Volume 18, Number 1 Article by Rishikesha T Krishnan March, 2006
Barriers to Innovation and the Creation of a Knowledge Society in India :
Despite the impressive growth of the industrial and services sectors during the last twenty years, there still remain major barriers to technological innovation in India, and more broadly to the creation of a genuine knowledge society. Rishikesha T Krishnan’s ongoing work is an attempt to map the changes in the Indian system of innovation since economic liberalisation, using Freeman and Lundvall’s concept of a national system of innovation that fuels economic development and growth. One part of the project is the identification of the barriers to innovation in the Indian innovation system. As the data collected by the government on innovation and research and development is both inadequate and subject to considerable lags, the current work has supplemented this data with case studies of organisations and more than twenty in-depth interviews with policy makers, researchers and managers of organisations.
In a world of complex technologies, much of contemporary innovation takes place within the boundaries of a corporation. The focus of this study is on the organised sectors of the economy, though there are broader issues regarding poverty and illiteracy that will in the long run place a cap on the extent to which India can become a knowledge economy.
While competition is an important motivator for innovation, this does not imply that innovative firms will automatically emerge in a competitive environment. The broader external context and the internal governance systems in firms influence both their motivation and their ability to innovate. The study reveals that there exist behavioural, systemic, organisational, and government-related barriers to innovation.
Behavioural (Societal) Barriers
The societal barriers revealed by the study include what Jeffrey Pfeffer and Robert Sutton call the ‘knowing-doing gap’ – thinkers who do not act, and the doers who disdain thinking; lack of specialisation which, as Michael Porter points out, is an important factor in the competitive advantage of nations; a static and passive view of technology with the focus on manufacturing rather than on innovation, along with an unwillingness to risk failure; disregard of the value learning by doing, even if it sometimes means reinventing the wheel; and the indifference to IPR issues.
Systemic and organisational barriers reflect and reinforce these societal barriers to innovation.
Systemic Barriers
The study indicates that India’s education system remains isolated from industrial innovation and problem-solving. Few institutions offer courses that give students practical design skills. In the area of industrial design, companies experience difficulties in making good use of qualified industrial and product designers. There is an acute shortage of employees who combine the technical and managerial skills needed to take on the role of project managers for new product development projects.
Other systemic barriers to innovation include a generally prevalent reluctance to improving products and manufacturing processes; a tendency to resort instead to ‘reverse engineering’; lack of collaboration in the industry; absence of a culture of debate; lack of adequate research capacity; inadequate compensation and facilities for researchers in the universities, leading to a serious depletion of faculty; lack of depth in most industries as well as in academia, with only a few experts in each field, which hampers the creation of a competent peer group to whom projects can be referred for appraisal; lack of good technology business incubators and access to start-up finance, especially for entrepreneurs without a track record; lack of testing facilities outside the metropolitan cities; and inadequate information about new opportunities.
Organisational Barriers
Indian industry has had a history of scarce, and hence expensive, capital; as a result, banks and other sources of capital continue to be conservative. Organisational barriers start from the top and include lack of ambition and aversion to risk, which is particularly high in knowledge creation and innovation activities; a preference for incremental improvements over revolutionary transformation; and failure to evolve unique, competitive business models.
Managerial positions in India are often accompanied by a distancing from technical work. This creates barriers to innovation including: discomfort with technology and a perception of loss of control among managers and owners; failure to create robust R&D departments and board-level representation for the R&D function; inadequate investment in plant and machinery, outdated production tools and inadequate use of computers on the shop floor; the lack of a process orientation; underestimation of commercialisation costs, weak product development skills, long development cycles and shifting priorities. Firms also fail to invest in training and development of skills in-house, team building, embedded innovation systems, robust knowledge management systems and creative performance management systems. Public research organisations and academic institutions also lack goal orientation and a strong research culture.
Government-related Barriers
Although the government has historically been the principal funder of research and development, several respondents believed that the government could do more to support innovation in industry. Government-related barriers include: lack of flexibility for government-funded organisations to perform their tasks effectively or to set up commercial arms; low compensation levels compared to those of the new multinational R&D centres, making retention of high performers next to impossible; aversion to risk and rigid pre-qualification or experience clauses in government procurement that keep out new technologies, local innovations suited to Indian needs and applications and young start-ups; long decision cycles that adversely impact even projects of national significance; funds spread too thinly over multiple projects resulting in under-performance; paucity of funds for obvious national priorities1; and failure to take a strong stance on IPR issues.
Conclusion
Indian firms are today subject to a highly competitive environment. However, this competitive environment has not automatically translated into firms having innovation capabilities. Many of the barriers to innovation are outside the immediate control of firms. Concerted action by the government, industry chambers, professional bodies, educational institutions and standards organisations is required to address these issues. Future efforts in this study will focus on the agenda for change, particularly on creating an environment conducive to innovation leading to knowledge creation, diffusion, and application.
References
1 Chandrashekar, S, and K P Basavarajappa, 2001, ‘Technological Innovation and Economic Development: Choices and Challenges for India’, Economic & Political Weekly, Vol. 36, No.34, Aug. 25, pp. 3239-3245; Parthasarathi, Ashok, 2002, ‘Priorities in Science and Technology for Development: Need for Major Restructuring’, Current Science, Vol. 82, No. 10, May 25, pp. 1211-1219.
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