Study on the Mechanism of Intermediary Institution in Regional Innovation System

Study on the Mechanism of Intermediary Institution in Regional
Innovation System
WANG Yue1, JIANG Ming-feng2
1 School of Economy, University of Jinan, P.R.China, 250022;
2 School of Management, University of Jinan, P.R.China, 250022
[email protected]
Abstract Intermediary institution is the important components of regional innovation system. Based on
the analysis of the present conditions and problems of intermediary institution of regional innovation
system in China, this paper pointed out its development strategic target, and give countermeasures and
suggestions on the development of intermediary institution.
Key words Region; Innovation System; Intermediary Institution; Mechanism
1 Introduction
Innovation is the strong force in a region as well as the national developing, and as a major
organizational network in the period of asking for innovation and development, regional innovation
system bring new vigor and vitality for our society and economy. Intermediary institution is an
important component of the regional innovation system, and in recent years, more and more people are
aware of the importance of it as the carrier of knowledge and information flow and its service abilities,
which make it develop rapidly and have a certain scale. But compared with developed countries, China's
intermediary institution is only at a preliminary stage; despite get a certain scale, shortcomings and
inadequacies as development constraints are following its developing. Therefore, we need to address the
problems in the process of development, analyze causes with China's reality, and find better ways of
solutions, not only to promote the development of intermediary institutions, but also to improve the
regional innovation system.
2 The Analysis of Intermediary Institution
2.1 The connation of intermediary institution
Intermediary institution is defined like that: It is a civil organization that in the condition of market
economy, between supply and demand or different interest groups to coordinate their interests, between
the government and the market actors (business and personal) to play the main interest creating of the
market economy, and realize indirectly, or to replace the macro-economic regulation and supervision
functions of governments [1].
By definition, we can learn about that the intermediary institution plays the role of a bridge linking as
the carrier of knowledge between the various actors. It has a variety of forms, such as: the service
intermediaries, science and technology intermediaries, financial intermediaries, such intermediaries in
the region form an information service network in a whole innovation system, connecting various
components and coordinating interests between the main actors, transferring knowledge directly or
indirectly, promoting the transformation of scientific and technological to achievements and improving
the efficiency, therefore, the role of intermediary institution should not be overlooked.
2.2 Regional innovation system and intermediary institution
The theory of regional innovation system (RIS) originated from the national innovation system (NIS)
theory. The famous British technological innovation theorist Freeman (1987) gave a precise definition:
the net is organized by public and private departments; their activities and interaction promote, induce,
change, and diffuse all kinds of new technology. Then it was perfected by OECD for the following four
parts:(Fig. 1)
Then main function of regional innovation system is to promote the regional knowledge innovation,
technological innovation, knowledge dissemination and application. Its fundamental task is to
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internalize technological innovation as the independent variable in regional economic growth, and
promote reasonability of regional industrial structure, regional industrial upgrading and high-quality
regional economic growth [2].
Enterprises
Universities and research
instructions
Circling of
knowledge
Agency
Government
Figure 1 the finger of NIS
In the basic framework of the regional innovation system, universities and research institutions are the
main body of new knowledge and technologies producing, in which the senior personnel and advanced
test facilities provide a guarantee for the knowledge and technology innovation and development;
modern enterprises as the main body of knowledge and technology application, should update the
internal and external business environment continually, strengthen irritate innovation, transfer the
knowledge and technology into economic benefits; government as a subject of law, should provide a
good policy environment to promote the dissemination of knowledge and technology; intermediary
institution as the knowledge-intensive enterprises , it is the main body for spreading the flow of
knowledge, plays an role of bridge in the entire innovation system. On the one hand, intermediary
institution absorb a large number of talented people, make the best use of the most advanced
professional knowledge and skills from the universities and research institutions, on the other hand,
through analyzing the policy considerations and the internal environment of enterprises and external
market conditions objectively, the intermediary institution provides supports of information, finance
and technology, and professional management consultants for entrepreneurship and development,
promote the transformation from knowledge and technology into achievements and profits, and regulate
and assist the relationship between business and, increase efficiency and the most optimum distribution
of resources.
3 The status of intermediary institution in Chinese RIS
3.1 The function and status of Chinese intermediary institution
According to the definition, the intermediary institution is the coordinator, service providers and
supporter among enterprises, government activities and research activities. Intermediary service
institution, it is not merely a message of "distributor", but also plays advantage of information resources
[3]
. Trade associations, chambers of commerce and other organizations and lawyers, accounting firms
provide public services to the market, especially chambers of commerce and industry associations can
coordinate the problems and disputes which can’t rely on the government to be solved in the market,
thus more efficiently; Financial intermediary institution through issuing various secondary securities to
market for commercial activities in the provision of financial support; and as a knowledge-intensive and
more specialized services, science and technology intermediary institution, is in the form of a
technology business incubators, the Productivity Center, science and technology advice and assessment
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institutions, technology transactions, and other institutions as the main form of market-oriented
economy as a whole, faces the whole market to provide all kinds of knowledge and technology diffusion,
the results of conversion and innovation consulting and management activities in the areas of technical
and scientific and cultural support.
At present, China's intermediary institutions have made certain achievements, they began show
growing and diversified development, new and high-level and the strong strength intermediary
organizations in the constant emergence of the community. There are power and organization to promote
a variety of intermediary agencies’ development. In such a development trend, the intermediary
institution give advance to enterprise technology development, management philosophy, innovation
activities and even play a great role in promoting and expanding the space for the development of
enterprises, such as business incubators, they give the professional advice and high-quality and
high-efficiency service for entrepreneurship and markets seeking, and bring new vigor and vitality.
3.2 The problems in intermediary institution
However, what we achieved could not prove the development of intermediary institutions have been
perfect. On the contrary, compared with some developed countries, the development of China's
intermediary institution is just at the initial stage, and there are certain problems.
First, China's intermediary institution has unbalanced development. On the one hand, as for the
intermediaries, because the development of society and the advancement of technology, the
socio-economic market have a huge demand on intermediaries, but due to China's vast region, some
areas lack by cultural knowledge, skills, concepts and accept extent, the market's level of development,
and other factors, the development of intermediary institutions is relatively backward, that will be in
conflict with the rapid development. Comprehensive and sufficient knowledge and information are
source of vitality for intermediary. On the other hand, as for the intermediary's clients, many of the
intermediary's clients are concentrated in certain sectors or departments, so that other sectors are
"ignored".
Second, China's intermediary institution is lack of competitiveness. Intense competition is a typical
modern market characteristics, but the intermediary organizations may be have low abilities,
occupational ethics, no industry credibility because of their low-quality personnel, the irrational internal
structure, management problems, then lead to declining competitiveness. Every year, a large number of
scientific and technological achievements emerged. To use those efficiently and transfer them into
economic and interest, we need the personnel in intermediary to seize market opportunities with sharp
vision, professional consultant and reasonable investment advice. If the staff can’t meet the requirement,
enterprises will lose a lot of opportunities, and intermediary institutions will gradually be "bankrupt"; at
the same time, some small intermediaries with lower capital and more difficult financing have lower
ability to bear the risk, so they will gradually lost the chance to be "." In addition, the lack of law and
regulation system, a not good legal environment, an irregular development and competitiveness will be
undermined the viability of the market intermediaries seriously.
Third, China's intermediary organizations, chambers of commerce did not give full play, that is, it is
not satisfactory with the role of a coordinator.
This situation was caused mainly by the long-term impact of China's "official oriented". The so-called
“official oriented” refers to acting as the pursuit being official as their life goals and values, and measure
people's social status and life values through the official position and rank [4]. In our country, people are
in habit of seeking help from government when the issues emerged. “Government oriented” is deep in
people’s thinking. Affected by such mind, people have a strong psychology with worship and dependent.
They are accustomed to seek help from leadership, and only are the words authority said by the leader,
they don’t want to solve problems by themselves, or simply do not trust their abilities. It’s unfavorable
for the enterprising start and development. Similarly, government officials have a certain “officials”
thought under the influence of “official oriented”. The government used its administrative rights to
intervene the economy excessive in decision-making. The system of administrative examinations and
approval gives the full expression of intervention. The Government has promulgated a series of policy
for intermediary institutions to foster the development, but it often appeared that the government
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"instead of the intermediary", intermediary institutions didn’t fight for their rights, or even thought that
went without saying because of weak concept. That is the result of excessive intervention in the market
economy, a broad market space has become crowded, and the intermediary also exist in name only.
4 The research on intermediary institution innovation in RIS
On the problems above-mentioned, there are some advices on the development of intermediary
institutions path.
4.1 Strengthen the innovation and change the conception from inner.
Innovation is the key factors decision of competitiveness in a national or regional. "Culture
innovation or the emergence of high-tech culture, is not focus on the construction of material
environment, but in the soft environment, the institutional, mechanism and talent level environment."[5]
Culture innovation, is not the material but spiritual level. In some regions with the backward concept
relatively, it is not only the regional ability insufficient, but also have difficulty in accepting foreign
cultures. Through the soft environment, regional culture innovation is hoped that innovation activities,
can change regional conception fundamentally, make the "innovation" enjoys popular support, so that
people understand the intermediary institutions fully, change the "passive acceptance" into "active
development" , then they are willing and able to develop intermediary institutions, and use this tool to
promote business and economic development better.
To strengthen the regional innovation culture, get rid of the old conception inside, accept new ideas
outside, and be awareness of the importance of intermediary institution, first of all, the government must
participate disseminating actively, so that people should have a certain understanding on intermediary
institution, and form a certain public opinion environment, pay attention to cultivating the relevant
professionals; Second, entrepreneurs should organize learning external, do not stick in their own region,
go out into the world and accept the new knowledge, enhance the entrepreneur cultural, recognize that
as an important part in market, intermediary institution can promote the flow of knowledge, coordinate
conflicts, provide services, and other functions. Entrepreneurs should change their habit of relying on
their own experience blindly, and be willing to try to get in touch with and use intermediary services;
third, the managers of intermediaries should change their "specificity" conception. It needs all the
departments and industries developing coordinately for the optimization and upgrading of industrial
structure in China, rather than one or a few fields developing. The intermediary managers also should
accept innovative thinking and update their concepts timely, find out opportunities in the market cracks
and extend their own operations and service targets out.
4.2 Enhance the competitiveness of intermediary institution and absorb talents.
Talent is the intellectual resources basis of development. It is priority to solve the high-quality
professional talent when enhance the competitiveness of intermediary institution. Modern enterprises
emphasized that the integrated innovation and open innovation. Integrated innovation asks higher on the
knowledge sharing, learning atmosphere, cooperation and trust, and open innovation indicated that a
single company can’t meet all the needs of the market. While developing their own advantages, it is also
necessary to combine with other relevant enterprises to form a combination of complementary.
Therefore, integrated innovation and open innovation need the intermediary to play role of a bridge and
linking to form a broad knowledge and information platform.
First of all, as for personnel training, higher education is changing the educational functions from the
focus on the dissemination of knowledge in the knowledge economy times, which simply teaching
functions, into teaching and educating people with moral, intellectual, physical all-round development,
solid foundation, broad knowledge, capability and high-quality, and innovative spirits. Our countries
also have promulgated a series of policy measures to promote the development of colleges and
universities and the training of personnel, to provide the community with specialized human resources.
Second, some intermediary institutions pay their attention to the candidate's qualifications and work
experience when selecting talents, and neglect weather they are as professional as the company needs,
so managers should not blindly pursue high academic qualifications, but select appropriate talents
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against its own scale and operational areas. For example, law firms, accounting firms or technology
assessment, advisory bodies, they need more specialized personnel to grasp the needs of enterprises
accurately, have a keen vision in the market, and provide professional advice and services. Third,
intermediary institution is not only a civil society organization to provide services, but also an enterprise,
and it has the same nature with other enterprises providing goods and services. As an enterprise, it must
do a good job of initiate innovation for a good development.
4.3 Change "official oriented" to "business oriented", play the role of coordinator.
Compared with the government, the coordinating of intermediary organizations has high efficiency,
and is more suitable for adjustment of disputes between enterprises. The Chamber of Commerce as an
example, in some developed countries and regions is more mature. Enterprises have become accustomed
to seek help from chambers of commerce when they have problems. It is not only better for enterprises
achieve the dominant position, but also saved the court time, and made the problem-solving more
efficient. In China, as has long affected by the "official oriented", people are more willing to rely on the
Government. In order to get rid of the shackles of this "official oriented", the corresponding definition
"business oriented" was raised. Changing From the "official oriented" to "business oriented”, actually
means an attempt to change the government functions, transform the roles from administrators to
servicer. In "official oriented", the government excessive interference in economic activities has made
some bold entrepreneurs with innovative spirit learn about that, in order to change this state, it is
necessary to follow a new democratic way to norm the market economy, insist that the government is
only a guide and assistant organization, the main part is business itself, which is the task of China's
transition period. In the past economic activities, when people have problems especially the business
disputes, they often thought of appeals and take the road of officialdom, but this is low efficiency and
easy to breed corruption, which will narrow the market space. To improve this situation, an important
non-profit intermediary organization - Chamber of Commerce will began to play its role. "we should
firmly make enterprises, market and social organizations handle the things which shouldn’t be
controlled by the government, and make full use of community groups, trade associations, Chambers of
Commerce and the intermediary institutions." said by Wen Jiabao. In other words, what the government
should do is to "relaxing" the enterprises and entrepreneurs, so that entrepreneurs can divert their
attentions from the government to Chamber of Commerce. The Chamber of Commerce should be the
supporting tool, and provide better service to business and government.
First, it is the concept of change. Not only the conception that entrepreneurs blindly believe
government should transfer into being will to seek help from the Chamber of Commerce, the
government officials also should change their old mind of “in charge of everything”, drawing lessons
from foreign successful mode, and using it combined with China's national conditions.
Second, intermediary institutions should dare to take up some business disputes when they are
intervened excessively. They should protect their own rights and interests, don’t withdraw from
advancing and shirk responsibility, and play their roles actively.
Third, the government should provide a good legal and social environment for the development of
intermediary institutions. According to the regional environment of competition and acceptance of the
concept, introduce policies and measures to promote the development of intermediary institution timely,
such as regulating and supporting policy for regulating the activities of the intermediary, and clearing
the channels of financing. With the law guarantee, the intermediary institutions can develop better.
5 Conclusions
Through the understanding of intermediary institution and regional innovation system, discuss the
development channels of intermediary, the article follow the logic and analysis and get conclusions as
follow:
1 An understanding of the intermediary institution has many forms. As the carrier of the knowledge, it
links every interest factors, transmits information efficiently. Intermediary institution is the coordinator,
servicer and supporter among government, enterprises and research institutions. It provides financial
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support and professional advice for enterprising, developing orientation, fruit transferring, market
position, scientific management, and replaces the government in economic activities with supervision,
management and coordination functions; promote market run cost-efficiently and stably.
2 In the regional innovation system, as an important component, the intermediary institution is an
important role that is not to be ignored. Regional innovation culture can change people’s mind and
attitude to intermediaries inside, the regional innovation culture promotes the concept updating, which
enable enterprises to access and use of intermediaries. Government is willing to "let go" for some
management functions of intermediary institution. Therefore, it is particularly important to change the
traditional conception in strengthening the regional culture innovation.
3 Intermediary institution should be able to initiate innovation, optimize its internal resources, absorb
high-quality professional talent actively, expand their service targets, seize market opportunities, tend
for long-term plans to enhance its own competitiveness, handle the business and government relations
correctly, separate from the "official oriented" shackles, meet the challenges bravely in the "transition
period", give full play to their strengths in a modern market economy.
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