Innovation Strategies in Latecomer Environments: Alternatives for Firms in Small Open Economies

Abstract

This paper is aimed at presenting and discussing the varieties of organizational strategies for innovation in the underdeveloped economic-institutional contexts. It is questioned whether the emphasis on institutional innovation systems (e.g. NIS, RIS), popular with policy makers, represents the key instrument for achieving innovation-driven growth in the latecomer economies and their firms. The latecomer environment can stimulate certain types of innovation strategies. However, to be sustainable in a longer run, they need to be supported by formal or informal institutions of the innovation system. The paper argues the need to combine institutional (top-bottom) and entrepreneurial (bottom-up) approaches, especially in the emerging innovation systems. Three sets of organizational innovation strategies are discussed in the latecomer context. Each innovation strategy has its potential strengths and weaknesses in the specific contexts, presented in the paper. Based on various cases of firms and empirical observations from the latecomer context, the paper concludes that entrepreneurial dynamics is not in the position to replace an institutional dimension of innovation system.