Innovation systems and ‘inertia’ in R&D location: Norwegian firms and the role of systemic lock-in

Abstract

This paper seeks to enquire why firms—ceteris paribus—tend to concentrate their R&D activities at home, using a systems of innovation (SI) approach. We argue that R&D inertia is associated with structural inertia and resultant systemic lock-in. Interaction within an SI is a self-reinforcing mechanism which may or may not lead to ex post efficiency. Lock-in can be efficient when technologies and institutions maintain the competitiveness of firms. On the other hand, radical innovations or technological discontinuities may require new institutions and resources, but systemic lock-in may prevent rapid reaction. Firms can use a ‘voice’ strategy by intervening to modify the appropriate institutions in the existing SI, or an ‘exit’ strategy by seeking alternative SI which more closely fit their needs.In the case of Norway, two groups of firms exist. Group A benefit from a systemic lock-in. These are large firms in traditional sectors, which are highly embedded, and around whom the Norwegian SI has been built. These firms engage in ‘voice’ and ‘loyalty’. Group B are in science based sectors for whom lock-in results in inefficiencies, and use ‘exit’, (slowly) expanding R&D abroad to seek competences in technologies not available domestically.