

Explicit

Explicit

Figure 9.2 SECI process of transnational learning in Oulu South.

Tacit

Tacit

Socialization

Abduction

Originating ba

Interacting ba

Good practice: Skive Technical

Good practice analysis of

Institute and furniture cluster in

innovation cooperation between

M idwest Jutland based on DUI innovation m ode

Centria Ylivieska and SM Es in Oulu South Construction of archetype based on STI innovation mode

Exercising ba Evaluating, selecting and justifying the archetype Internalization o f new explicit knowledge/archetype as new tacit knowledge by actors in M idwest Jutland In process -fu tu re scenario

Explicit

System atizing ba Translating the archetype Com bination of features of STI of Oulu South with innovation mode in M idwest Jutland is DUI/STI innovation m ode

Explicit

Figure 9.3 SECI process of transnational learning in Midwest Jutland.

Industrial development   283 STI innovation mode due to innovation networks established as a part of national policy. The SECI process, as it relates to transnational learning in Oulu South and Midwest Jutland, is presented in Figures 9.2 and 9.3. Although in both cases new archetypes were found, the process of evaluating, selecting and justifying them is still in process, meaning that the SECI process is not yet completed. Internalization of the new archetypes would mean the convergence of the innovation modes as well as of the regional development paths based on these modes.

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284   S. Virkkala Lindegaard, K. (2006a) ‘The STI – Innovation Centre competence-­building activities for the furniture industry, Denmark’, in S. Virkkala and K. Niemi (eds) Peripheral Localities and Innovation Policies: Learning from Good Practices between the Nordic Countries, Oslo: Nordic Innovation Centre, pp. 55–68. Lindegaard, K. (2006b) ‘Learning from the Finnish Centria Ylivieska case in Skive’, in S. Virkkala and K. Niemi (eds) Peripheral Localities and Innovation Policies: Learning from Good Practices between the Nordic Countries, Oslo: Nordic Innovation Centre, pp. 51–4. Lindegaard, K. (2012) ‘Dynamics of peripherality’, in M. Danson and P. de Souza (eds) Regional Development in Northern Europe: Peripherality, Marginality and Border Issues, London and New York: Routledge, pp. 78–97. Lindqvist, M., Smed Olsen, L. and Baltzopoulos, A. (2012) Strategies for Interaction and the Role of Higher Education Institutions in Regional Development in the Nordic Countries, Stockholm: Nordregio Report 2012: 2. Malecki, E. (2010) ‘Global knowledge and creativity: new challenges for firms and regions’, Regional Studies 44(8): 1033–52. Niemi, K. and Virkkala, S. (2006a) ‘Innovative co-­operation between Centria Ylivieska and the SME’s in Oulu South, Finland’, in S. Virkkala and K. Niemi (eds) Peripheral Localities and Innovation Policies: Learning from Good Practices between the Nordic Countries, Oslo: Nordic Innovation Centre, pp. 33–47. Niemi, K. and Virkkala, S. (2006b) ‘Learning from the Danish STI – Innovation Centre case in Ylivieska, Finland’, in S. Virkkala and K. Niemi (eds) Peripheral Localities and Innovation Policies: Learning from Good Practices between the Nordic Countries, Oslo: Nordic Innovation Centre, pp. 69–71. Online. Available at: www.nordicinnovation.org/fi/julkaisut/peripheral-­localities-and-­innovation-policies-­learning-from-­goodpractices-­between-the-­nordic-countries/ (accessed 20 May 2012). Uyarra, E. (2010) ‘Conceptualizing the regional roles of universities, implications and contradictions’, European Planning Studies 18(8): 1227–46. Virkkala, S. (2007) ‘Innovation and networking in peripheral areas – a case study of emergence and change in rural manufacturing’, European Planning Studies 15(4): 511–29. Virkkala, S., Hirvonen, T. and Eskelinen, H. (2012) ‘Seutukaupungit Suomen aluerakenteessa ja kaupunkijärjestelmässä’, in A. Hynynen (ed.) Takaisin kartalle. Suomalainen seutukaupunki, ACTA 237, Helsinki: Suomen Kuntaliitto, pp. 17–28. Virkkala, S. and Niemi, K. (2006) (eds) Peripheral Localities and Innovation Policies: Learning from Good Practices between the Nordic Countries. Oslo: Nordic Innovation Centre, pp. 5–19. Online. Available at: www.nordicinnovation.org/fi/julkaisut/ peripheral-­localities-and-­innovation-policies-­learning-from-­good-practices-­betweenthe-­nordic-countries/ (accessed 20 May 2012). Virkkala, S., Niemi, K. and Lindegaard, K. (2006) ‘Conclusions on the competence-­ building good practices’, in S. Virkkala and K. Niemi (eds) Peripheral Localities and Innovation Policies: Learning from Good Practices between the Nordic Countries, Oslo: Nordic Innovation Centre, pp. 72–4.

10 Is there a need for transnational learning? The case of restructuring in small industrial towns Kenneth Nordberg Introduction: what can Finland learn from Norway? Both Finland and Norway have several small cities and geographically isolated industrial towns which depend upon one or a few industries, often based on natural resource extraction. These are often titled one-­company towns or one-­ generation towns. This chapter investigates restructuring policy in peripheral and one-­company towns in Norway and Finland. The Norwegian policy is regarded as an ideal, and an analysis of the case of Kaskö in Finland illustrates how Norwegian practices could be of use also in the Finnish context. Kaskö is an exception in the Finnish context, and the case therefore draws attention to defects in the Finnish restructuring system, which might not be visible in other restructuring cases in Finland. There are three main reasons why the restructuring efforts failed in Kaskö: • • •

the company displayed a reluctant attitude to supporting restructuring measures; language and cultural differences obstructed regional cooperation with regards to economic development (mainly the construction of a common regional business development agency); while Kaskö suffered economically, the surrounding region was prosperous, which partly stopped national level restructuring funding.

The government mainly perceives the cases where these factors are in order. This is in line with Bob Jessop’s Strategic-­Relational Approach theory, which is described below. As other cases similar to that of Kaskö are hard to find, the Kaskö case itself has often been neglected. Therefore, as the Kaskö case is a rather exceptional one, transnational learning can be proven useful. The Norwegian model for restructuring demonstrates qualities that would have been beneficial in the case of Kaskö. In Norway, a system favouring long-­term economic restructuring (called ‘omstilling’ in Norwegian) of one-­company towns has been developing since the early 1980s to ensure the survival of peripheral towns. In short, the Norwegian strategy focuses the restructuring measures on converting the activity of the main

286   K. Nordberg company or industry branch into one which diversifies the economic life of the town. This is accomplished over a long period of time through a broad planning effort, by which regional actors are gathered from both the private and the public sector. Thereby the grounds for the allocation of restructuring resources changed from being directly connected to crisis situations in the 1980s, to a situation in the 1990s and onward, where the grounds for resource allocation are often connected to situations that can occur in the future. This kind of shift, from crisis-­ based interactions to precaution-­based efforts, is not easy to accomplish. With regards to precaution-­based efforts, there are higher demands for reaching consensus among regional actors. In practice, this is a governance process characterized by the ideals of consensus, transparency, participation, equity, inclusiveness, accountability, and the idea of regions as common enterprises. During the last years of economic turbulence these experiences have been summarized in the Norwegian law ‘Omstillingslova’, which was approved in 2008. This legislation obliges the company concerned to assume social responsibility for the community it is acting in. In the past, the restructuring efforts in Finland have demonstrated characteristics of a market-­led restructuring policy. One consequence of this, and more precisely of the economic crisis in the 1990s, is that still today Finland carries the burden of a high level of long-­term unemployment. The 1990s recession in Finland was dealt with by investing in the growing ICT industry (see, e.g. Ornston and Rehn 2005). When the economy started to recover, boosted by the success of Nokia, unemployment started to fall. Furthermore, when the ICT industry declined in 2001, the energy and mechanical industry stepped into its place. Growth was limited to a few successful growth centres, leaving less fortunate regions with long-­term unemployment (more than one year without work). Additionally, the skills of the laid-­off employees from the more traditional industry sector did not meet the requirements of the ICT sector. Managing growth in successful regions and supplying the booming industries with educated people was of primary importance in national policy at this time. In 1990, the share of long-­term unemployment of the total amount of unemployment was merely 2 per cent, while between 1992 and 1994 this share grew to more than 30 per cent. In 2010 unemployment was recorded at 8.5 per cent, of which 23.6 per cent were long-­term unemployed, corresponding to 2 per cent of the workforce. The corresponding figure in Norway is 0.035 per cent and in Sweden 0.14 per cent. In Norway, the strategy has been to support engagement at a regional level in order to achieve continuous restructuring instead of exposing peripheral areas to the risk of sudden closedowns. The relationship between the structure of the national system and local actors in the region of a one-­company town is important when trying to understand the process of restructuring. Bob Jessop’s Strategic-­Relational Approach (SRA) offers one way of analysing this relationship (Jessop 2008). He sees states as entities that are formed by sets of actors who create long-­term strategies, which in turn form the main structures within the national system. These structures act as selection mechanisms, which, on the basis of the existing structural strategy,

Restructuring in small industrial towns   287 may either approve or deny suggestions for change. Therefore the national system forms path dependencies, which may favour certain actors, strategies and actions over others. However, the SRA also implies that actors have the ability to act reflexively, i.e. adapt their identity and their interests in order to set up a strategy to modify the limitations of the structure that exists at a particular point in time, and thus achieve their objectives and construct alliance strategies. The structure is thus not static but situational. Looking at industrial restructuring from this perspective, the structure of the national system, i.e. the administration system, territory, development grants, regional traditions and culture, form path dependencies when a restructuring effort is required. Although Finland and Norway as Nordic states are similar in many respects, large institutional differences that affect restructuring are visible. Norway has traditionally had a strong community-­based regional administrative system while in Finland a similar system has emerged only during the past two decades. In Norway the institutional differences have contributed to the establishment of a restructuring apparatus, which does not really have an equivalent in Finland. The case analysed in this chapter is the town of Kaskö, a small, peripheral municipality located in the sub-­region of Southern Ostrobothnia, about 100 km away from a regional growth centre. Until recently, the town was dominated by MetsäBotnia, a pulp factory which started its operations in 1977. Of the town’s 1,400 inhabitants, 400 are employees of the company. It is interesting to draw comparisons between the case of Kaskö and the Norwegian approach to local and regional industrial restructuring, with regards to administrative structure and tradition, for example. Kaskö represents a case where regional cooperation related to development has largely failed. The purpose of this chapter is to draw attention to some crucial elements in institutional structures and in national legislation for restructuring possibilities.

Structure of regional administration and its development in Finland and Norway Norway and Finland have the same Nordic legacy in public administration and share many characteristics. Both countries are unitary states with strong municipal governing bodies and, on the other hand, traditionally weak regional governing structures. The administrative framework is important as it relates to the possibilities that exist for regional restructuring. In what follows, the regional administration systems, regional organizations and regional development programmes in both countries will be examined, as all of these elements are essential for regional restructuring. Norway The regional structure in Norway is an old construction, dating back to the early centuries of the last millennium. The regional divisions existing today have been largely the same for several centuries. Norway currently has 19 counties

288   K. Nordberg (fylken). The importance of the counties increased significantly in 1976 when a separate county tax and direct elections were introduced. Additionally, a separate county administration was established with the assignment to carry through the county planning. Previously, the counties were indirectly elected and financed by the municipalities (NOU 2000: 137–41; Bukve 2008: 19). Another adjustment was the free municipal experiment (frikommunforsøket) of 1987–92, which allowed 20 municipalities and six counties to develop autonomous strategies in order to become more democratic and efficient. The experiment changed the relationship between the state and the counties and raised awareness of the importance of an autonomous regional policy. In practice, new political and administrative routines were introduced by the counties for strategic planning, agreements of intent, and project organization (Grindheim 2004: 59–60). During the last two decades, the position of the counties has weakened substantially. Many small adjustments have transferred responsibilities from the counties mainly to state regional offices. This paradoxically happened during a period when the public debate has emphasized the position of counties as leading organizational structures in regional development. In 1993, the Norwegian Industrial and Regional Development Fund (SND) was set up by merging previous district funds and industrial funds. The effect of this has been the increase in the number of regional offices, as the SND established local offices in each county. The counties have consequently lost the responsibility for the allocation of business support measures in 1997, as this has been transferred to state regional agencies. Later, the SND merged together with three state councils to form Innovasjon Norge (formed in 2003), a state regional organization, with the purpose of developing state districts and business innovation on a regional level. In 2002, the counties lost responsibility for health and social services, which changed their position fundamentally. Prior to the reform, health and social services occupied 61 per cent of the county budgets and with the reform these services were transferred to five health regions under state responsibility (Grindheim 2004: 61). The most important responsibilities of the counties now, after the reforms, are regional planning, regional development, secondary schools, public transportation, social welfare and cultural services (Grindheim 2004: 68). The state also has a representative on the county level in the form of a county governor whose task is to supervise the municipalities, but they may also inspect decisions regarding health, social welfare, education, building regulations and planning. The parliamentary report from 1997 states that ‘the County Governor and regional government agencies are the key players on the county level’, and that ‘to achieve good coordination between democratically elected bodies at the county level, it is important that the County Governor participate actively in the work’ (St. Meld. Nr. 31 1996–97). However, the governor intervenes to a very small degree in the politics of the county authorities. Instead, the county authorities are sector-­specifically subordinate to the ministries on a functional basis. Beside the County Governor, there are 40 state agencies on the regional level (Bukve 2008: 18). These circumstances display the strong tradition of centralized rule in Norway.

Restructuring in small industrial towns   289 Whilst losing responsibilities in many areas of governance, the counties managed to keep the responsibility for regional development through the Regional Development Programme (Regionaltutviklingsprogram, RUP, established in 1995). Through this programme counties hold the responsibility for the allocation of development funding to the implementing bodies: InnovasjonNorge, the municipalities and the Agricultural Development Agency. In addition to the RUP, the planning process involves County Plans (Fylkesplaner) and Strategic Business Plans (Strategiske næringsplaner, SNP). The County Plan and the Regional Development Programme are pivotal with regards to the county’s role as a leading actor in regional development. The County Plan sets up goals and strategies for the development of the community, either through sector plans (county schemes) or through the County Plan as a whole, and the content can be decided according to how urgent different challenges are. In many cases, the County Plan represents a regional interpretation of government initiatives in various topics. However, the Strategic Business Plan (SNP) represents the overall business development policy in the counties and is therefore a key policy document. The SNP is developed by the municipality through collaboration between business representatives, civil associations and public municipal institutions, and it must be approved by the municipal council in order for it to come into force (Karlsen and Lindeløv 1998: 18). While the County Plan and the Strategic Business Plan are mainly oriented towards goals and strategies, the Regional Development Programme focuses on the actions and measures that are to be implemented in the near future. The Regional Development Programmes are usually developed in collaboration with the various departments of the county council, government agencies at the regional level, municipalities, business organizations, educational and research institutions, amongst others. The Regional Development Programme represents a tool for the state and the county to use when taking action for the development of a region. The RUP is important with regards to the spending of loans and grants received from the Norwegian Industrial and Regional Development Fund (SND), funds from the County Department of Agriculture, the County’s Business Fund and different state funds for business development and establishment grants. Accordingly, the RUP grants the counties a central position as a coordinating body of business development efforts in their region (Leknes 2002). The structure of the Regional Development Programme in Norway is evidently influenced by the regional policy of the European Union. The counties are required to write a regional development programme in cooperation with key regional actors, including labour, trade and industry, and thereby to develop a partnership model as well as formulate a collective goal for the county. This programme must, however, be in accordance with national goals mapped out by the government. A study made in 2004 (Grindheim 2004: 67), investigating the budgets of three regions, shows that the budgets of the Regional Programme mainly consisted of transfers from the state to the regional governing bodies. Because of increased international interaction, however, the counties have improved their status in the recent decades (Grindheim 2004: 72). In accordance

290   K. Nordberg with the following description it is possible to conclude that the introduction of the Norwegian Industrial and Regional Development Fund, Innovasjon Norge, and of the Regional Development Programme, established a two-­tier system in development on a regional level. Finland Today’s regional system in Finland, formed in the last two decades, is a very recent construction. Finland is a Nordic unitary state, and thereby traditionally the state has been granted significant power and it has had a strong influence on the local level. The municipalities own taxation rights and have control over the health care services and elementary education. However, a locally tied regional structure has historically not existed in Finland, instead, it has been divided into state districts. The title ‘landskap’ (maakunta in Finnish) was first recorded in 1526 (Westerlund 1989: 87) under the Swedish rule, and in 1630 these ‘landskap’ were renamed and transformed into five ‘län’ (State Provincial Offices). Later reforms increased the number of State Provincial Offices to 12, and these were the main regional bodies in Finland until the introduction of the regional administration reforms in the 1990s. The preparation for an eventual EU membership demanded extensive adjustments in the administration system in Finland, even more than in Norway. The country did not have locally committed regional bodies, which were a requirement for the structural funds of the union. ‘Landskap’ was reintroduced as a title for regional units, when 21 ‘Landskapsförbund’ (today 18, in English Regional Councils) were formed as municipal cooperation bodies in 1994. The Regional Councils were largely based in the Regional Planning Offices, which were municipal cooperation units for land use planning. This activity, together with the responsibility for regional development, is a primary function of the Regional Councils today. They are formally the receiving unit for EU structural funding, although this activity is largely shared with the state regional institution (previously TE-­centre, now ELY-­centre). The council’s activity also has an important international dimension, as it is responsible for international issues and contacts. At the same time as the Regional Councils were formed in the 1990s, the state regional administration also went through a complete restructuring. A number of reforms followed, and finally in 2010 a substantial reform merged a number of state agencies and organizations to form only two state regional units: the Regional State Administrative Agency (AVI from the Finnish abbreviation) and the Centre for Economic Development, Transport and the Environment (ELY in Finnish). In the context of the present chapter the ELY-­centres are more important, since the AVI-­centres mainly handle tasks connected to permits and legal rights. The ELY-­centres are responsible for promoting regional competitiveness, well-­being and sustainable development, and for managing the regional implementation and development tasks of the state administration. As a consequence of the aforementioned reforms, the Regional Council, established in 1994, in fact became the institution offering the longest continuity

Restructuring in small industrial towns   291 in regional administration in Finland. Finland currently functions with a two-­tier system in the sphere of regional development: the Regional Councils possess the formal responsibility for regional development, while funding is mainly handled by the ELY-­centre. The Regional Council controls regional development by writing their development programmes and gathering regional stakeholders to discuss the development of the region following EU and state given directives. On the basis of these discussions, the Council writes a long-­term Regional Scheme, sketching out a development plan for the region for several decades ahead (currently up to the year 2040), and a four-­year development programme, the Regional Programme. On an annual basis, the Regional Management Committee (a regional body gathered together by the Regional Council, consisting of private, public and civil sector representatives) develops a Regional Plan for the coming year. The Scheme and the Programme should, according to legislation, be the leading programmes on a regional level, but the Regional Council does not dispose of the means for imposing the implementation of these programmes and therefore their actual relevance is not definite. With regards to the development programmes there are two national programmes of importance to regional development: the Regional Cohesion and Competitiveness Programme (COCO) and the Centre of Expertise Programme (OSKE). COCO is a special programme for developing regional policy administered by the government, and more specifically it is the Ministry of Employment and the Economy that is responsible for the national coordination of this programme. The COCO programme emphasizes competence and deeper regional profiling, based on the strengths of the region, and it is financed by the Ministry of Employment and the Economy and individual municipalities. It was launched in order to function in the period 2010–13, but was terminated in January 2012, because of cutbacks in the state budget. OSKE, established in 1994, is a special government programme promoting the utilization of knowledge in different regions. During the term of 2007–13, the programme is being implemented on a regional cluster-­based model, and it draws special attention to regional strengths, areas of regional specialization and cooperation between centres of expertise. The programme is coordinated and financed by the Ministry of Employment and the Economy. As an EU member, Finland is also subject to EU funding. Important for regional development are the Structural Funds and the European Agricultural Fund for Rural Development (EAFRD). The proposal for Structural Funds for the programme in the period of 2007–13 emphasizes regional competitiveness, specialization, employment, and that each region should have ‘a joint working table’. Innovation networks, know-­how structures, accessibility, and an operating environment are mentioned as important focus points in the funding strategy.

Restructuring policy in Norway Looking at restructuring policies in small, geographically isolated one-­company towns, Norway offers a good place to study. In Norway, industrial clusters have been built on the basis of having access to natural resources – mainly fish, forest,

292   K. Nordberg ore, farming products and, not least, hydropower. This concentration of industry around natural resources, together with the Norwegian tradition of emphasizing the importance of locality in the regulation of business, entailed an emergence of a large variety of one-­company towns (Mariussen 1996: 10–11). In the wake of the economic recession in the 1970s, ‘Buviksutvalget’ identified 104 small industrial towns spread all around the country. Buviksutvalget, an official report of the Norwegian state (NOU 1983), to a large extent forms the basis for the restructuring policy which presently operates in Norway. Buviksutvalget marked a turning point in the change from crisis-­based interventions to a precaution based approach. The question posed by Buviksutvalget was how the employment situation could be improved in these small and economically declining peripheral towns. In the 1970s Norway, similar to other countries, experienced a decline in their until then steadily growing economy as a result of the Second World War, and the aim was to meet the challenges of the crisis by supporting weak companies, with the hope of improving the economic situation. On the other hand, Buviksutvalget steered the development of restructuring efforts away from this kind of strategy. The notion of crises as a result of economic fluctuations was rejected and instead it was argued that they were caused by the fact that one-­ company towns relied on only one business branch, and sometimes even just one company (Mariussen and Karlsen 1997: 4). A market-­led restructuring policy was a popular method for confronting the crisis in many Western countries in the 1980s, especially in Great Britain. The idea was to allow declining companies to take care of themselves, and to expect increased foreign investments and a rise in entrepreneurship as a result of the workforce that was made available as a consequence of closedowns in the declining industry. Instead, Buviksutvalget argued that the small and peripheral towns in Norway were not attractive to outside investment, nor was labour less expensive than anywhere else. The circumstances were different in Norway, and Buviksutvalget feared that many small towns would diminish with the enormous infrastructural and social costs the relocation of a community would cause. Buviksutvalget raised concern for the survival of the town rather than for supporting the cornerstone company. As opposed to the market-­led approach, this was a collaborative answer to the economic challenges (Mariussen and Karlsen 1997: 6). In any case, looking at the situation today, nearly 30 years later, increasing globalization has amplified the competition for investment and cheap labour considerably. Buviksutvalget pushed for the measures to be focused on converting the activity of the cornerstone company towards a more diverse economic set-­up in the town. This would then be accomplished over a long period of time through a broad planning effort involving regional actors from both the private and the public sectors. However, such a precaution-­based effort is not easy to achieve. For example, one aggravating circumstance is that the cornerstone company in a one-­company town often gives rise to normative control, where small businesses representing other business branches have difficulties establishing themselves in

Restructuring in small industrial towns   293 the community. Usually, the small companies that emerge act as subcontractors for the cornerstone company, or in any case are closely linked to its activities. Furthermore, also the cornerstone company is interested in preventing the establishment of competing industries, because of the competition for labour. At the same time, the community often attempts to protect and maintain the existing structure because of the security it offers and often many of the public services are designed to suit the needs and character of the cornerstone company. These circumstances often easily cause the community to suppress warning signs of a sharp decline of the cornerstone company (Mariussen and Karlsen 1997: 8). The modification of restructuring efforts in Norway that Buvikutvalget initiated can be described as a move from crisis-­based to precaution-­based interventions. Crisis-­based interventions represent measures that are taken only after a cornerstone company is announced to be shut down. Precaution-­based interventions on the other hand are a consequence of a shared understanding within the community of the vulnerability of the location. The effort involves the whole community and is continuous. According to a research report written in the late 1990s (Karlsen and Lindeløv 1998: 8), crisis-­based interventions significantly decreased in Norway from the 1980s to the 1990s, while precaution-­based interventions increased. The grounds for the allocation of restructuring resources changed from being directly connected to crisis situations in the 1980s, to a situation in the 1990s, where the grounds for resource allocation are often connected to situations that can occur in the future. Karlsen and Lindeløv claim this shift to be a result of practical experiences, where the authorities have realized the importance of getting ahead of the crisis. This development of funding for restructuring in Norway is in line with the regional policy of the Structural Funds of the European Union, which will be addressed in the Finnish case later in the chapter. In comparison with crisis-­based interaction, precaution-­based interaction is more demanding to carry through. There are higher demands on consensus among regional actors as well as on broad participation and accountability. One could argue that consensus on an issue as broad as the restructuring of the economy of a whole society requires a crisis, and the possibilities for precaution­based interventions are therefore determined by the potential for reflection on possible crisis opportunities in the future. On the other hand, having a discussion on restructuring on the daily agenda forces regional actors to constantly reflect on the economic development of the region, which of course improves the economic dynamics of the region (Karlsen and Lindeløv 1998: 14). The Norwegian process of restructuring presented here is not, however, the reality in all cases in Norway, but instead an ideal case of restructuring. This ideal process will be further recaptured in five phases, as presented in the aforementioned research report by Karlsen and Lindeløv (1998: 17–26). The report meritoriously describes the course this policy has taken after interaction between political measures and practical experiences has occurred. Already from the starting point it is evident that consensus about the process and its aims must be reached, and the process of legitimization is important throughout the procedure. The phases identified by Karlsen and Lindeløv are the following:

294   K. Nordberg The scanning process The scanning process is mainly a bargaining game between the municipality and the government authorities concerning funds for restructuring. The distribution of funds depends on whether the municipal agents can convincingly describe the requirements for the restructuring of their municipality. The individual skills of the chairman of the municipality are crucial, since this person often becomes the public face of the restructuring process. The mobilization process The mobilization process should involve the widest possible number of local actors and all sectors of society should be represented in order to achieve consensus, to enhance the sense of involvement in the community and to achieve collective brainstorming with regards to the economic development of the municipality. A successful process of mobilization creates a sense of project ownership for the participants. The process must be idea-­generating and it must have a legitimizing function. The process of restructuring thereby receives legitimacy by virtue of its character as a democratic process. The planning process The planning process might appear to be a procedure carried out in the wake of the mobilization process, but is in reality an integral part of this. The mobilization process collects a number of ideas and proposals that suggest different directions for the development of the region. In the planning process a number of industry branches and projects are selected to be focused on, after which they are connected to a solid support base made up of industry representatives. Ideally, the process should be communicative, with participants being aware of the need for compromises and of the fact that not all projects can be effective. Thus, an action plan is developed based on the Strategic Business Plans (SNP). The planning document easily becomes just a means to obtain funds, i.e. the communicative process disappears. The plan thereby ends up being little more than a wish list, and when the plan is converted into reality, room for interaction must be allowed. A long period of time is required for consensus to be reached and an operational network involving key players in politics, business and organizations is also necessary. Establishment of the restructuring apparatus Establishing a restructuring organization in practice implies that the decision be made in the location that has been granted responsibility, usually a special business development agency. Placing development responsibilities outside the municipal administration is motivated by the often paternalistic role of the cornerstone company in the small community. In addition, in terms of resources a

Restructuring in small industrial towns   295 small town has limited possibilities to sustain such an activity. Simplification is also an important favourable component – companies need to apply to only one organization. A separate organization also provides greater discretion, decision efficiency and professional autonomy as a consequence of democratic processes being left outside of these matters. This can of course be problematic from a democratic point of view and, consequently, some kind of representation would be preferable. SNP should be a tool that the municipality uses to steer or control the business development agency, although one possible difficulty regarding this scenario is the scarcity of feedback given to the municipality. To succeed in the task, it is important that business representatives participate in the process. Another common complicating factor is the business tradition of confidentiality and of making rapid decisions, the consequence of this being the often closed discussions that the public is unable to take part in. However, because of the competitiveness of business organizations in Norway, this is considered legitimate, even though it does not meet the requirements of a communicative and democratic process. Consequently, there is a limit to how much of a closed process is allowed, and it is important that the municipality is involved in the development work. Operation Ideally, the operation of the restructuring process should comply with the strategies and action plans that have been agreed upon. The business development agency should select projects that have been accepted for funding, as well as act as an implementing body for the SNP, and as a ‘mail box’ for applications. The SNP provides the guidelines for the acceptance of projects. In conclusion, if a region wishes to conduct a long-­term restructuring process that is characterized by contingency, demands for mutual understanding, broad regional participation, accountability and legitimization are raised. To help with these challenges, Karlsen and Lindeløv present three important factors for a successful process: • • •

Communication is important for the participants in order for them to understand and accept the transition from idea generation to the selection process. Strategy, planning and implementation must be anchored to each other. This is done by the involvement of regional actors in all the different phases of the process and by providing feedback throughout its development. The fact that the responsibility is placed on one organization should not mean that no other organization is liable. Restructuring must operate as a partnership.

Omstillingslova 2008 In 2008, a new legislation for restructuring was enacted in Norway. This new act, Omstillingslova (Act on Notification of Closure of Business, LOV

296   K. Nordberg 2008–06–06 nr 38), essentially sets out a notification requirement for companies that intend to terminate their business, forcing them to participate in discussions. This is done with the aim of finding alternatives for closing down, thus stopping the process before it is carried through. Earlier, the company was only obliged to notify employees of the termination of activity (in accordance with EU policy on the same matter). The Act involves companies with 30 employees or more that are in a situation where closing down or the dismissal of more than 90 per cent of the workforce is considered. Closure due to bankruptcy is not subject to the Act. The required notification should be public and delivered to the regional authorities at least 30 days before the actual closedown of operations, thereby supporting a process of restructuring and dialogue between the company, regional and state authorities, employees and other stakeholders. Omstillingslova should be perceived as the latest development in the Norwegian restructuring policy described above, strengthening the possibilities for a continuous restructuring policy. The main objective of the Act is to force companies to take responsibility for the local community affected by its actions. A further aim of the Act is to reduce negative consequences of closure, and if the appropriate business requirements exist, the expectation is that the entire company, or parts of it, continues its activities. In addition to this, available labour and capital should be invested in new and profitable businesses. Omstillingslova also allows the possibility for employees to acquire the business. The labour legislation in Norway obliges the company to inform employees about the closure, but does not give employees the right to take over the business. Now, however, the company is forced by the Act to discuss compensation and restructuring possibilities for the employees, as well as possible business policy measures by which the company can support the community. In a recommendation to the parliament, the Business Committee presented a series of beneficial effects that the enactment of the legislative bill would have on restructuring (see Næringskomiteen 2008). With the notification requirement, the aim is to increase dialogue between the company, regional authorities and other important actors. The dialogue should make alternatives to the closure visible and the legislation should ensure that dialogue starts as early as possible. According to the Business Committee, the economic benefit for the community is tied to enhanced transparency in the restructuring process, as stakeholders receive more accurate information about restructuring requirements at an earlier stage. A public notification can simplify the accessing of information for potential investors. According to the Act for Restructuring (LOV 2008–06–06 nr 38) the company must compose a notification containing: • • • •

the number of employees working at the company; information about the activities of the company; an assessment of the consequences for the employees and the local community in the event of the closedown of the company; background to the plans for closure;

Restructuring in small industrial towns   297 • • •

information about what assessments the owner or others have made about alternative activities; an assessment of what is necessary for the activities to continue; information about negotiations with the employees about the closure.

The notification must be sent in to the county authorities at least 30 days before the closure. In special cases, the county has the right to prolong this period of time to up to another 30 days. After receiving the notification, the county will gather together representatives from the company directors, the employees, the municipality, the state regional development agency (Innovasjon Norge), and the Labour and Welfare Agency, for a discussion. The group then has to discuss possibilities for a continuation of operations and evaluate alternatives to the closedown. Compensation and restructuring possibilities for the employees and the community should also be evaluated.

Restructuring in Finland: the case of Kaskö The case study in Finland for comparison with the Norwegian model of restructuring is the town of Kaskö, situated on the west coast of Finland, in the very south of the region of Ostrobothnia, far away from any centre of economic growth. The case is studied partially with the help of local historical material, but mainly through interviews with 13 key actors in the region. First, however, restructuring policy in Finland will be investigated. Regional development policy in Finland Joining the European Union meant that a locally tied regional administration body had to be constructed in Finland. This also meant that developing a more coherent locally generated regional development policy became possible. According to the Regional Development Act from 2009 (1651/2009), the government and the municipalities are both responsible for regional development in Finland today. It also states that the Regional Councils are responsible for managing the development, which is done through writing the Regional Scheme and the Regional Programme. The regional state authority responsible for regional development is the Centre for Economic Development, Transport and the Environment (ELY-­centre). The ELY-­centre is also responsible for a functional labour market (897/2009 3§) and organizes business support and labour market services on a regional level, though in practice, regional development is handled through collaboration between the Regional Councils and the ELY-­centres. The regional policy of the European Union is important for regional development because, as previously mentioned, the Structural Funds and the funds for rural development are vital sources for development funding. This, along with state development funds, encourages precaution-­based development somewhat similar to the Norwegian case. The Structural Funds also finance crisis-­based efforts.

298   K. Nordberg The Regional Scheme and the Regional Programme provide guidelines for development on a regional level. On a sub-­regional level, Business Development Agencies have been established to promote the development of each sub-­region. These agencies manage the Regional Cohesion and Competitiveness Programme (COCO) mentioned previously, and write up a regional strategy for the sub-­ region in which the agency is operating. The strategy is based on the Regional Programme and during the planning process key actors, such as elected officials, business representatives and NGOs, are gathered together in the sub-­region. In Finland, these business development agencies are recent constructions as many of them were founded during the last two decades. When COCO was terminated in early 2012, the Business Development Agencies lost an important part of their activity. Of course, peripheral areas have more difficulties maintaining business development activities on their own. With regards to the case presented here, the three towns in the sub-­region of Southern Ostrobothnia have been gathered around COCO for the development of the region (see Figure 10.2 on p. 301). The COCO programme has been handled by Dynamo, the business development agency of Närpes, the largest town in Southern Ostrobothnia. Southern Ostrobothnia has a history of cooperation difficulties, which became evident when an attempt to found a business development agency for the whole sub-­region failed in 2010 (see pp. 300–2). Sudden and proactive restructuring policy in Finland In Finland, a model for restructuring that responds to sudden and substantial layoffs has been constructed on the basis of experiences from the Voikkaa case in 2005 (see Ahlberg 2008 for a description of this case). Following this model, the Ministry of Employment and the Economy sets up a working group gathering together central labour market organizations, and decides whether the region should be classified as an area in need of sudden restructuring funding. On a regional level, the regional state organization ELY gathers together a working group consisting of employment agencies, affected municipalities, business development agencies, the employer in question, and the employees. Re-­ education of employees and support for new businesses are important components in the model. Providing employees and firms in the area with information about new jobs, new business solutions and education is essential in order to rapidly initiate a development process in the region. In this process, the cooperativeness of the company in question is decisive (Mäkitalo and Paasivirta 2011). The above-­mentioned model was also used as a guideline in the restructuring process in Kaskö. Despite this, the course of events in the case of Kaskö differs sharply from other cases in Finland. Mäkitalo and Paasivirta (2011) point to the Kaskö case as the largest failure in the Finnish restructuring model in recent years. Especially notable compared to other similar cases in Finland is the lack of social responsibility on the part of Metsä-Botnia, the company terminating operations in Kaskö. In Kajaani, for instance, following the closedown of the paper mill in 2008 and the termination of the contracts of 535 employees, the

Restructuring in small industrial towns   299 company UPM provided 16 million euros for the modification of the factory facilities and for funding other restructuring measures. In early 2011, after declaring the termination of the production of their mobile operating system Symbian, Nokia announced their commitment to supporting the restructuring process in affected areas financially, with technology, as well as with know-­how. In Jyväskylä in 2009, Metso and Nokia simultaneously terminated the contracts of a substantial number of employees, though both companies participated actively in the restructuring processes, which produced new education programmes and innovative environments (Mäkitalo and Paasivirta 2011: 81–6). The description of events in the Kaskö case depicts vast differences compared to the above-­ mentioned cases in the attitude displayed by Metsä-Botnia. Taking into account social responsibility is generally a standard element in restructuring cases in Finland, though such efforts are not required by law. The case of Kaskö draws attention to the necessity of such legislation. During recent years, the Finnish government has understood the importance of getting ahead of large industry closedowns. In 2009, the Ministry for Employment and the Economy in cooperation with the paper company Stora Enso initiated the development of a model for proactive restructuring. With this model, restructuring efforts are initiated prior to the closedown, allowing new businesses into the factory area and making use of facilities, infrastructure and equipment already in place. The efforts are financed equally by the ministry and the company in question (Mäkitalo and Paasivirta 2011: 80). This is a model that is in line with the Norwegian approach to restructuring, though it needs comparable legislation to back it up. Restructuring legislation in Finland Finland does not have a legislation equivalent to the Notification Act of Closure, i.e. an Act endorsing a more continuous restructuring process, which is present in Norway. Norwegian legislation obliges the company in question to take responsibility for the community it operates in, while the Finnish legislation only requires the company to take care of the employees. In addition, the Norwegian legislation offers a 30-day extension time in the case of a closedown, while the Finnish legislation does not. In cases of closures, Finland complies with EU directives for informing and consulting employees (2002/14/EG), and for collective redundancies (1998/59/ EG). These legislations declare that ‘information, consultation and participation for workers must be developed’ (2002/14/EG), and that ‘where an employer is contemplating collective redundancies, he shall begin consultations with the workers’ representatives in good time with a view of reaching an agreement’ (1998/59/EG). These directives are closely followed in Finnish legislation in the Act on Co-­operation within Undertakings (334/2007). This Act states explicitly that a cooperative negotiation in the case of a closedown is a matter between the employer and the employee (§7, §46), and the law obliges no liability for the company with regards to the community. However, the company, together with

300

K. Nordberg

the employment authorities, is obliged to investigate public employment services that promote job opportunities (§48). The town o f Kasko and the sub-region o f Southern Ostrobothnia The town of Kasko is situated in the very south of the region of Ostrobothnia in Finland. Kasko is a peripheral town, situated in a rural area 100 kilometres from the regional centre. Kasko was founded in 1785, and is consequently not a genuine one-generation town in the true sense of the term. However, a change of government economic policy meant that competition with other cities and har­ bours along the Finnish west coast - Kristinestad, Bjorneborg, Vaasa and Gamlakarleby - from the very beginning, gave little room for Kasko to ‘take off’ as a centre for foreign trade or an industrial city (Rasanen 1985: 21-2). When the Metsa-Botnia factory was established in 1977, Kasko was a diminishing town with around 1,300 inhabitants (see Figure 10.1). With the setting up of the factory, the population increased with almost 600 inhabitants. In this sense, Kasko became a typical one-company town for 35 years, completely dominated by its largest employer, the pulp mill owned by Metsa-Botnia. Finland is a bilingual country, with both Finnish and Swedish as official lan­ guages. Swedish is spoken by a 5 per cent minority situated along the coastline in the south and to the west. Kasko changed from being a predominantly Swedish-speaking town prior to the establishment of the factory, to a 70/30 ratio in favour of the Finnish-speaking population. These language differences, amongst other culturally tied factors, create a peculiar situation for cooperation in the area. Kasko is part of the sub-region of Southern Ostrobothnia, which consist of Narpes, with a 90 per cent Swedish-speaking population, and 2000 1800 1600 1400 1200 1000 800 600 400 200 0

Year

Figure 10.1 Population development in Kasko 1785-2010 (Rasanen 1985; Statistics Finland).

Restructuring in small industrial towns

301

Kristinestad with a nearly 50/50 language ratio (Figure 10.2). In total, about 18,000 inhabitants live in the sub-region, of which about 5,000 are Finnish­ speaking. Traditionally, cooperation between the municipalities has been com­ plicated and Kasko acts with caution at the prospect of falling under the administration of the Swedish-speaking Narpes while at the same time maintain­ ing close connections with Teuva, the bordering municipality to the east. Teuva is monolingually Finnish and administered by the neighbouring region to the east and part of the Finnish speaking sub-region of Suupohja. Many of the workers at the factory in Kasko lived in or were originally from Teuva. Con­ sequently, and as one can expect, a part of the Finnish-speaking population in

S w e d ish F innish B ilin g u a l

Figure 10.2 Southern Ostrobothnia and a part of Suupohja. Southern Ostrobothnia (Närpes, Kristinestad, Kaskö) is predominantly Swedish-speaking, while neighbouring municipalities are monolingually Finnish-speaking.

302   K. Nordberg Kaskö feel more closely connected to Teuva and Karijoki than Närpes and Kristinestad. The tradition of cooperation between municipalities in Southern Ostrobothnia has historically been weak. Recent pressure from the government to merge small municipalities has drawn attention to this fact, but still there is no solution in sight. From the point of view of regional politicians and stakeholders outside Kaskö, the presence of the Metsä-Botnia pulp mill enhanced these difficulties. As a consequence of the strong economic position the factory offered, these actors experienced reluctance from Kaskö to cooperate, despite attempts being made. The standpoint of Kaskö would have been that everyone must safeguard their interests. Another example of difficulties with regards to initiating closer cooperation is the failed plans to establish a common development agency for all the three municipalities in Southern Ostrobothnia. This initiative tried to meet the demands that occurred when the factory was shut down, but failed because Kristinestad had already started planning its own business development agency. Instead of establishing a development agency for the whole sub-­region, there is now one development agency in Närpes, and one in Kristinestad, while Kaskö cooperates with Teuva through the NBB2 project. Policy interventions – main actors, coordination and process of intervention When asked about the possible closure of Metsä-Botnia’s pulp mill before it actually closed down, both the town of Kaskö and the mill workers stated that the mill was well maintained and would not be closed down in the foreseeable future. Metsä-Botnia never communicated clearly that a closure would occur, which somewhat prevented pre-­emptive measures. The manager of the ELY-­ centre in Ostrobothnia has stated that normally the procedure for the restructuring process closely follows the standard model of restructuring used in Finland in these kinds of cases, where first, a working group is assembled, and then employment and enterprise measures are taken. However, the passivity on the part of Metsä-Botnia stands out compared to similar cases. When the final decision for the closedown of the mill had been taken, a working group was appointed by ELY, including actors from the Regional Council of Ostrobothnia, Regional Council of South Ostrobothnia, the ELY-­centre, the local Employment Office, and the city of Kaskö, as well as other affected municipalities. The working group applied for the whole sub-­region of Southern Ostrobothnia to receive status of an area for structural transformation, though the application was not successful. This is usually the case when a factory closedown occurs as it did with the Metsä-Botnia mill. Instead, the Ministry of Employment and the Economy decided that only the city of Kaskö should be classified as an area for structural transformation, because the neighbouring municipalities Kristinestad and Närpes had such a low unemployment rate (just above 2 per cent at the time). As a consequence, Kaskö does not qualify as an area in need of special development

Restructuring in small industrial towns   303 support and cannot receive support for building facilities for companies interested in establishing themselves in the town. This has been an obstacle for Kaskö when seeking new investors. State funding is, however, offered directly as investment subsidies to new businesses. Support percentages have been 20 per cent for small companies and 10 per cent for larger ones. A sum of 2.1 million euro has been assigned to Kaskö for this purpose. In February 2009 Kaskö received the status of an area for structural transformation, allowing the city to apply for ERDF funding. Two consecutive Nova Business Botnica-­projects have been funded by ERDF (see below). The Employment Offices have also been active, especially through the Botnia Progress project. The project enabled the retraining of workers as well as supporting start-­ ups of new companies. Nova Business Botnica The ERDF-­funded Nova Business Botnica projects constituted the main restructuring effort organized in the Kaskö region. The total budget of the two projects reached 513,000 euro, of which ERDF and the town of Kaskö accounted for the largest part. Metsä-Botnia invested 80,000 euro. Two projects were deployed in sequence and these can be considered as crisis-­based action, a short-­term operation to attract new investors to the town of Kaskö. The first initiative was taken by a working group dealing with structural change, where the Regional Council, ELY and the municipalities in the area were represented. The business development agency in Närpes was appointed to write the development programme for the project. The objectives of the projects were the following: •

• •

Investigate the potential of new business ideas of MB’s employees and their interests in entrepreneurship, and direct these potential new entrepreneurs to receive business advice and support. Support development of existing business in the region. Find and attract new business, mainly to Metsä-Botnia’s factory premises. This is done in cooperation with Metsä-Botnia. A ‘Business Park’ vision. Develop the industrial area, the factory and the offices, together with the harbour and the infrastructure.

The project was a failure and did not achieve any new companies or jobs within the time limit of the project. This was, according to the manager of the project, mainly because of two things: • •

The global economic recession. The company contacts were made when entrepreneurs did not have the means to carry out new investments. Metsä-Botnia consistently displayed reluctance with regards to other companies moving into their old factory area. This was justified by referring to M-­Real (a factory still operating in the industrial area, partly owned by Metsä-Botnia) and the possible disturbance of their production. The

304

K. Nordberg promises from Metsa-Botnia about what establishments were possible in the factory area were somewhat confused. The third objective, the Business Park vision, was not realistic considering the attitude Metsa-Botnia expressed with regards to possible establishments.

The second Nova Business Botnica project worked in line with the first project, however neglecting the Business Park vision. The main effort of both projects was to attract new companies. This was done basically through ‘bulk mailing’ 1,300 contacts were made by the first project and 6,500 by the second project. In addition to the second project, another short-term development project was realized through the local employment office. This project, Botnia Progress, diminished the effects of the closedown by retraining a number of redundant workers and creating new entrepreneurship, through which also a small number of one-man firms were founded. W hat can Finland learn from Norway? For the purpose of transferring practices from Norway to Finland, two regional seminars have been arranged in Finland. The seminars have gathered local and regional actors and the Norwegian model has been presented by researchers from the LUBAT project. In the following, a summary of these seminars will be pre­ sented through an interpretation of Nonaka and Takeuchi’s SECI model (1995). The discussions during the seminars will be analysed by looking at three main characteristics of the Norwegian model for restructuring: the long-term stance to restructuring, the regional approach to restructuring and the legislative obliga­ tions that exist for the company. These three issues are regarded as the most significant and potent differences between transnational learning concerning the restructuring of industrial towns in Finland and Norway.

1.

2.

Socialization: sharing of tacit knowledge

Externalization: creating common concepts

Method of restructuring in Kasko and Norway

Similarities and differences between the two methods

3.

4.

5.

Externalization: assessing the concepts

Combination: creating an archetype

W hich concepts are beneficial In the context of the other country?

In what way can beneficial concepts be implemented?

Internalization: crossleveling, explicit knowledge New concepts are tested in practice

Figure 10.3 Stages in transnational learning. Interpretation of the SECI model (Nonaka and Takeuchi 1995).

Restructuring in small industrial towns   305 Five stages are used to analyse the seminars, as seen in Figure 10.3. The first seminar, held in Kaskö on 5 October 2011, reached the third point, while the second seminar in Vaasa, five months later, reached the fourth point of the model. As the LUBAT research project continues, the expectation is that the fifth and last point of the model can be reached by testing the new concept. The learning seminars The first seminar took place in Kaskö on 5 October 2011, and mainly gathered actors from the sub-­region of Southern Ostrobothnia. Politicians and civil servants from Kaskö were represented, as well as representatives from the local employment office, the business development agency in Närpes, and previous employees from the Metsä-Botnia pulp mill. The seminar lacked representatives from regional authorities. The seminar reached the third point on the SECI interpretation, which is summarized in Table 10.1. The second seminar took place in Vaasa on 16 March 2012. The aim of this seminar was to achieve the next step in the SECI model, to combine practices to form an archetype for handling restructuring. For this purpose, the engagement of actors from the regional administration was necessary. This was a smaller seminar, with one representative from the Regional Council of Ostrobothnia, one from ELY and one from a business development agency in Närpes. The seminar is summarized in Table 10.2. The two first steps are similar to the seminar in Kaskö, and are consequently left out of this compilation.

Conclusions The threat that a closedown of the main industry implies in all one-­company towns should always encourage efforts for diversifying the economic life of the town. The efforts to meet the challenges created by the closedown in Kaskö were mainly short term, and searching for replacement companies was the main goal of the development projects that were launched. This set-­up is similar to the market-­based measures made in Great Britain in the 1980s and in Finland in the 1990s. Some entrepreneurs were supported in Kaskö, but there were no successful efforts to bring about a permanent support organization for the development of the labour market in the Southern Ostrobothnia region. The stakeholders interviewed in the region clearly expressed that on the global market the attractiveness for exogenous investment is limited for a small peripheral town. The difference in legislation between the countries becomes evident when the behaviour of the company, in this case Metsä-Botnia, is analysed. With the Norwegian Omstillingslova, Kaskö would eventually have had a better chance of coordinating the allocated resources. Development planning does to an extent exist in Finland, carried out through the Regional Programme of the Regional Council and development programmes of the sub-­regions. However, a comparison with the Norwegian tradition of restructuring draws attention to the fact that the regional planning process there

3. National legislation

Norway: the responsibility for restructuring is administered on a regional level.

2. Regional approach to restructuring

Norway: the Norwegian legislation commits companies to assuming responsibility over the local community. The legislation does not only give the employees protection, but also obliges companies to offer their facilities for sale, among other things. The legislation demands a notification 30 days in advance before the closedown of an operation. Kaskö: the legislation is concerned with employees’ conditions.

Kaskö: restructuring is conducted through collaboration between regional authorities and municipal powers in the region.

Norway: long-term continuous restructuring by a common regional restructuring organization. Kaskö: short-term development projects to attract new business, and development of existing companies. Efforts to establish a long-term business park.

1. Long-term restructuring

1. Sharing of tacit knowledge

Table 10.1  Transnational learning seminar in Kaskö

Finnish legislation for employee protection lacks a component for supporting future entrepreneurship, in other words, the legislation puts no obligation on the company to facilitate entrepreneurship in the local community. The Finnish legislation does not demand early notification about a closedown, and the closedown in the town of Kaskö, for example, came as a surprise.

Allocation of restructuring resources is not administered on a regional level in Finland. This enhances the cooperation problems in Southern Ostrobothnia.

A long-term ‘Business Park Vision’ was hindered by the reluctant attitude of Metsä-Botnia. The legislation for restructuring did not offer the town of Kaskö support for purchasing facilities.

2. Creating common concepts

The legislation for restructuring in Finland is lagging behind in comparison with the Norwegian legislation.

The regional component was not assessed further in the seminar in Kaskö.

The most important difference between Norwegian cases and Kaskö in Finland is the reluctance of the company in the latter to cooperate. Cooperation between the municipalities in Southern Ostrobothnia has traditionally been limited. This has obstructed the formation of a permanent business development organization for the whole region.

3. Assessing the concepts

A long-term strategy for restructuring would have been useful for a one-company town like Kaskö. However, this did not happen, as the cultural differences between municipalities in Southern Ostrobothnia are substantial and cooperation has therefore been difficult to achieve. In addition, the municipalities in Southern Ostrobothnia are too small for maintaining a restructuring organization on their own.

The aim of the municipalities in Southern Ostrobothnia is not to create new employment opportunities within the whole region, but rather within each specific municipality. They compete for tax revenue when restructuring efforts are discussed. However, elevating the coordination of restructuring to a regional level, as in the Norwegian model, is not the answer to cooperation difficulties. Rather, the problem lies in the nature of the relationship between the municipalities in Southern Ostrobothnia. The approach to regional administration in Finland is based on municipal governance. A municipal reform imposed by the government has proposed a merging of the three municipalities in the region. This would make competition for tax revenue insignificant.

The restructuring legislation in Finland is lagging behind in comparison to the Norwegian one. Commonly, a sub-region receives restructuring area status. The case of Kaskö is an exception, since only the town of Kaskö received the status in question. This complicated the cooperation difficulties in the area. If legislation in Finland would have automatically raised the level of support to the region, Kaskö would have received funding for purchasing facilities for future business establishments.

1. Long-term restructuring

2. Regional approach to restructuring

3. National level legislation

3. Assessing the concepts

Table 10.2  Transnational learning seminar in Vaasa

Legislation for restructuring should take into account both employee safety and incentives for future entrepreneurship as well as the survival of the community. Further, it should oblige the company to offer the industry estate for the use of the municipality. Also the company should notify plans regarding closing in advance. The legislation for an area in need of structural transformation should be modified so that a sub-region would automatically receive restructuring area status, not as in the case of Kaskö, where only the town of Kaskö received this status.

The power of regional governing bodies should not be strengthened in Finland. Instead, the municipalities should be enlarged and strengthened, and this would give better prerequisites to manage restructuring challenges and also make the competition for tax revenue irrelevant.

Long-term restructuring is preferred in the Finnish context. However, cooperation difficulties have obstructed such activities in the studied area. These difficulties could be solved through merging the municipalities.

4. Creating an archetype

308   K. Nordberg is insufficiently linked to a continuous reinforcement of regional economic development. For instance, complaints were made about the regional strategy for Southern Ostrobothnia (written within the framework for the COCO programme) by regional actors, who pointed out that no one wanted to take responsibility for the programme. Feedback must be given continuously and regional actors must be allowed to join the process. Further, this task can only be carried out by a regional business development agency. At the time of closure, there was no joint development organization in Southern Ostrobothnia and the consequence of this was that a wide range of stakeholders had to reach an agreement with regards to the measures that were taken. Stakeholders in the region had no common strategy, which was largely due to the existing administrative structures. By contrast, in the Norwegian model a long-­term strategy is planned so that the resources made available can be concentrated in order to strengthen the economic development of the region. All responses were late in the case of Kaskö, and the lack of a Finnish Omstillingslova further increased the lateness of the efforts. The scope for regional initiatives for the development of an area has traditionally been limited in Finland as regional development institutions have largely consisted of state-­controlled structures. Despite the significant developments at a regional level during the last two decades, the position of Regional Councils is still weaker than that of counties in Norway. The difference is partly due to the fact that Regional Councils do not own taxation rights, and partly because the regional administrative structures in Finland are a recent development, and in which the division of remits is not as clear as in Norway. The path dependency of the structure described by Jessop’s SRA theory is thus visible in the Kaskö case. However, regional development of Finland consists of programme writing, in which all sectors of society are invited and thus there can be room for engagement on a local level. Analysing structural differences further, it becomes clear that the regional administrative structures are somewhat different in the two countries. In Norway, the initiative for restructuring and funding originates from the Fylkeskommun. A similar structure in Finland would have prevented the problems of funding only being directed at the town of Kaskö and not the surrounding region. This increased competition for tax revenue already being a problem in the region. The path dependency of the administrative structure becomes evident as the Finnish system so strongly emphasizes the role of the municipalities at the expense of regional structures. The closure of the mill in 2010 came as a surprise, without advance warning to the employees or the municipality. The first actions that were taken were somewhat misdirected, and the attitude of the company hindered effective action. In comparison with the Norwegian ideal, the region of Kaskö lacked the readiness displayed by a structure that is geared towards long-­term restructuring. Therefore Kaskö provides a case example of a situation where there is a lack of mutual understanding and cooperation, and the case analysis demonstrates what the consequences of these disadvantages are. The history of cooperation prob-

Restructuring in small industrial towns   309 lems in the region, the relatively weak position of the regional government and the lack of a business development agency, intensified the difficulties when restructuring efforts were needed, which in turn, led to misdirected and late responses. In addition, there was no possibility to set up obligations for the company to offer their facilities for future operations. Because of these circumstances, all efforts were short-­term. The learning seminars point out especially three issues that are valuable when considering new practices for restructuring in the Finnish context. First, that cooperation difficulties and competition for taxation incomes are possible in a geo-­political structure that consists of many small municipalities. In the Finnish context these are rare, but in the case of Kaskö seemingly unavoidable, obstructing long-­term restructuring in the region of Southern Ostrobothnia. Arranging funding and restructuring efforts at a regional level has been the Norwegian answer to these difficulties. The Finnish administrative structure strongly emphasizes municipal governance, and as a consequence, municipal merging has become a more natural solution. Second, legislation regarding restructuring is lagging behind in Finland, as it largely neglects the company’s social responsibility. Third, the case of Kaskö draws attention to the inflexibility of the legislation that regulates the level of support for the restructuring of areas. The legislation hindered the town of Kaskö with regards to engaging with constructive actions to meet the challenges of the closedown of the factory. With these elements corrected, restructuring in Kaskö would have been more successful.

References Act on Notification of Closure of Business, LOV 2008–06–06 nr 38. Act for Restructuring LOV 2008–06–06 nr 38. Ahlberg, A. (2008) Kuolema Voikkaalla: erään tehdasyhdyskunnan, ja pitkän perinteen loppu, Kuusankoski. Bukve, O. (2008) ‘The long and winding road: regional reform in Norway’, in O. Bukve, H. Halkier and P. Souzas (eds) Toward New Nordic Regions: Politics, Administration and Regional Development, Aalborg: Aalborg Universitetsforlag, pp. 15–46. Grindheim, J.E. (2004) ‘Norway’, in S. Dosenrode and H. Halkier (eds) The Nordic Regions and the European Union, Aalborg: Aalborg University, pp. 55–75. Jessop, B. (2008) State Power, Cambridge: Polity Press. Karlsen, A. and Lindeløv B. (1998) Omstillingspolitikk i møte med praksis – et spørsmål om forankring, NF-­rapport nr 8/98, Bodø: Nordlandsforskning. Leknes, E. (2002) Fylkeskommunen som regional utviklingsaktør – eksempler fra Vestog Sørlandet, Arbeidsnotat RF – 2002/151, Stavanger: Rogalandsforskning. Mäkitalo, J. and Paasivirta, A. (2011) ‘Äkillisten rakennemuutosten hoitomallin kehittyminen työ- ja elinkeinoministeriössä’, in Työpoliittinen Aikakauskirja 2/2011, Helsinki: Ministry of Employment and Economy, pp. 72–91. Mariussen, Å. (1996) ‘Innledning’, in Å. Mariussen, A. Karlsen and O.J. Andersen, Omstilling – fraløsrivingtil ny forankring, Oslo: Universitetsforlaget, pp. 9–34. Mariussen, Å. and Karlsen, A. (1997) ‘Innledning’, in Evaluering av arbeidet med omstilling i kommuner/regioner med ensidig næringsgrunnlag, NF-­rapport nr 5/97, Bodø: Nordlandsforskning.

310   K. Nordberg Næringskomiteen (2008) Innstillingtil odelstinget fra næringskomitee, Innst. O. nr. 37, Oslo: Stortinget. Nonaka, I. and Takeuchi, H. (1995) The Knowledge-­Creating Company: How Japanese Companies Create the Dynamics of Innovation, New York: Oxford University Press. NOU (1983) Problemer og muligheter på ensidige industristeder, Universitetsforlaget Oslo, Bergen og Tromsø. NOU (2000) Om oppgavefordelingen mellom stat, region og kommune, Oslo: Ministry of Local Government and Regional Development. Ornston, D. and Rehn, O. (2005) An Old Consensus in the ‘New’ Economy? Institutional Adaptation: Technological Innovation and Economic Restructuring in Finland, Discussion paper, Berkeley Roundtable on the International Economy, Róbinson Rojas Archive. Räsänen, M. (1985) ‘Utgångpunkter’, in A.-M. Åström (ed.) Kaskö – Kontinuitet och Förändring i en Småstad, Folklivsstudier XVI, Helsinki: Folkkultursarkivet, pp. 9–49. Regional Development Act from 2009 (1651/2009). St. Meld. Nr. 31 (1996–1997) Om distrikts- og regionalpolitikken, Oslo: Ministry of Local Government and Regional Development. Westerlund, L. (1989) Statsbygge och distriktsförvaltning, Åbo: Åbo Academy Press.

11 Developing destinations in the northern periphery Dieter K. Müller and Ulrika Åkerlund

Introduction Tourism is often identified as an important tool for sustaining rural communities, not least in peripheral areas (Butler et al. 1998; Müller and Jansson 2007). This is partly a government response to rural restructuring and a decline in traditional rural industries. However, increasing global competition in relation to people, capital and investments is forcing rural communities to find new ways to re-­ image their place and remain competitive (Hall 2005). For people in these communities, tourism appears to be one of the few options for making a living in an increasingly de-­industrialized rural arena (Müller 2011). However, developing tourism is not an easy endeavor, particularly in peripheries that are remote from populated demand markets (Müller and Jansson 2007). For tourism businesses, limited accessibility constrains the number of potential tourists and thus companies have to earn rather high revenues per visiting tourist. This implies high quality requirements to justify the necessary price levels. For public sector stakeholders, there are also other problems that challenge the successful development of tourism. A lack of access to economic capital, political influence and competent human resources within tourism are only some of the issues that local communities face (Botterill et al. 2000; Hall and Boyd 2005). Moreover, finding a common re-­imaging strategy acceptable to all tourism stakeholders is sometimes difficult. While public stakeholders usually have ambitions to engage in long-­term planning, tourism entrepreneurs tend to be reliant on shorter planning horizons, forcing them to utilize all business opportunities they receive (Russell and Faulkner 1999). Particularly the lack of knowledge about tourism within the public sector, but also within the private sector, where lifestyle businesses sometimes dominate, can turn out to be a major shortcoming when engaging with destination development. Market intelligence is needed here, including linkages with the wholesaler and incoming companies. Moreover, companies’ marketing budgets usually have to be pooled to facilitate visibility in the marketplace. A major question is how to enable this development and maintain it by learning from other destinations. The purpose of this chapter is to provide an analysis of learning and the development of a rural tourist destination. This is mainly done through a case

312   D.K. Müller and U. Åkerlund study of the organization that markets the Gold of Lapland destination in Northern Sweden and the ability of another destination, the Kvarken Archipelago World Heritage Site outside Vaasa, Finland, to learn from the Swedish experiences. Certainly, the cases at hand differ regarding their historical and current contexts. The Gold of Lapland area is a traditional mining and industrial area suffering from de-­industrialization and de-­population, and has been turned into a tourist destination in order to deal with these problems. In contrast, the Kvarken Archipelago is located close to the center of Vaasa, and though rural in character and tradition it has benefitted greatly from its location. Thus, tourism is not the first option for maintaining a livelihood in the region. Instead, the World Heritage Area is simply seen as a protected area that can be consumed by urban dwellers and possibly tourists from Vaasa and elsewhere. However, it is not only the historical-­geographical setting that distinguishes the areas from each other, as different national strategies regarding tourism also play a role. In Sweden, public policy on tourism is implemented by the Swedish Agency for Economic and Regional Growth (Tillväxtverket), and it clearly focuses on entrepreneurship and business development. This focus on growth also increasingly compromises other realms of public policy. Thus, today even the protection of culture and nature is seen in the light of economic growth and development. In the Finnish case agencies responsible for the environment seem to play a greater role, though even here tourism is increasingly seen as part of regional innovation and growth strategies. Still, tourism appears to be primarily located in the realm of planning rather than business development. Thus, business-­related models as expressed in the destination approach are rather absent in the Finnish case while they dominate the Swedish way of thinking about the development of tourism. Despite these differences, there is reason to study the processes of adaptation needed in order to change and the learning dimensions involved.

Learning destinations Destinations are a central element in current ideas about tourism. This is not least because of the complex nature of tourism as a product, which seldom consists of only one attraction. Instead it is made up of different elements, including transport services, accommodation, restaurants, activity providers, guides, etc. In this context, a single company is not able to provide all services but is instead reliant on other entrepreneurs. This applies certainly to most rural tourism, where single attractions seldom justify or make a tourist trip. Thus, tourists visit several attractions and use multiple services within a small geographical space. As a consequence, stakeholders with an interest in tourism organize themselves in order to provide better services to tourists but also to pool their resources, enabling them to promote their destination on the market. Thus, destinations are primarily spatially defined areas of cooperation between tourism stakeholders. In most cases this cooperation is carried out as a public, private or

Developing destinations   313 public/private organization, which is responsible for coordinating internal communication and external marketing activities. These destination marketing organizations (DMOs) have been criticized for often only focusing on marketing activities, while local product development remains unsupported (Müller 2007). Although global tourism is growing, so is the number of regions trying to gain a greater share of the tourism market. In this context, accessibility is a crucial precondition for succeeding in reaching this goal (Hall 2005). Here, peripheral destinations have a disadvantage as they are often located far from metropolitan areas comprising large markets with greater demand. This implies, among other things, higher prices for transportation and thus often small tourist numbers. Moreover, production costs for services and attractions have to be paid for by fewer tourists, making the tourism product more expensive per customer than in core destinations. Thus, in order to be competitive, attractions and services have to be of a quality that balances the disadvantages caused by the price. The condition of peripherality, however, implies that this has to be achieved despite limited access to human and economic capital and political influence (Hall and Boyd 2005). In order to cope with this situation of limited capital and increasing competition, destinations have to be engaged in learning activities (Hall 2005). Departing from the notion of a learning economy (Lundvall and Johnson 1994), which ‘signifies a society in which the capacity to learn, and therefore to innovate, is critical to economic success’ (Hall 2005: 111), Hall argues that also tourist destinations have a constant need to learn and innovate. In this context it is not necessarily individual knowledge that is the key to success, but rather collective and place-­based knowledge (Hall 2005). Hudson (1999) provides a critique of this faith in learning. According to Hudson, there are structural constraints to the potential of learning and hence it is rather the availability of shared tacit knowledge that appears to be crucial to innovation and economic success. This leads further to ideas regarding the role of institutional thickness (Amin and Thrift 1994), untraded interdependencies (Storper 1995) and social capital (Putnam 1993), all drawing attention to the importance of social, formal and informal networks for regional development. These ideas are also applied in innovation systems, which are currently considered a way forward for regional development, also for the tourism industry (Hjalager et al. 2008). However, these ideas of regional development are seldom based on experience and empirical evidence derived from tourism and destinations, but instead they arise from knowledge-­intensive industries. An exception, however, is Hjalager et al. (2008), who tried to identify factors of a successful innovation system for ten Nordic enterprises. The following factors played a significant role (Hjalager et al. 2008: 15): • • • •

a multitude of actors; a diversity and density of relations; mobilizing roles of key actors; open access to resources;

314   D.K. Müller and U. Åkerlund • • • • •

promoting second comers in order to create innovation; keen competition and simultaneous cooperation on various issues without difficulty (‘co-­opetition’); role of the public sector; increasing global outreach; increasing cross-­sectoral outreach.

Moreover, in the context of alpine resorts Flagestad and Hope (2001) argue that corporation-­led development performs better than community-­based approaches. Nordin (2007) concludes that the success of Åre as an alpine destination builds on a trustful and informal public–private partnership involving a major company. Still, strong corporations within tourism are few, and most destinations are not of major interest within their business strategies. Moreover, Müller (2007) pointed out the potential loss of public influence in the public–private partnership and the transfer of public money and responsibility into private hands. Hence, most destinations have to cope with development issues without being able to rely on a strong tourism company. Instead, public and private resources have to be pooled and small-­scale solutions sought. Russell and Faulkner (1999) argue that the development of a tourist destination has to be understood as a chaotic process that is difficult to plan and consecutively to transfer, owing to destination-­specific set-­ups of geographical and institutional preconditions as well as stakeholders. Particularly entrepreneurs with low revenues have difficulties engaging in long-­term commitments and will instead seek business opportunities independent of whether they are in line with broader destination strategies or not. Hence, destination managers are likely to constantly face the problem of gathering tourism businesses for common strategies. This can be read as an attempt to bring order to Russell’s chaos development. Thus, successful examples can be used for mutual learning, which will be demonstrated here in the case of two rural areas in northern Europe. The research was conducted during 2009, and entailed interviews with stakeholders at the destinations as well as workshops at which the stakeholders were exposed to experiences and practices at other destinations and asked to comment on them.

Gold of Lapland Gold of Lapland is a themed tourism destination that spans over five municipalities in the Northern Swedish county of Västerbotten (Figure 11.1). The five municipalities are Skellefteå, Malå, Norsjö, Lycksele and Robertsfors. The mining industry has been a very important sector of the economy here, and mining is still a prominent theme at the destination. In the late 1980s tourist attractions began to develop and they would later form the thematic core of the destination. Three stages of development can be distinguished thus far.

Developing destinations   315

Figure 11.1  The research area.

Early development The area around Skellefteå and Boliden is rich in gold and other minerals, and the mining industry has had particular significance in the region. Still, many production facilities and milieus were abandoned because of declining demand as well as the introduction of new means of production. Since the 1980s, a desire to preserve the remains of the area’s mining heritage has emerged. This is also when the story of the Gold of Lapland tourist destination started. Alternative livelihoods were searched for, and in this context an inventory of relics from the mining era were created in order to determine which ones could be preserved as well as operated for commercial purposes. The person who carried out the inventory was Alve Johansson, who along with the first tourism entrepreneurs has been described as one of the ‘enthusiasts’ who initiated the Gold of Lapland project and also managed to convince the local government and county administration to provide initial development funds. Six attractions were selected, and in 1989 four municipalities agreed to collaborate with regards to the mining heritage. The original sites all had the common denominator of having been part of the mining industry, and in 1993 the project was officially launched. The selected attractions were the world’s longest cableway; the underground church in Kristineberg; the Saga cinema in Adak; Bergrum Boliden; Varuträsk Mineral

316   D.K. Müller and U. Åkerlund Park; and Malå Geomuseum (see Figure 11.2). Soon the destination’s original name, ‘Kingdom of Mines’, was changed to the more positive-­sounding ‘Kingdom of Gold’ and a further attraction was added, namely the Forum Museum Rönnskär. The EU stage and the planned development of a tourist destination When the seventh site was added, the need for additional funding was noted. The economic power of the entrepreneurs and other stakeholders at the destination was simply not sufficient to develop a tourism industry in a broader sense. It was also recognized that several other types of tourist activities were needed, and thus the project also started to include accommodation, transportation, restaurants and other necessary parts of the tourism supply chain. During this phase, in 1995, Sweden entered the European Union, which suddenly opened new gateways to funding local development initiatives. Several EU-­funded projects were implemented during this period, all with the aim of contributing to the development of the destination. In 2000 an Objective 1 project called ‘Kingdom of Gold’ was submitted, and in this context the four municipalities engaged thus far formalized their cooperation by forming a non-­profit organization under the same name. Thus, the Kingdom of Gold was now politically and administratively endorsed. The non-­

Figure 11.2 Bergrum Boliden – the old mining office, today a museum, was one of the first sites at the Gold of Lapland destination (Photo: D.K. Müller).

Developing destinations   317 profit organization has since mainly been engaged in infrastructure projects, and currently functions as a host for EU projects aiming at the development of tourism in the area. At this stage Västerbotten Tourism, the regional tourism organization, had also become involved in the project as a co-­financier. Entrepreneurship and the extension stage For its development, the Kingdom of Gold has been almost entirely dependent on project funds. This was criticized in several of the interviews. Stimulating entrepreneurship has always been a priority, although in the beginning development revolved around the tourist sites and later around economic cooperation. When the Kingdom of Gold project ended, the goal was set to continue even after the project financing ran out, and plans to form an economic association began to take form. In 2003 a well-­educated and skilled destination manager was hired, initially with the task of developing a marketing plan for the destination, though her responsibilities were subsequently expanded. This is believed to have been of great importance for the future development of the Kingdom of Gold. In the new project, the destination organization decided to include more attractions than just strictly mining-­related ones. With regards to marketing activities even other stakeholders than those representing core activities were included, and by 2004 the number of companies involved in the project had grown from the initial seven to 19. Seniors were selected as the main market segment to be targeted, with a focus on group tours and the summer season. The Kingdom of Gold began to broaden its focus beyond mining, although the seven mining-­related sites were still the ‘highlights’. The metaphor ‘tourist treasures’ was used to symbolize the destination theme. Some examples of sites that were created by the association include Lycksele Zoo, Svansele Wilderness Center, and Adventure House in Skellefteå. In 2005 the economic association ‘Gold of Lapland’ was established. The name was something of a fluke; the only one of the various proposals that was approved by the SCRO was not the first choice, but has since proven to be an excellent trademark. The corporate form was chosen with the necessity to adapt to the tourism industry’s changing nature in mind. A project based on economic cooperation allows a changing membership to a greater extent, whereas small businesses come and go. The number of members grew steadily during the early years and activities other than purely touristic ones were also included, which shows an awareness of the rather comprehensive tourist production system. Other members include companies in the service sector and retail as well as associations like local heritage unions and various interest groups. In 2007 a major step was taken in terms of expansion, when the neighboring economic cooperation, the destination ‘Kingdom of Cheese’ (Ostriket), became a member of Gold of Lapland. The 20 member companies of the Kingdom of Cheese, which is based on attractions around the production and sale of Västerbotten cheese, were offered dual membership in the Kingdom of Cheese and Gold of Lapland. Moreover, it also involves a fifth municipality, Robertsfors, in the Gold of Lapland. The following year a destination management company, Destination

318   D.K. Müller and U. Åkerlund Skellefteå, was formed in Skellefteå. This was initially a member of the Gold of Lapland but later left for reasons the two organizations are unclear about. Today’s situation At present EU funding continues to play a significant role in the project. Today, two different parts can be distinguished within the Gold of Lapland project: the Kingdom of Gold, a non-­profit organization that is run through political cooperation between the four original member municipalities of Skellefteå, Malå, Norsjö and Lycksele, and the Gold of Lapland economic association, an industry association with around 70 member companies and associations. The mining and quarry theme has been used metaphorically to describe the ‘tourist treasures’ and the members are mainly in the tourism industry, though companies involved in trade and a number of local history societies and the like are also represented. Gold of Lapland works primarily as a marketing agency for the destination. This includes operating a website and publishing an annual magazine in which members are presented, as well as participating in trade fairs and similar events. However, it is the network between the members that is considered the main asset of membership in the association. Furthermore, Gold of Lapland offers quality improvement activities, such as courses for service skills, seminars, study tours, etc. The connection to the municipalities is maintained through the Kingdom of Gold non-­profit organization, in which the original four municipalities cooperate, and through the Kingdom of Cheese’s membership in the Gold of Lapland organization (Figure 11.3). Thus, the municipalities indirectly allocate development funds to the non-­profit association, which in turn allocates them to development projects within the Gold of Lapland economic association. Furthermore, the five municipalities co-­finance yet another EU project in relation to the destination. Today, the municipalities’ role is more about creating opportunities for communication and tourism infrastructure than conducting direct growth-­enhancing activities within the tourism industry. These activities are instead a responsibility of the economic association. In the latest public procurement process for the tourist offices in Lycksele and Norsjö, it was decided that Gold of Lapland would take over the operation of these two tourist offices in January 2009. With this it was hoped that the tourist offices’ activities would be in closer dialogue with the industry, as the entrepreneurs are indirectly responsible for the offices through their membership in the economic association. However, direct contact with Västerbotten Tourism (the county tourism organization) is now missing, not least since Västerbotten Tourism has taken on a new strategic plan in which the thematic destinations were abolished in favor of more administrative units. Västerbotten Tourism and Gold of Lapland do continue to exchange information, however, even though official cooperation now takes place via the municipalities. Moreover, Västerbotten Tourism is co-­financing the Gold of Lapland project on behalf of the county council. The management of Gold of Lapland considers 2009 to have been a year of major change: it was decided that a new brand strategy would be developed, a

Developing destinations

319

new reservation system tested and the website re-designed. According to the manager, there was a need to ‘settle’ after the rapid expansion in order to hold the increasingly heavy organization together. Although there is talk of geographical extension, and contacts with the adjacent municipalities Sorsele and Arvidsjaur have already been initiated, for now the predominant perception is that it is time to slow down and consolidate the current destination. For a couple of years already, instead of a geographical expansion an operational extension has been taking place. Through a municipal initiative, Gold of Lapland has agreed to market the region to potential immigrants from the Netherlands. Since the organi­ zation’s first trip to the Netherlands in 2007, the first Dutch immigrants have moved in and thus far the venture is considered successful and is believed to have great potential for the future. Of course this might also have an effect on tourism in the region, and thus it coincides with the major goals of Gold of Lapland.

Gold of Lapland as an innovation system Gold of Lapland can also be seen as an innovation system and analyzed in accordance with a model developed for studying tourism innovation in Nordic countries (Hjalager et al. 2008).

Infrastructure Policies Co-financing

Kingdom of Gold (Non-profit association)

Skellefteâ m unicipality Norsjö m unicipality Mala m unicipality Lycksele m unicipality

Gold of Lapland - EU-project Co-financing

■Vasterbotten Tourism

Project management Brand, quality Assignments

Robertsforsmunicipality Gold o f Lapland Economic Association

Kingdom of Cheese

Member companies Marketing Networks Competence dev. Tourist bureaus

Tourism companies Trade/transportation/construction etc. Heritage village associations etc.

Figure 11.3 Organization o f the Gold o f Lapland tourist destination.

320   D.K. Müller and U. Åkerlund Relationships The focus is on the role of Gold of Lapland as the provider of a business network. The Gold of Lapland business association represents tourism entrepreneurs, a few large and many small, and associations that act as representatives of local people (as heritage or village associations), a relatively thick network in which there is a sense of ‘co-­opetition’. A general comment among the respondents is that ‘there are many entrepreneurs here’, which suggests constant innovation and creativity. A charismatic leadership stakes out the directions and creates possibilities for collaboration within the organization. A disadvantage of this system is that contact with the public sector is relatively weak, mainly consisting of co-­financing and the provision of regulatory functions, policies and more general strategy plans. A more communicative relationship would be desirable. Mobilization of new relationships and resources Gold of Lapland is now in a phase of operational expansion that will create both new relationships and new resources. This is the result of a new task assigned by the participating municipalities, whereby the goal is to attract immigrants from the Netherlands to the destination. Since this was originally an initiative of the municipalities, it could lead to improving contacts between the economic association and the public sector. Participation in the emigrant trade fair leads to new relationships with various local, national and international stakeholders, while the thematic and geographic base of the destination is maintained. New resources are created, as the trademark may take on an additional meaning, referring not only to a tourist destination but also to a place to live. This creates opportunities to attract new tourist groups within the VFR (visit friends and relatives) segment too. Types of relationships and structures In Gold of Lapland, a mix of two types of organizational structures can be discerned. The network of the economic association is held together by a strong leadership that controls development and ensures that all members are pulling in the same direction. At the same time the association is itself composed of a wide variety of stakeholders, including several strong personalities and ‘enthusiasts’ who have been involved in the organization for a long time and have thereby influenced its development considerably. Stakeholders can be both small and major companies, more or less complex associations, and a special player is the Kingdom of Cheese, its own business association whose members have dual membership in both the Kingdom of Cheese and Gold of Lapland. The organizational structure can be described as both liquid and ‘chaotic’, while it is centrally controlled by a cohesive leadership.

Developing destinations   321 Power structures within the relationships The many types of relationships that exist within the Gold of Lapland network are of course informed by many different types of power structures. This is not surprising as the stakeholders are so different and come from such different contexts. While differences are often a strength, they can sometimes also set the stage for conflict. However, currently it is generally not perceived as a major problem. An apparent power asymmetry exists in the relationship between large and small operators, whereby large companies and municipalities like Hotel Lappland in Lycksele and Skellefteå municipality obviously have a greater impact than individual small businesses and the smaller municipalities. This is very much based on who has the financial power to act, though sometimes the stakeholder that possesses the knowledge may end up being the powerful one. Hjalager et al. argue that ‘much knowledge is embedded in legal procedures and public planning’ (2008: 32), which in the case of Gold of Lapland becomes visible when it comes to seeking funding from the EU. A potential conflict may also arise when applications depend on co-­ financing from municipalities, which to some extent lack the necessary expertise in tourism. For example, today the larger municipalities list tourism as a priority area for development, whereas the smaller ones lack overall strategies for developing tourism. An additional power struggle can be seen between the different types of tourism products (cultural versus ‘new’ products) and between the commercialization and conservation of the cultural heritage (see Molin et al. 2007). Women are well represented both among entrepreneurs and in leading positions within the organization, which is a positive element, as an effective mobilization of resources is only possible when all capacities are being utilized, e.g., no one is excluded from participation because of their gender (Hudson and Rönnblom 2007). Hence, in summary, Gold of Lapland seems to be a destination that has developed successfully not least because of the local ability to utilize local tourism resources as well as supportive infrastructure and stakeholders. It is thus a good example of a successful bottom-­up approach to the development of a tourist destination involving numerous stakeholders, even those that are usually free riders and not considered part of the tourism industry. Moreover, regarding funding, innovative structures were set up involving public and private stakeholders and mechanisms were developed to guarantee smooth relationships despite considerable power asymmetries. This is not least because of a charismatic, professional and involved leadership with no private stake in tourism. The question for the remainder of this chapter is whether this set-­up is appealing and can be transferred to other destinations, in this case the Vaasa region and the Kvarken Archipelago World Heritage Site just some hundred kilometers away on the other side of the Bothnian Sea.

The Kvarken Archipelago World Heritage Site Analogous to the study of the Gold of Lapland, tourism development in the World Heritage area of the Kvarken Archipelago was studied. The area gained

322   D.K. Müller and U. Åkerlund its status in 2006 owing to the unique landforms resulting from the elevation of the land after the last Ice Age. Nevertheless, efforts to be awarded UNESCO World Heritage status date back to the late 1980s (Svels 2008). The status was expected to contribute to the attractiveness of the region, which is otherwise a secondary destination within Finland, but also to allow it to become a nucleus for tourism development. In contrast to the Swedish case, the systematic effort to develop tourism in the area is relatively recent. A plan for managing the World Heritage area was published in 2009, marking the starting point of a more systematic approach to tourism and destination development (Söderholm 2010). The major stakeholders promoting the area as a potential World Heritage Site include public stakeholders mainly at regional and national levels. This can be partly explained by UNESCO’s requirement that only qualifying states can apply for the designation. Söderholm (2010) argues that the initial situations in the Kvarken Archipelago and the Gold of Lapland region were similar. In both cases, local stakeholders tried to involve public stakeholders to assist in the development of the regional heritage. However, whereas the stakeholders in Sweden realized that regional networks among private agents would be needed in order to succeed, the Finnish stakeholders managed to convince the public realm to take a leading role in the development of the nature heritage (Söderholm 2010). In other words, in Finland a top-­down approach to the development of tourism was taken. An advantage of this approach is certainly the availability of capital to develop the attraction base of the region. In contrast, in Sweden the necessary bottom-­up strategy always made access to capital difficult, but entailed private engagement and involvement in business networks leading to business development as well. In the Finnish case, business development and engagement were delayed and seem to have taken off only since the publication of the management plan outlining the possibilities for the development of tourism within the area. However, public involvement still implies uncertainty regarding who should be responsible for different aspects of the development of a tourist destination. As a result, relationships between stakeholders are fewer and weaker. A major difference to the Swedish case is the strong role of public agencies in the development of tourism, which, by leaving the private stakeholders in a wait-­ and-see mode, guarantees a strong power asymmetry. Moreover, no strong and professional leadership for the destination development process has yet been developed. A presentation of the Gold of Lapland experience to tourism stakeholders in Finland was not met with enthusiasm. The strong role of the public sector in destination development was preferred, though the need for more strategic work and the involvement of tourism entrepreneurs was recognized.

Conclusions The development of tourism has traditionally often occurred unplanned and has been based on entrepreneurial initiative. However, rural decline has moved

Developing destinations   323 tourism to the center of interest among policy-­makers and entailed a call for a more systematic approach to destination development in order to utilize tourism as a tool for regional development (Hall 2005). The current case studies illustrate this development. In both cases, public involvement was requested to enable tourism stakeholders to operate in an increasingly competitive and international market. However, the development paths differ and it can be argued that the Kvarken Archipelago destination would benefit from learning from its neighbors in Sweden. Destination development at the Kvarken Archipelago World Heritage Site was mainly initiated by public stakeholders and state authorities. Top-­down strategies dominated the development of the destination, while in the case of Gold of Lapland entrepreneurs took the lead early on to enhance the development of the destination. An interest in the local heritage motivated enthusiasts to look for ways to sustain it, and tourism development was seen as a way to achieve this. Municipalities were involved not least to gain access to public funds, but the strong entrepreneurial component was never lost. Hence, the Gold of Lapland destination has many features of an innovation system as identified by Hjalager et al. (2008). A multitude of stakeholders is involved, even comprising companies that are not usually identified as part of the tourism industry. This has created dense and innovative relations as well as co-­opetition. At the same time, the public sector continues to play a role as an important stakeholder in providing funding and supporting structures. Even an increasing cross-­sectoral approach can be spotted, implying a greater responsibility for the DMO. An important ingredient in the process has been the acknow­ ledgment of academic knowledge and expertise. Thus, tourism development has been taken seriously and conducted professionally. This has not been achieved immediately; instead it has been a long process. An important step has been the departure from a project-­based organization toward a more permanent one that only uses projects to supplement its ordinary activities. This provides an opportunity to create strategies that are not limited by the lifespan of various projects. A geographical expansion of the destination enables it to operate powerfully on the market and meet new competitive challenges. Of course, this destination also constantly faces new challenges, but it has proven its ability to adapt and learn. Tourism development in the Kvarken Archipelago is not at the same stage. Although it is a tool for sustaining a local heritage here as well, it was not initiated by local tourism entrepreneurs and enthusiasts. Rather, it is facilitated by administrators and policy-­makers and seems itself to be a consequence of an environmental policy aiming at preserving landscape rather than an attempt to develop business. Thus, not all stakeholders are equally involved in the process. This creates a situation in which strategies of different stakeholders diverge in various directions. Consequently, the tourism supplies are not as well organized here as in the Swedish case and they lack many services that tourists might enjoy. Instead the focus is on the preservation of the landscape, and tourism appears to be only a secondary means to achieve this. In fact, only

324   D.K. Müller and U. Åkerlund a few stakeholders seem to have requested support for tourism development in the first place. In summary, it can be noted that the Kvarken Archipelago is approximately at the point at which the Gold of Lapland destination was in its early stages. The challenge now is to learn from the experiences in the latter in order to achieve a similar development process. Whether this will be possible is contingent on multiple factors. However, a crucial task is certainly to create networks and institutions that enable the destination to learn and innovate. Learning from one’s neighbors’ experience should be enriching and show potential development paths for the future.

References Amin, A. and Thrift, N. (1994) Globalization, Institutions and Regional Development in Europe, Oxford: Oxford University Press. Botterill, D., Owen, R.E., Emanuel, L., Foster, N., Gale, D., Nelson, C. and Selby, M. (2000) ‘Perceptions from the periphery: the experience of Wales’, in F. Brown and D. Hall (eds) Tourism in Peripheral Areas, Clevedon: Channel View, pp. 7–38. Butler, R., Hall, C.M. and Jenkins, J. (eds) (1998) Tourism and Recreation in Rural Areas, Chichester: Wiley. Flagestad, A. and Hope, C.A. (2001) ‘Strategic success in winter sports destinations: a sustainable value creation perspective’, Tourism Management 22(5): 445–61. Hall, C.M. (2005) Tourism: Rethinking the Social Science of Mobility, Harlow: Prentice Pearson. Hall, C.M. and Boyd, S. (2005) ‘Nature-­based tourism in peripheral areas: introduction’, in C.M. Hall and S.W. Boyd (eds) Nature-­Based Tourism in Peripheral Areas: Development or Disaster?, Clevedon: Channel View, pp. 3–17. Hjalager, A.-M., Huijbens, E.H., Björk, P., Nordin, S., Flagestad, A. and Knútsson, Ö. (2008) Innovation Systems in Nordic Tourism, Oslo: Nordic Innovation Centre. Hudson, C. and Rönnblom, M. (2007) ‘Regional development policies and the constructions of gender equality – the Swedish case’, European Journal of Political Research 46(1): 47–68. Hudson, R. (1999) ‘The learning economy, the learning firm and the learning region: a sympathetic critique of the limits to learning’, European Urban and Regional Studies 6(1): 59–72. Lundvall, B.-Å. and Johnson, B. (1994) ‘The learning economy’, Journal of Industry Studies 1(2): 23–42. Molin, T., Müller, D.K., Paju, M. and Pettersson, R. (2007) Kulturarvet och Entreprenören – om nyskapat kulturarv i Västerbottens Guldrike, Stockholm: Riksantikvarieämbetet. Müller, D.K. (2007) ‘Planering för turistdestinationer’, in M. Bohlin and J. Elbe (eds) Utveckla Turistdestinationer: ett svenskt perspektiv, Uppsala: Uppsala Publishing House, pp. 199–218. Müller, D.K. (2011) ‘Tourism development in Europe’s “last wilderness”: an assessment of nature-­based tourism in Swedish Lapland’, in A.A. Grenier and D.K. Müller (eds) Polar Tourism: A Tool for Regional Development, Montreal: Presses de l’Université du Québec, pp. 129–53. Müller, D.K. and Jansson, B. (eds) (2007) Tourism in Peripheries: Perspectives from the Far North and South, Wallingford: Cabi.

Developing destinations   325 Nordin, S. (2007) ‘Innovative destination governance: the Swedish ski resort of Åre’, International Journal of Entrepreneurship and Innovation 8(1): 53–66. Putnam, R.D. (1993) Making Democracy Work: Civic Traditions in Modern Italy, Princeton: Princeton University Press. Russell, R. and Faulkner, B. (1999) ‘Movers and shakers: chaos makers in tourism development’, Tourism Management 20: 411–23. Söderholm, J.U. (2010) Världsarvet Kvarkens Skärgård: nyckeln till destinationsutveckling för Österbotten? Vaasa: Åbo Akademi. Storper, M. (1995) ‘The resurgence of regional economies, ten years after: the region as a nexus of untraded interdependencies’, European Urban and Regional Studies 2(3): 191–223. Svels, K. (2008) Världsarv i Samverkan? Förvaltningsutredning 2010 Världsarvet Höga Kusten/Kvarkensskärgård, Vaasa: Åbo Akademi.

12 Learning transnational learning A transatlantic perspective E. Wanda George and Kristina Svels

Introduction The concept of transnational learning is not something new. In fact, ‘diffusionists’ would no doubt argue that it has always been an implicit feature in the evo­ lution of civilizations since the beginning of time. After all, we have learned, copied, imitated, exchanged and appropriated knowledge from each other throughout centuries. Early explorers, travellers and tourists learned from those in foreign and exotic places that they visited and explored, before returning home to apply their new knowledge and ideas. Likewise, through encounters and exchange processes, new knowledge and ideas were left behind with those that the travellers confronted and communicated with during their excursions. While centuries ago the primary motive for travel was trade and the search for new resources to be exploited for economic gain, encounters with new cul­ tures resulted in knowledge exchange and transfer - and consequently, trans­ formation processes (George 2002), as shown in Figure 12.1. This phenomenon continues even today, although the process of knowledge exchange has been accelerated by rapidly advancing technologies in travel and

Tourist-Host Interaction

Tourist Origin

Encounter & Transforming Process

Host Destination

Cultural Transform ation Figure 12.1 Transnational learning and transformation through tourism (George 2002).

A transatlantic perspective   327 communication. As the process accelerates, however, it appears that two opposing forces are becoming more obvious. On the one hand, we are anxious to discover, absorb and apply new learning; on the other, we tend to resist changes and innovation that are perceived by many to threaten our unique identities and differences. Transnational – what does this term mean anyway? Many of us associate the term with notions of internationalization and globalization; however, some authors point out that these terms, although related, are not synonymous. Tyrrell states: ‘transnational’ is a broader term, but it is less encompassing than either the deterministic and unidirectional juggernaut of globalization, or the generalities of the terminology of ‘trans-­border’ which might refer to borders within nation states, including municipalities. The purpose of the transnational label was in fact more precise: to focus on the relationship between nation and factors beyond the nation. (Tyrrell 2007) In his article, ‘What is Transnational History’, Tyrrell (2007: para. 2) discusses Thelen (1999), Bender (2006) and others’ views, who argue that ‘transnational’ ‘concerns the movement of peoples ideas, technologies and institutions across national boundaries’. The term is more commonly referred to in the period since the emergence of nation states as important phenomena in world history and has been well established in the twenty-­first century, particularly with reference to the actions of the European Union, which justifies the concept as ‘transnational added value’ – in other words the lessons from the experiences of one country may prove useful in another. If we apply the definitions above, we can deduce that the concept of ‘transnational learning’ implies learning that transcends national boundaries and borders. The concept of transnational learning, generally speaking, is about ‘learning how others successfully do it’ so we can do likewise. Many large corporations, commercial firms and government institutions employ systematic strategies for transnational learning. In Canada, for example, provincial government agencies often organize industry trade missions to other countries in order to learn about ‘best practices’ that could potentially be applied in Canada, while at the same time university students from the EU visit Canada on organized study tour programmes with a similar agenda. Another strategy is ‘benchmarking’, outlined by Mariussen and Virkkala in Chapter 4 of this volume. However, they remind us about some limitations with this type of strategy. They point out that some strategies cannot easily be transferred because of socio-­ cultural differences and other intangible factors. Is transnational learning, as we understand it, a variant of diffusion theory? Diffusion theory, also known as ‘diffusion of innovations’ theory, concerns the spreading of ideas, innovations and technology throughout a culture or cultures. Through transnational learning, we purposely look for ideas, knowledge and

328   E.W. George and K. Svels innovations that are successful in other nations, and which we can then assess as to whether or not they can be applied to our own situations or regions to gain or improve positive benefits. If an idea or innovation seems better than whatever preceded it, it will most likely be adopted. However, Klarl (2009: n.p.) warns that there is a difference between knowledge transfer and knowledge diffusion: ‘Knowledge transfer is associated with the exchange of knowledge within networks [groups] which consists of innovators and imitators. Knowledge diffusion describes the diffusion [spread] of the knowledge within the groups.’ That is, knowledge diffusion refers to the extent to which the exchanged knowledge is spread, absorbed, adopted and employed by members within a recipient group. Mariussen (Chapter 1, this volume) rightfully notes that one of the main challenges remains the context of diffusion beyond the network itself. As noted throughout this book, transnational learning occurs through different structures and social collectives: communities of practices, of interest, and of networks, as well as other social forums and arenas for knowledge exchange and transfer. Mariussen and others (Mayntz 2010) note that while social collectives do exist beyond the realm of those that typically dominate the globalization hierarchy, these are very much neglected. The merits of transnational learning through less formal structures are far less recognized in comparison to that of more complex and more established hierarchical structures. Still, diffusion does not imply an absolute transfer and adoption of knowledge. ‘Components may be transformed and new designs imported from elsewhere, adapted and used by actors in ways which change the actant structure incrementally’ (Chapter 4, this volume). This process of combined diffusion and translation often results in innovation and transformation. Much of the transnational learning today occurs through new technologies, for instance, videoconferencing, webinars and Skype, which are used to enhance educational learning opportunities. Services and resources are available from anywhere in the world with a click of the ‘mouse’: digital/E-­courses; course support; curriculum development support; institutional support; library and documentation delivery, communication, and other resources enabled by Internet access. Advanced communication technology has opened the door to an unlimited number of transnational learning opportunities, not only in education, but also in industries and professional practices. Time and distance are no longer barriers. Transnational learning occurs through various knowledge-­related processes and knowledge exchange; knowledge transfer/conversion; knowledge creation and knowledge use.

Learning and knowledge processes Knowledge management has become an important focus for study, particularly within the operation of large businesses and corporations. The SECI model of knowledge management developed by Nonaka and Takeuchi (1995, 2008), discussed by Mariussen and Virkkala earlier in this book, is a seminal piece of work

A transatlantic perspective

329

in this field of study (De Geytere 2005). Nonaka and Takeuchi argue that tacit knowledge is a critical element within the framework of knowledge develop­ ment. They overlap this four-stage model with the concept of ba, which refers to ‘a shared space of engagement’ that enables knowledge creation through differ­ ent levels of interaction - individual, group, organization and interorganization (see Figure 12.2). These spaces of engagement can be physical, mental, virtual or any combination of these. While much of the research done in the field of knowledge management has been done within an organizational/firm management context, the concepts seem relevant also to rural and regional development and management, particularly those in areas facing sustainability challenges. Historically, rural areas and small communities are built upon and sustained by long-standing tacit knowledge that has been transmitted down through generations. In rural areas going through change and restructuring, the interaction and interchange between knowledge that is explicit (formally expressed ways of doing things, easily transmitted, e.g. standards and policies) and tacit knowledge (informal, unwritten, intuitive, not easily transmitted) may lead to the creation of new knowledge that could greatly benefit rural communities as they go through periods of adaptation to change. Transnational learning across borders enables and further expands a new ‘space’ or ‘environment’ for knowledge processes to occur. While much discussion about transnational learning in this book is framed within a European context, this chapter will examine the concept through a trans­ atlantic lens. First, the authors will discuss a collaborative initiative by a group

Tacit

Tacit

Socialization

Externalization

Originating ba

Dialoguing/interacting ba

■ Sharing tacit knowledge face-to-face communication or shared expertise. ■ Informal social interaction.

■ Understanding explicit knowledge transforms it to tacit which becomes basic information. ■ Knowledge base grows, may change based on continuous process of interactions between tacit and explicit kn ow ledge-a cyclical model.

■ Trying to convert tacit to explicit know­ ledge by developing concepts/models. ■ Tacit knowledge is converted to understandable and interpretable forms (explicit) so it can be used by others. ■ Collective interactions. ■ Compiling explicit knowledge to broader entities and concept systems. In this form, can be combined with earlier explicit knowledge. ■ Knowledge is evaluated, reviewed, analyzed and (re)organized.

Internalization

Combination

Exercising ba

S yste m izin g ba

Explicit

Explicit

Figure 12.2 The SECI model and ba concept (Nonaka and Takeuchi 1995).

330   E.W. George and K. Svels of international academic researchers, inspired by common interests, concerns and goals, to form a ‘transnational learning network’. For the most part, this network functions as a virtual network with its home base located in Canada. The underlying purpose of the network is to provide an environment for researchers to enable them to share, exchange, transfer, synthesize and create new knowledge about tourism management and policy issues at World Heritage Sites (WHS) around the globe, knowledge that could potentially benefit all stakeholders in the management of WHS, but most particularly at a local level. The authors will then present one outcome of the network, a research project ignited through the network’s ambitions, which will illustrate transnational learning between two countries separated geographically by the Atlantic Ocean – Canada and Finland. Perhaps one of the most interesting outcomes of the Finland–Canada research project is that it inspired a phenomenological study about ‘learning transnational learning’ as two researchers reflect upon the process and analyse their own personal learning experiences. The authors reveal some of the challenges, obstacles, issues and key insights that emanated from their transnational learning experiment.

The genesis of a transnational learning network – WHTRN In 1972, UNESCO1 and world leaders recognized that cultural and natural heritage was increasingly being threatened with destruction not only by traditional causes of decay, but also by changing social and economic conditions which aggravate the situation with even more formidable phenomena of damage and destruction. Since then, the UNESCO World Heritage Centre has listed over 960 properties from around the world deemed to have outstanding value to humanity (UNESCO 2012) and worthy of special protection. Paralleling this change has been a burgeoning global tourism market with interest, access and means to travel to visit these heritage sites and properties, placing extreme pressure on many of them. Researchers in this area and in others continue to struggle for common understandings about the concepts of heritage, and of universal ownership and responsibility. These gaps in the research have been a concern to many. Hence, a multidisciplinary group of Canadian and international social scientists responded to a ‘Call for Interest’ to propose a collaborative and comparative research program that would focus on concerns and issues associated with the designation of UNESCO World Heritage (WH) status, including the complex relationships and interconnections between cultural heritage planning and management of World Heritage Sites as global tourism destinations. As a result of the Call, ten researchers from five countries – Belgium, Lebanon, Hong Kong, the United States and Canada – gathered in Halifax, Nova Scotia, Canada in July 2008 to initiate a collaborative and comparative research programme. One of the most significant outcomes of this gathering (the Halifax Initiative) was the formation of an independent and informal research group, the

A transatlantic perspective   331 World Heritage Tourism Research Network (WHTRN), which would be dedicated to the ongoing pursuit of the group’s goal. This was not to be a sophisticated organization or structure, but rather a ‘community of interest’ built on principles of mutual interest and respect, voluntary collaboration, reciprocity and shared benefits. From the outset, WHTRN’s primary goal was to construct and implement an international collaborative and comparative research agenda that would contribute to new understandings and knowledge about tourism management at World Heritage Sites.

Collaborative learning and transnational learning: two sides of the same coin Collaborative learning is a situation in which two or more people learn or attempt to learn something together (Dillenbourg 1999). Unlike individual learning, people engaged in collaborative learning capitalize on one another’s resources and skills (asking one another for information, evaluating one ­another’s ideas, monitoring one another’s work, etc. (Chiu 2000, 2008)). The Halifax Initiative involved a five-­day workshop organized around daily agendas including presentations, extensive discussion sessions, informal evening socials, excursions and a day trip to one of Nova Scotia’s three World Heritage Sites (WHS), Old Town Lunenburg, for a site tour and meeting with local authorities. Daily workshop activities took place on the campus of Mount Saint Vincent University. All workshop discussions throughout the week were recorded. From the beginning, a mutual and high-­level interest of participants was obvious. Two of the participants had travelled from as far away as Hong Kong and California. However, it seemed necessary to clarify the rationale for this group gathering in Halifax. Hence, the first morning comprised of a think-­tank forum to answer the question, ‘Why do international multi-­disciplinary research collaborations make sense for the study of UNESCO World Heritage sites and interconnection with tourism development, management of cultural heritage sites and sustainability policies?’ In a three-­hour reflective and engaging process, participants contemplated, debated, re-­thought and revisited the merits of a collaborative learning approach (see Figure 12.3). The following are selected quotes transcribed from the recorded WHTRN think-­tank forum (World Heritage Tourism Research Network 2008): Opportunity for us to learn from different contexts . . . good practices that are practiced in other areas, the solutions that we are trying to struggle with. The different perspectives that these different disciplines bring challenge the assumptions that we work with all the time. There is great diversity of perspectives, experiences . . . wondering how we are going to find compatibility, this is a challenge.

332   E.W. George and K. Svels

Figure 12.3  Reflecting on collaborative learning (MSVU Staff, George 2008).

Look at the common problems, without being caught up in the descriptions of the local context. What are the common elements in the decision making, in the management, and tourism management models? To go beyond typology and comparison to see if there is any policy connected to particular types of sites. If policy that works at one site, could it be applicable to another site or learning about failures. Taking new ideas and comparing them with different people and perspectives is helpful. We could come up with a broad set of issues; this will help when comparing sites. On the surface, many of the issues seem very different but they have common roots and therefore common solutions. So much on world heritage is based on myth, assumptions about what people should do rather than the reality of what people do, and what is really happening. We should broaden our thinking instead of only looking at more of the less positive benefits . . . We should look at how we can do it . . . What is the ideal way ‘best practice’-way of doing it? Would like to see more comparative studies of both good and bad ways. (World Heritage Tourism Research Network 2008)

A transatlantic perspective   333 Table 12.1  Benefit of collaborative learning and value-added transnational learning Exchange of knowledge and dialogue with a diverse group of research colleagues (interdisciplinary/international thinkers) Potential for joint research publications Potential for joint research workshops, seminars and conferences Potential for collaborative consulting opportunities Extend and reinforce research capacities (human and funding resources) Shared approaches for doing comparative research studies Access to bibliographic resources specific to world heritage and tourism research Access to valuable publications and documents between researchers Intercultural learning and networking Potential for exchange programmes/scholar exchange Potential for other partnerships between organizations, individuals, academic networks

Clearly, the motives for adopting an international collaborative approach align well with those for transnational learning. While the comments from this international group provide a rationale for collaborative learning approaches, they also exemplify the enhanced values to be gained from a transnational learning perspective (see Table 12.1). Since its inception in 2008, this ‘community of interest’ has undertaken various research projects. Members have aligned themselves with other members from different countries, depending on interest and expertise, to develop proposals and applications for specific research projects. Some have been successful; others have not. Because of distances between members, most communications takes place via the Internet, e.g. Skype, webinar forums, emails, with the occasional gathering at a conference for face-­to-face interaction. The members have shared ideas and exchanged knowledge, and by leveraging expertise from within the group, conceived and implemented new projects. There are certainly challenges with a social collective of this nature, for instance, there are organizational issues, leadership as well as a lack of funding and human resources to maintain a visible profile, i.e. website and external communications. The network is strictly a volunteer effort and members have different levels of commitment because of other interests and obligations. But the opportunities for knowledge transfer and transnational learning are unlimited. By applying Nonaka and Takeuchi’s SECI model of knowledge management and ba concept (1995, 2008), we attempt to explain how a knowledge transfer process unfolds and new knowledge is created through an international research network, such as WHTRN (see Figure 12.4). Initially, spontaneous encounters occur at various conferences, where individuals meet and share their common interest and expertise (Socialization). Through a larger call to the wider research community for interest and involvement, an interest group forms to engage in dialogue, share previous knowledge, research methodologies and findings about World Heritage Site and tourism management topics (Externalization). Through interaction, dialogue, discussion and the integration of the group’s tacit knowledge, a new research agenda emerges. Individually,

334

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T a cit Socialization Originating ba

o

T a cit E xternalization Dialoguing/interactive ba

• Spontaneous encounters with individuals • Conferences, online communications Limited sharing/exchange, e.g. interest, motivation/willingness to collaborate (face-to-face individual interactions - individual tacit knowledge)

• Organized encounters, i.e. virtual communications, interest group formation • Group meetings, e.g. Skype • Sharing/transfer of tacit knowledge between researchers, e.g. methodologies (face-to-face virtual interactions collective)

• Collaborative reflection/contem plation • Comparison/integration of methodologies • Potential options, adoption and Integration of new concepts (tacit) • New knowledge created - new larger researcher agenda • Repeatable process

• Extensive sharing of prior knowledge • Shared outcomes/collective discussion (tacit-explicit Interaction) • Discussion, review, feedback analysis, new questions • Ongoing back and forth process between researchers

Combination Internationalization

Systemizing ba

Excercising ba

Explicit

Explicit

Figure 12.4 WHTRN project - knowledge transfer and creation process applying the SECI model and ba concept (Nonaka and Takeuchi 1995, modified by George and Svels 2012).

no one is able to conceive and pursue such an agenda; collectively, however, by combining and synthesizing its collective knowledge, the group develops new concepts and approaches (Combination). Review and evaluation of previously learned knowledge, coupled with integration and adoption of newly conceived concepts and approaches, provides a new larger agenda; hence, the creation of new knowledge (Internalization). As more researchers join the network, bringing their own tacit knowledge, the process repeats itself and the body of knowledge continues to change and expand. Currently, several WHTRN transnational learning projects are underway. For instance, a group of researchers from the network teamed up to develop and launch an international online survey in four languages - English, French, Dutch and German (2012). The project involves researchers from Canada and Belgium, with input by others from Lebanon, France, the UK, Australia and Germany.

A transatlantic perspective   335 This project materialized after an extensive exchange of ideas, ­dialogue, interaction and transfer of knowledge, and the application of novel approaches. Many lessons have been learned and shared throughout the process. Another project initiated through the network is a collaborative, cross-­cultural case study involving two researchers – one from Canada, the other from Finland. By sharing, exchanging and synthesizing ideas and concepts, this project incorporates the concepts of knowledge transfer. It is aimed at expanding a limited body of knowledge about understanding residents’ attitudes and perceptions towards tourism at World Heritage Sites. This knowledge may be beneficial to stakeholders at other WHS – at all levels, from local to administrative. In the next section of the chapter, we will discuss this case in order to illustrate the concepts of transnational learning, knowledge creation and transfer process as it has occurred between two countries separated by the Atlantic Ocean – Finland and Canada. In this section, we also attempt to extend the concept (and benefits) of knowledge transfer and creation to the local community using the SECI and ba model.

Transnational learning from a transatlantic perspective It was at an international conference in Quebec City, Canada, in June 2010, organized by UNESCO/UNITWIN on World Heritage and Tourism Development, when a young Finnish researcher and PhD candidate at the Åbo Akademi University, Vaasa, Finland, first heard about research similar to her own that was being conducted by a Canadian researcher and associate professor at Mount Saint Vincent University, Halifax, Canada. During this conference, the Canadian researcher and member of WHTRN co-­ hosted a half-­day workshop on tourism management issues at World Heritage Sites. Although the two researchers did not initially meet face-­to-face in Quebec, they connected by email and eventually embarked together on a comparative research project that would be mutually beneficial for achieving their respective research goals. Their goals were two-­fold – first, to help the Canadian researcher advance the research agenda of WHTRN, and second, to complete work that would form part of a doctoral thesis for the Finnish researcher. The project would be a comparative investigation into the attitudes and perceptions of residents living in and around two WHS – Old Town Lunenburg, NS, Canada and the Kvarken Archipelago, Finland (Svels 2011). It would draw on an earlier survey study completed in 2006 by the Canadian researcher, which was to be replicated in the Ostrobothnian region in Finland. Over the following months, the two researchers collaborated (by email and Skype) to design their research approach and, in spring 2010, the Canadian researcher was invited by Åbo Akademi University, Vaasa, Finland, as a visiting lecturer, where she would meet with her new research colleague in person and engage in face-­to-face interaction. It was during this time that the idea of expanding the survey to the High Coast, Sweden (Svels, 2010) came into consideration. Because Kvarken is one of two sites that form a transboundary

336   E.W. George and K. Svels UNESCO World Heritage Site (the High Coast, Sweden; Kvarken Archipelago, Finland), it seemed logical to also conduct the survey in the other transboundary region. Subsequently, the Finnish researcher received financial support from the Regional Council of Västernorrland, Sweden, the managing body of the High Coast WHS, and the prospect became reality; the survey was to be carried out in the High Coast region as well as the Kvarken region during autumn 2011. The initial research study concerning Lunenburg and the Kvarken Archipelago grew into a three-­part study incorporating Sweden’s High Coast WHS. The description of the collaborative initiative as a typical ‘project’ may be somewhat misleading. This was not the usual joint project with respect to financial arrangements. Each researcher was financially independent, supported by her respective university or other stakeholders. Still, they had a common research goal. However, each had a different and separate reporting system in terms of research funding and university policies. The supporting bodies were not interrelated in any way apart from the fact that they supported the researchers’ common goal – to investigate and compare locals’ perception and attitudes towards the UNESCO World Heritage designation in three WHS. In short, this was not the typical joint project; it was a creative collaborative initiative, which allowed the researchers to combine and maximize resources in order to achieve a common goal. The study methodology consisted of a survey comprising a questionnaire sent to approximately 1,500 households in each one of the three UNESCO World Heritage Sites. Using a Likert scale model, a number of survey statements were quantitatively analysed in addition to several open-­ended responses, which were qualitatively evaluated. The original questionnaire was expanded from 50 statements in the Lunenburg study (2006) to include 52 statements in the Kvarken Archipelago study and to 54 statements in the High Coast study. These revisions were done following discussions about specific regional problems, challenges and issues of concern to local stakeholders who participated in several reference group interviews. The two researchers had different points of departure when beginning this project; thus, their objectives were different. The Canadian researcher, having conducted the original study in Lunenburg in 2006, saw the possibility to expand the inquiry into a comparative study of WHS internationally. On the other hand, the Finnish researcher saw an opportunity to incorporate existing empirical data and new research results that would further her own and similar fields of study. Their goals, objectives and needs were well-­aligned to create a cradle for ‘local’ investigation. No hypotheses were put forth at the beginning of the research, and the study was characterized by its exploratory and inductive nature. The researchers had three basic assumptions based on the earlier Lunenburg study and on comments obtained from the reference group interviews. These assumptions were: 1 local residents’ attitudes and perceptions about WHS management issues had not been considered a priority concern for WHS management;

A transatlantic perspective   337 2 local residents living in WHS have concerns about tourism management issues; and 3 certain variables would have some influence on residents’ attitudes and perceptions at a particular site – for example, the type of WHS designation (cultural or natural), how long it had been since the site had been designated; the structure of the site – urban/rural, and so on.

Learning transnational learning and challenges Several questions emerge in relation to the Finland–Canada project. First, why would researchers in this field of research decide to work on a transatlantic scale rather than on a national or even continental level? Certainly, there would be sufficient advantages in working at a more regional level, for instance, awareness of regional objectives, geographical proximity, cultural similarities, common language and knowledge, and so on. Second, what was learned from this transatlantic experience? There were clear learning outcomes created as a result of collaboration in this research project, including: generative and adaptive learning; survey tools that were adaptive to local cultural conditions e.g. translation/interpretation; new insights as a result of the sharing of previous research experience and methodologies; new appreciation of another’s culture and ways of life; generation of new ideas and ways of thinking; creation of new social relations and friendships; inspiration for new directions in research and comparative studies; collective ideas for publications that incorporate diverse and synergetic perspectives, and the testing of an initial framework from which to modify and further expand the scope of the study to include other sites. The actual face-­to-face collaboration on a personal level was one of the most rewarding experiences of the transatlantic collaboration project. It gave the researchers the opportunity to directly transfer and share knowledge, ideas and identify challenges related to the study, as well as to engage in dialogue and discuss issues about rural development and tourism research in general. While in Scandinavia, the two research colleagues visited the two transboundary World Heritage Sites – High Coast and Kvarken Archipelago with a reciprocal trip to Old Town Lunenburg WHS in Canada planned for June 2012. Developing new social and research relationships was part of the transnational learning experience (see Figure 12.5). Considerable time was spent on a trilingual translation to ensure contexts and meanings would not be misinterpreted. Much of the knowledge needed for translating the original English Lunenburg questionnaire into appropriate Finnish and Swedish contexts and language came from reference group interviews. ‘Translation’ was not just a literal translation of words from one language to another, but rather, needed to take into account cultural expressions, meanings and language specific nuances that could be easily understood by the local residents. Some challenges became evident while carrying out this comparative research study, for example: language differences (English, Finland-­Swedish, Finnish and

338   E.W. George and K. Svels

Figure 12.5 ‘Transnational learning’ – new research, new relationships. Researchers George (left) and Svels (right) overviewing the outstanding universal values from Saltkåret, observation tower in the World Heritage Kvarken Archipelago (Photo: Anita Storm 2011).

Swedish); temporal aspects (year of site designation); differences in university procedures (e.g. ethics policies and requirement differences2); differences in the structures and scale of the WHS (rural, urban or rural/urban scale; distribution of population, etc.); differing World Heritage criteria (cultural, natural or mixed heritage site); size of sample and geographic scale of the territory of research sites; power dynamics among different stakeholders (e.g. level of stakeholders’ support and interest in the study), and other local differences (i.e. incentives for participation in the poll). In spite of the challenges, these observations were important lessons for carrying out future multicultural research and transnational projects. At first thought, one might say a project such as this, having no concrete framework or solid funding sources, might represent a case without any future value. However, irrespective of financing, this transatlantic project is expected to survive and, ideally, it would also be reproduced in five years time in order to observe changes that occur over time. Obviously, individual motivation, interest, effort and commitment to ongoing research are key aspects in the success of smaller scale transnational academic projects. These are also critical for lifelong learning and knowledge creation. With the advanced technologies of the twenty-­first century, there should be no great obstacles for preventing researchers from engaging in a transnational

A transatlantic perspective   339 project with a twist of ‘transatlanticism’ in spite of a few minor drawbacks, such as time zone differences, which might affect communication scheduling (e.g. Halifax, Canada, GMT -5 and Vaasa, Finland, GMT +2). Regardless of these minor impediments, transnational initiatives permit new forms of knowledge transfer and knowledge creation within specific fields of research and the advantages to be gained outweigh the costs of impediments by far. Sharing and collaborating, instead of competing, is the main message in transnational learning.

Extending benefits from transnational learning to the local community What are the benefits of this study on a broader scene, in this case, in the local communities around the Kvarken Archipelago WHS? Who may benefit from this learning experience and how? Developing suitable models and frameworks for comparing World Heritage Sites is a challenge for researchers worldwide, though some researchers have attempted to do so (Jansen-­Verbeke and McKercher 2010). One of the most important outcomes of our transnational learning experience may be the inspiration for a new knowledge management approach that incorporates the tacit knowledge of locals into the management of WHS. Applying the research process used in the case study of the Kvarken Archipelago WHS, we again draw on the SECI and ba model in order to help explain how new knowledge can be created, knowledge that can potentially benefit WHS managers and local communities alike (see Figure 12.6). This case study project involved a mixed-­methods approach. The key objective of the project was to elicit opinions and perspectives from the local stakeholders about conditions, issues and concerns regarding the WHS. One method used to achieve this was to implement a survey. Coupled with this quantitative approach, qualitative research methods were also used to obtain face-­to face information, i.e. tacit knowledge from individual local residents. To do this, we first held ad hoc and spontaneous encounters with individual residents who lived within the boundaries of the Kvarken Archipelago WHS (Socialization). To enlarge the inquiry, we then organized encounters with selected local reference groups – tourism officials and representatives, a museum curator and the Forest Board as well as media representatives – in order to engage in dialogue, share and exchange information/tacit knowledge. Through these meetings, we also acquired much explicit knowledge – written documents on policies, procedures, promotional materials and so on. Using this approach, along with data obtained from the survey, we were able to acquire and compile extensive tacit and explicit knowledge about the Kvarken WHS (Externalization). The same process was followed in the High Coast a couple of months later. Following the analysis of the collected data, we hosted a public forum during the World Heritage conference WHILD Vaasa 2011 where locals, decision-­ makers, officials and researchers could interact within a presentation, which outlined some initial outcomes and observations from the research – new knowledge. This sharing of outcomes led to collective discussion and evaluation

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Tacit S ocialization Originating ba • Initial meetings between researchers • Ad hoc meetings with locals at WHS • Spontaneous encounters - public • Individual interviews (face-to-face individual interactions - local tacit knowledge)

• Individual and collective reflection • Comparisons (what works best?) • New knowledge created/ absorbed/potential changes (synthesis process) • No best practice - contingent on transfer process and decision-making • Repeated process becomes the norm

Internationalization Excercising ba

Explicit

T acit E xternalization Dialoguing/interactive ba • Organized encounters with reference group interviews outside interest - media • Survey; transfer of tacit knowledge between researchers and locals and media (face-to-face interactions collective)

• Analysis; public presentation of research (to decision-makers, locals and others) • Sharing outcomes/collective discussion (tacit-explicit Interaction) • Review/feedback - new questions • Back and forth process between researchers and locals

Combination Systemizing ba

Explicit

Figure 12.6 Canada-Finland research project - knowledge transfer and creation process. Applying the SECI model and ba concept (Nonaka and Takeuchi 1995, modified by George and Svels 2012).

where various individual perspectives, questions and answers, opinions and new questions were presented in a back and forth process between the researchers and others present. Also the media was interested in the outcome which gave the collaboration public display (Combination). Continuing the approach, the next step, ideally, would be further individual reflection and collective discussion - a process of review, evaluation and contemplation of the outcomes - by all stake­ holders, including the decision-makers, managers and locals alike. Synthesizing the combined knowledge should inspire new collaborative, actionable strategies, which adopt and transfer some of this newly created knowledge ‘on the ground’ (Internalization). This knowledge-building process could be repeated periodic­ ally (e.g. five-year intervals). The process of knowledge transfer and the creation of new knowledge, result­ ing from the interaction of tacit and explicit knowledge, could provide a useful

A transatlantic perspective   341 tool for the management of WHS, particularly for sites with inhabitants. After all, locals have managed these sites for generations and have the know-­how to do so. It would seem logical that managers would seek out and draw on the tacit knowledge of locals to optimize the sustainable management of the WHS. Further discussion on this concept will be the subject of a later paper.

Final remarks about learning transnational learning The transatlantic project was carried out in order to build research knowledge about three national treasures – Old Town Lunenburg, Kvarken Archipelago and the High Coast. An essential aspect in determining benefits will depend on how various researchers, state actors and World Heritage managers establish a dialogue and take the results of the research into account. One benefit of research collaborations, especially for younger researchers, is that it offers the possibility to build new networks and legitimizes their role in the research academy. Like other fields of study, the study of UNESCO World Heritage Sites is a small, highly selective and highly focused area of research. Because of this, it is difficult for new researchers who are interested in this subject area to tap into it or build national research networks. However, on the international scene, there are numerous individual researchers in other countries, most of them working independently, who are studying the same or similar phenomena, but in a piecemeal fashion. Hence, to maximize the contributions made by old and new researchers alike in this area of study, creative approaches are needed. With this in mind, the concepts of collaboration and transnational learning make logical sense – to pull together a critical mass of existing knowledge through small, collaborative initiatives that include the sharing, exchange and transfer of knowledge – in order to build, expand and enhance the value of a specialized body of research. Further, by pooling financial and human resources, smaller, informal transnational projects become more appealing and feasible. Two collaborative initiatives are discussed in this chapter to exemplify transnational learning through knowledge transfer and creation. In the Finland–Canada project, two researchers, through their own individual and collective experiences, have personally learned the ‘true’ value of transnational learning and collaborative research and, hopefully, through future academic endeavours, this learning will be transferred to and benefit others.

Notes 1 United Nations Educational, Scientific and Cultural Organization. 2 For instance, even though the project was in another country, an official Ethics Committee approval was required by the Canadian researcher’s home institution before her participation in the project in order to receive funding support. This took three months to obtain. There was no similar requirement by the Finnish university.

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References Bender, T. (2006) A Nation among Nations: America’s Place in World History, New York: Hill and Wang. Chiu, M.M. (2000) ‘Group problem solving processes: social interactions and individual actions’, Journal for the Theory of Social Behavior 30(1): 27–50, 600–31. Chiu, M.M. (2008) ‘Flowing toward correct contributions during groups’ mathematics problem solving: a statistical discourse analysis’, Journal of the Learning Sciences 17(3): 415–63. De Geytere, T. (2005) SECI Model (Nonaka Takeuchi). Online. Available at: www.12manage.com/methods_nonaka_seci.html (accessed 20 April 2012). Dillenbourg, P. (1999) ‘What do you mean by collaborative learning?’, in P. Dillenbourg (ed.) Collaborative-­Learning: Cognitive and Computational Approaches, Oxford: Elsevier, pp. 1–9. George, E.W. (2002) ‘Tourism and culture in rural communities: a dichotomous affair’, in Canada: Rupture and Continuity, Montreal: McGill Institute for the Study of Canada, pp. 69–88. Jansen-­Verbeke, M. and McKercher, R. (2010) ‘The tourism destiny of cultural World Heritage sites’, in R. Butler and D. Pearce (eds) Tourism Research: A Vision 20/20, Oxford: GoodFellow Publishers, pp. 190–202. Klarl, T. (2009) Knowledge Diffusion and Knowledge Transfer: Two Sides of the Medal, Discussion paper no. 09–080, Germany: ZEW Centre for European Economic Research. Mayntz, R. (2010) ‘Global structures: markets, organizations, networks – and communities?’, in M.-L. Djelic and S. Quack (eds) Transnational Communities: Shaping Global Economic Governance, Cambridge: Cambridge University Press, pp. 37–54. Nonaka, I. and Takeuchi, H. (1995) The Knowledge-­Creating Company: How Japanese Companies Create the Dynamics of Innovation, New York: Oxford University Press. Nonaka, I. and Takeuchi, H. (2008) Seci, Ba and Knowledge Assets. Online. Available at: http://paei.wikidot.com/nonaka-­takeuchi-seci-­ba-and-­knowledge-assets (accessed 20 April 2012). Svels, K. (2010) ‘Tourism development and joint management of a transnational World Heritage: the case of the transnational World Heritage in the High Coast/Kvarken Archipelago (Sweden/Finland)’, in conference proceedings World Heritage and Tourism: Managing for the Global and the Local, Quebec, Canada, 2009, pp. 1109–26. Svels, K. (2011) ‘MacCannell revisited in Kvarken Archipelago, Finland’, Journal of Tourism and Cultural Change 9(3): 259–69. Thelen, D. (1999) ‘The nation and beyond: transnational perspectives on United States history’, Journal of American History 86: 965–75. Tyrrell, I. (2007) What is Transnational History? An Excerpt from a Paper Given at the Ecole des Hautes Etudes en Sciences Sociale, Paris, January 2007. Online. Available at: http://iantyrrell.wordpress.com/what-­is-transnational-­history/ (accessed 28 February 2012). UNESCO (1972) The World Heritage Convention, Paris: UNESCO. UNESCO (2012) The World Heritage List, UNESCO World Heritage Centre. Online. Available at: http://whc.unesco.org/en/list (accessed 10 March 2012). World Heritage Tourism Research Network (WHTRN) (2008) World Heritage Sites Collaborative Research Workshop, unpublished transcribed discussion notes, Halifax, CA: Mount Saint Vincent University.

13 Transnational learning in local governance Two lessons from Finland Hannu Katajamäki and Åge Mariussen

In the theories of transnational learning developed in Part I of this book, we have outlined the preconditions for moving from comparative analysis to searching for good practices abroad and to dialogues in order to change policies. We have suggested that the process of transnational learning can be analyzed with the help of the SECI process. The preconditions for successful transnational learning, illustrated by the two lessons presented in this chapter, one successful and one not so successful, are structural, cognitive and organizational. First, in terms of structural preconditions, the ability of a national system to learn from abroad depends on what Jessop (2008) calls ‘structurally inscribed selectivity’ (see Chapter 1, this volume). There has to be a dynamic in the structure, a process revealing unsolved problems, which makes it possible and relevant for actors to ask questions about the current state of domestic affairs, and to actively seek answers abroad. This creates an opening, or what Jessop (2008) refers to as emergence. Jessop emphasizes that in nation states ruled by coalitions of powerful actors and institutions, the dynamic is often set in motion by the strategies of the elite. These elite strategies tend to work as selection mechanisms, not just at the central level, but also with implications for local or regional level actors. As pointed out by Mariussen in Chapter 8 of this volume, the combination of central level coordination and regional level fragmentation in Finland, as compared to Denmark, in some cases tends to limit the ability of local actors to seek and find new solutions to their own development challenges. This is also illustrated in the chapter on tourism (see Chapter 11, this volume). The emergence discussed in this chapter is an attempt to solve some of these problems in Finland by developing new and stronger regional level institutions, through municipal reform. The need for municipal reform was the point of departure for both the cases presented below. Second, in terms of cognitive and analytic preconditions, Mariussen and Virkkala (Chapter 4, this volume) discuss the need for not just comparative analysis, leading to the discovery of a good practice which might be seen as relevant, but also the need to move further than that. Two related analytical tools are abduction and translation. Abduction means to take a good practice in a ­different country out of its national context, and hypothetically reposition it into  another context, in a different country. Through this move, a number of

344   H. Katajamäki and Å. Mariussen inconsistencies are likely to emerge, points where we discover that ‘this does not fit here’. Accordingly, abduction must lead to translation. Translation is an analytic process, where the concrete description of the good practice leads to a more abstract understanding of its internal logic. What comes out of the sequence of abduction and translation may be something quite different from the original, concrete practice. In terms of the SECI process, this is a move from tacit knowledge (the practice abroad) to explicit knowledge (know-­what), to an abstract understanding of the causal chains producing the good results (know-­why), and further to something else, where the model from abroad is reconstructed in a way which fits the new context. Third, this analytic exercise of translating and abducting must lead to a situation in which the new practice can be implemented practically. In other words, there must be actors in the receiving region who are able and willing to redefine their roles and change some of their habits. This is a crucial part of the ‘know-­ who’ process. If successful, it is likely to lead to the integration of the new solution into the existing institutional order.

Municipal reforms in Sweden and in Finland In the early 1950s, Sweden still had almost 2,500 municipalities. The progress of building a welfare state led to a radical reform in local government structures. The services provided by the society required strong basic municipalities and, in the early 1970s, decision-­makers settled on complex greater municipalities. Today there are less than 300 municipalities in Sweden. An in-­depth discussion on the issues concerning the efficiency and proximity of municipal administration took place in Sweden as early as the 1970s. The aim was to establish regional bodies with a strong authority, in municipalities which had been extended through consolidation. These would secure citizens’ participation, neighborhood democracy and the municipalities’ legitimacy (Gren 2009). Inspired by Sweden’s example, Finland began in the 1960s to implement a welfare state where municipalities carried great responsibility for offering and organizing services for their residents. However, due to lack of political unanimity, a great reform in local government structures was not implemented in Finland; instead, the Finnish welfare state was founded on considerably smaller municipalities than that of Sweden. The differences in the sizes of the municipalities are the reason why Sweden’s current regional structure is substantially more centralized than that of Finland. It was not until the 2000s that Finns awoke to the need of great reform in local government structures. Consequently, there is now a process underway which will result in the number of municipalities falling to half the current number: in the future, there will be approximately 150 municipalities in Finland. The municipalities being formed now are so large that new kinds of instruments for local administration will be required in their sub-­districts to allow the residents of all the areas of a municipality to have an influence on the way services are organized and land use is planned in their own communities.

Transnational learning in local governance   345 Are there lessons to be learned in Finland from the procedures of sub-­ municipal district administration developed in Sweden? We will present here two processes that are linked to this idea.

Sub-­municipal district administration in Sweden The most interesting of the conventions of sub-­municipal district administration applied in Swedish municipalities is the neighborhood council. Variants of it are applied in very different aspects of local government from the administration of the metropolis of Stockholm to the configurations of small municipalities. In this chapter, the model of the Umeå neighborhood council will be used as an example. Umeå has three neighborhood councils (Holmsund-­Obbola, Hörnefors and Sävar) whose population bases range from 6,400 to 8,500 residents. The neighborhood councils are diversified councils responsible for social services; preschools and comprehensive schools; cultural, youth and recreational services and libraries. Preparatory, reporting and executive officials have been appointed for the Umeå neighborhood councils. Their members are municipal politicians proposed by parties. The political distribution of the neighborhood councils is in line with the distribution of the municipal election results. The neighborhood councils receive their resources as a part of Umeå’s budget process. Their authority is great in the duties they have been given by the resolution of the Umeå City Council. They also have to make unpleasant decisions. For example, if the amount of pupils in a primary school is falling significantly, the neighborhood council has to consider ways to resolve the issue. The Swedish model of neighbourhood councils is an attempt to reconcile the demands of efficiency and proximity with the target of creating harmony between centralization and decentralization. Certain issues must be handled through a unitary municipal decision-­making system, but some others can be resolved in the appropriate sub-­municipal districts. In terms of budget, this practice is not complicated, as long as a consensus has been found on responsibilities to be handled jointly or separately by the different sub-­municipal districts.

The Swedish idea for sub-­municipal district administration reaches Finland In the early 1990s, an experiment was started in Finland involving free municipalities. This meant that municipalities were given the opportunity to organize their operations more flexibly than before. It was a time of recession and the government wanted to encourage municipalities to develop new, cost-­effective procedures. An interesting pre-­occurrence of the model reached Finland from Sweden when a new kind of sub-­municipal district body was established in the largest center of Lapland, the city of Rovaniemi. Finnish municipalities had already had some sub-­district resident committees before, which gave various reports. Now,

346   H. Katajamäki and Å. Mariussen however, inspired by Sweden, the aim was to establish a regional body with strong authority: a neighborhood council. This council was founded in Yläkemijoki, a region with approximately 1,100 residents, some 50 kilometers from the center of Rovaniemi. The neighborhood council was established in 1993. After the trial period it was not abolished, but became a permanent structure. An application of direct democracy Candidates for membership of the neighborhood council are fielded in the civic meetings organised in the territory’s nine villages. Each village has one representative in the council. The neighborhood council is nominated by the Rovaniemi City Council. The party political standpoint is not emphasized in the selection; instead, representatives who are active in their own areas are appointed. The neighborhood council has an annual budget of approximately two million euros and it belongs in the city of Rovaniemi’s budget. It is a diversified buyer council that handles matters concerning daycare, basic education, culture, young people, library services and health care and home care services. It is also responsible for developing sources of livelihood in its own area. Most of the services are provided by the city of Rovaniemi because there are no private service providers in the region. The council cooperates with associations, businesses and the Rovaniemi parish organization. The Rovaniemi City Council has set targets for the Yläkemijoki Neighborhood Council which include organizing services efficiently, economically and in a way that takes the residents’ needs into account. The services bought by the neighborhood council are evaluated by the same criteria as in the corresponding areas of responsibility in the rest of the city. In 2008, the Rovaniemi Audit Committee appraised the results of the council’s 15 years of activities (Rovaniemi 2008). Good experiences The appraisal revealed that in 2007 the amount of 1,680 euros per resident was channelled via the neighborhood council to daycare, health care and home care services, basic education, cultural services and facilities for young people. The corresponding expenditures in other areas of the city of Rovaniemi amounted to 1,260 euros per resident. The population of the region of the Yläkemijoki Neighborhood Council is falling and consequently unit costs are growing. The population is aging, but because the distances are great, the savings achieved through regional centralization of services would be lost owing to the greater need of residents to travel and the expenses caused by this and by everyday activities becoming more difficult. The example of Yläkemijoki demonstrates the importance of a broad point of view: when organizing services for rural areas, the benefits and disadvantages

Transnational learning in local governance   347 caused to the residents must be estimated in an all-­round way. It would not be fair to examine only costs. The appraisal also sought the views of the neighborhood council members on the effects of the operation (Rovaniemi 2008). The members emphasized the importance of having an influence in their own communities: the neighborhood council is able to react flexibly and quickly to changes in the need for services and it is the local partner to the region’s service providers. It is able to examine the Yläkemijoki region as a whole. In sparsely populated rural areas, the overall perspective of a neighborhood council is more beneficial for the residents than the view of municipal committees which examine the municipality as a whole. This supports the principle of the new paradigm of rural policy, which emphasizes the region-­based development of rural areas. For example, the OECD has stressed this point of view (see OECD 2006), and the view has also been adopted in Finland as an important principle of rural policy. A neighborhood council also implements the principle of proximity in organizing services. Utilization of local initiative will be made possible after new modes of operation are found between the public sector, businesses and civic organizations. Fruitful interaction between the rural area and the city The Yläkemijoki Neighborhood Council also has a duty to develop its own area. A plan has been prepared for this purpose, and it is the responsibility of the neighborhood council to update it. The neighborhood council’s report card characterizes this area development as follows: The role of the Neighbourhood Council as the administrator of various development projects has ensured continuity in development work. It has made it possible to refine the job creation ideas originating in the region. Many cooperation networks benefiting the Yläkemijoki region have been created. (Rovaniemi 2008) The experiences of Yläkemijoki on the viewpoints of the interaction of city and rural areas are promising. Services near the home, which are based on the needs of the residents, have been organized far from the city’s main center, in the rural areas of sparsely populated Lapland. The residents have gained benefits from it and the expenses caused by it are not unreasonable. Region-­based budgeting and the definition of authority have been entirely possible to deal with. The selection of the council members combines representative democracy and direct, resident-­based democracy in an interesting way. A practice concerning one of the rural areas of a city that is large in area has been successfully regularized. On the one hand, this practice supports Yläkemijoki’s special development needs, which start off with the needs of the residents, and on the other, it reinforces the city strategy of the whole city of Rovaniemi.

348   H. Katajamäki and Å. Mariussen The experiences derived from Sweden’s sub-­municipal district administration have been insightfully applied in Yläkemijoki. Here they have renounced the mechanical principle, extensively debated also in Sweden, which requires parties to appoint the members of the neighborhood council on the basis of party-­list proportional representation of the whole municipality. In Yläkemijoki, the candidates for members of the neighborhood council are nominated in open civic meetings. This is a way of pursuing the elements of direct democracy. The Yläkemijoki Neighborhood Council can be construed as an interactive forum for representative and direct democracy. The Yläkemijoki Neighborhood Council is an example of neo-­endogenous development work For a long time, the greatest attention within the sector of regional development and local administration lay in the exogenous factors: the emphasis was on the structures and the connections of influence linked to the regions’ external dependencies, the economy and the importance of centralization and urbanization. From the 1970s, the models of endogenous development provided a new point of view for the dialogue. They highlighted a region-­based approach, local resources, entrepreneurship and the multiformity of rural areas (Ward et al. 2005; Hyyryläinen et al. 2011). The period from the mid-­1970s to the early 1990s was the time of constructing and consolidating the endogenous development model. According to Michael Woods, the bottom-­up approach and taking the region’s needs into account have become the dominant paradigm of regional development (Woods 2005). Woods refers to the critical discussion that has taken place on this subject and states that the approach is far from problem-­free: a sense of community is not a remedy for all the problems local communities face. As a result of variable local strengths, all regions do not have equal endogenous qualifications to succeed in the ever tougher contest between regions (Woods 2005: 156; Hyyryläinen et al. 2011). One interpretation of Woods’ comment is that without boundary conditions, endogenous development will not materialize. In this sense, the Yläkemijoki model is extremely interesting, because it is an attempt to create institutional premises for endogenous development. Researchers from Newcastle University have participated in the theoretical dialogue on regional development and introduced the concept of neo-­endogeneity (Lowe et al. 1995; Ray 1999a, 1999b, 2000, 2001, 2003). When exogenous and endogenous factors take effect simultaneously, an arrangement is created in the local community in which internal processes and external influences intermingle. In the present situation of social development, this intermingling is extremely complex. From the neo-­endogenous perspective, the vital issue is how the opportunities of the local communities’ residents to influence and direct the rich interactive processes of exogenous and endogenous factors can be improved (Ward et al.

Transnational learning in local governance   349 2005: 5). Better institutional means for the participation of citizens and civic organizations must be created; the possibilities to participate in decision-­making and programme processes concerning the region must be improved. The neo-­endogenous approach requires new arrangements for regional development and local government. The target then becomes a multifaceted and network-­like governance paradigm. According to Shucksmith (2010), what is important here are the processes with which the administration strives to create interaction in new ways within regional and local development. This new kind of governance is implemented in arrangements where the public, private and communal parties work together. This is exactly what the Yläkemijoki model exemplifies. The Vaasa region’s attempt to learn from the Umeå neighborhood councils In 2007, researchers from the University of Vaasa, Åbo Akademi University and Umeå University began the project ‘Nya modeller för regional mobilisering – jämförelse och lärande i Kvarkenregionen’ (‘New Models for Regional Mobilisation – Comparison and Learning in the Kvarken Region’), funded by the EU’s Bothnia-­Atlantica programme. One of the themes of the project was sub-­municipal district administration. The basis for this was the situation in the Vaasa region. The central city, Vaasa, has long sought to establish a large consolidation of municipalities, with Vaasa and its six neighboring municipalities forming one municipality called Vaasa with 110,000 residents. The reasons given for this are the strengthening of the region’s competitive position, the increased efficiency of land use planning and service organization and cutting down on administrative overlaps. The decision-­makers of the neighboring municipalities have not been equally enthusiastic. They fear that in the new greater Vaasa the possibilities for rural areas to influence decisions will decrease and the services for Swedish speakers will diminish. Less than 30 percent of Vaasa dwellers are Swedish-­speaking, but the majority of its neighboring municipalities are almost exclusively Swedish-­ speaking. An idea arose to examine the possibilities of applying the Umeå model of sub-­municipal district administration from the points of view of neighborhood democracy and the organization of services in the Vaasa region’s possible greater municipality. A study was launched to assess the Umeå sub-­municipal district administration (Gren 2009). After the study was completed, a discussion was organized at the University of Vaasa for the region’s municipal decision-­makers (Figure 13.1). At the discussion, the writer of the study estimated the experiences gained from the Umeå neighborhood councils. The event was well received, and approximately 100 municipal and other decision-­makers attended it (Figure 13.2). The local media was also present. The study results generated a lively discussion. One of the authors of this chapter acted as the moderator at the discussion, which had two front lines. The

350   H. Katajamäki and Å. Mariussen

Figure 13.1 Maria Gren represents the Umeå neighborhood council model in a learning seminar in Vaasa (Hannu Katajamäki).

decision-­makers of the central city, Vaasa, saw a great opportunity in the Umeå neighborhood councils that could be applied also in the Vaasa region. The representatives of the neighboring municipalities emphasized the problems of the model: they saw it as administratively heavy, with few possibilities to have an influence, and they found the idea strange that the neighborhood council’s membership was determined on the basis of party-­list proportional representation of the whole municipality, because party support is not the same in sub-­municipal districts as it is in the whole municipality. No shared vision arose from the discussion, because learning was selective: Vaasa-­based participants emphasized the benefits, whereas the representatives of the neighboring municipalities focused on the disadvantages. At no stage did the discussion move onto the subject of how the Umeå model for the neighborhood council could be applied in the Vaasa region. The media reported that the Umeå model had been found not suitable for the Vaasa region. The matter was quickly forgotten. At the moment, the realization of the consolidation of municipalities in the Vaasa region is still at an undecided stage.

Transnational learning in local governance   351

Figure 13.2 A learning seminar on Umeå neighborhood councils in Vaasa (Hannu Katajamäki).

Conclusions A learning process led by chance In 2013 the Yläkemijoki model of neighborhood councils is being extended to other sub-­municipal districts of the municipality of Rovaniemi, albeit after a long period of hesitation. It has recently also gained extensive exposure nationally. For example, Helsingin Sanomat, the newspaper with the widest circulation in Finland, featured it in its editorial at the beginning of 2012 and presented it as the brilliant forerunner of new local democracy (Helsingin Sanomat 2012). Finland’s reform in local government structures has brought the Yläkemijoki Neighborhood Council into the limelight. A publication on it (Pihlaja 2012) has also been made for decision-­makers and it has attracted wide publicity. Consequently, two Finnish ministers launched an investigation in the spring of 2012 to estimate the alternatives of suitable neighborhood democracies for Finland (Pihlaja and Sandberg 2012). Previous presentations of the Yläkemijoki model found no echo at all (for example, Katajamäki 2008, 2009). The starting of the learning process required the social situation to reach a stage where decision-­ makers realized that the new greater municipalities will not survive without arrangements by a local government that has authority, and that the whole reform in local government structures may fail unless the sub-­municipal district administration is put at the hub of the process. It is expected that the future greater municipalities in Finland will establish sub-­municipal districts with strong authorities, based on the premises of the Yläkemijoki model. Sparked off by the Swedish sub-­municipal district administration, the development of the Yläkemijoki model into a nation-­wide learning process has been slow and coincidental. A scheme of systematic transnational learning would have brought the Yläkemijoki model to public awareness much faster and in a more diverse way. This might have allowed decision-­makers to realize already at the start of the reform of local government structures that in a

352   H. Katajamäki and Å. Mariussen modern society administrative reforms must be prepared from the bottom up. The time for top-­down solutions is over. Too light a procedure The Vaasa region arrangement was well prepared. A study was made of the experiences of the Umeå sub-­municipal district administration. A seminar was organized in which the possibilities of the model from the point of view of the Vaasa region were described. The seminar caught people’s attention, and the key municipal decision-­makers in the Vaasa region attended it. Nevertheless, the learning process was not a success, because there was no shared, creative speculation on the possibilities of applying the model. Instead, the juxtaposition between Vaasa and its neighboring municipalities deepened. The cooperation between Finnish and Swedish researchers worked, and as a result, a versatile analysis of the Umeå sub-­municipal district administration was created. This kind of an arrangement in transnational learning is important, but it is not enough. The real challenge begins when researchers start transferring the results they have gained to the practical learning processes of decision-­makers. The major differences between these cases are: 1 2

3

In terms of emergence, the municipalities in the Vaasa region may at the time have seen maintaining the status quo as a relevant alternative to the merger. The situation was one of negotiations rather than shared vision. In terms of abduction and translation, through transfer Yläkemijoki succeeded in reconstructing the model from the original Swedish ‘sub-­ municipality’ structure with local representative boards appointed by the municipal board into a new institutional solution, based on the neighborhood council made up of active participants in local development groups formed according to bottom-­up principles. In terms of ‘know-­who’, the core actors who could implement the new solution were identified, and thus it was possible to carry out the change.

The effort in the Vaasa region was interesting, nevertheless, and provided Finnish municipal decision-­makers with the following concise messages about the Umeå model (see Gren 2009; also Strandin 1980): 1

2

It is not practical to centralize all the municipality’s responsibilities to the municipal council, municipal executive boards and municipal committees. By way of the neighborhood councils, an easy distribution of work can be implemented between tasks requiring a uniform practice and tasks that take into account the special characteristics of the different sub-­municipal districts. By way of the sub-­municipal district administration, it is possible to implement a decentralized growth strategy. At the same time, the increase of developmental differences inside the municipality can be prevented.

Transnational learning in local governance   353 3 4 5

6

7

The sub-­municipal district administration integrates the logic of greatness that emphasizes efficiency with the logic of proximity and small size which the residents want. A sub-­municipal district administration with authority will prevent the growth of a democracy deficit inside the municipality and the consequential eruption of a legitimacy crisis. From the point of view of the realization of local democracy, it is not wise to apply the Swedish practice in which the political power relationships of the sub-­municipal district administration are determined on the basis of party-­list proportional representation of the whole municipality. In selecting the members of regional bodies, special procedures are required that take into account the wishes and opinions of the residents in the sub-­municipal districts. In multilingual areas, it is important that the sub-­municipal district administration takes language relationships into account. A sub-­municipal district administration does not mean that new posts have to be established, but that the work of officials required by the sub-­municipal district administration is implemented by revising the existing job descriptions. A consolidation of municipalities provides ideal opportunities for this. The neighborhood council will increase the number of citizens who participate in the municipal administrative processes. The number of actual decision-­makers will be greater than in the applications of regional forums providing counsel.

This examination of two examples has demonstrated that transnational learning is an important tool in developing good administrative practices. It is apparent, however, that little attention has been paid to this theme in Finland.

References Gren, M. (2009) Kommun i delar. En utvärdering av Umeås kommundelsorganisation. Unpublished thesis, Umeå universitet. Statsvetenskapliga institutionen, 49 p. Hyyryläinen, T., Katajamäki H., Piispanen S. and Rouhiainen V. (2011) ‘Neoendogeenisen maaseutupolitiikan ilmeneminen kylätoiminnassa’, Maaseudun uusi aika 2/2011: 20–38. Helsingin Sanomat (2012) ‘Kuntauudistuksessa tärkeää on mittakaava’, Helsingin Sanomat, editorial, 22 January. Jessop, B. (2008) State Power, Cambridge: Polity Press. Katajamäki, H. (2008) ‘Aluelautakunnat vahvistaisivat paikallisyhteisöjä kuntaliitoksissa’, Helsingin Sanomat, 11 October. Katajamäki, H. (2009) ‘Suurkuntien maaseutualueet edellyttävät uudenlaista paikallista hallintaa’, Maaseudun uusi aika 2/2009: 47–55. Lowe, P., Murdock J. and Ward, N. (1995) ‘Beyond endogenous and exogenous models: networks in rural development’, in J.D. van der Ploeg and G. van Dijk (eds) Beyond Modernization: The Impact of Endogenous Rural Development, Assen: Van Gorcum, pp. 87−105. OECD (2006) The New Rural Paradigm: Policies and Governance, Paris: OECD ­Publishing.

354   H. Katajamäki and Å. Mariussen Pihlaja, R. (2012) Rovaniemen uusi lähidemokratiamalli. Travel Report 18–20 January. Maaseutupolitiikan yhteistyöryhmä, Kansalaistoiminnan teemaryhmä. Pihlaja, R. and Sandberg, S. (2012) ‘Alueellista demokratiaa? Lähidemokratian toimintamallit Suomen kunnissa’, Valtiovarainministeriön julkaisuja 27/2012. Ray, C. (1999a) ‘Endogenous development in the era of reflexive modernity’, Journal of Rural Studies 15/3: 257–67. Ray, C. (1999b) ‘Towards a meta-­framework of endogenous development: repertoires, paths, democracy and rights’, Sociologia Ruralis 39/4: 521−37. Ray, C. (2000) ‘The EU LEADER programme: rural development laboratory’, Sociologia Ruralis 40/2: 163. Ray, C. (2001) Culture Economies: A Perspective on Local Rural Development in Europe, Newcastle upon Tyne: Centre for Rural Economy, CRE. Ray, C. (2003) Governance and Neo-­Endogenous Development, review paper for Defra, the Countryside Agency and Economic & Social Research Council, London: Defra. Rovaniemi (2008) Yläkemijoen aluelautakunta, Arviointi 6/2008, Rovaniemi: Tarkastuslautakunta. Palvelut-­jaosto, 15 p. Shucksmith, M. (2010) ‘Disintegrated rural development? Neo-­endogenous rural development, planning and place-­shaping in diffused power contexts’, Sociologia Ruralis 50(1): 1−14. Strandin, B. (1980) ‘En svensk modell för kommunal närdemokrati’, Vasabladet, 7 November. Ward, N., Atterton, J., Kim, T.-Y., Lowe, P., Phillipson, J. and Thomson, N. (2005) Universities, the Knowledge Economy and ‘Neo-­Endogenous Rural Development’, Discussion paper Series No. 1, Newcastle: Centre for Rural Economy, CRE. Woods, M. (2005) Rural Geography: Processes, Responses and Experiences in Rural Restructuring, London: Sage Publications.

Index

Page numbers in italics denote tables, those in bold denote figures. abduction 152, 180, 343–4, 351; comparing good practice 275–7, 277; good practice analysis 180–6; good practice evaluation 187 absorptive capacities (AC) 14, 74–5, 76, 76, 89, 91, 93–6, 97, 134 absorptive capacity, development capacity and transnational learning in regional and local development 93 accountability 198 Act on Co-operation within Undertakings, Finland 299–300 actants 146 action ba, social integration, network ba and structure ba 47 action level ba 42–4 action research 31 actor network theory 45–6, 48, 146 actor networks 63, 64 actors: defining 63; influencing institutions 146; interaction 64; peripheral regions 95 adaptations 222–3 adhocracies 110, 159 agencies: choice of model 207; features of 206; governing of 210; tasks 211–12; typology 206–7, 210–12 agencies and agency bonfires as a SECI process 167 agencification: drivers of 207; European Union (EU) 209; Finland 210; in governments 205–7; Netherlands 209–10; New Public Management 207–10; overview 196–7; of regional institutions 25; summary and conclusions 213–14 agency perspective 55–6

agents 61 aid 172 Alasuutari, P. 202 allegories 44 Allen, J. 57 alliances 33 American Empire 26–7 Americanization 27, 156, 165 analogies 118 analytic preconditions 343–4 analytical framework 3 Andersen, T.M. 246 Anglo-Saxon model 25–6 ant hill theory 145–50, 148, 163, 189 archetypes 182, 263 Argyris, C. 4, 104, 132, 159, 220 arm’s length government 205 Asheim, B. 141 Asian tigers 71 assessment criteria 15 austerity 172 autonomy 126–7; of actors 64; governmental 205; innovation and creativity 31; managerial 208; of states 23, 212 ba 39, 40, 66, 89, 329, 329; action ba, social integration, network ba and structure ba 47; application of 124; concept of 119–20; criticisms 127–8; dialoguing/interacting 120, 121, 180; exercising 120, 122, 180, 189; focus groups 186; learning transnational learning approach 131; modality 44–5; originating 120–1, 180; social integration 43; space of knowledge creation and learning 54; structure 40–2;

356   Index ba continued system 42–4; systematizing 120, 121–2, 180; and transnational learning from good practices 123; typology 120–3; virtual 132; see also knowledge creation backwash effects 70 Barca, F. 83 barriers: to knowledge creation 233–7; to knowledge transfer 221–2, 229, 231–3, 238 Barrutia, J. 106 Bathelt, H. 63 Battle of Production 27 Beccatini, G. 31 Beck, A 28 behaviorism 105 beliefs, existential and cognitive 15 benchmarking 33, 94, 139–41 benchmarking studies 140 Bergrum Boliden 316 best case, defining 151 best practices 111, 141, 151–2 big government 203 big society 167 black boxes 46, 48, 157, 158, 159, 163 Blakeley, E. 59 bonfire of quangos 212 book, overview 4–8 borders: and knowledge 5, 13–23; and varieties 23–6 Boschma, R.A. 62 Botnia-Atlantica Institute 132, 132 bottom-up organizations 125–6 Bouckaert, G. 204 bounded rationality 107 British Empire 26 ‘burning platform’ memo 259 Business Development Agencies, Finland 298 Buviksutvalget 292 Callon, M. 45, 146, 150 Canada 327 Canada-Finland research project see transatlantic perspective care 127 case studies 7; Gold of Lapland 312, 314–21, 322–4; Kvarken Archipelago 312, 321–4; restructuring policy, Finland 297–304; restructuring policy, Norway 291–7; see also tourism; transatlantic perspective case studies, HEIs 251; Centria Ylivieska 268–72; comparing good practice

275–7, 277; evaluations and translations of good practice 278; HEIs in regional development 277; innovation modes and converging development paths: building new archetypes 280; learning potential and innovation modes 279–80; SECI sequences 255; shared learning 278–9; Skive Technical Institute 272–5; summary and conclusions 281–3 Castells, M. 2 central place theory 53 Centre for Economic Development, Transport and the Environment (ELY), Finland 290–1, 297 Centre of Expertise Programme (OSKE) 291 Centria Ylivieska 262–3, 268–72; compared to Skive Technical Institute 275–7, 277; evaluations and translations of good practice 278; impacts 270–1; innovation modes and converging development paths: building new archetypes 280; innovative cooperation 269–70, 272; learning from 271–2; role in knowledge creation 277; SECI process 282; shared learning 278–9; summary and conclusions 281–3 chance, and learning 351 change 71; drivers of 203–4; modes of 191–2 China 258 Christaller, W. 53 churches, influence of 23 city states 23 Civil Service, United Kingdom 209 clans 23 classic organizational theory 102, 106–8, 112, 159 classification, of regions 77–8 closure, actor network theory 46–7 cluster analysis 78–9 clusters: absorptive capacities (AC) 74; types of 78–9 codified knowledge 15 cognitive beliefs 15 cognitive learning 159, 160 cognitive learning, organizational and spatial structures, learning loops 162 cognitive preconditions 343–4 cognitive proximity 62, 66 cognitive psychology 105 Cohen, W. 74 cohesion 5, 172 collaborative learning 331–5, 332, 333 collective actors 63

Index   357 collective knowledge 13–14 Colomb, C. 228, 229 combination phase 89, 92, 118, 334, 340 commitment 127 common education programs 122 Common Pool Resources 35–6 Common Property Regimes (CPR) 35–6 communities 16–17, 21–2, 26 communities of interest 333 communities of practice 141–2 communities of science and education 149 community formation 16 company closure, Norway 295–7 Comparative Research into Current Trends of Public Organization (CRIPO) 211 complex social orders 19 conceptual knowledge assets 125 conceptualization, lack of 228–9 concrete actions 17 constructivism 105 consultancies 27–8 containers of power 23–4, 30 context-free prototypes 223 contextuality 15, 38 contextualized benchmarking 33 continuity, of knowledge 15 continuous innovations 116 contractualism 198 convergence 202 conversion 192 cooperation: Centria Ylivieska 269–70, 272; research 351; Southern Ostrobothnia 302; between states 19 cooperation programmes 219, 220; see also INTERREG coordination 172, 246, 257–8 Copenhagen Summit on Climate Change 135 County Governors, Norway 288 County Plans (Fylkesplaner), Norway 289 craft-based industries 149 creative chaos 127 CREST Report 32–3 crisis-based interventions 293 critical incidents 183–4 cultural influences 23 cultural studies 53–4 cumulative causation 69–70 cumulative causative development 266 cumulative learning 91, 158 Czarniawska, B. 3, 145–50 Dabinett, G. 228 Dahlström, M 167

Danson, M. 205 Darwin, Charles 14, 15 de-agencification 212 De Jong, M. 223 debt 170–2 decentralization 138–9 democratization 29, 203 Denmark: education 143–4, 145, 146–7, 149–50; flexicurity 250; historical background 245–6; industrial development 254, 256; Skive Technical Institute 272–5; see also education and regional development destination marketing organizations (DMOs) 312–13 development: actor network theory 46; defining 58; as economic growth 59; endogenous 60–1; neo-endogenous 348–9; regional and local 58–63 development capacities (DC) 59–60, 75, 76, 76–7, 91, 93–6, 97, 134 development networks 64 development paths 91–2, 266–7 development policies, regional and local 81–8 development strategies, following global economic crises 4 dialectic of structure 42 dialectic transformation 38, 40, 41 dialectical duality 33 dialogue 104 dialoguing/interacting ba 120, 121, 180 difference, learning through 111–14, 134, 156 differentiation and specialization, of knowledge 28–9 differentiation, of states 246 difficulties 6 diffusion 30–1, 146 diffusion theory 327 Directorate for Public Governance and Territorial Development (GOV) 199–200 displacement 191 distances 160 diversification, escaping lock-ins 73 Djelic, M.-L. 21–2, 146, 150–2 Doing, Using and Interacting (DUI) 7, 78–80, 263, 264–5, 279–80 Dolowitz, D. 102, 156 domination 18 double-loop learning 77, 93, 132, 134–5, 158, 159, 220 drift 192

358   Index Drost, A. 174 Dubois, A. 228 Dühr, S. 227, 228 duplication 221 Durkheim, Emile 16 earth science, global warming 36–7 East–West divide 245–6 Echebarria, C. 106 economic and societal organization, range of models 2 economic development theories 59 economic globalization 203 economic growth 59, 149 economic organization, territorially based 111 economic restructuring 8 economic shocks 165 education: ant hill theory 145–50; Denmark 143–4, 145, 146–7, 149–50; Finland 143–4, 145, 146–7; investment in 149; public investments 27 education and regional development: background for case studies 264–7; over view of case studies 262–3; overview 262–4; research method 263–4; research questions 263; see also higher educational institutes (HEIs) educational policies, SITRA report 143–4 elites 14, 112, 163, 343 Elop, Stephen 259 embeddedness 103 emergence 46, 144–5, 163, 190, 247, 343, 351 emergent forms 41–2, 44, 48 emergent structures 138–9 empires 23, 24 empowerment, local societies 82 endogenous development 60–1 endogenously generated change 71 entrepreneurial heroism 147 entrepreneurship, Gold of Lapland 317–18 ethnic groups 23 Etzkowitz, H. 265 Europe 2020 strategy 172 European Enlightenment 23, 24 European innovative regions, classification 77–8 European Neighbourhood Policy 201 European Union (EU): agencification 209; Gold of Lapland 315–16, 318; institutional diversity 139; learning between 32; market learning and GDP/ capita 248; Member State cooperation

219; network platforms 95–6; networks 142–3; regional diversity 220; regional policy 289–90, 297; response to economic crisis 172; restructuring legislation 299–300; supra-national programs 82 evaluations 169–70, 219, 278 evolutionary approach 71 executive agencies 205 exercising ba 120, 122, 180, 189 exhaustion 192 existential beliefs 15 exogenous approach, to regional development 266 expectations 18 experiential knowledge assets 125 experiential learning theory 105–6 experimentalist governance 111 explicit knowledge, vs. tacit 114–16 exploitation behavior 134 exploration behavior 134 external constraint 41 externalization phase 39, 88, 89, 91, 117, 121–2, 333, 339 Faludi, A. 5 Faulkner, B. 314 Ferlie, E. 204, 208 Fifth Discipline (Senge) 108–9 Financial Management Initiative (FMI) 207–8 Finland: Act on Co-operation within Undertakings 299–300; agencification 210; Centria Ylivieska and SMEs 268–72; compared to Norway 287; cooperation 302; education 143–4, 145, 146–7; EU funding 291; industrial development 256–7; languages 300–1, 301; municipal organization 252–4; municipal reform 344–5; Nova Business Botnica 303–4; policy interventions 302–3; public management reforms 212; recession, 1990s 286; regional administration 290–1; Regional Councils 290; regional development policy 297–8; restructuring legislation 299–300; restructuring policy 297–304; Russian legacy 254, 257; shift to Danish model 259; sub-municipal district administration 345–50; sudden and proactive restructuring policy 298–9; Swedish influence 257; unemployment 286; universities 206; see also education and regional development; restructuring policy

Index   359 Flagestad, A. 314 flexible specialization 111 flexicurity 250 flows 1–2, 29, 53 focus groups 131, 186 Fordism 25, 27, 110, 111 Fordist–Keynesian success story 27 foreign influences, openness to 19 formalized network organizations 16 formative influence 202 free municipal experiment (frikommunforsøket) 288 Friedmann, J. 57 friendliness 157 functional approach, to social integration 57 furniture industry 273–4 futurizing 163 game theory 36 garbage can 108, 110, 112 Garvin, D.A. 109 generalized principles 17 geographical proximity 61–2, 66 George, G. 74, 75 German/continental model 25–6 gestation, actor network theory 46 Giddens, A. 5, 13, 16, 17–19, 21, 24, 28, 29, 34, 37, 40, 44, 157, 189 Giuliani, E. 74 global economic crisis 170–2 global economy 19, 29–30 global governance 21–2 global institutions 149 global tourism 330 global warming 36–7 globalization 1–2, 19–23, 26, 203 globalization, and transnational learning 163–80; New Public Management 165–8; Nordic cooperation 175, 177; Open Method of Coordination 168–70; Smart Specialization 170–3; World Heritage (WH) 173–5 globalization theory 2 globally dispersed knowledge 266 Glückler, J. 63 Gold of Lapland: Bergrum Boliden 316; business network 320–1; current situation 318–19; early development 315–16; entrepreneurship 317–18; EU involvement 315–16, 318; as innovation system 319–21; map 315; organization 319; overview 312; planned development 316–17; power structures

321; role of municipalities 318; summary and conclusions 322–4 Gold of Lapland economic association 318 good practice: 130, analysis 180–6; Centria Ylivieska 268–72; comparison 275–7, 277; evaluation 187, 278; internalization 189–93; reconstruction 188–9; Skive Technical Institute 272–5; translations 187–9, 278 good practice analysis 263 Gornitzka, Åse 35 governance, policy networks 64 Government Management 199 Grabher, G. 158 Great French Revolution 23 Green Leigh, N. 59 Grindheim, J.E. 289–90 Halifax Initiative 330–3 Hall, C.M. 313 Hanseatic League 23 happiness 7, 247 hard globalization 4, 20, 26, 30, 38, 156, 165 Hardin, G. 35 Harmaakorpi, V. 128, 158, 163 Hassink, R. 139, 140, 141, 223 Hautala, J. 128 Hawthorn experiments 31 Healey, P. 5 health and social services, Norway 288 Hegel, Georg 20, 29 heterogeneity, escaping lock-ins 72–3 hierarchical coordination 112 High Coast, Sweden 335–6; see also transatlantic perspective high modernity 38 higher educational institutes (HEIs): Centria Ylivieska 268–72; comparing good practice 275–7, 277; creation of development paths 266–7; endogenous vs. exogenous development, stability vs. change 267; evaluations and translations of good practice 278; Finland 206; innovation modes 264–5; innovation modes and converging development paths: building new archetypes 280; learning potential and innovation modes 279–80; in networks 266; in regional knowledge economy 264; regional networks 79; role in development 277; Science Technology Innovation (STI) mode 265; SECI process 282; shared learning 278–9; Skive Technical

360   Index higher educational institutes continued Institute 272–5; summary and conclusions 281–3; and triple helix approach 265; see also education and regional development Hirschman, A.O. 70 historical institutionalism 190 historical trajectories 70–3 history, narrative construction 24 Hjalager, A.-M. 313–14, 321 Hjortnaes Kristensen, H. 64–5 Hollanders, H. 77 Hood, C. 198, 199 Hope, C.A. 314 horizontal coordination 257–8 Hospers, G.-J. 141 Hudson, c. 313 Huggins, R. 140 Hülz, M. 139, 141 human capital 27 hybridity 205–6 hypothetic-deductive methods 151, 152 Hyyryläinen, E. 166 ideological influence 202 imaginaries 145 imagined communities 22 imitation 221 incremental learning 34 India 258 individual-group-organization, as knowledge creating entities 116 individual knowledge 13–14 individual learning 104–6 individuals, in organizations 63 inductive methods 152 industrial development 7, 27; Centria Ylivieska and SMEs 268–72; Denmark 254, 256; Finland 256–7; Sweden 256 industrial modernization 149 industrial restructuring 252 Industrial Revolution 24, 26, 28–9 industries, innovation modes 78–9 information and communication technology (ICT) 258, 328 information sharing 122 Innovasjon Norge 288, 289 innovation: continuous 116; diffusion of 30–1; modes of 77; regional and local development policies 82; technological innovations 27; through diffusion 146; and training 269–70 innovation flows 149 innovation modes 78–80, 263; clusters

78–9; combining 265; and learning potential 279–80; and regional taxonomy 81; and role of educational institutes 264–5; see also Doing, Using and Interacting (DUI); Science Technology Innovation (STI) mode innovation modes and converging development paths: building new archetypes 280 Innovation Strategies through Smart Specialization (S3) 4 Innovation System and the Periphery (ISP) project 5 innovation system theory 107 innovation systems: Gold of Lapland 319–21; Nordic states 254–9; tourism 313 instability, of knowledge 38 institutional change, typology 190–2, 191 institutional complementarities, Nordic states 249 institutional differences 24–5 institutional diversity, European Union (EU) 139 institutional entrepreneurship 146 institutional thickness 60, 313 institutionalization 35 institutions: communities of science and education 149; global 149; influence of actors 146; research and educational 75; and social order 190; transnational 95; types of 60 integration 40, 42–4 inter-sector coordination 258 interaction, actors 64 interdependency 64 internal consistency 15 internal preconditions 48 internalization 94–5, 189–93 internalization phase 39, 89, 91, 92, 118, 122, 334, 340 international institutions 22, 27, 32 International Monetary Fund (IMF) 32 international research networks, knowledge creation and transfer 333 internationalization 204–5 interplay, resources, networks with capacities, and institutions 60 INTERREG 4, 5, 7, 32, 142; barriers to knowledge transfer 229; criticisms of 219; evidence for learning 227–8; impact of projects 236–7; influencing factors on knowledge transfer and learning 230; limitations of research

Index   361 228–9; overview 218, 225–7; summary and conclusions 237–9; transition of activities 226; see also process perspective interventions, crisis-based vs. precautionbased 293 introspection 104; see also reflexivity investment, science, technology and mass education 149 invisible infrastructure 203 IPCC 37 J-form 110 Jackson, M. 198, 199 Jashapara, A. 104, 105, 106, 108–11 Jensen, M.B. 78–9, 80, 264–5, 280 Jessop, B. 5, 14, 22, 33–4, 37, 38, 40, 41, 48, 55, 144–5, 146, 148, 157, 190, 285, 286–7, 343 Johansson, Alve 315 Johnson, B. 18, 52 Juggernaut 29–30, 34, 37, 157, 189 justification 188 Karlsen, A. 293–5 Kaskö: failure of restructuring 285; Nova Business Botnica 303–4; population 300; restructuring policy 297–304; summary and conclusions 305–9; transnational learning seminar 306, 309 Keynesian regional development policies 70 Keynesianism 27 Kickert, W. 209–10 Kingdom of Cheese 317 Kingdom of Gold 316–18 Klarl, T. 328 know-about 220 know-how 15, 21, 38, 42, 78, 84, 94, 95, 103, 130, 220, 264 know-what 15, 18, 24, 28, 33, 38, 85, 94 know-who 15, 18, 38, 78, 86–8, 94, 265, 351 know-why 15, 18, 21, 38, 78, 86, 94, 265 knowledge: and borders 5, 13–23; differentiation and specialization 28–9; as embodied 113; globally dispersed 266; instability of 38; nature of 2–3; recognition of 13–14; tacit vs. explicit 114–16; understandings of 157 knowledge acquisition, regional development networks 68 knowledge assets 124–5 knowledge conversion 2, 115–17, 267; see also SECI process

knowledge creation 28, 39–40, 52, 116, 224; barriers to 233–7; conditions for 233–7, 238–9; international research networks 333; leading the process 126; learning transnational learning approach 131–2; transatlantic perspective 340–1; see also ba knowledge creation theory see theory of organizational knowledge creation knowledge diffusion 327–8 knowledge economy 27 knowledge flows 149 knowledge infrastructure 75 knowledge institutes 129 knowledge management 328–9 knowledge protection 157–8 knowledge spiral 6, 52, 81, 88, 89, 95, 116, 180, 193; see also SECI model knowledge system and SECI model 39 knowledge transfer 102–3; barriers to 221–2, 229, 231–3, 238; conditions for 231–3; influencing factors in INTERREG 230; international research networks 333; transatlantic perspective 340–1; vs. knowledge diffusion 328 knowledge typology 52, 96; and structuration of action 19 knowledge vision 44, 124–7, 131, 161, 163 Kok Report 32 Kolb, D.A. 105–6 Konno, N. 89, 119, 120, 128, 189 Kostiainen, J. 89, 120–2 Kristensen, P.H. 252, 259 Kröger, S. 170 Kvarken Archipelago 312, 321–4, 335–6; see also transatlantic perspective labour collective, Norwegian industries 30 Lafarge, F. 209 Lagendijk, A. 55, 223 Lähteenmäki-Smith, K. 228 Laking, R. 206 Lam, A. 110, 134 Landabaso, M. 141 landskap 290 languages, Finland 300–1, 301 Lapland, local governance 345–50, 351 latering 191 Latour, B. 45, 146, 150, 156 Laukkanen, M. 90 Lave, J. 105 leadership, knowledge vision 44 leading the knowledge-creating process 126

362   Index learning: blocking 159; evaluation of 219; incremental 34; and knowledge 15; organizational, regional and transnational 129–30; proximity and distance 196; through difference 111–14 learning and destination development 8 learning capacity 222 learning environments 47–8 learning from good practices 67 learning history methodology 183–4 learning loops 4, 132, 158, 159, 161, 162 learning organizations 108–11, 159–60 learning potential, and innovation modes 279–80 learning regions 82 learning styles 105–6 learning through difference 111–14, 134, 156 learning through monitoring 3, 111–12, 139 learning transnational learning approach: ba 131; and theory of organizational knowledge creation 130–2; vs. theory of organizational knowledge creation 133 legitimation 18 Levinthal, D. 74 Lilja, K. 257–8 Lindegaard, K. 274–5 Lindeløv, B. 293–5 Lisbon policies 110–11, 168 literature, regional development policy and planning 5 local and regional development policies 81–8 local buzz 61 local conditions 184–5 local embeddedness 2 local governance: chance, and learning 351; context and overview 343–4; direct democracy 346; good experiences 346; municipal reform 344–5; neoendogenous development 348–9; ruralurban interaction 347–8; sub-municipal district administration, Finland 345–50; sub-municipal district administration, Sweden 345; summary and conclusions 351–3; Umeå neighborhood and Vaasa 349–50, 351–2 local government: Nordic states 249; reforms 252, 344–5 local practices 163 local societies, empowerment 82 localities 53 localized interaction 39

lock-ins 66, 71, 72–3, 91, 158, 160, 178 loose policy networks 63 love 127 LUBAT project 5 Lubatkin, M. 220 Lundvall, B.-Å 15, 18, 52, 140, 258 Lyotard, J.-F. 29 Lysgaard, S. 30 M-form organizations 134 Mahoney, J. 190 Major, John 197, 199, 208–9 Mamoudah, V. 223 managers, role in knowledge creation 125, 126–7 manufacturing, relocation of 259 March, J.G. 102, 107, market learning and GDP/capita, European Union (EU) 248 market-led restructuring 286, 292 Marsh, D. 102, 156 Marshall Plan 27, 28, 32 Martin, R. 72–3 Massey, D. 53, 55 ‘master story’ 29 Mathiasen, D. 203, 205 membership 63–4 Mendez, C. 169 mental models 109, 118 ‘meta-governance’ 22 metaphors 44, 118, 188–9; ant hills 147–8 methodologies 155–63 methods 180–93; abduction 180; internalization 189–93; New Public Management 165–8, 177–8; Nordic cooperation 175, 177; Open Method of Coordination 168–70, 171, 178; Smart Specialization 170–3; World Heritage (WH) 173–5, 176, 177 Metsä-Botnia 287, 298–9, 302–3 middle managers, role in knowledge creation 125, 126–7 middle-up-down organizations 126 Midwest Jutland 272–5; see also Skive Technical Institute migrant communities 26 mining heritage, Gold of Lapland 315 ministries, defining 206 mobilization process 294 modalities 17, 44 modality ba 44–5 models of development 2 modernization 29

Index   363 Moen, E. 257–8 motivation 177–8 movement 53 Müller, D.K. 314 multi-level governance 20, 38; see also Open Method of Coordination municipal organization: Gold of Lapland 318; Nordic states 252–3 municipal reform: Finland 344–5; Sweden 344 mutual dependency 64 Myrdal, G. 69–70 Nadin, V. 227, 228 narrative construction 24 narratives 121, 183–4 national business systems 25 national elite 14, 112, 163 National Innovation System (NIS) 110–11, 257–8 national integration 24 national knowledge, shared 40 national selection system 169 national societal integration 246 natural resources, Norway 291–2 negative lock-in 72, 91 ‘negotiated decision making’ 22 neo-liberalism 29–30, 32, 165–6, 247 Netherlands, agencification 209–10 Network of Senior Officials from Centres of Government 200 network relations, outcomes 66 networking, types of 94 networks: European level 142–3; Gold of Lapland 320–1; higher educational institutes (HEIs) 266; limitations 142–3; path-breaking 73; peripheral regions 95; regional and transnational 63–9; regional multi-actor 131 new contractualism 198 new European states 24 New Institutional Economics 198 new knowledge 224 new paradigm of regional policy 83 New Public Management (NPM) 7, 25, 156, 165–8, 177–8; agencification 205–10; de-agencification 212; features of agencies 210–12; global community 199–202; ideology 198–9; models of 204; organizational developments 208–9; overview 196–7; problems 212; and public management reform 197–9, 203–7, 212; summary and conclusions 213–14

New Zealand 198 Newcastle University research 348 Next Step agencies 205, 209 Niittykangas, H. 90 Nokia 160–1, 257, 258, 259 Nonaka, I. 2–3, 5, 6, 8, 13, 38, 39, 42, 44, 52, 68, 88–9, 103, 104, 106, 113–15, 116, 118, 119, 120, 124, 125, 126, 128, 130, 131, 134, 161, 182, 188–9, 222–3, 224, 328–9 Nordic cooperation 175, 177 Nordic history 245 Nordic institutional complementarities 249 Nordic learning 157; case studies 251; historical background 245–6; overview 245, 251; typology 250 Nordic model: overview 262; success of 247–8; vs. neo-liberalism 247 Nordic states: differentiation 246; education and regional development see education and regional development; innovation systems 254–9; local government 249; municipal organization 252–3; reforms 165–6; unemployment 286; welfare 247–50; see also higher educational institutes (HEIs) Nordin, S. 314 Norway: compared to Finland 287; economic restructuring 285–6; health and social services 288; natural resources 291–2; regional administration 287–90; regional funding 289; regional government 288–9; restructuring policy 291–7 Norwegian Industrial and Regional Development Fund (SND) 288 Norwegian industries, labour collective 30 Nova Business Botnica 303–4 OECD 27, 28, 32, 77–8, 165; agency definitions 211; influence on transnational learning 202–3; public management reforms 199–200; transnational committees 166 Old Town Lunenburg 335; see also transatlantic perspective Olsen, J.P. 107 omstilling 8, 285–6 Omstillingslova 2008 295–7 one-company towns 285–6, 292–3; see also restructuring policy, Finland; restructuring policy, Norway ontological influence 202

364   Index Open Method of Coordination 3, 5, 32–5, 38, 102, 112, 134, 139–40, 143–4, 168–70, 178, 196, 219; as SECI process 171 operation, of restructuring policy 295 organizational and spatial structures, cognitive learning, learning loops 162 organizational developments, and New Public Management 208–9 organizational learning: and the learning organization 108–11; and regional and transnational learning 129–30 organizational proximity 61 originating ba 120–1, 180 Ormala, Erkki 257, 258 Östhol, A. 250 Ostrobothnia 26 Ostrom, E. 35 Oulu South 268–72; see also Centria Ylivieska outcomes, of network relations 66 Paasi, A. 52, 53, 58 Page, E. 223 Panteia and Partners 229 paradox of path-dependent learning 73 paradox of transnational learning 138–43 Parsons, T. 15 partnership 220 path-dependence 34, 51, 70–3, 158–9, 160, 167, 287 path dependence, and knowledge types, SECI model 92 Peace Treaty of Westphalia 24 peer reviews 157, 165, 168–70 peripheral industrial societies 8 Peripheral Localities and Innovation Policies (PLIP) 5 peripherality 81, 313 ‘permanent fragmentation’ 22 personal mastery 109 perspectives, variable and changing 38 Pike, A. 59, 82 Piore, Michael 31, 111 PISA 143–4, 146, 149–50 place 52 place-based development policy 83 platforms 173 Polanyi, M. 115, 128 policy coordination 172 policy interventions, Finland 302–3 policy networks 64 policy replication 82 policy transfers 102, 129, 155–6, 221

political, economic and knowledge organizations, and regional and transnational learning 130 Pollitt, C. 204 polycentric world order 2 Porter, Michael 107 positive lock-in 72 post-Fordism 32, 111 post-modernism 28, 29, 38 potential absorptive capacity 74, 75 power structures, Gold of Lapland 321 practitioner-basedness 166, 199 pragmatic learning 112 precaution-based interventions 293 precaution-based restructuring 286 preconditions 51; analytic 343–4; cognitive 343–4; internal 48; structural 343 Pred, A. 53 predictability 18 preliminary rules 47 primus inter pares 25 principal agent theory 166, 198–9 principle of least effort 53 principles, structural 17–18 private companies, global scale 149 process perspective: barriers to knowledge transfer 231–3; conditions for knowledge transfer 231–3; knowledge creation 224; overview 218; overview of research 229–31; summary and conclusions 237–9; theories 221–4; transfer of existing knowledge 221–2; transnational learning as research topic 218–20; see also INTERREG prototypes 223 proximities 61–3, 66, 160 public choice theory 166, 198 Public Governance Committee (PGC) 200 Public Management Committee (PUMA) 199–200 public management reforms 196, 201, 203–7, 212 public management, subfields 204–5 public sector development 201–2 Pyper, R. 210 Quack, S. 21–2, 146 qualitative approaches 59 Quality of Work Life (QWL) 31 quangos 205, 212 quantitative approaches 59 quasi-federalism 20

Index   365 radical innovation strategy 43 rationality 107 rationalization 29, 30 realized absorptive capacity 74 reciprocity 40 recognition, of knowledge 13–14 redistribution of wealth 82 redundancy 127 reflexive modernization 30, 38 reflexivity 76–7, 94, 134; see also introspection region: defining 52–3; as key concept 52 regional absorptive capacity 75 regional administration: Finland 290–1; Norway 287–90 regional and local development 58–63; absorptive capacity, development capacity and transnational learning 93 regional and local development policies 81–8 regional and transnational networks 63–9 regional approach, territorial approach 56–8 Regional Cohesion and Competitiveness Programme (COCO) 291, 298 Regional Councils, Finland 290–1 regional development: complexity of learning 143; evaluations and translations of good practice 278; exogenous approach 266; higher educational institutes (HEIs) 277; inputs from transnational learning 6; learning from good practices 67; learning potential and innovation mode 279–80; overview 51–2; preconditions 96–7, 127; as process of interplay 51; qualitative approaches 59; quantitative approaches 59; SECI model see SECI model; structuralism vs. agency perspective 54–6; summary and conclusions 96–7; territorial approach 265; see also higher educational institutes (HEIs) Regional Development Act, Finland 297 regional development agencies (RDAs) 64, 166–7, 205 Regional development and knowledge types 88 regional development funding, Finland 297 regional development network, and transnational learning networks 68 regional development networks: economic development 67; knowledge acquisition

68; regional innovation systems and transnational learning 69; tasks 129; and transnational learning networks 65–6; vs. regional partnerships 64–5 regional development policy and planning literature 5 regional development policy and transnational learning, SECI model 90 regional development policy, Finland 297–8 Regional Development Programmes (Regionaltutviklingsprogram, RUP), Norway 289 regional development vision, and knowledge vision 131 regional economic decline, lock-ins 72–3 regional economies, paradox of pathdependent learning 73 regional government, Norway 288–9 regional identity 61 regional innovation strategy, developing 3 regional innovation systems (RIS) 66–9, 82, 96–7, 172, 173; regional development networks and transnational learning 69 regional institutions, agencification of 25 regional learning 61, 129–30 regional lock-ins 72–3 regional multi-actor networks 131 regional networks, universities 79 regional partnerships, vs. regional development networks 64–5 regional policy, European Union (EU) 289–90, 297 Regional State Administrative Agency (AVI), Finland 290 regional strategies, common education programs 122 regional Structural Fund objectives 58 regional taxonomy, and innovation modes 81, 81 regional variations, state formation 23 regionalization 138–9 regions: absorptive and development capacities 74–7; bounded and unbounded 57; classification 77–8; institutional set-ups 75–6; relational approach 57–8; similarity 77; strategic relational approach (SRA) 55; structural view 51; structuralist and agency based approach 56; transnational learning in 83–4; as voluntarily constructed entities 51 regularity precondition 213

366   Index Reid, A. 141 relational approach 51, 57–8, 61 relational proximity 62, 66 relations, at different levels 24–5 religion 16, 23, 158 repositioning 14 requisite variety 127 research and development (R&D) 35, 258–9 Research Framework Programme 219 research, limitations of 228–9 resources 59 restricting and enabling processes of learning loops 161 restructuring apparatus, establishment 294–5 restructuring legislation: European Union (EU) 299–300; Finland 299–300; Norway 295–7 restructuring policy: market-led 292; Norway vs. Finland 287; overview 285 restructuring policy, Finland 297–304; Kaskö 300–2; lessons from Norway 304–5; policy interventions 302–3; sudden and proactive 298–9; summary and conclusions 305–9 restructuring policy, Norway 291–7; establishment of the restructuring apparatus 294–5; lessons for Finland 304–5; mobilization process 294; Omstillingslova 2008 295–7; operation 295; scanning process 294; summary and conclusions 305–9 rewriting experiences 186 RIS 3 Guide 173 risk sharing 246, 262 rituals 16 Rokkan, S. 23, 25, 245 Roman Empire 23 root cause analysis 6 routine knowledge assets 125 routines 28 Rovaniemi, local governance 345–50, 351 rules 17, 37–48 rural communities 329; see also tourism rural-urban interaction, local governance 347–8 Russell, R. 314 Sabel, C. 3, 31, 32, 111–12, 134, 139, 143, 169 safety, sense of 127 Sahlin-Andersson, K. 201–2, 223 scale 57–8

scanning process 294 Scharpf, F.W. 169 Schick, A. 198 Schön, D. 4, 104, 132, 159, 220 science and education, communities of 149 science-based knowledge 29 Science Technology Innovation (STI) mode 7, 78–80, 263, 264, 265, 279–80 sea-based empires 25 SECI model 8, 38–9, 52, 68–9, 328–9; application to Finland and Norway 304; development paths 91–2; and Knowledge system 39; path dependency and knowledge types 92; phases of 88–9; regional development 88–96, 103; regional development policy and transnational learning 90; regional development practices 89–91; transatlantic perspective 339–41, 340; WHTRN project 333–4; World Heritage Tourism Research Network (WHTRN) 334; see also theory of organizational knowledge creation SECI model and ba concept 329 SECI process 3, 6–7, 38–45, 48, 116–19, 117; agencies and agency bonfires 167; in case studies 255; criticisms 127–8; Midwest Jutland 282; Open Method of Coordination 171; Oulu South 282; overview 159; steps 161, 163; World Heritage (WH) 176; see also knowledge conversion Second World War, effects of 292 selection mechanisms 144–5, 148, 157 selectivity 144 Senge, P.M. 108–9 Sevón, G. 150 shared beliefs 157 shared consciousness 21 shared knowledge 13, 14, 16, 18, 37–8, 40, 157 shared learning, higher educational institutes (HEIs) 278–9 shared vision 109 shocks 71 Shucksmith, M. 349 signification 17–18 Simon, H.A. 107 single-loop learning 4, 132, 158, 159, 220 SITRA report 143 Skive Technical Institute 262–3, 272–5; compared to Centria Ylivieska 275–7, 277; evaluations and translations of good practice 278; innovation and

Index   367 design in furniture industry 273–4; innovation modes and converging development paths: building new archetypes 280; learning from 274–5; role in development 277; SECI process of transnational learning in Midwest Jutland 282; shared learning 278–9; summary and conclusions 281–3 small and medium enterprises (SMEs) 268–72 Smart Specialization 95–6, 131, 156, 167, 170–3 social capital 313 social integration 40, 42–4, 57 social integration ba 43 social learning theory 105 social proximity 62, 66 socialization 79, 94, 95 socialization phase 39, 88, 89, 91, 110, 117, 333, 339 societal context, overview 13 Söderholm, J.U. 321–2 soft globalization 20, 35–7 soft institutionalism 55 Sorge, Arndt 25 Sotarauta, M. 74 Southern Ostrobothnia 300–2; map 301 space: disaggregation 54; perspectives on 52–4 spaces of engagement 329 spatial organization, theoretical development 53–4 specialization and differentiation, of knowledge 28–9 stabilization 40, 46–7 state formation 23–4 state formations 19–20 states: ability to learn 33–4; cooperation 19; differentiation 246; nature of 144; new European 24 Stone, D. 222 Storper, M. 61 story analysis 186 story creation 185–6 strategic action 55–6 Strategic Business Plans (Strategiske næringsplaner, SNP), Norway 289 strategic relational approach (SRA) 14, 33, 55, 157, 169, 285, 286–7 strategic selectivity 55–6 Streeck, W. 190, 191 Structural Funds 172 structural preconditions 343 structural principles 17–18

structuralism, vs. agency perspective 54–6 structuralist and agency based approach to regions 56 structurally inscribed selectivity 38, 343 structuration 17–19, 37, 40 structuration theory 40, 157 structure-agency beyond structuration theory 34 structure ba 40–2; system transformation 41 structure, dialectic of 42 structures: reflexive change 28; selection mechanisms 144–5, 148 structures of global societies and preconditions for transnational learning 19–20 sub-municipal district administration 8; Finland 345–50; Sweden 345 subsidiarity 203 success: perceptions of 163; transnational learning 177–80 Sunley, P. 72 Support for Improvement in Governance and Management (SIGMA) 199, 200–1, 207 supra-national EU programs 82 sustainable development 36 sustainable tourism 191 Svensson, B. 250 Sweden: historical background 245–6; industrial development 256; municipal reform 344; sub-municipal district administration 345; welfare development 253–4 system ba 42–4 system integration 40 system thinking 109 systematizing ba 120, 121–2, 180 systemic benchmarking 140 systemic knowledge assets 125 Szydarowksi, W. 228 tacit knowledge 15, 39; acquisition and dissemination 180; of citizens 28; codification 152; importance of 130; lock-ins 158; vs. explicit 114–16 tacit mechanisms 159, 160 Takeuchi, H. 5, 8, 13, 38, 39, 44, 52, 68, 88, 103, 104, 106, 113–15, 118, 119, 124, 125, 126, 134, 182, 188–9, 222–3, 224, 328–9 Talbot, C. 206 Tampere conference 258–9 Tavistock Institute 30–1

368   Index team learning 106, 109 technological development 27 technological innovations 27 technologies: escaping lock-ins 72; as means of learning 328; and scope for research 338–9 temporary proximity 61–3, 66 territorial approach 51, 56–8, 63; to development and learning 60–1; to regional development 265; to social integration 57 territorial development approach 83 Territorial Development Policy Committee (TDPC) 200 territorial vs. relational approach, and transnational learning in regional development 62 territorially based economic organization 111 territory 53 Thatcher, Margaret 25, 197, 199 The Constitution of Society (Giddens) 17–19 ‘the end of history’ 20 The Postmodern Condition: A Report on Knowledge 29 The Second Industrial Divide (Sabel and Piore) 31 The Tragedy of the Commons (Hardin) 35 Thelen, K. 25, 190, 191 theories 221–4 theory comparisons 113 theory-in-use 132 theory of cumulative causation 69–70 theory of globalization and reflexive modernization 21 theory of learning through difference 111–14 theory of learning through monitoring 3, 111–12, 139 theory of organizational knowledge creation 2–3, 6, 107, 112, 114, 130, 222–3, 224; application of 130–1; criticisms 127–8; and learning transnational learning approach 129, 130–2; overview 102–4; vs. learning transnational learning approach 133; see also SECI model/process theory of policy transfer 102 theory of pragmatic learning 32, 112 theory of scientific management 107–8 Thorsrud, Einar 30–1 Thrift, N. 54 Tödtling, F. 141

Tomlinson, M. 140 top-down organizations 125–6 Tosey, P. 135 Total Quality Management (TQM) 203 tourism 8, 252; destinations 312–14; global 330; Gold of Lapland 312, 314–21; Kvarken Archipelago 312, 321–2; overview 311; as product 312; summary and conclusions 322–4; transnational learning and transformation 326; see also World Heritage Tourism Research Network (WHTRN) Toyama, R. 89, 115, 116, 119 training, and innovation 269–70 trans-Nordic learning 252 Transaction-Cost Economics 198–9 transatlantic perspective 8; challenges of project 337–8; languages and translation 337–8; local benefits 339–41; methodology 336, 339–41; origins of project 335–7; overview 326–8; overview of project 335–7; questions raised 337; research assumptions 336–7; researchers 338; SECI model 339–41, 340; summary and conclusions 341 transfer of existing knowledge 221–2 transfer roles 231–3 transferability 232–3 translations 3, 146–52, 163, 187–9, 222, 223, 278, 343–4, 351 transnational committees 166 transnational communities 2, 16–17 transnational institutions 95 transnational knowledge, defining 65 transnational learning: cognitive and organizational requirements 181; as explorative process 151; how to 157; influence of OECD 202–3; locations 129; means of 328; modes and strategies 164; and regional and organizational learning 129–30; regional development networks and regional innovation systems 69; in regions 83–4; as research topic 218–20; spatial, organizational and cognitive dimensions 179; successful 177–80 transnational learning and transformation through tourism 326 transnational learning networks 63, 65–6; and regional development networks 68 transnational learning seminars 306–7, 309 transnational, meaning of term 327 transnational platforms 131

Index   369 transnational societies 2 transplantation, escaping lock-ins 73 tribal societies 16 trickle down 70 triple-helix model 76, 265–6 triple-loop learning 132, 135, 159, 160–1 Trippl, M. 141 trust 120, 127 Tyrrell, I. 23, 327 Umeå neighborhood, local governance 349–50, 351–2 uncertainty 159 unemployment, Nordic states 286 UNESCO/UNITWIN conference 335 UNESCO World Heritage Centre 330 unique conditions 184–5 United Kingdom 197, 209 United States 21, 26–7, 156, 165 universities see higher educational institutes (HEIs) untraded interdependencies 313 upgrading, escaping lock-ins 73 Upton, R. 5 US model 32, 38 Vaasa: municipal reform 349–50, 351–2; transnational learning seminar 307, 309, 349–51, 350, 351 value systems 124 varieties: and borders 23–6; creation of 19–20 Venables, A. 61 Verhoest, K. 205, 209 voluntarism 55, 73 Von Krogh, G. 128 Vygotsky, L. 105 Walker, R. 71 waves of globalization 19 weak hypothesis 185 wealth redistribution 82 Weaver, C. 57

Weber, Max 23 welfare 247–50, 252; Sweden 253–4 Weltgeist 21 Wenger, E. 105 Wink, R. 140 Wintjes, R. 77 Wolman, H. 223 Woods, M. 348 work organization 248 worker collectives 30 Working Party of Senior Public Officials 200 Working Party on Human Resources Management 200 Working Party on Regulatory Management and Reform 200 Working Party on Territorial Indicators 200 Working Party on Territorial Policy in Urban Areas 200 Working Party on Territorial Policy on Rural Areas 200 World Bank 32 World Heritage conference WHILD Vaasa 2011 339–40 World Heritage Convention 37 World Heritage Sites 330 World Heritage Tourism Research Network (WHTRN) 330–3, 334–5; SECI model 333–4, 334 World Heritage (WH) 156–7, 173–5, 177, 191; as SECI process 176; see also transatlantic perspective world society 20, 22 Yläkemijoki, local governance 346–50, 351 Ylivieska 268; see also Centria Ylivieska Zahra, S. 74, 75 Zaucha, J. 228 Zeitlin, J. 3, 31, 32, 33, 35, 38, 111, 112, 134, 139, 169

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