developing iran’s government strategies for strengthening the national system of innovation using...

Science and Public Policy August 2006 0302-3427/06/070529-12 US$08.00 Beech Tree Publishing 2006 529

Science and Public Policy, volume 33, number 7, August 2006, pages 529–549, Beech Tree Publishing, 10 Watford Close, Guildford, Surrey GU1 2EP, England

Iran

Developing Iran’s government strategies for strengthening the national system of innovation using SWOT analysis

Sepehr Ghazinoory and Soroush Ghazinoori

This article offers a method for formulating gov-ernment strategies for improving and strengthen-ing national innovation systems in particular for the developing countries. For this purpose, the SWOT (strengths, weaknesses, opportunities, threats) analysis (as an instrument for examin-ing the innovation system situation) is recom-mended as well as studying the best practices for formulating the strategies. This method has been implemented in Iran, as a developing country. Before executing the process, ten essential ele-ments comprising six major functions and four major interactions were briefly examined to describe the innovation system of a country. The results were used to describe the implementation stages of the recommended method for Iran.

Sepehr Ghazinoory is in the Department of Industrial Engin-eering, BU-Ali Sina University, Hamedan, Iran. Email: [email protected]. Soroush Ghazinoori is in the School of Management, Allameh Tabataba’ee University, Tehran, Iran. Email: [email protected].

N RECENT YEARS, governments have con-sidered development of innovation important, but it was probably the great economist Joseph

Schumpeter who was the first to pay serious attention to the role of innovation in economic development. This was at a time when the common idea among economists was that industrial development is de-pendent on social growth, and increases in population and a high rate of saving are the most important fac-tors stimulating social growth (Khalil, 2000).

Nowadays, innovation, and particularly tech-nological innovation, is known to be one of the main means of increasing productivity and many experimental studies have shown the result is an improvement in countries’ competitiveness. Recent research such as that of Porter and Stern (2002) has proved the correlation between innovative perform-ance and the economic success of a country:

Until after World War II, the technological inno-vation process was viewed as a linear model in which technology was assumed to start with basic research and move to applied research, invention, commercialisation and finally to diffusion. Innova-tion appears in this context as the result of a process made up of different and independent stages that take place in a sequential, hierarchical and one-way order. Recent contributions from evolutionary theory show that technological innovation is a much more complex process (Marques and Abrunhosa, 2004).

Today the linear model of innovation is no longer used. Different stages of innovation are in inter-action with each other and there is feedback among them. One of the first attempts to show the systems

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Strengthening the national system of innovation

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feedback in the innovation process is the “chain linked” model of Kline and Rosenberg (1986).

At the same time as this model was developed, re-searchers paid more attention to systematic nature of innovation process. For this approach, researchers focused on individual and comparative analyses of the innovation systems in different countries. The concept of a ‘national system of innovation’ (NSI) was first developed by Freeman in the late 1980s. Freeman (1987, 1988) defined such a system as “the network of institutions in the public and private sec-tors whose activities and interactions initiate, import, modify and diffuse new technologies”.

In subsequent years, many studies have been con-ducted on NSI (Lundvall, 1992; Nelson, 1993) and different definitions have been presented. For exam-ple, Lundvall (1992) defined a NSI as constituted by “the elements and relationships which interact in the production, diffusion and use of new and economic-ally useful knowledge … are either located within or rooted inside the borders of a nation state”. There are many definitions, but Edquist (1997) believes that the institutional set-up related to innovation and the underlying production system are the basic characteristics of NSIs.

The concept of NSIs has recently been expanded towards ‘systems of innovation’ (SIs), such as sec-toral and regional SIs. However, despite trends such as globalisation, the national level is very important for SI analysis (Niosi, 2002).

In addition to researchers, the concept of NSI has seemed to be important to policy-makers in devel-oped and developing countries (Niosi, 2002). Nowa-days, the Organisation for Economic Co-operation and Development (OECD), the United Nations Con-ference on Trade and Development (UNCTAD) and European Commission have accepted this concep-tual framework as their analysing tool. The US Academy of Science has recently brought national innovation into its vocabulary and now uses it as a framework for analysing science and technology policy in the USA (Lundvall et al, 2002).

Also in developing countries that have a weaker innovation performance, using the NSI conceptual framework can help to identify strengths and weaknesses, especially institutional and systematic weaknesses, and can formulate general guidelines for national science, technology and innovation.

A framework for NSI study

We should have a framework for studying and ana-lysing a NSI. In this article, we use the Chang and Shih (2004) model as a framework for presenting government strategies for strengthening NSI. The performance of NSIs largely depends on how the actors in the system function and interact with each other to develop and apply innovative knowledge. Therefore, the functions and interactions of institu-tions involved are the main area of study (Chang and Shih, 2004).

Institution functions

OECD (1999) suggests that a NSI requires institu-tions with six different functions:

• technology and innovation policy formulation; • performing R&D; • financing R&D; • promotion of human resource development and

mobility; • technology diffusion; • promotion of technological entrepreneurship.

Because Chang and Shih (2004) believe that tech-nology diffusion and mobility of personnel include some actors, they listed these in the interactions section and in their place have added “bridging institutions”1 to this list.

Interactions of institutions

OECD (1997) discusses four main knowledge flows (interactions) within NSIs:

Sepehr Ghazinoory is an associate professor in Departmentof Industrial Engineering, Bu-Ali Sina University, Hamedan,Iran. He received his BSc, MSc and PhD in Industrial Engi-neering from Iran University of Science and Technology(IUST). He has authored numerous books and articles aboutcleaner production, strategic planning and management oftechnology in Persian and English. He was also consultantto the Iran presidential Technology Co-operation Office(TCO) for four years and senior consultant in formulating theIran Nanotechnology National Initiative. He is currently con-sultant to different ministries and organisations.

Soroush Ghazinoori is Director of Technology Policy StudiesGroup in the Department for Hi-tech Industries, Ministry ofIndustries and Mines and candidate for a PhD in Manage-ment at the School of Management, Allameh Tabataba’eeUniversity, Tehran, Iran. He received his BSc and MSc inIndustrial Engineering from Iran University of Science andTechnology (IUST). His research interests are in innovationsystems, technology assessment, technology policy andnew technology-based firms.

The performance of national systems of innovation largely depends on how the actors in the system function and interact with each other to develop and apply innovative knowledge, so the functions and interactions of institutions involved are the main area of study


Science and Public Policy August 2006 531

• joint industry activities; • public/private interaction; • technology diffusion; • personnel mobility.

As OECD says, in many countries informal linkages have a large effect on innovative activities and sometimes have been more effective than formal linkages, so Chang and Shih (2004) combined the first two and added informal interactions as the fourth. Thus, their list of four interactions is:

• R&D collaborations; • technology diffusion; • personnel mobility; • informal interactions.

As a result, for analysing a NSI, ten factors (six functions and four interactions) must be addressed.

Research methodology

In any policy process, in particular in innovation policy-making for a country, two points should al-ways be considered: One is related to the experi-ences of the successful countries in this field and the other to the specific characteristics of the policy en-vironment of the country in question. As illustrated in Figure 1, to make policies in these areas, the best practices and historical context of the country should be considered simultaneously.

The suggested process in this paper for govern-ment strategies follows this general model. Although this methodology puts emphasis on identifying and examining the country’s socio-political environment of the country, the experiences of other countries will help a great deal in formulating such strategies.

We now explain the recommended process in de-tail. A summary of the different stages of the work, the involved parties and the techniques used are presented in Figure 2.

Setting up a study group

In this stage, a small group of experts is gathered together who work in fields such as NSI, policy de-cisions and strategic planning. This group should

also be capable of leading and implementing the par-ticipatory methods. Usually the head of the study is responsible for setting up the group.

Problem definition and system bounding

A clear and accurate definition of the problems is one of the key steps in any problem-solving process. Here too, clarifying the objectives of the study and the questions that must be answered are very important.

As Bartzokas and Teubal (2002) have specified, every policy process might consist of the following phases:

• strategy formulation; • program identification and design; • program implementation and assessment.

The important point here is that there are various types of policy process, which follow different aims. Each comprises one or several of these phases.

This paper relates to a policy process that consists of the first phase, with the objective of determining clear policies for strengthening the national innova-tion system. In this stage, the study group should determine the bounds of the system. This means that the general scope of the study should be ascertained to avoid over-expansion of the study. It is necessary to mention here that too much focus on the issues would only lead to a lengthy study and would bring confusion to the conclusion.

On the other hand, too general a view would deter us from identifying and locating the roots of the problems. Therefore, the study group should trade-off its examinations. The study group should know the capacities and authority of the government so that it is able to clarify which factors are internal and which are external (opportunities and threats) while working on the SWOT (strengths, weaknesses, op-portunities, threats) analysis.

If it fails to do so, the elicited strategies would not be

fully valid. For instance, if certain social issues of the

country (even though relevant to the internal affairs of

the country) are considered as part of the internal fac-tors (weaknesses and strengths) it would lead to wrong

results. This means that the study group should be

able to distinguish clearly between the internal matters

of the country and the government-related matters.

Historical context Best practices

Policy

Figure 1. A simple illustration of the gateways to policy decisions



The result of this argument is that, in conducting the SWOT analysis, we come across several layers of ‘environment’; for instance, one layer is related to the internal affairs of the country (outside the govern-ment) and the other is related to the universal domain. Each of these layers would impose a specific set of opportunities and threats of its own on the system.

Providing a preliminary list of factors

In order to carry out this stage, a panel should first be set up that includes a number of experts who are well aware of the country’s situation. Then, using

brainstorming techniques, the factors (strengths, weaknesses, opportunities, threats) will be deduced according to the bounding in the previous stages.

Determining the importance of the factors

To approve the results of the previous stage and to determine the factors that have most importance, more specialists and experts should be involved in the process and their views included. For this stage, a survey could be conducted. The Delphi method would probably yield better results but it requires more time and money.

Figure 2. An illustration of the suggested process



At this stage, the most significant internal and ex-ternal factors are determined and the SWOT matrix is ready for extracting the strategies.

Examining the experiences of other countries

As well as working on the previous two stages, the study group should examine the experiences of other countries by literature review. In particular, they should consider best practices alongside strengthen-ing the NSI, the results of which would be presented to the panel of experts.

Identification and formulation of the strategies

The panel of experts first attempts to extract ade-quate strategies for the government through brain-storming each of the six functions and four interactions that are known for the NSI. Then, in later meetings, the panel members discuss the rec-ommended strategies and, through the experiences of other countries, finalise the results and prepare them for communication. After receiving the feed-back and amendments, they will be prepared for operational planning.

National innovation system of Iran2

In order to implement the suggested model for Iran as a case study, we first introduce the present situation of its national system of innovation. To explain the system, the role of the major actors is identified, as well as the form, quality and intensity of the interactions among them. The analysis is split into the six types of institution function and four types of institution interaction as already described.

Technology and innovation policy formulation

Technology and innovation policy formulation in Iran is not fully integrated and there is a variety of institutions dealing with policy formulation (as in many other political domains). Some of the institu-tions involved are explained below, with their do-main functions:

Council of the Expediency The members of this Council are appointed according to the constitution by the supreme leader of the country and, while working as advisor to the leader, they also deal with formulating policies related to various areas, so that all institutions of the country act according to the same policy line. In 2003, the Council approved macro-policies related to technology and presented them to the supreme leader for approval and signing. In these policies, emphasis is given to moving to-wards a knowledge-based economy and improving the relationships among technology institutions to provide for the country’s needs.

Parliament3 Parliament plays the role of legislator and, since Iran does not have a senate, acts of Par-liament are only ratified following approval by the Guardian Council when they have been proved not to be contrary to Islamic laws and the Constitution.

Parliament has various commissions, one of which is the Education and Research Commission, which has the task of preliminary observation of the plans as presented by the members of Parliament and the bills as presented by cabinet ministers in relation to various innovations.

Cabinet Decision-making in areas related to Gov-ernment plans for executing the laws, preparing bills to be presented to Parliament, establishing or recon-structing the state organisations and companies and other similar activities are part of the duty of the Cabinet. It has six commissions and the innovation-related issues are examined in the Cultural Commis-sion.

Supreme Council of Cultural Revolution4 This Council was established in 1980 to change the aca-demic situation in the country. However, today it formulates policies for all areas related to science and technology. Although this Council is not mentioned in the constitution or any other legisla-tion, since the members are appointed by the su-preme leader, its enactments are similar to acts of Parliament.

Supreme Council of Science, Research and Technol-ogy This Council was approved in the third five-year development plan (1999–2004) headed by the President, to co-ordinate all activities of the Govern-ment in science, research and technology. However, because of certain political issues, its first meeting was in 2005.

Ministry of Science, Research and Technology (MSRT)5 This used to be called the Ministry of Culture and Higher Education (MCHE) and was re-sponsible for the administration of universities. Its title changed to Ministry of Science, Research and Technology in 2000, and its responsibilities in-creased to include: planning, guiding, supporting, evaluating and monitoring, and examining and for-mulating policies and strategic priorities in research and technology.

However, as a result of certain bureaucratic prob-lems, it has in practice been unable to play this role and is mostly involved with administering the universities.

Other ministries No doubt each of the ministries and governmental organisations are involved with formulating policies and planning for R&D, science and technology development in their domain. That is why the majority of them have a research depart-ment, even though the tasks and responsibilities of these institutions and the MSRT are as yet unclear.



Promotion of human resource development

The higher-education institutions and universities that are administered in the modern style are not very old having only been running for 70 years. However, they have had a remarkable quantitative progress, the number of students having increased sevenfold since the victory of the Islamic revolution. There are now 1.6 million students, 55% of whom continue their studies in the private sector. The aca-demic quality has not developed so well.

Unfortunately, subjects related to engineering are at too theoretical a level and, because of lack of practical facilities and inadequate practical experi-ence among the professors, engineering graduates have poor innovative ability and fail to use their skills for R&D activities. Iranian universities are facing various problems, including financial difficul-ties, lack of communication with foreign universi-ties, migration of professors and elite graduates to foreign countries and challenges created by some political groups within universities.

Performing R&D

There has been remarkable progress in areas of re-search in recent years. The number of researchers in the country, which was around 82 per million in-habitants in the 1980s, had reached 331 per million by 2001. It is estimated that by 2004 it will reach almost 630. The number of scientific articles pub-lished in journals indexed by the Institute for Scien-tific Information (ISI) in the period 1993–2003 increased from 323 to about 3000. This has mainly been a result of dedicated awards by the MSRT.

Major research centres in Iran are divided into the following categories:

• Universities and higher-education centres - around 80% of the country’s researchers are

working in the universities; - only 20% of the research budget is allocated to

universities; the rest is allocated to Government research centres and ministries’ researchers;

- academic research is usually performed without considering the needs of the market.

• Government research centres - In 2001, there were 24 medical research cen-

tres, 56 research centres in sociology and hu-man sciences, nine in basic sciences, 26 in engineering, 50 in agriculture and natural re-sources and 52 multi-purpose research centres throughout the country;

- 65% of all these centres are located in Tehran; - a number of researchers are employed in minis-

tries to work on the particular research they need.

• Non-governmental research centres The role of non-governmental sectors in R&D in Iran is lim-ited to industrial R&D and there are no significant activities elsewhere. The number of industrial R&D units that have received their licence from the Ministry of Industries and Mines reached around 925 by 2001.

Technology bridging

One of the problems for technology bridging insti-tutes in Iran is that, up to now, many of them were established by the policy-makers but each has been transformed into an institute for conducting research. Although there are not strong relationships among various innovative activities in Iran, there are differ-ent entities that work in these fields, of which the most important are:

Iran Scientific and Industrial Research Organisa-tion6 This was established in Tehran after the Is-lamic revolution and had branches in several other provinces. Apart from direct R&D, it helps to guide researchers at various stages (from basic research to marketing of the products). In addition, it organises important scientific festivals in the country. The president of this organisation was also the deputy of the MCHE.

In 2002, after MCHE was transformed into MSRT, this organisation was divided into several departments and its national tasks were transformed into the technology deputy of the Minister of MSRT. Its provincial branches were made into science and technology parks and it was only called by its proper title within Tehran and its suburbs.

Technology Co-operation Office (TCO)7 This of-fice was established in 1982, and now is under the auspices of the President. It has been able to play the role of co-ordinating and connecting the ties be-tween the governmental and the private sector in innovation through transfer, development and local-ising a number of important technologies in the country. In recent years, TCO has endeavoured to act more as a policy-maker and promoter.

TCO is considered one of the successful examples of technology bridging in Iran.

Engineering services companies These companies act as intermediaries between industry and technology

The higher-education institutions and universities in Iran, administered in the modern style, are only about 70 years old: they have had a remarkable quantitative progress, the number of students having increased sevenfold since the Islamic revolution



innovators, and manufacturers of machines, equip-ment and industrial buildings. The planning for the establishment of these companies began in 1988 and, up to the present day, the Ministry of Industries and Mines has issued a licence to more than 1800 companies.

Since the promotion of ISO9000 certificates in Iran, these companies have gained more prosperity and the Government has supported them through financial and tax instruments as well as information and organisation facilities. Nonetheless, the activi-ties of some of these companies are low in quality and their software services are not yet adequate.

Financing R&D

Considering that the economy in Iran is Government dependent as we mentioned earlier, the private sec-tor only operates in areas of industrial research; hence, all financial support is given by the public sector itself under the supervision of the Ministry of Industries and Mines, which has its major finance provided by the Government budget.

The proportion of R&D expenditure to gross national product (GNP) in 1978 (the last year of the former regime) was 0.25%. This proportion in-creased to 0.43% in 1993. However, it decreased again in 2002 to 0.39%. Moreover, the proportion of governmental research budget in the general budget, which was 0.56% in 1978, reached its highest peak of 1.78% in 1993 but again declined in 2002 to around 1.6%.

As can be seen, total R&D expenditure is depend-ent on the Government research budget and there is no important role for the private sector. Thus, the researchers of the public sector are financed through their own organisation and the private sector re-ceives financial assistance through the public funds that some of them mentioned below:

• Industrial research, training and information plan8 This plan, which is now over 20 years old, was first initiated through a legal act that 0.2% of the total sales of all industrial and mines products are to be deposited in the account of this plan to sup-port all research, training and technological activi-ties. This plan was terminated in 2005.

• Automobile plan This plan allocates a percent-age of the tax received from automobile producers and importers to support projects whose objective is to promote the quality of automobile parts produced by domestic manufacturers.

• Electronic industries R&D support fund9 This fund was established in 1998 by public money and allocates low interest loans and guarantees for R&D and new products commercialisation in electronic industries. It has accepted more than 40% of around 1000 received loan requests up to now. This fund also presented 74 guarantees for loans to companies. Although there are doubts about this fund and its activities efficiency,

government has increased its capital and audi-tioned VC investments to its programs.

• Hi-tech industries centre10 (Department for Hi-tech Industries) The Ministry of Industries and Mines established this centre in 2000 with the fol-low stated objectives: - articulating priorities in hi-tech sectors; - stimulating techno-entrepreneurship; - championing successful hi-tech enterprises; - encouraging constructive interactions among the

industrial base, universities and Government; - seeking/encouraging international partnerships.

This centre allocated financial help and loans to more than 300 projects in seven fields of software, electronics, biotechnology, nanotechnology, new materials, civil aviation and lasers at different levels including research pilot plans and commercialisation up to now. Also three research teams are working on fields relevant to technological policy-making.

Of this centre’s other activities, there is imple-mentation of management courses of high-tech companies’ managers.

Since there are many of these centres, this has led to confusion for some researchers and for others it has given an opportunity to receive help from several financial resources for one project.

Promotion of technological entrepreneurship

The university education system in Iran has failed to

be business based and the majority of the graduates are

trained to be hired (particularly in the public sector). However, in recent years followed by the unem-

ployment crisis for university graduates, the issue of entrepreneurship has become a major concern and a number of institutes have been set up for this purpose, the most important of them are:

• Entrepreneurship centres in the universities The centres in Sharif University of Technology11 and Iran University of Science and Technology12 are good examples in this field. The majority of these centres’ activities are concentrated on implemen-tation of learning courses for university students, implementation of student competitions in devel-opment of business plans, implementation of lec-tures by entrepreneurs and similar activities. Surveys and field studies are also conducted.

• Incubators and technology parks In recent years, there has been great emphasis on incubators and technology parks in Iran. A large number of these units have been set up, even though they might have limited activity, with directors who have lit-tle knowledge about the functioning of such insti-tutes. These institutes are mainly governmental and have been set up by ministries and govern-mental bodies or the provinces and universities. They mainly focus on information technology (IT). The most important of these units is the



Isfahan Scientific–Research Complex and Pardis Technology Park13 (near Tehran).

Now, we will introduce the interaction of institutions.

R&D collaboration

The Iran innovation system is facing the lack of im-portant intra-firm R&D collaboration. One of the activities for developing R&D collaborations is the establishment of joint research laboratories for some industries (such as the tyre industry) that still show no sign of success.

Most R&D collaborations in Iran are between industry and university, but lack of suitable commu-nication channels have led to the universities not being aware of the needs of industry and industry not being aware of the possible uses of the research results of research institutes and universities.

Informal interactions

Even though Iranians pay much attention to maintain-ing their relationship network and treating it as the most important part of their job, some problems like weakness in Iran’s intellectual property rights protec-tion system have led to the non-existence of strong and close partnerships between people in the country.

Technology diffusion

In Iran, the main model of technology diffusion is that universities and research institutes transfer their R&D achievements, including implicit knowledge and tacit knowledge that is embedded in personnel, to enterprises. However, because of the mutual lack of awareness and not paying sufficient attention to mechanisms such as spin-off, the technology diffu-sion process did not work well.

Personnel mobility

One of the major problems related to the innovation system in Iran in recent decades, in particular in the

last decade, is the brain drain. Just in the USA there are more than 500,000 Iranian specialists and a large share of the university professors especially in the basic sciences and engineering fields are Iranian. This is a result of economic, social, political and cultural problems in Iran. It is unlikely that these people will return home, since there are no adequate research and financial facilities but any further brain drain should be avoided.

As a positive point, we should mention that some university professors spend most of their time in the service and industrial sectors; in this way, they have a great deal of mobility in their activities, but they contract individually and these activities do not have a systematic method in the universities.

The engineers and experts engaged in the indus-trial sector are usually active for short periods and have a high level of mobility. The public sector has attracted groups of experts and has recruited those who tend to be deposited in the system. Neverthe-less, there are not many of them and the majority have a high level of mobility. Sometimes this causes the private sector not to have adequate investment for training their engineers, since they worry they might lose them.

Conducting research in Iran

Thorough observations in the previous section on the position of the institutions and the existing mecha-nisms in the NSI showed that this system has many problems, which, in practice, reduce its efficiency and effectiveness a great deal. For this reason, through a research project, efforts were made to ex-tract strategies for solving these problems by using the SWOT analysis. A team comprised of five university professors and experts in the field of in-novation management was set up.

Literature survey

To examine other countries’ experiences in this re-gard, four countries were selected out of the developed

countries — Germany, Norway, Great Britain and

Japan — as part of a library search. In selecting these

countries, two factors, the structure, and the condi-tions and feasibility of resources, were considered. In

addition, two successful examples were selected from

the developing countries: the more successful South

Korea and the less successful Thailand. In this study, the infrastructures, institutions and

NSI interactions of the six countries and their policies for strengthening these factors were exam-ined in detail and the results were presented to the panel members in the form of a report. Because of their differences, absolute benchmarking with other countries is not possible. Therefore, their practices in NSI (base on the OECD model) were studied for learning about, and then analysing, Iran’s NSI.

Most R&D collaborations in Iran are between industry and university, but lack of suitable communication channels have led to the universities not being aware of the needs of industry and industry not being aware of the possible uses of the research results of research institutes and universities



Panel set-up

To identify the NSI conditions in Iran, 12 profes-sionals from various sectors including governmental departments, academia, research centres and the pri-vate sector were invited to set up a panel. After elaborating on the methodology of the study and the results gained from examining the NSI of the other six countries, through the brainstorming technique, a list was prepared of the strengths, weaknesses, op-portunities and threats in the innovation system in Iran.

Weaknesses, strengths, opportunities and threats

Using the preliminary list provided by the panel members, the study group conducted research to de-termine the importance of these factors. In this sur-vey, 178 questionnaires for different people in relevant governmental organisations, the private sector, and research departments in the universities and research centres were dispatched: 38 of these people (21%) responded to the questionnaire.

The results collected and selected by the study group were identified based on the level of import-ance of the factors. Below the selected factors for each of the four factors are presented:

Opportunities

• The country’s enjoyment of adequate quantitative manpower, in particular in science and

engineering. • Information and communications technology de-

velopment at global level, and cheap and fast accessibility to information

• Legal commitments for the organisations and governmental companies to prioritise purchasing Iranian products.

• The advantage as a latecomer and the opportunity of benefiting from the experiences of other lead-ing countries.

Threats

• The brain-drain phenomenon in an extensive

form. • Lack of R&D in the private sector. • Lack of technological collaboration with foreign

companies and research centres. • Low rate of entrepreneurship in the private sector. • Lack of venture capital. • Low rate of foreign investment in particular in the

hi-tech areas. • International sanctions, in particular those im-

posed by the USA against Iran and lack of access to multi-purpose technologies.

• Iran’s absence as a member in the important regional and international treaties such as the As-sociation of South-east Asian Nations and the World Trade Organisation.

Strengths:

• Strong interest of the policy-makers in innovation,

technology and science development in the country. • The presence of many components of the national

innovation system in the country. • The existence of large research centres in the pub-

lic and defence sectors. • Establishing centres with the aim of expanding

modern technologies.

Weaknesses:

• Lack of integrity and the prevalent conflicts among the components of the national innovation system.

• Absence of a transparent technology policy in the country that would cover the objectives, instru-ments and institutions.

• Deficiency in determining the technology priori-ties for the country.

• Lack of consideration of intellectual properties. • Intensification of state bureaucracy, which com-

plicates implementing government decisions and policies.

Resulting strategies

At this stage, the panel members attempted to extract strategies in the light of the experiences of other countries and the SWOT matrix based on the framework presented earlier.

Policy formulation

• Centralising authorities and responsibilities of pol-icy-making, prioritising and co-ordinating between

the departments of the Supreme Council of Science, Research and Technology in order to bring synergy

and remove the conflicts of the NSI components. • Formulating a comprehensive technology policy

comprising objectives, instruments and the re-sponsible institutions by the above-mentioned council and allocating an adequate amount of budget in the five-year development plans and in the annual budgets.

Performing R&D

• Financial reorganising in the public and defence research centres to orientate their researches to-wards the customer.

• Supporting and activating the private sector through subsidies to improve their competitive-ness with the governmental sector in receiving research grants.

Financing R&D

• Establishing and activating the non-governmental funds for venture capital.



• Sharing tasks and co-ordinating among the finan-cial institutions (which are mainly under the supervision of the Ministry of Mines and Industry).

• Using other financial policies such as small and medium-sized enterprise banks, grants and loan guarantees, and benefiting from tax incentives.

Promotion of human resources development

• Improving training programmes and research in the universities and creating diversity in their ac-tivities in order to train manpower with more extensive empowerment.

• Planning to solve the socio-political and economic problems of the elites in order to decrease the brain drain and to attract back into the country the individuals who have emigrated.

Technology bridging

• Supporting the establishment of institutions that could assist researchers to register their patents and to help them market the results of their researches.

• Supporting the establishment of institutions that could examine the technology needs of the indus-trial and services sectors, provide appropriate resources from within or outside the country and help with the technology transfer.

Promotion of technological entrepreneurship

• Objectifying and specialising the incubators and technology parks that have been set up in recent years in order to improve entrepreneurship in the private sector.

• Promotion of entrepreneurship training at various university levels for students of post-graduate studies in science and engineering.

R&D collaboration

• Encouraging and supporting foreign investments in the hi-tech industries.

• Conducting joint international research to achieve better results and improve the capacity of local researchers.

Informal interactions

• Clarifying the decision-making processes, selec-tion of research projects and offering grants to remove discrimination against researchers in the governmental organisations.

Technology diffusion

• Setting up an efficient system for patents and for joining the Patent Co-operation Treaty (PCT).

• Supporting the establishment of spin-off compa-nies, in particular those from universities and governmental research centres.

Personnel mobility

• Formulating standard frameworks for simultane-ous activities of scientists in universities and research centres and the industrial and services sectors.

• Planning to benefit from Iranian scientists resid-ing abroad in the form of part-time co-operation in order to transfer experiences and technology into the country.

Discussion

This article has presented a method for planning and formulating government strategies for empowering a national innovation system. Strategy formulation is one of the most significant phases in the policy process. At this phase, the strategies and priorities of state activities for innovation and technology devel-opment are identified through search, research and interaction among the policy-makers, beneficiaries and the experts of the country.

In many developing countries, such as Iran, the innovation initiation is limited because of institu-tional and system inefficiencies. It appears that the governments should focus their attention towards change the systems and making institutional im-provements. In particular, we have mentioned the lack of, or weak performance of, some professional financial institutes (such as private venture capital firms), copyrights, policy-making institutes and so on: this has made Iran’s NSI an inefficient system.

The SWOT analysis, which is one of the best rec-ognised methods for formulating strategies at corpo-ration level, has been of major assistance in formulating state strategies to improve the NSI, since it can describe well the internal factors (strengths and weaknesses ) and the external factors (opportunities and threats) of the system. It also has the ability to draw the attention of the policy-makers to the specific conditions and the historical context of the national innovation system. The NSI concept

In the strategy formulation phase in the policy process, the strategies and priorities of state activities for innovation and technology development are identified through search, research and interaction among the policy-makers, beneficiaries and the experts of the country



focus is on the role of the institutes and the inter-action among parts of the system. Therefore, using this concept together with Chang and Shih’s frame-work for analysing the strengths and weakness in the system provides an adequate study. When using this framework, attention should be paid to considera-tions outlined in the conclusions below.

It is also very important to pay attention to best practices. The method presented above sought to pay simultaneous attention to best practices and the his-torical context. In addition, it was designed to use interaction, which, besides providing the given re-sults and products, is one of the recommended methods, even though it may be that implementing interaction processes in developing countries faces numerous problems, as it was seen in Iran. Thus, in this analysis, innovation should be considered in its extended meaning, including the ability to absorb technology and incremental innovation. The particu-lar country situation, such as the social-political situation, macro-economic conditions, and the learn-ing and innovation ability in firms, should also be considered.

Finally, it is worth noting first that the policy process will not end with formulating strategies, but it is the beginning of a trend. After this, and based on the results, a set of plans should be formulated and implemented for operating the strategies. The second point is that the formulation of strategies is a dynamic process that should receive feedback both from the programme identification and design pro-cess and from the results gained from the implemen-tation of the programmes. This means that the designed strategies should always be capable of amendment, either during the adoption of pro-grammes or even after the implementation and evaluation of the results.

Conclusion

It is essential that keep some considerations are kept in mind when using the NSI analysing frame-work in developing countries. Because of the ex-treme path-dependency in social systems and NSI as a social system, using comparative studies for revision and improvement of performance of a country is extremely challenging (see Niosi, 2002; Balzat, 2003). It seems that the function of this kind of study is more to present a better description of the NSI concept for strategy developers and to create some ideas in their mind, than to make a di-rect impact on the strategies a country adopts for reinforcement.

As Viotti (2002) said, the technical change pro-cess in the knowledge systems and economies of developing countries is more related to the learning process than to innovation, and the absorption of existing techniques and incremental advancement is more important in this countries. As a result, when using the NSI concept for countries like Iran more

attention should be paid to learning processes on both an organisation scale and a corporate scale.

There are other topics that are not considered se-rious in the NSI framework but are very important when analysing countries like Iran:

• The importance of paying attention to political stability, macro-economic policy and the general political and economical situation.

• It is vital to pay attention to the advantages and dis-advantages in active corporations of the country in

comparison with other countries’ corporations. • More attention should be paid to the ‘systematic

creation of institutes’ approach versus the ‘im-provement of communications and parts’ approach.

All the same, because the main focus of NSI topics is on ‘institutes’ and knowledge-system problems, in countries like Iran, where there is a lack of, or in-adequate, performance of institutes, using the NSI analysing framework for reinforcing the technology and innovation levels can be very helpful.

Notes

1. Bridging institutions emerged to facilitate the interactive as-pects of the innovation process and resolve mismatches among different types of actor in the innovation system (Change and Shih, 2004).

2. The contents of this section refer to the experience of the au-thors and Persian-language references. We have not cited these references directly.

3. See <www.majlis.ir>, last accessed 2 August 2006. 4. See <www.iranculture.org>, last accessed 2 August 2006. 5. See <www.msrt.ir>, last accessed 2 August 2006. 6. See <www.irost.org>, last accessed 2 August 2006. 7. See <www.tco.ir>, last accessed 2 August 2006. 8. See <www.irtip.ir>, last accessed 2 August 2006. 9. See <www.esfrd.ir>, last accessed 2 August 2006. 10. See <www.hitech.ir>, last accessed 2 August 2006. 11. See <www.sharif.ac.ir>, last accessed 2 August 2006. 14. See <www.iust.ac.ir>, last accessed 2 August 2006. 13. See <www.hitechpark.com>, last accessed 2 August 2006.

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