26th International Association for Management of Technology Conference - IAMOT 2017

The rapid adoption of e-commerce and digital technologies to disrupt brick and mortar businesses and transform industries is under way with far-reaching consequences. The globalization of industries has connected once isolated national innovation systems (NISs; Nelson, 1993; Lundvall, 2007) heightening both similarities and differences between countries. Digital technologies have allowed industrialized economy firms to take advantage of low-cost locations around the world to outsource manufacturing while retaining the research and development and other skill-intensive tasks in high-cost locations. This innovation strategy has focused attention on new and emerging high-technology industries to take the place of traditional industries for innovation systems to remain competitive in the global economic system and to provide employment to those disrupted by the globalization of supply chains and outsourcing. At the same time, the rise of China, India and other emerging economies and entry of emerging market firms as new players in the global economic system has increased competition. While rising income has reduced poverty in many emerging economies, NISs in emerging economies are concerned with raising the competitiveness of firms and industries while ensuring social and economic inclusion. Additionally, governments of both industrialized and emerging economies have focused on upgrading NISs to facilitate innovation, widely recognized as critical for competitiveness (Baumol, 2002). For example, India and China have focused on adapting their respective innovation systems (Fan, 2011). The interconnection of NISs suggests some level of integration at a global level (Meuer et al., 2015). Linkages with the global innovation system can be forged through: (1) institutional adaptation; (2) mechanisms for stimulating growth; (3) commercialization of innovations, locally and globally. This paper examines the research question: How do NISs adapt to remain competitive in a digital world? The paper uses two theoretical frameworks – NISs and complexity - to develop a conceptual model of NIS adaptation to promote innovation and competitiveness in global markets. Complexity theory (Holland, 1995; Iansiti and Richards, 2006) is relevant as it highlights the importance of diversity of interactions and linkages in a system. Case examples of selected NISs are provided to support the model and yield insights on innovation strategies. These insights can help to modify and develop other innovation systems and provide guidance on strengthening linkages in the global innovation system. References Baumol (2002). The free-market innovation machine: Analyzing the growth miracle of capitalism, Princeton, NJ: Princeton University Press. Holland, JH (1995). Hidden Order: How Adaptation Builds Complexity, Reading, MA: Addison-Wesley. Iansiti, M. and Richards, G.L (2006). The information technology ecosystem: Structure, health and performance, The Antitrust Bulletin, 51 (1), 77-110. Meuer, Johannes., Rupietta, Christian., Backes-Gellner, Uschi (2015). Layers of co-existing innovation systems, Research Policy, 44:888-910. Nelson, R. R. (Ed.) (1993) National Innovation Systems. A Comparative Analysis (New York: Oxford University Press). Lundvall, Bengt-Ake (2007). National Innovation Systems – Analytical Concept and Development Tool, Industry and Innovation, Vol. 14, No. 1, 95-119. Fan, Peilei (2011). Innovation capacity and economic development: China and India, Economic Change and Restructuring 44.1-2 : 49-73.