Can regional ICT lighthouses be built?

Transcription

1 Can regional ICT lighthouses be built? - The experiences from the Digital North Denmark Christian Ø. R. Pedersen 1 DRUID / IKE Group, Dept. Business Studies, Aalborg University Paper for the DRUID Winter Conference 2004 in Rebild, Aalborg January 2004 First Draft Abstract A variety of polices have in the recent years been used as tools for development of peripheral regions. In the late 1990s have policies for cluster development become popular and widely implemented. Especially policy programs focusing on creating or promoting clusters within the Information and Communication Technology (ICT) sector have been used with more or less dubious results. Some of the inspiration has come from the literature on clusters, regional innovation systems and learning regions, focusing on developing clusters and learning regions. The focus has been on network cooperation between firms and public organizations, and a common will in the community to give the region a lift in competencies. In this paper we analyze the Digital North Denmark (DDN) ICT policy program , initiated to build an ICT lighthouse and to promote the network society by developing the ICT sector in the peripheral region of North Denmark by building on the existing positive cooperation between the university, industry, science park and local government. But when it was implemented the goal had changed to create a learning region and diffuse ICT in the region. The cluster firms and the university were among the main arguments for establishing the program, but somehow they were largely missing as participants. Some of the large projects revealed a lack of cooperation between firms and public organizations, since it seemed that the common vision was not shared. It also became evident that it was problematic to carry out an ICT policy program, without having a general idea of how to continue the results of the program after the end of financial support in DDN was presented in 1999, when the ICT sector was booming, but implemented from late 2000, when the crisis in ICT sector had begun. Is it possible to build a regional ICT lighthouse? And did North Denmark become an ICT lighthouse? 1 crp@business.auc.dk 1

2 1 Introduction The present paper analyses the Digital North Denmark (DDN) ICT policy program initiated to build a regional ICT lighthouse in the peripheral region of North Denmark 2. The government wanted to make the ICT environments in Denmark which already had the strongest and best ICT potential even stronger and thus better equipped to be ICT lighthouses of international standards. These were seen as an important part in the conversion from the information society to the network society. The inspiration to the creation of ICT lighthouses came from internationally visible ICT growth areas that had arisen as a result of focused initiatives and investments. The purpose of DDN was to promote the development in the region of North Denmark, which already had shown a great ICT potential with private firms, the university and science park through a large-scale experiment, building on the existing network cooperation between public and private organizations (Dybkjær and Lindegaard 2000, p ). A clear description of an ICT lighthouse cannot be found in the background report for the policy program, but the description of its role and empirical examples from the report can give an indication. An ICT lighthouse should act as a magnet to high-tech firms and investors, entrepreneurs, researchers etc. and function as large-scale IT based experiments directed at citizens, the training and education sector, the public administration, trade and industry and the infrastructure. It should be a cornerstone of the network society, and light up and show the way. The examples are Silicon Valley (US), the well know ICT cluster; Ennis (IE) a town which was selected to experiment with the use of IT; Oulu Technopolis (FIN), the first technology park in the Nordic countries and Kista (SWE), a large science park with many IT firms (Dybkjær and Lindegaard 2000 p ). The examples are quite different in size and nature 3, but a common denominator for three of these is that they can be described as regional clusters. In the empirical examples is the importance of a deliberate policy and interaction between universities and firms stressed. The DDN policy program is closely related with the variety of polices that in the recent years have been used as tools for development of peripheral regions. In the 1990s have policies for cluster development become popular and widely implemented in Denmark, but also in many other European countries (Drejer et al. 1999). Especially policy programs focusing on creating or promoting clusters within the Information and Communication Technology (ICT) sector have been used with more or less dubious results. Some of the inspiration has come from the literature on clusters, regional innovation systems and learning regions, focusing on developing clusters and learning regions. An argument for public financing and engagement in research is that uncertainty related to knowledge production may result in under-investment in this activity (Nelson 1959; Arrow 1971). Another argument for support field experiments is that innovation is an interactive process. The interaction between suppliers, cus- 2 In the reports on The Digital Denmark etc. they use the words Information Technology (IT) Lighthouse and not ICT Lighthouse. In this paper we will use ICT since it describes the targeted sector more precisely. 3 Silicon Valley is the large ICT center located in and around Santa Clara Valley in California, USA. The size and breath is many times multiple that of the other examples and North Denmark. Oulu Technolopolis and Kista are both very successful science parks with many ICT firm located close by universities. Kista is larger than Oulu, but both of them are known for the success of the universities and science parks in attracting and creating ICT firms. A part of this can be linked to the success of Nokia (FIN) and L.M. Ericsson (SWE) that chose to locate R&D departments in the areas. Ennis is however a town in Ireland that in 1996 was used as a test for the implication of the diffusion of Internet connections (ISDN) to firms and private households. 2

3 tomers and knowledge institutions is a necessary condition for a successful innovation (Lundvall 2002). In this paper we analyze the DDN ICT policy program initially focused on developing the ICT sector in North Denmark and build on the existing fruitful cooperation between the local university, industry, science park and local government. But when it was implemented the goal was changed to create a learning region and diffuse ICT in the region. The program was organized as project offers in four themes: Digital Administration, Qualification and Education, IT Industrial Development, and IT Infrastructure. The ICT sector in North Jutland had an impressive growth (63.5%) from , which was almost twice the average national growth, but this was largely due to a successful wireless communication cluster in the region that accounted for more than 40% of the ICT employment in The cluster firms and the university were the main arguments for establishing the program, but somehow they were largely missing as participants in the projects. Instead the new focus on the use of ICT in the program targeted participants from the IT service and software segment of the ICT sector, which was fairly weak in the region compared with the national average. In the theories of regional innovation systems and learning regions are network cooperation between firms and public organizations and a common will in the community to support learning and give the region a lift in competencies considered important. However some of the large projects in DDN revealed a damaging lack of cooperation between firms and public organizations, since it seemed that the common vision was not shared. Other problems also became evident during the period e.g. the problem of carry out an ICT policy program, without having a general idea of how to continue the results of the program after the end of financial support in DDN was presented in 1999, when the ICT sector was booming, but implemented from late 2000, when the crisis in ICT sector had begun. We analyze the creation of the ICT policy program, the final program, change in purpose, why the cluster firms and the university were missing in the projects, the implementation, the project offers, the winning projects, the lack of cooperation between firms and public organizations and the current results for the industrial development perspectives of ICT sector in North Denmark. Is it possible to build a regional ICT lighthouse? And did North Denmark become an ICT lighthouse? The paper is structured as follows. First an introduction followed by an analysis of the structural change in the business structure in region of North Jutland in the 1990s with a emphasis on the ICT sector. Section three describes the history of the DDN, ICT lighthouses and the shaping of the DDN profile. Section four presents theories of the learning region and the regional innovation system. In section five is the process of building the lighthouse analyzed. The results of DDN and its influence on the development perspectives of the ICT sector in North Jutland are presented in section five with a discussion of the large projects on digital TV, e-business and IT infrastructure. Finally, the conclusions are presented in the last section. 2 The North Jutland region from lagging behind to catching up The North Jutland County is located at the northern tip of the peninsula of Jutland, the part of Denmark connected to the European continent. The population is around half a million people, slightly less than one tenth of the Danish total. Total employment was 246,500 persons in 1999, of which the private sector share was 163,500. The largest municipality is Aalborg, the fourth largest city in 3

4 in Denmark, with 163,000 inhabitants. The region has traditionally been characterized as peripheral with an unemployment rate among the highest in Denmark. The industry structure has been dominated by more traditional industries, such as agriculture and food processing, fishery, tourism, shipyards, textiles, tobacco and cement. However, during the late 1980s and the 1990s the region has experienced a process of structural change with jobs moving from the traditional sectors to the service and the high-tech sectors. Although North Jutland still is specialized in the primary sector and the metal product industry, it also is specialized (i.e. got an above national average employment share) in especially mechanical engineering as well as in electronics. The latter has been among the features, which points at the region not being peripheral any more. The industry structure is at present in line with the average Danish non-metropolitan counties. 4 The region has undergone a structural change, but still has an above average unemployment rate and a below average income compared to the Danish average (Dalum et al. 2002, p.9-10). Aalborg University plays an important part in the development in North Jutland. It was established in 1974 and has today 13,000 students and 1,700 employees in Humanities, Engineering, Natural Sciences and Social Sciences. Aalborg University (AAU) was until 2000 the one of only two universities in Denmark that educated the M.Sc. in engineering (5 years) and in the 1990s was approximately half of every year s graduated M.Sc. in engineering from AAU. From its establishment has AAU been very active in cooperation with private firms and it participates in many networks and joint research projects (Dahl 2003). Almost 40% of the total number of graduates from the university get their first job in the region, which underlines the importance of the university for the region (Nielsen et al p. 81). The region has from 1986 been supported with several EU Programs due to the crisis in North Jutland especially in fishing, shipbuilding from the last half of the 1980s and the structural problems with a high unemployment rate 5. Especially the Objective 2 funds for Industrial Reconversion have been used to support the structural change 6. In the period was the region supported with 1,561 million DKK from the EU, which generated additionally 1,839 million DKK in support from Danish public organizations and 2,248 million DKK from private firms. The private financing is thus higher than the EU support. In comparison is the DDN program financed with 170 million DKK in public support and the current Objective 2 EU program running from is financed by 1,834 million DKK from the EU and in public support. The evaluation reports indicate that the overall effect of the EU programs is positive for the region, but due to the fragmented nature of these, is the direct effect in terms of employment and indirect effects e.g. creation of networks difficult to measure 7. The North Jutland County administration has been the administrator for the EU programs i.e. organizing the project offers, putting together the financing, attracting external partners etc. Through this work the County Administration has built up competencies, which were useful in the DDN program and created a wide network to the different participating actors. The region has become well known for the cooperation between firms, university, Science Park and public decision makers, which was one of the 4 The two metropolitan regions are the greater Copenhagen area and Aarhus. 5 From was the average unemployment rate in North Jutland percentage point higher compared to national average (Ministry of Industry 1994). 6 The programs have been quite wide in their objects e.g. the objective 2 program for industrial conversion that has supported projects with physical investments in private companies, knowledge building projects in private companies, knowledge building projects with soft framework conditions, infrastructure, education in firms and education with soft framework conditions

5 main arguments for establishing DDN. A part of this cooperation can be related to EU programs that to some extent stressed cooperation and since the County Administration main industrial policy has been the EU programs, it has become an active and influential actor in the development of the region. The involvement of the County Administration and its wide network has many positive implications, but also negative, especially since its policies can move or block certain network good related developments that require a large demand drive to move the process. An example of the negative effect can be found in the IT infrastructure project, which has become a story of missed opportunities in building the best IT infrastructure in Denmark. A lack of shared vision made North Jutland miss the opportunities within the IT infrastructure field, which will be analyzed in a later section. 2.1 The ICT sector in North Jutland before the DDN program The ICT sector in North Jutland had a high growth during the 1990s. The employment grew with 63.5% from compared with a growth at 33.7% at national level. Total ICT employment 8 was 8,300 in 1999, but the region has however not been specialized in ICT employment, where the specialization increased from 0.7 to 0.8. The region has thus been catching up from a low level. The structure of the ICT sector in North Jutland is different from the overall Danish structure, since 45% of the employment was in manufacturing compared to 25% for Denmark. Specialization in ICT manufacturing ICT increased during the 1990s from 1.05 to 1.5 concentrated on two segments, telecommunications equipment and electronic components. Table 1 reveals that especially telecom hardware has been outstanding with an increase from a three to nearly six times larger employment share compared to the national average. Denmark is internationally specialized (export) in manufacturing of telecommunication equipment. 8 The ICT sector is defined as NACE/DB93: 3001, 3002, 3130, 3210, 3220, 3230, , , , 3320, 3320, 3300, , , , 6420, , 72 5

6 Table 1 The structure of the ICT sector in North Jutland private sector employment North Jutland Specialization Employment Share of ICT (persons) (percent) Development (1992=100) Share of Change ICT (persons) (percent) Denmark Development (1992=100) Export specialization (1998) Manufacturing , , Office machinery Computers Electronic components and wire Telecommunications equipment , , Consumer electronics Electro medical Instruments etc Services , , Wholesale trade Telecommunications , IT services and software , Total ICT sector , , Note: Instruments etc. are instruments and equipment for detecting, measuring, checking and controlling physical phenomena or processes. The export specialization is based on trade by commodities statistics for OECD (23). Source: Statistics Denmark and OECD (2000) International Trade by Commodities Statistics, No. 1. The region has not been specialized in ICT services at large level where specialization only increased from approximately 0.5 to The employment in ICT services grew 76% in the period compared with 48% at national level, but this segment is still rather weak in North Jutland. The ICT service consists of three parts: Wholesale, Telecommunication service, and IT service and software. The latter is the largest segment in Denmark and North Jutland and contains most of the new IT firms of the 1990s, but despite of a high employment growth did the specialization in North Jutland fall from 0.67 to However in telecom services the region is at the national average, which otherwise is much concentrated in the two metropolitan regions. The ICT sector has a tendency to concentrate around the large cities, which is confirmed by the specialization pattern at the municipality level that shows a the relative concentration of ICT around the large cities, including Aalborg, and in particular, the metropolitan regions of Aarhus and the Copenhagen area 9 (Dalum et al. 2002). A special feature of the ICT sector in North Jutland is the presence of a wireless communication cluster mainly consisting firms working with mobile communication equipment and equipment for maritime communication and navigation. In 1999 the cluster consisted of 30 firms, which employed more than 40% of the employees in the ICT sector and a large share of these were related to R&D activities (for a detailed analyses of the development of the cluster see Dalum et al. 2002; Dahl et al. 2003). The cluster had grown out a few maritime communication firms from the late 1970s and had in the 1990s experienced high growth and also attracted many subsidiaries of large multinational companies. The cluster is thus an important part of the entire ICT sector and it also attracted a lot of attention due to its success and international profile. In the Digital Denmark report that initiated the DDN policy program was the wireless communication cluster directly named as an area of great IT poten- 9 Odense, the third largest city in Denmark, was however not specialized in ICT at the municipality level in

7 tial, which was one of the main reasons for selection of North Jutland for the building of an ICT lighthouse. However, when the DDN program was finally launched, the wireless communication firms were largely missing as participants, while the comparable weak IT services and software segment were strongly represented. The reason for this could be found in the final elaboration of the DDN policy program. 3 The history of the Digital North Denmark and ICT lighthouses The history of the DDN program can roughly be divided into five periods with different actions from September 1999 to the first project offer in June 2000: The first is the invitation and presentation of the policy program by the Minister of Research and Information Technology. This was followed with early discussions and ideas in the region on the program. Then the report on the Digital Denmark, which describes the background for the DDN, was published, and the region response came shortly after with the report on the Digital North Jutland. During the final writing of the report began the final elaboration of the policy program and the organization, which ended with the project offer. The periods will be divided into three sets of action, the invitation and the Digital Denmark report, the regions response, and creation of the final program. The two former is analyzed in this section. 3.1 The invitation and the Digital Denmark report At Aalborg University s 25 years jubilee celebration in September 1999 the Minister of Research and Information Technology invited the region of North Jutland to built an ICT Lighthouse. The plan was to initiate an ICT policy program with a support of 170 million DKK to be matched by 340 million DKK from the participating organizations. The policy program was a part of the governments ICT strategy on The Digital Denmark. The strategy was further described in a report in November 1999 from the ministry The Digital Denmark conversion to the network society on how Denmark should evolve from an information society into a network society (Dybkjær and Lindegaard 1999). One of the policy measures to achieve the goal was the creation of two ICT lighthouses: one in Copenhagen and one in North Jutland. The ICT lighthouse in Copenhagen was to be built by establishing an IT University and a private IT research park, and relocate the Danish Broadcasting Authority and the State Archives to the same area. While the policy program in Copenhagen was focusing on creating infrastructure was the DDN program to be an experiment (Dybkjær and Lindegaard 2000, p ) The ICT lighthouses should act as a magnet to high-tech firms and investors, entrepreneurs, researchers etc. and function as large-scale IT based experiments directed at citizens, the training and education sector, the public administration, trade and industry and the infrastructure. It should be a cornerstone of the network society, and light up and show the way. The government wanted to make the ICT environments which already had the strongest and best ICT potential even stronger and thus better equipped to be ICT lighthouses of international standards. The inspiration to the creation of ICT lighthouses came from international ICT growth areas that have arisen as a result of focused initiatives and investments (Dybkjær and Lindegaard 2000). The purpose of DDN was to promote the development in the region, which already had shown a great ICT potential with private firms, the university and science park through a large-scale experiment, building on the existing network cooperation between public and private organizations 7

8 An IT lighthouse should be established in Northern Jutland on the basis of the very positive co-operation which has already been established between enterprises, Aalborg University, Northern Jutland s Science Park (Nordjyllands Videnpark NOVI) and central political decision makers in the area. (Dybkjær and Lindegaard 2000, p.98) The government wanted to build an ICT lighthouse, but did not define directly what it is. A clear description of an ICT lighthouse cannot be found in the background report for the policy program, but the above description of its role and empirical examples from the report indicate that they wanted to promote the development of an ICT cluster or the ICT sector in the region through large-scale experiments. Even though the rhetoric in the report is stressing the idea to build on the strong potential of the ICT sector and are paralleling to examples of international ICT lighthouses of Silicon Valley, Kista and Oulu it would wrong to conclude on their arguments that they wanted to build a new Danish Silicon Valley 10. But it seems clear that they wanted to support the further development and expansion of the existing strengths in the ICT sector through experiments with the university, Science Park and firms as driving forces. The purpose of a large-scale experiment in Northern Jutland, an IT lighthouse, is to promote development in an area which has already shown that it contain great IT potential, with private enterprises, Aalborg University and NOVI as driving forces. The large-scale experiment should promote IT development and IT use and, via concrete projects, kick-start life into the network society. The concrete projects should reinforce the electronics infrastructure, competence development, e-commerce, efficiency and service in the public sector, the democratic dialogue and opportunities for the individual citizen to exploit the potential of the network society. (Dybkjær and Lindegaard 2000, p.100) The Minister stressed, when giving the invitation in September 1999, that it was required that the public organizations, the university and private firms cooperated on designing a program and building the ICT Lighthouse, which also can be found in the report. In a large-scale experiment, Northern Jutland could be Denmark s first IT lighthouse via the activities which have already been commenced and via a number of prioritized initiatives which should be formulated in partnership between the Government, decision-makers in Northern Jutland and the private enterprises in the area (Dybkjær and Lindegaard 2000, p.99) Since the proposal was presented at the university s jubilee it was a common belief at least among the university employees that the program would have a strong research profile and include joint research projects with private firms. The university had many contacts with private firms and was used to cooperate with these. Internally in the university some of the researchers began to use their international contacts to create ideas for large visible research projects, also including foreign multinational companies. The fear was that the DDN project would be used to support many fragmented 10 Dybkjær and Lindegaard (2000) do not argue directly that Silicon Valley, Kista and Oulu have arisen as a result of focused initiative, even though they are used as examples of international ICT growth areas. They however argue that the interaction between universities and industry has been important in the three examples. 8

9 small projects like a traditional development program for a less favored regions. But also other actors in the region were in parallel, active in the region s response to the invitation. 3.2 The region s response The Digital North Denmark After the Minister s invitation in September 1999 began strategy discussions on how to respond to the invitation on North Jutland as an ICT Lighthouse. It was believed that a quick response was needed to show that North Jutland was able to fulfill the task of becoming an ICT lighthouse. At the county administration the initiative was taken to establish a regional interim board of executives consisting of the county mayor, the mayor of the municipality of Aalborg, the mayor of the municipality of Hjørring, the rector of Aalborg University and representatives from the Danish Trades Union Congress, the Confederation of Danish Industries and the Danish Employers' Confederation. The result was a report on why North Jutland should be an ICT lighthouse, a vision of how it should be build and a roadmap for the further work. The vision for North Jutland consisted of ten points: North Jutland should become a learning region North Jutland should have a strong and coherent educational system that is in the front in Denmark North Jutland should have high level research within IT North Jutland should have education and continuing education for the future worker North Jutland should have a strong service industry North Jutland should have leading development and sales firms within IT North Jutland should have all citizens having direct or indirect access to a computer and the Internet North Jutland should have use of e-business and e-service widespread among the citizens North Jutland should have good framework conditions for private firms e.g. technological, conditions for development and qualifications of the workforce North Jutland should have a public sector that is the most open in Denmark with good service accessible 24 hours a day By becoming a learning region and fulfilling the 10 points it was believed that the productivity in the private and public sector would increase. The rationale was that the technological development would not result in rationalization and increase in productivity in itself, without a joint effort with education and organizational development. The potential increased productivity could only be achieved by combining technological development with further education and organizational change (The North Jutland County 1999, p.36-38). This line of arguments could also be found in the initial ideas presented in the report for the selection of projects for the DDN policy program. IT was not considered a goal, but a mean to build the lighthouse. As a result the report recommended that an important selection parameter should be the focus of the experiments on possibilities and advantages for the region and its citizen created by using IT. To get a positive synergy effect they also found it necessary 9

10 that the forthcoming experiments were large and comprehensive enough to make a difference. The selected experiments should be able to reach and be important for a large proportion of the citizens of North Jutland (The North Jutland County 1999, p.42). In the report it was specified, that an important part of the vision of the forthcoming policy program was North Jutland as a learning region. In the report there was however no clear definition of a learning region, but keywords were the ability and the will of citizens, firms and other organizations, to change, renew, innovate, learn, cooperate and to build new capabilities, networks and supporting institutions. The regional interim board of executives wanted to make North Jutland a learning region through the large-scale experiment (The North Jutland County 1999) 11. The profile of DDN had thus begun to change from a focus on research, industrial development of the ICT sector and networks between university and firms to a user-orientated with a wider purpose of education, IT use and diffusion of IT. A roadmap for the further work was also described in the report. The policy program was to be organized as project offers within different themes. The organization should consist of a board of executives with the responsibility to select the themes of policy program in cooperation with the ministry and to appoint the project groups connected to each theme; a board of directors with the responsibility of the practical implementation; project groups with the responsibility to select the winning projects and a secretariat supplied by the county administration with the responsibility of all the practical work 12. The regional interim board of executives wanted to stay in the same configuration as board of executives with the addition of the Minister in the new DDN organization. The editors of the report, the clerk to the county council and the university director, were to be a part of the board of directors (The North Jutland County 1999, p.48). The board of executives included a wide selection of interest groups to secure a broad acceptance in the region. It also revealed a strong commitment from the leadership of influential public organization and a lot of effort was put into enrolling actors into the planning and management of DDN. The selection of actors in the two boards, however, strongly influenced the DDN profile. Development of the ICT sector and networks with the university had almost not been included in the plans for DDN, but the final selection of themes and profile, and more importantly the building of the lighthouse could still offer opportunities for these actors. Even though it only took six weeks to write the report with the regions response to the minister s invitation, did the initial ideas become determining for the elaboration of the final DDN profile with a focus on becoming a learning region. 4 Theories of the learning region and regional innovation systems The concept of the learning region emerged in the 1990s and draws theoretically on the innovation economics, economic geography and organizational theory. Innovation economics deals with innovation theory and subjects as, innovation systems, knowledge, technological development and change, learning etc. The innovation theory includes theories of what is generating innovation (source, speed and direction) and theories of the economic consequences of innovation. Especially the theories of 11 Dybkjær and Lindegaard (1999, 2000) do not use the term learning region. 12 In addition they wanted to nominate an independent participatory research group consisting of university researchers to carry out research in relation to the DDN policy program. The author is a member of this group. 10

11 national innovation systems (Lundvall 1992), sectoral innovation system and the learning economy (Lundvall and Johnson 1994) are used in theory of the learning region. In economic geography, the spatial dimension of the innovation systems approach is enhanced and further developed to the regional innovation system, (e.g. Storper 1997). The importance of the region, given by regional based knowledge production and learning, is also seen in the competence-based theory of the region. Where regions have special capabilities that are crucial for the competitiveness of firms in the region and the development of the region (Maskell et al. 1998). In addition Audretsch (1998) has shown, by analyzing patent data, that innovative activity tends to be highly localized. A long line of literature of why the spatial dimension is important in economic development exists within economic geography, e.g. theories of industrial clustering and its role in regional development. From the organizational theory comes the theory of the knowledge creating company and organizational learning, which is, focused on the firm as a knowledge creating entity. The value-laden concept of the learning region can be found in the overlap between learning in systems, institutions, organizations and space. 4.1 Definition and main arguments for the learning region Since the mid-1990s the term the learning region has been used in an increasing number of papers. One of the first to use the term, is Florida (1995), who used following definition: Learning regions, as their name implies, function as collectors and repositories of knowledge and ideas, and provide an underlying environment or infrastructure which facilitates the flow of knowledge, ideas and learning. Learning regions are increasingly important sources of innovation and economic growth, and are vehicles for globalization. (Florida 1995, p.528) In Florida (1995) the learning region was seen as an evolution in the role of the region, from a mass production region with static comparative advantage based on e.g. natural resources and physical labor. The new role of the region was argued to be the learning region, defined as: regions are increasingly defined by the same criteria and elements which comprise a knowledge-intensive firm continuous improvement, new ideas, knowledge creation and organizational learning. Regions must adopt the principles of knowledge creation and continuous learning; they must in effect become learning regions. Learning regions provide a series of related infrastructures which can facilitate the flow of knowledge, ideas and learning. (Florida 1995, p.532) Florida is clearly inspired by the theories the knowledge intensive firm and draws a parallel from it to the learning region. Applying this theory to the region is criticizable since the power structure and more importantly the management tools are very different. The changed role of the region was seen as a result of the ongoing globalization, the increasing importance of knowledge creation (and learning as the process of obtaining it), and the emergence of specialized regions heavily involved in world trade (e.g. Silicon Valley). The rapid change caused by globalization creates a need for learning. In Fagerberg and Verspagen (1996) the importance of knowledge and learning in growth of regions has been shown. Different growth rates among regions and path dependency of regions have shown the importance of both learning and unlearning (forgetting). Unlearning becomes important when regions 11

12 are locked in on vicious development paths leading to stagnation and decline. However learning regions implies that the region can change its path and be revived. The main rationale for analyzing learning is, that knowledge is the most fundamental resource and that learning is therefore the most important process (Lundvall and Johnson 1994). The concept of the learning region is linked to the learning economy. Simply defined, a learning economy is an economy where the ability to learn is crucial for the economic success of individuals, firms, regions and national economic. Learning refers to building new competences and establishing new skills and not just getting access to information (Lundvall and Borras 1997, p.35) A whole stream of literature deals with the question, why some knowledge should be localized. In competences based theory, where competences are what organizations can do well and core competences what they do best, the basis for competences is knowledge in different forms: Know-what, know-why, know-who and know-how (a distinction used in Lundvall and Johnson, 1994). One of the main arguments is, that knowledge is either codified (in some degree) or tacit. While codified knowledge is easy transferable, tacit knowledge is embedded in persons or organizations and can mainly be learnt through interaction. The tacit knowledge is thereby localized in particular organizations and locations, and is therefore not easily diffused over distances. 4.2 Is the learning region a virtuous regional innovation system? The connection between the learning region and sectoral and regional innovation systems is, that a learning region can be seen as a virtuous regional system of innovation. In OECD (2001) is high innovative capacity of firms and other organizations argued to be the comparative advantage in a learning region. The learning region then becomes an ideal region that has an ability to sustain and improve high innovative capacity, flexibility and interaction and knowledge exchange between organizations through changing economic conditions. The Learning region is characterised by regional institutions, which facilitates individual and organisational learning through the co-ordination of flexible networks of economic and political agents (OECD 2001, p.24) There has also been a lot of criticism of the learning region and the limits to learning. It is argued that learning covers too much, and that learning may not always be the miracle cure for less favored regions (Hudson 1999). The link between the innovation system approach and the learning region seem to be close. The learning region can then be a virtuous innovation system, where the difference is the focus on ability to change and renew, not only at individual, firm and organizational level, but also in the innovation system structure. Thereby it signals that the focus should shift from a more static endowment oriented approach to learning. If however regional institutions, which facilitates individual and organizational learning through the co-ordination of flexible networks of economic and political agents characterize the learning region, then is a common will in the community to support learning and give the region a lift in competencies important. The will to change and the ability to cooper- 12

13 ate between public and private organizations to create changes seem to be key abilities in a learning region. 5 Building the lighthouse The discussions of the Digital North Jutland became intensified after the regions response in November 1999 and various beliefs and ideas of the implementation of the policy program flourished. The IT sector was booming and this could have an influence on the shaping of the profile since the IT industry seemed to be forging ahead, while the public sector was lagging behind. The report on the Digital North Jutland had described a roadmap for the building of the lighthouse, where a board of executives should decide upon four themes, the profile and appoint four project groups to select the projects. The DDN policy program were to be organised as project offers within four themes of which the government supported up to 1/3 of the total amount and the rest was to be financed by the participants. Three different profiles were competing for dominance in the large-scale experiment: The industry innovation orientated profile that stressed the importance of industrial development through innovation and cooperation with the university; the research-orientated profile that had a point of departure in the university research projects with industry; the user-orientated that focused on extensive use of IT (see also Bruun 2001). 5.1 The planning phase and the final program The board of executives officially appointed in February 2000, but the work on the four themes, profile and appointment of actors to the projects groups were already begun with the completion of the report in November During December and January were the four themes lay down and enrollment of actors to the project groups and mobilization of actors to create ideas and projects had begun. The organizations that wrote the regions response report were all represented in the board of executives and the members stayed almost unchanged. The director of the lighthouse secretariat joined the board after her appointment in the spring The board thus included a wide selection of groups to secure a broad acceptance of the program in the region and to mobilize as many actors as possible. This selection can be said to be more political and powerful, than visionary and ICT orientated, but it is also potential positive since it reveal a will and ability to cooperate in the region. A policy program like DDN could easily have ended in a big catfight in other regions, but the actors in North Jutland demonstrated a rather unique capability to cooperate between organizations. The vision described by the ten points in the report stayed unchanged, since the actors in the board of executives and in the board of directors were not changed. The profile was not definitely decided upon in mid- January, which was revealed in an newspaper article where the clerk to the county council and the university director, both from the board of directors, admit that the fight can be whether the money should be used broadly for IT experiments for the population of North Jutland or more narrowly in targeted research. The university director also argues that the funds should be used to increase the present high level of the ICT sector and the clerk to the county council argues that the funds should only be invested in projects with a return on the investment Thorhauge, Claus Nordjysk IT fyrtårn leder efter ideer Computerworld 14/

14 In January 2000 were the four themes selected 14 : IT infrastructure IT industrial development Qualification and Education Digital Administration A project group was attached to each themes which should participate in the selection of winning projects from the project offers and work on a project strategy and frame for each theme under the guidelines from the board of executives. A professor from the university was selected as chairman for the first theme, a director from a private firm was selected as chairman for group two, a chief executive from a municipality in theme three and a director from the county was chairman for theme four. Actors were enrolled to participate the project groups from December 1999 until spring The groups consisted of up to nine members and had a strong influence of public organizations since two were from the university, one from the county administration, one from the lighthouse secretariat and at least one from a municipality. The influence of the groups on the overall DDN profile is unclear, but seems to be delimited to the participation in the selection of the winning projects. The groups also worked in April-June on the description of the four themes in the project offers. In February 2000 did the Ministry of Research and Information Technology approve the DDN policy program but even though any project offers had been held, appeared several forthcoming DDN projects in a newspaper 15 and the clerk to the county council argued for a possible project that included pc s for all the public employees in North Jutland, this however never got approved. The DDN secretariat was also established in spring 2000 and a head of the secretariat was hired, with a background in Human Informatics from the Aalborg municipality administration 16. She represented the user-orientated profile of the DDN policy program that became prevailing. During the spring 2000 was the strategy for the desired final outcome of DDN and the profile determined. The profile was the same as described in the report on the Digital North Jutland and the DDN program was to reach as many of the county s citizens as possible. The profile had thus changed from what seems to be the original idea described in the Dybkjær and Lindegaard (1999) report or in the minister s speech. The profile was not to build on the existing strengths to lift the entire region, but to broaden the use of IT to lift the entire region and create a learning region. The project should not focus on one sector but all sectors and not concentrate on one problem or area, but cover it all (The Lighthouse Secretariat 2000, p. 5). The allocation of funds to the four themes in the first round of project offers also underline the user-orientated profile, since IT infrastructure got 15 million DKK, IT industrial development 15 million DKK, Qualification and Education 30 million DKK, and Digital Administration 20 million DKK 17. The allocation of funds to certain sectors is however a bit blurred since private ICT firms are involved as partners in many of the projects. The university and the cluster firms were somehow put on the 14 The names of the themes are a bit different in January, but they are covering the same area: Infrastructure, E-business and technological framework conditions, IT in the public sector, and Qualification and Education. 15 Special supplement to Computerworld 28/ The core themes in the human informatics education are that of building competencies among the users and the construction of user-friendly systems (Bruun 2001). 17 Of the total project sum on 170 million DKK were 158 million DKK allocated to projects, whereas the rest were to cover administration, participatory research and evaluation. Approximately 50% of the funds were to be spent in the first project offer. 14

15 sideline, but the project offers still had themes on IT infrastructure and IT industrial development which could hold positive development perspectives for the ICT sector in North Jutland. Since the profile had changed it is necessary to analyze the DDN program with respect to the final profile of the DDN program and winning projects in the five rounds of project offers. 5.2 How the university was put on the sideline and the missing participation of the cluster firms During the work on the rules for the project offers in spring 2000, the Ministry of Finance decided that there should be special rules for public financed organizations and organizations who wanted to use EU objective 2 funds for the DDN projects to avoid that the state paid more than the 1/3 of the total project sum. The ministry rules for funding meant that the university could not use regular funds or let the employees participate in project as a part of the 2/3 of the funding that had to be self provided. To participate had the university to use external funding for the projects or let the potential project partners pay the total funding. It was believed that this put an end to university participation in the DDN project and made the profile of DDN become what it did. The funding rules did stop some project ideas, but the university still managed to become partners in many projects by special arrangements, although the overall DDN policy program did not become as research-orientated, what many on the university believed it should be and wanted. Researchers from AAU participated in 15 % of all DDN projects according to a report from the lighthouse secretariat (The Lighthouse Secretariat 2003). It seems that the level of university involvement and the user-orientated profile of DDN already was determined when the ministry decided on the rules for funding. The missing participation of the cluster firms became evident during the project offers and firms from the mobile communication cluster participated only in 6 of the total 90 DDN projects. The main participant were the service provider Sonofon and L.M. Ericsson, while other cluster firms only participated in two small projects. The reason for this can be found in the early stages of strategy making for the DDN program. There were no representatives from the cluster or the ICT sector in the regional interim board of executives who wrote the initial DDN report and profile that prevailed. Later on in the process, in early 2000, was a member from the cluster firms included in the board of executives, but this was as a representative for the local Confederation of Danish Industries. The representative was changed again during the spring 2000 with another cluster firm manager. The two companies that these representatives were managing were also the two most frequent cluster firm participants in DDN. The DDN profile did clearly not encourage the cluster firms to participate and the IT infrastructure theme was focused on the fixed network and the IT industrial theme was mainly looking at e- business. Why the cluster only was sparsely involved in shaping the DDN profile is still unclear, but it could be related to the boom in the industry was the heyday of mobile communications industry and the main problems within the cluster were the increasing wages and the lack of qualified labor. The cluster looked viable, which could have made the decisions makers to look at other sectors and in the same time, had the cluster firms plenty of projects to undertake before getting involved in the DDN program. However before the first round of project offers the cluster association arranged meetings to mobilize members to participate in the DDN program. The cluster association wanted to secure that the DDN policy program did not become a failure, since a failure would be a scandal and 15