Chapter 7 : Conclusion

The following is the draft conclusion chapter from my thesis. Comments always welcome.

Review

Innovation policy can be critical to the economic development of a region with abundant natural resources. This thesis examined how the government of Alberta created three innovation agencies to affect the sub-national system of innovation and whether said agencies were instrumental in the affecting the capabilities of the sub-national system of innovation. 

To examine this topic the thesis used a combination of historical analysis and case study methods. The focus of the historical analysis was the events, institutions, individuals and natural resources that shaped Alberta from its earliest eras up until the formation of the Trio. The case studies analyzed Trio documentation and expert interviews. The findings were analyzed through a systems of innovation perspective.

This research is needed because often studies of sub-nation systems of innovation do not incorporate the historical elements that give the region a distinct character. Also, innovation agencies are an important option for governments to implement their innovation policy and studies of sub-national systems of innovation may not incorporate these organizations into their frameworks. The actions of institutional entrepreneurs are another dynamic that may be underappreciated as a source of change in a sub-national system of innovation. Finally, this research addresses a gap in the literature specific to understanding Alberta sub-national system of innovation and three significant innovation agencies.

Key points and recommendations

It makes sense that the natural resources can affect the character of a local economy; and the resultant economic structure will impact the role of the sub-national region in the national and global context. The economic development of a region like Alberta was shaped by the needs of the political and economic institutions in Ottawa and London. Yet the resources that were so desirable did not simply appear under the institutional control of the Crown. The access to the natural resources from which Alberta’s system of innovation emerged began with the treaties with First Nations peoples.  The challenging dynamic between Ottawa and Edmonton relating to control of natural resources is also noteworthy. The recognition of the headwaters of natural resource abundance is often overlooked, although it is expected that First Nations institutions will play an increasing role in natural resource development and may even provide incremental demands (e.g. environmental mitigation, economic development) that will drive incremental technical change. It is recommended that when analyzing the history of a resource-focused sub-national system of innovation that the historical institutional context be examined for significant clues to the regions character.

Sub-national regions may have valuable and technically challenging natural resources, which can lead to the government to consider investing in their development. The example of AOSTRA shows that innovation agencies can be extraordinarily effective agents in transforming the behavior of firms and qualitatively changing a sector of the economy (through expansion of knowledge, development of supply chains, etc.).  It is important to recognize that AOSTRA acted as a signal maker and assumed some risk by establishing the Underground Test Facility. AOSTRA also implemented an important intellectual property and knowledge management regime that allowed knowledge to be more effectively shared across firm boundaries. The situation that led to AOSTRA is extremely context specific; nevertheless, regions that have valuable and technically challenging natural resources that are being underdeveloped by industry may want to closely examine what made AOSTRA effective and determine if a similar approach might suit their context.

In this thesis, innovation agencies have been shown to play an important role in the delivery of a government’s innovation policy. Providing an ability to focus on a specialized innovation function and to provide an arm’s length relationship between policymaking and program delivery. There is room in the systems of innovation literature to recognize that these organizations can play a role in qualitatively changing the sub-national system of innovation. The nature and scope of the potential impact of an innovation agency will vary dramatically depending upon the target group for programs as well as the agency’s organizational effectiveness and program design. However, given the impact of the Trio, it is not unreasonable to speculate that innovation agencies are organizations that are uniquely positioned in a sub-national system of innovation to enable qualitative change in the system.  If the conditions are favorable, the potential impact can be epic, leading to qualitative change on a large scale. Future research should be directed towards better understanding the role and the functioning of innovation agencies within the systems of innovation literature.  This would also include the idea that innovation agencies should be able to learn from each other in terms of what are effective techniques to achieve desired outcomes.

It is important to recognize that institutional entrepreneurs can drive institutional change which could include innovation policy such as the formation of innovation agencies. In Alberta, there was the alpha institutional entrepreneur Peter Lougheed; and there were other individuals who were important in identifying functional gaps in the sub-national system of innovation and working with the government to create policy to address these gaps. The effort of these individuals are discernable vectors in the narrative of a sub-national system of innovation. This makes perfect sense as these individuals are, by definition, positioned to adjust the institutions of the region; also if they are savvy and positioned to understand signals that lead to perceived gaps in the innovation system. In Alberta’s case Lougheed was able to lead the effort to qualitatively change the energy and health innovation systems. Since institutional entrepreneurs adjust elements at the institutional level their potential impact can be significant in a sub-national region. It is recommended that research into the functioning of systems of innovation consider whether the role of innovation policy (including innovation agencies) was at least partially contingent upon the actions of an individual institutional entrepreneur.

When one examines a ‘secondary’[1] innovation agency (like any of the Trio) and asks whether it has been successful in the creation of impact, the answer must be mindful that these innovation agencies were never designed to be the primary providers of an innovation function to the system. The Trio did not conduct research or develop technologies themselves. It is the portfolio of firms or academics that are the primary providers of the desired innovation function. Most of the instruments that the Trio used were designed to co-invest with stakeholders on desired initiatives, which supports this perspective. Also ‘successful’ instrumentality for an innovation agency will vary significantly depending upon the sector and stakeholders it is mandated to affect. An innovation agency working with the oil sands industry on optimization of monetarily quantifiable technical processes will succeed very differently compared to an innovation agency looking to attract or develop research talent at the leading edge of science. The thesis argues that the innovation agencies were all instrumental in their own way, relative to sector, stakeholder and scale. It is suggested that any approach to examining the instrumentality of a secondary innovation agency needs to incorporate an examination of the recipient organization as well.

1.3     Future Research

The role of the individuals

In the case studies individuals from across government, university, and industry domains were behind the early identification of gaps in the sub-national system of innovation and the creation of the conditions necessary for policy entrepreneurs to incubate innovation agencies. Further research into these individuals, the importance of their social networks, and how they utilized their capabilities to begin to establish innovation agencies could add to the emerging literature on institutional entrepreneurship. These individuals exert significant influence on both the creation of and evolution of institutions related to innovation agencies (e.g. policy instruments, assessment of innovation agency performance, etc.). An alpha example of such an individual is Peter Lougheed. 

A sub-theme of this research may explore the idea of deliberately developing a institutional entrepreneur support system. Perhaps allowing innovation policy ideas to be discussed and incubated in an open evolutionary format may lead to better policy.  Perhaps encouraging increased institutional entrepreneurship training (and systems of innovation training) within government and universities would increase the pool of available knowledgeable institutional entrepreneurs. Finally, perhaps agents from the ‘start up’ ecosystem could be better leveraged to create more modern innovation agencies. 

The role of boards and committees

Innovation agencies often have boards and committees that bring individuals from industry, university, and government together to provide governance to the innovation agency. Perhaps the board, and specifically the chair, plays a critical role in moderating innovation agency and government interactions. Perhaps the boards of innovation agencies vary in the extent to which they integrate direct investment adjudication and scientific assessment into their mandates. Also, perhaps the boards of innovation agencies may be in conflicts of interest, given that they may have roles in the organizations that the innovation agencies are directed to support. For the purposes of improving the operations of innovation agencies, a deeper examination of the role of boards and committees is an area of interest for future study. 

The Heritage Fund

The funding model for Alberta’s Heritage Fund was modified in 1987 and received no natural resource revenue or investment yields. An interesting project would be an essay about this policy evolution and a counterfactual discussion of what difference a larger heritage fund could have meant for contemporary Alberta.

Additional Alberta innovation agency case analysis

This thesis’ research methods could be the beginnings of a framework for the examination of innovation agencies. Future research could utilize a similar mixed method research approach to examine other innovation agency cases. Research could conduct a historical analysis of a region and then conduct case study analysis. Future research may also broaden from innovation agencies that remained public organizations to include investigations of innovation agencies that began as publically funded and evolved to become public-private partnerships (e.g. Spatial Data Warehouse) or moved completely to maintaining a market focus (e.g. Computer Modeling Group). A list of Alberta-based innovation agencies that could be interesting cases for future research is presented in Table 25.

Table 25: Potential innovation agencies for future research

Alberta Heritage Fund for Science and Engineering Research (known as ‘Alberta Ingenuity’)

• Innovation agency with a mandate to improve science and engineering research capabilities. 
• Some functional overlap with iCORE.
• Funded by the Alberta Heritage Fund.
• Sunset with Bill 27.

Spatial Data Warehouse

• Innovation agency that focused upon reservoir modelling software. 
• Began as a not for profit, converted to for profit.

Computer Modeling Group

• Innovation agency that focused upon reservoir modeling software. 
• Began as a not for profit, converted to a for profit.

Alberta Science and Research Authority (ASRA)

• Innovation agency that acted as the operating arm of the Alberta’s Ministry of Innovation and Science and oversaw organizations (e.g. Alberta Research Council, iCORE, etc.). 
• In 2005, ASRA’s function of overseeing other organizations was removed and ASRA then focused on its advisory role to the government.
• Sunset with Bill 27.

AMERA

• Innovation agency that provided environmental monitoring capabilities for government, industry, academia, and the public.
• Was dissolved in 2016, upon review by the government. The NDP government (which had replaced the incumbent Conservative government) assessed AMERA and determined that its function was better provided by the government itself.

Alberta Research Council

• Innovation agency and primary organization (i.e. directly provided R&D functionality) with a mandate to provide applied research capabilities to Alberta’s economy. 
• Worked closely with AOSTRA.
• Sunset with Bill 27.

Optimizing the creation and management of innovation agencies

Perhaps there is a need for a new approach to the early stages of innovation agency formation. The government could create a system where the ideas for innovation agencies are incubated. Incubation could consist of taking embryonic innovation agencies and subsidizing the establishment of their legal routines, strategic routines, instrument design, financial routines, socioeconomic performance assessment, user feedback, etc. There could be improved quality of operations in these innovation agencies that result from their not having to create routines from scratch. It may also allow for the improved standardization of additionality assessment.

1.4     Summary

If the role of innovation agencies and how they emerge and evolve in Alberta remains under-examined there is a risk that future investments in innovation agencies will be unnecessarily inefficient. Furthermore, without considering innovation agencies as a distinct class of organization the systems of innovation research community risk overlooking a potentially significant source of dynamism. With AOSTRA’s impact on in-situ oil sand technology systems, AHFMR’s impact on biomedical research and iCORE’s impact on university informatics research capabilities there is no doubt the Trio made a discernable and significant impact. 

Examination of the origins and evolutions of innovation agencies has just begun both in the Alberta context and in the systems of innovation literature. Innovation agencies are an important tool for governments to alter the trajectories of sub-national systems of innovation and positively impact the socioeconomic prospects of the regions. Innovation agencies are important and underappreciated examples of entrepreneurial government behavior that can lead to qualitative technical change at a sub-national scale.

[1] 'Secondary' organizations affect the behavior of 'primary' organizations (e.g. firms, universities); Primary organizations provide innovation functions directly (e.g. commercialization, research).