Innovation activity in Taiwan and Russia

In Russia, “Open innovation model” is becoming widespread and allows companies to pursue more flexible research and development policy, rely less on their own efforts and use actively the results obtained by other organizations (universities, research institutions, start-ups). Russian government is working with open innovation model which especially popular in the most dynamic industries, in which the developments' cost and implementation rate constantly grow as the technologies in use are becoming more complex and sophisticated.

Informal interaction

In Taiwan, a large proportion of the personnel in high-tech companies graduated from a small group of universities, including Chiao Tung University, Tsing Hua University, and so on, or has been employed in certain research institutes, such as ITRI. The relatively small pool of talent sources means that personnel in the high-tech industry tend to utilize their relationship network for assistance when they encounter problems. Since Taiwan's people pay considerable attention to maintaining their relationship network and treat it as the most important component of their social capital, the informal personnel relationship network significantly increases the efficiency of the diffusion of knowledge and information within the high-tech industry. The fact that Taiwan's industry can operate like this is based mainly on the informal interaction of the personnel relationship network.

The flow of knowledge and information in Russia's innovation system is only influenced by informal relationships. A data from foresight Russia (2014) shows that technology acquisition from informal exchanges of results are common throughout in the ICT sector (accompanying transfer in 39% of cases), manufacturing sector in 25% and frequent use in timber industry in 46.3%. Technology transfer from informal exchanges of results is common throughout in the ICT sector (accompanying transfer in 27% of cases), manufacturing sector in 23.8% and frequent use in chemicals and petrochemicals in 50.8%. Russian actively uses informal channels to transfer technology (research activities, personal contacts in research communities, etc.).

Technology diffusion

In Taiwan, the main model of technology diffusion is research institutes and universities transferring their R&D achievements, which are embedded in techniques, personnel, equipment, and information, to enterprises by three mechanisms, i.e. technology transfer, contract services, and spin-off companies. To improve the technological capability of the industry or establish new industries, Taiwan's government takes measures to encourage research institutes to take on a seeding role and spin off new companies in developing industries.

R&D in Russia was conducted mainly by government. In Russia's current innovation system, technology transfer centers (TTC) were being founded at colleges and research institutes. In 2005-2010, more than a hundred of technology transfer centers under universities and research institutions were established. These include the Technology Transfer Center of RAS and Rusnano, involved in the search for projects in the RAS institutions, Sarov Science Park and Penza Center for technology commercialization.

Personnel mobility

In Taiwan, a large proportion of the personnel of research institutes, work in institutes for a period and then move over to enterprises, which efficiently advance the effect of transfer and interaction of the tacit knowledge they carry with them in the innovation system. Numerous Taiwanese people have worked aboard and then returned to work in Taiwan, bringing back a wealth of knowledge and technologies, and thus benefiting Taiwan's innovation system.

Russia is suffering from a significant brain drain, with much local talent fleeing to more lucrative labor markets in the West. Nearly 1 million people have left Russia in the past decade, and around 80% were highly qualified specialists (25,000 PhD holders have left Russia in the last few decades). The number of workers in the most highly skilled professions and occupations is declining rapidly. This has forced the authorities to rethink the country's immigration policies to balance the interests of closing talent gaps with those of maintaining social order and cohesion.

Table 10 lists the distinguishing characteristics resulting from country size and level of development, and also shows the functions and interactions of Taiwan and Russia's innovation systems. This study found that Taiwan and Russia have complementary resources and capabilities, and both will be benefit each other by increasing exchange and cooperation in S&T innovative activities.

Table 10 National innovation systems performance in Taiwan and Russia

1. Russia's big consumer market could satisfy Taiwan's need for internationalization. Taiwan's enterprises could directly contact the end users and thus increase the incentives for them to engage in developing product and market innovations, instead of pursuing process innovations owing to the present “original equipment manufacturer (OEM)” business model by establishing a regional economic alliance. With the Russian economic alliance, Russia could cooperate with Taiwan to develop Russian related innovative technologies themselves and commercialized them.

2. Russian economy is still going through the catch-up stage, and thus need to market their technology in order to benefit from late development. And Taiwan has successfully established several high-tech industries and developed the relevant technology, with valuable marketing strategy. Taiwan could serve these as a case and import source to assist Russia develop these industries and technologies. At the same time, Taiwan could benefit from cooperation with Russia to help these industries increase the economic scale of their manufacturing capacity and R&D activities.

3. Russia has plenty of entrepreneurial opportunities due to its large internal market and technology reforms, however entrepreneurial capacity is lacking, and the entrepreneurial infrastructure remains immature. Taiwan has a mature incubation system and numerous entrepreneurs. Taiwan's entrepreneurs are currently suffering from a lack of good entrepreneurial opportunities. Therefore, both Russia and Taiwan could benefit if they cooperated in promoting entrepreneurship in Russia.

4. Russia's capital markets are immature and unstable financial system, making it difficult to collect sufficient R&D funds from the private sector, and thus forcing the government to play a large role in financing R&D activities. Taiwan has mature venture capital and capital markets, but these markets are currently suffering from reduced marginal benefit on investment compared with previously. Therefore, opening free capital flows between the two sides could allow Russia to utilize Taiwan's capital market to raise funds to increase its R&D investment, while Taiwan could increase its investment targets and improve its investment returns.

5. Basic research in Taiwan is quite poor, but it's Russia powerful area. Basic research is the kind of work that requires plentiful resource, and it is also time consuming and risky, and its achievement depends heavily on the scale and the scope of resources in vested in it. However, high technology without good marketing and commercialization is also useless. Therefore, if Taiwan and Russia could collaborate on basic research together, both sides would have a good opportunity to enhance in quantity and quality research.

6. Research institutes in Russia, such as TTC, Rusnano, Skolkovo, have evolved into the major performers of R&D and become diffusers of innovative technologies. Taiwan's research institutes, such as ITRI, generally act as a key hub with innovation system. Thus, research institutes on both sides could act as intermediaries between Taiwan and Russia for technology transfer, diffusion, and adoption, as well as enhancing collaboration and interaction among the enterprises, universities and institutes on both sides.

7. Relationship networks and personnel mobility contributes to the interaction efficiency of the national innovation system. Taiwan is highly mobility in personnel, and has strong personnel relationship networks. Russia is weak in personnel mobility. If Russia and Taiwan could enhance the flow of personnel between two sides, interaction efficiency in Russia would improve, while Taiwan would benefit as its personnel expanded their own relationship networks.

CONCLUSION

This study shows the evolution of NIS in Taiwan and Russia. The performance of NIS in Taiwan and Russia can evaluate the efficiency of government policy. The functions of several types of institutions involved in innovation are separately illustrated, and the interactions among these institutions are analyzed. This study proposes the possibility for both countries to cooperate on S&T fields in the future. Government, research institutions and enterprises of innovation system have been influencing each other in Taiwan and Russia, especially speed up academic and industrial cooperation. Both will enhance the efficiency and effectiveness of the innovation systems while they increase cooperation with each other.

Nowadays, Russia's science holds particularly strong positions mainly in technological areas that were traditionally oriented toward supporting national defense capacity (such as space research, nuclear power, aviation), specific “intellectual” areas that do not require major capital investment, and studies of natural resources. In this regard, the Russian S&T sector rests on a paradox. Russia comes far behind even formerly scientifically undeveloped nations of Southeast Asia. Russia's share of world high-technology exports is just 0.5 %, whereas that of Singapore, Korea or Taiwan is 4-8 %. Based on Russia's government policy and economic situation in 2014, Southeast Asia is the perfect options for them to cooperate with. For Taiwan, government, enterprises and institutions need to take this opportunity to go forward to the world.

Russia has fruitful natural resource, strong science and technology, high quality of human resource and high market potential. Taiwan is lack of nature resource with strong capital and operating managers, also familiar with marketing and industrial design. Both sides of industry are complementary; therefore both sides have great potential in trade and investment. (1) Taiwan should have new thinking to face on Russia's economic development and policy direction. Russian government actively promotes Russian's Ostpolitik. Therefore, Taiwan should elaborate complementary strategy with Taiwan's industrial need for bilateral industry. (2) Russia's high-tech industries have competitive advantage in the international market. Taiwan's government could cooperate and develop high-tech industries with Russia, such as aerospace, nuclear technology, optical communication, composite material, power machinery, special metallurgy, computer chips design, etc. (3) Russian Far East geopolitical relations with Taiwan economy increase closely; Taiwan should work on effective projects to cooperate with Russia. Russia could use Taiwan's economic geostrategic advantages in the Western Pacific, as a transfer station into Southeast Asia or China's southeastern coastal provinces. Taipei-Vladivostok could actively on transportation to improve both trading and economy.

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APPENDIX

Taiwan's Main Economic Indicators in 2014

Sources: Directorate-General of Budget, Accounting and Statistics (DGBAS), Executive Yuan, ROC (Taiwan); Ministry of Economic Affairs (MOEA)

IMD Scientific and Technological Subindex

Source: The World Competitiveness Yearbook 2014 (IMD)

Innovation Top 10 (The Global Competitiveness Index 2014-2015)

Source: The Global Competitiveness Report 2014-2015(WEF), September 2014Overview of the Hsinchu, Central Taiwan, and Tainan Science Parks

Products of which Taiwan was among the World's Three Largest Producers in 2013 (Including Offshore Production)

(1) Production value; (2) production volume.

Source: Industrial Technology Information Service (ITIS) Program.

Stages in the formation of Russia's industrial policy in the 2000s

Source: OECD, based on ERA Watch (2010) and Ministry of Education and Science (2010).

Source: OECD Reviews of Innovation Policy: Russian Federation, 2011.

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