Dr Mark Cloney, Professor of Practice, Economics

By Mark Cloney

Could a new approach to regional development policy premised on creating shared value and utilising existing institutional networks be a key catalyst to the implementation the Turnbull government’s national innovation agenda?

The upcoming Federal Budget should outline more details of the government’s national innovation agenda. One way to ensure the successful implementation of the agenda could be to utilise established institutional arrangements and networks that foster regional economic development across Australia’s regions – and not duplicate or marginalise their efforts.

In December 2015 the Turnbull government announced an Innovation Statement that committed $1.1 billion dollars over the next four years to support business based research, development and innovation. A key focus of the Innovation Statement is a desire to strengthen the ties between business, universities and scientific institutions.

Many leading theorists have written on the importance of innovation and regional development to the international competiveness of firms and nations. For example, Harvard business gurus Michael Porter and Mark Kramer (2011) argue for the importance of creating shared value, which focuses on the connections between societal and economic progress including enabling industry clusters. Much of what they say is consistent with the Innovation Statement objectives.

According to Porter and Kramer (2011), policies, collaboration and operation practice that enhances competiveness of a company while simultaneously advancing the economic and social conditions in the communities in which they operate will be the power behind next wave of global growth. They cite firms such as Google, IBM, Intel, Johnson and Johnson, Nestle, Unilever and Wal-Mart as examples of companies that have embarked on shared value initiatives within the communities where they operate. According to Porter, in particular, the success of every business is affected by the supporting companies and soft and hard infrastructure around it and the networks within which they operate (i.e. the microeconomic foundations). Therefore stronger local capabilities in areas such as education and training, R&D, transport services and logistics, supplier collaboration, distribution channels and infrastructure are key to increased competitiveness and innovation. To support industry cluster development, business needs to identify gaps and deficiencies in these areas and enter into closer collaboration with like businesses, peak industry groups, government and universities to collectively address local deficiencies.

Regional Development Australia (RDA) is a national network of 55 committees (including metropolitan RDA’s) made up of local leaders who work with all levels of government, business and community groups to support economic and social development of their regions. This initiative is funded by the Australian Government and supported by state, territory and local governments in all jurisdictions. Most RDAs have at least one university in their catchment area and are at various stages of maturity in their engagement with them. For example, La Trobe University is a board member of both the North Melbourne (NM) RDA and North Link, two regional development bodies who between them cover seven local government areas in Melbourne’s northern suburbs (incorporating La Trobe University’s Bundoora campus).  La Trobe has been supporting these organisations for a number of years and provides facilities for North Link at its R&D Technology Enterprise Centre. The established networks of NMRDA and North Link are all about facilitating R&D research connections with business, industry and the tertiary sector in the northern region with an objective to help local business grow and innovate.

Perhaps options to consider delivering the innovation agenda through policies focused on creating shared value and directing new resources to the existing institutional arrangements and networks of the RDAs would provide an efficient mechanism and real impetus to delivering the government’s innovation vision.

Dr Mark Cloney is a Professor of Practice Economics at La Trobe Business School.

Mark has had 20 years’ experience in the federal government in corporate areas including program design, implementation, evaluation and compliance. He was a member of the Senior Executive Service in the department of Agriculture and completed a PhD with the University of Sydney in 2003 on regional development policy and economic theory.

Michael E. Porter and Mark R. Kramer (2011) The Big Idea: Creating Shared Value, Rethinking Capitalism, Harvard Business Review, Jan- Feb – https://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/pr

North Melbourne RDA – Regional Development Australia web site: https://rda.gov.au/

North Link website: http://melbournesnorth.com.au/