Technovation 22 (2002) 485491

www.elsevier.com/locate/technovation

Building a national innovation system through regional innovation

systems
*
S. Chung
School of Business Administration, Sejong University, Kunja-Dong 98, Kwangjin-gu, Seoul 143-747, South Korea

Received 22 September 2000; received in revised form 25 February 2001; accepted 29 March 2001

Abstract

This paper deals with the effective formulation and implementation of a national innovation system. It emphasizes that a concept
of regional innovation system is a good tool to generate an effective national innovation system, as it can effectively create different
sectoral innovation systems in different regions. Based on this theoretical review, this paper analyzes Korean regional innovation
systems in terms of mapping of innovation actors. It concludes that the Korean national innovation system is relatively weak, as
it has only three advanced regional innovation systems. However, it tells that there are six fast developing regional innovation
systems and seven less developed regional innovation systems. They should be refined and further developed based on the active
support by the central government, some policy measures for activating interactive learning between innovation actors, and also
the close cooperation between the central and regional governments. 2002 Elsevier Science Ltd. All rights reserved.

Keywords: National innovation systems; Regional innovation systems; Sectoral innovation system

1. Introduction NIS. On the other hand, influenced by the concept of

Many experts argue that this century will be a knowl-
edge-based society. It will be characterized by very
active generation, diffusion, and appropriation of new
technologies. Under this background, a new concept,
national innovation system (NIS), has been raised and
studied intensively. In these days, some experts also
argue that this century will be a century of regionaliz-
ation. Nation-state has been losing its importance in
economic, R&D, and innovation activities in the glo-
balized society. Instead, region-state gains an importance
as it is expected to bring up their regional economies
more effectively in terms of systematical promotion of
innovation activities.
Since the end of the 1980s, there have been many
studies on the NIS on the one hand. However, they have
rather concentrated on theoretical discussions or super-
ficially on the composition of innovation actors. There
have been no active discussions on how to formulate a
* Tel.: +82-2-3408-3710; fax: +82-2-3408-3310.
E-mail address: sychung@sejong.ac.kr (S. Chung).
NIS, there have been discussions on RISs since the
beginning of the 1990s. However, they have been
focused on analyzing region itself and so the relationship
between regional and national innovation systems have
been ignored.
This paper, therefore, aims at bridging regional and
national innovation systems. National economic per-
formance is closely related to the regional economic per-
formances in a nation. Therefore, we will show that a
NIS will be easily formed and implemented in terms of
effective RISs (Section 2). The NIS can be depicted as a
matrix of regional and sectoral innovation systems. The
concept of RIS is a good tool to generate effective sec-
toral innovation systems. Therefore, by generating dif-
ferent but competent SISs in different regions RISs can
build up an effective NIS.
Based on this theoretical discussion, this paper ana-
lyzes the Korean regional innovation systems in terms of
geographical mapping of innovation actors and discusses
their relationships with the Korean national innovation
system (Section 3). Finally, we classify the Korean
regional innovation systems according to their develop-
ment stages and draw some strategic implications to

0166-4972/02/$ - see front matter 2002 Elsevier Science Ltd. All rights reserved.
PII: S 0 1 6 6 - 4 9 7 2 ( 0 1 ) 0 0 0 3 5 - 9
486 S. Chung / Technovation 22 (2002) 485491
strengthen the Korean regional and national innovation
systems (Section 4). This paper is based on our long
studies on Korean regional and national innovation sys-
tems (e.g. Chung 1995, 1999; Chung and Lee, 1998;
Chung et al. 1997, 1999). Our discussions will also be
helpful for other countries that have tried to formulate
their effective regional and national innovation systems.
2. National innovation system and regional
innovation systems
In order to understand RISs, we need to know NIS
first. The concept of NIS has been discussed frequently
in S&T policy research (e.g. Freeman, 1987; Nelson,
1993; Lundvall, 1992; Patel and Pavitt, 1994; Chung,
1996; Chung and Lay, 1997; OECD, 1996a). There are
several definitions for NIS. They can be classified into
broad and narrow definitions. The broad definition
encompasses all interrelated institutional actors that cre-
ate, diffuse, and exploit innovations, while the narrow
definition includes organizations and institutions directly
related to searching and exploring technological inno-
vations, such as R&D departments, universities, and
public institutes. Experts in this area emphasize that
effective institutional setting and interactive learning
between major actors within the setting, which can be
classified into knowledge producers and users (Lundvall
1988, 1992; Johnson, 1992; Chung, 1996), are very
important for generating innovations and strengthening
and maintaining national competitiveness.
In this paper, the narrow definition is followed. We
understand innovation to mean technological innovation
and define a NIS as a complex of innovation actors and
institutions that are directly related to the generation, dif-
fusion, and appropriation of technological innovation
and also the interrelationship between innovation actors.
The major concern in this concept is how we can formu-
late an effective national setting of major innovation
actors and how to motivate information flows among
them in order to generate and appropriate innovation
effectively.
A NIS consists of three comprehensive innovation
actor groups, i.e. public research institutes, academia,
and industry. They are actual research producers who
carry out R&D activities. In addition, there are govern-
ments, i.e. the central and regional governments, which
play the role of coordinator among research producers
in terms of their policy instruments, visions and perspec-
tives for the future.
The reason why such a systems approach is emphas-
ized is that technological innovation nowadays requires
lots of resources and accompanies very high level of
risks, so that any single innovation actor could not gener-
ate and exploit them effectively. In order to appropriate
technological innovation, innovation actors should coop-
erate very closely with each other based on strong level
of trust, and governments should promote and activate
the trust and interaction between innovation actors.
One among the good ways to enhance trust among
innovation actors is to apply a systems approach, i.e. a
concept of NIS. This implies that any NIS should have
a critical mass of innovation actors. Among innovation
actor groups, the most important actor group is industry
or manufacturing companies, as national competi-
tiveness depends heavily on industrial competitiveness.
Therefore, the ultimate goal of NIS is to enhance firms
innovation capabilities. These four groups should not
only generate innovations, but also innovate themselves
in order to survive and prosper in the rapidly changing
environment.
We can raise an important question of how we can
formulate an effective NIS. Here, both regional and sec-
toral approach could be utilized, as a NIS should be
understood and analyzed as a complex of sub-systems
that can be classified according to individual sector and
region (Chung, 1996, 1999). We argue that a NIS is
composed of both regional and sectoral systems of inno-
vation (see Table 1). As the userproducer relationship
of innovation is established in almost every region and
industrial sector, the concept of innovation system will
be very helpful for the enhancement of regional and
industrial competitiveness by activating interaction and
flow of qualitative information among major innovation
actors in a region and sector. For example, following the
classification of industrial sector, many sub-systems of
a NIS can be formulated, e.g. NIS of capital goods indus-
try, NIS of agriculture (e.g. Senker, 1996; Breschi and
Malerba, 1997).
However, in this paper we emphasize that a regional
approach is better to formulate and implement a com-
petent NIS than a sectoral approach. Nowadays, the con-
cept of RIS has been gaining much attention from policy
makers and researchers (e.g. Braczyk et al., 1998; De La
Mothe and Paquet, 1998; Chung, 1999; Meyer-Krahmer
1985, 1990). More basically, Ohmae (1990, 1995)
argues that the nation-state has been losing its impor-
tance in the globalized economy and that the region-state
Table 1
Regional innovation system and national innovation system (Note:
university; public institute; industry; regional
government; central government. Source: Chung (1996, 1999))
Region A Region B Region C %%
Sector 1 % SIS-1
Sector 2 % SIS-2
Sector 3 % SIS-3
Sector 4 % SIS-4
RIS-A RIS-B RIS-C % NIS
 S. Chung / Technovation 22 (2002) 485491
has become a focal point of economic activities. In sup-
port of this, he argues that regions are more dynamic
and reflexive than states in R&D and economic activi-
ties. Breschi and Malerba (1997) argue that the regional
cluster will result in industrial cluster in innovation
activities. Florida (1995, 1998) argues that a region
should become a learning region by appreciating the
importance of knowledge and that public policy should
not only target short-term economic competitiveness, but
also the long-term sustainable advantage of regions.
Based on these current trends of economic dis-
cussions, we think that RISs are very helpful for
attaining effective SISs and therefore a competent NIS.
The concept of RIS is easier to implement than SIS
(Chung, 1999). The concept of RISs can be a good tool
to formulate SISs, as regions should concentrate specific
industrial sectors for the effective development of their
regional economies. In addition, RISs could prevent the
problem of unfair geographical concentration of techno-
logical and economic capabilities, which will hinder the
future development of the national economy as a whole.
Following our definition of NIS mentioned above, in
this paper, we define a RIS as a complex of innovation
actors and institutions in a region that are directly related
with the generation, diffusion, and appropriation of tech-
nological innovation and an interrelationship between
these innovation actors. Like a NIS, a RIS is composed
of three main innovation actor groups: universities,
industrial enterprises, and public research institutions.
Through region-specific trust and close interaction
among innovation actors, a RIS can generate its own
SIS. When a region does not have sufficient trust, the
trust can and must be studied and accumulated so that
interactive learning and so technological innovation can
be activated effectively.
3. Korean regional innovation systems
In order to understand a countrys RISs and NIS as a
whole, we need to investigate three innovation actor
groups in regions. In this section, we will discuss Korean
regional innovation systems based on these three actor
groups.
It was only when Korea introduced a regional political
system for the first time in 1995 that it has begun to
recognize the importance of regional innovation activi-
ties. Since then, the Korean central and regional govern-
ments have made a great effort to develop their regional
economies in terms of technological innovation. As of
the end of 2000, there are 16 regions in Korea, among
which seven regions are metropolises and nine regions
are provinces that are called as Do. Metropolitan areas
have traditionally been industrialized areas, as the
Korean government has tried to bring up regional clus-
487
ters. Among provinces, there are significant differences
in the degree of economic development. Kyonggi prov-
ince has been developed remarkably well, based on its
proximity to the capital, Seoul. The eastern regions of
Korea, especially Kyongbuk and Kyongnam, have been
much more developed than the western parts of Korea,
e.g. Chunnam and Chunbuk. Kangwon and Chungbuk
have also been less developed, as they are not suited
geographically for industrial activities (NSO, 1998).
Developed regions, especially metropolises, were estab-
lished by the central governments effort to develop
industrial clusters. This could be called as a sectoral
approach according to our understanding in this paper.
However, it raised the problem of the geographical con-
centration of economic activities.
However, nowadays many less developed regions
have been also making a great effort to extend inno-
vation potential in their regions. They have prepared an
organization in their regional administrations for
regional S&T activities, increased regional S&T bud-
gets, and tried to induce and establish research institutes
in their regions (Chung et al. 1997, 1999; Chung, 1999).
In this section, from the point of view of RIS, we will
discuss the regional distribution of innovation actors,
who are the building stones of RISs.
As discussed above, a RIS consists of three innovation
actor groups: universities; public research institutes; and
industrial enterprises. In addition, the role of regional
governments must be emphasized in effectively directing
and coordinating innovation activities in each region.
But the actual actors of innovation activities are public
research institutes, private companies, and universities.
In spite of some overlapping, they are placed differently
in innovation process and make a significant contribution
to enhance regional and national technological competi-
tiveness. Among public research institutes, government-
sponsored research institutes (GRIs) and national labora-
tories (NL) are important. As a proxy variable for private
companies innovation activities, we deal with private
research institutes. As Korean universities are heavily
focussing on education, university research institutes are
included for the measurement of innovation potential of
the university sector.
By this approach, we can approximately measure the
innovation capability of the Korean regional innovation
systems as a whole. Table 2 shows the mapping of major
innovation actors of 16 regions according to three major
innovation groups. We can identify some interesting
characteristics as follows.
First, as of the end of 1999, there are 4731 innovation
actors in Korea. It means that each region has about 300
research institutes on average. The Seoul metropolis has
the most innovation actors, with 1673 research institutes
(35%). Kyonggi (1139 institutes) and Inchon (252
institutes) follow Seoul in the total number of research
institutes. Therefore, these metropolitan areas, i.e. Seoul,
488 S. Chung / Technovation 22 (2002) 485491

Table 2
Regional innovation systems in Korea (as of 1999). Source: adapted from Chung et al. (1999). Unit: number

Region Public research institutes University Private institutesb Total (A+B+C)

institutesa (B) (C)

GRIs NL Subtotal (A)

Metropolis Seoul 13 20 33 319 1321 1673

Pusan 1 2 3 71 114 188
Taegu 2 2 4 39 85 128
Inchon 2 2 4 18 230 252
Kwangju 2 2 35 37 74
Taejon 16 1 17 33 149 199
Ulsan 7 78 85
Province Kyonggi 2 15 17 60 1062 1139
Kangwon 3 3 37 30 70
Chungbuk 2 3 5 19 112 136
Chungnam 2 1 3 45 135 183
Chunbuk 2 3 5 48 45 98
Chunnam 21 26 47
Kyongbuk 77 138 215
Kyongnam 2 2 4 41 178 223
Cheju 4 4 13 4 21
Total 44 60 104 883 3744 4731

a
Except for Excellent Research Centers and Regional Research Centers.
b
As of the end of 1998.

Kyonggi, and Inchon, have 3028 innovation actors. It
accounts for 64% of the total number of research insti-
tutes in Korea. Provinces have relatively small number
of innovation actors. In particular, Cheju, Kangwon,
Chunbuk, Kwangju, and Chungnam have a small num-
ber of research institutes. However, some advanced
provinces like Kyongnam, Kyongbuk, and Chungnam
have relatively large number of innovation actors.
Second, with regard to the public research sector, pub-
lic research institutes are heavily located in Seoul,
Kyonggi, and Taejon. In the case of GRIs, Taejon has
16 institutes, which are more than Seoul (13 institutes).
The reason is that many GRIs are located in Daeduck
Research Park in Taejon. But, in the case of national
laboratories (NLs), there are 20 institutes in Seoul, fol-
lowed by Kyonggi (15 institutes). In particular, Kyonggi
has many national research institutes, because Suwon in
the Kyonggi province has traditionally many national
research institutes in agriculture. Except for Seoul, Tae-
jon and Kyonggi, most regions have about 25 public
research institutes. However, Ulsan, Chunnam, and
Kyongbuk have no public research institutes.
Third, we can also recognize that some developed
regions like Pusan and Kyongbuk lack public research
institutes: Kyongbuk has no institutes and Pusan has
only one GRI. It indicates that their developments were
not based on technological innovation but mainly on low
labor costs. Recognizing that public research institutes
play an important role of bridge between basic research
in academia and applied research in industrial firms,
such weakness will be a barrier to the further develop-
ment of these regions. In fact, both regions have been
unsuccessful in transforming their traditional industrial
structure to rather high-tech areas, even though, in the
past, they were very successful in low-tech areas, i.e.
shoes sector in Pusan and textile sector in Kyongbuk.
Fourth, we can see the absolute tendency of concen-
tration of university institutes in Seoul. Seoul has 36.1%
of the total number of university institutes, followed by
Kyongbuk 8.7%, Pusan 8.0% and Kyonggi 6.8%. Since
the beginning of the 1990s, the number of university
institutes has increased as the university sector has
gained importance in the Korean national system of
innovation. However, compared with their counterparts
in developed countries, Korean universities are still in
the beginning stage of extending their R&D potential
(see, OECD, 1996b; Chung and Lay, 1997). However,
university institutes are relatively fairly distributed
among regions, compared to innovation actors in other
groups. Therefore, universities could be utilized as focal
points for regional innovation activities.
Finally, private research institutes are also concen-
trated in metropolitan areas. About 35.2% of total private
research institutes are located in Seoul (1321 institutes),
which is followed by about 28.4% of Kyonggi (1062
institutes). There is no big difference between Seoul and
Kyonggi in the number of private institutes. The Seoul
and Kyonggi areas have good R&D infrastructure and a
relatively strong advantage in recruiting well-qualified
research manpower. Therefore, Korean enterprises prefer
 S. Chung / Technovation 22 (2002) 485491
these areas for the location of research institutes. Kyong-
nam, Inchon, Taejon, and Kyongbuk also have relatively
many private research institutes. They are characterized
as relatively industrialized regions in Korea, so that com-
panies in these regions can afford to carry out systematic
R&D activities. Compared with the distribution of public
research institutes, however, the industry sector shows a
relatively fair distribution of innovation actors.
4. Conclusions
A systems approach is needed to effectively
strengthen national innovation capabilities. In this paper,
we emphasize that the concept of RIS is a good tool for
this purpose. Efficient RISs build up a competent NIS
by generating competitive SISs in respective regions. We
also argue that a RIS should be composed of appropriate
number of relevant innovation actors in three groups:
academia, public research sector, and industry. There-
fore, it would be very interesting to investigate the map-
ping of RISs in a nation.
Based on these theoretical considerations, we
reviewed the RISs of 16 regions in Korea. From the
innovation actors mapping and its efficacy, we can
classify Korean regional innovation systems into three
categories: advanced RIS; developing RIS; and less
developed RIS (see Table 3). The first category,
advanced RISs, means that regions have already appro-
priate numbers of innovation actors in three major
groups of innovation actors. According to our analysis,
only three regions, i.e. Seoul, Taejon, and Kyonggi,
belong to this category.
The second category, developing RISs, refers to those
systems that are expected to be competent systems in
the near future, even though, at the present, they have
some shortage of innovation actors in any of three actor
groups. In particular, we can recognize the limited num-
ber of public research institutes in some regions. Taegu,
Inchon, Chungbuk, Chungnam, Chunbuk, and Kyong-
nam belong to this category, as they have very small
number of public research institutes, especially govern-
ment-sponsored research institutes.
The third category, less developed RISs, is those sys-
tems that have critical problems in their RISs, as any of
three major actor groups is missed. In particular, we can
Three categories of the Korean regional innovation systems
Category
Advanced regional innovation systems
Developing regional innovation systems
Less developed regional innovation systems
Total
489
see that there are some regions that have no or only few
public research institutes, so that an active interaction
could not be expected. In general, we can see that these
regions have relatively weaker innovation actors in other
two groups. Pusan, Kwangju, Ulsan, Kangwon, Chun-
nam, Kyongbuk, and Cheju belong to this category.
In summary, the Korean national innovation system is
relatively weak, as it has only three advanced RISs. It is
especially due to the short history of innovation systems.
Innovation actors, especially public research institutes,
are unfairly distributed among regions, which leads to
weak interactions between innovation actors. However,
according to our analysis there are six fast developing
RISs and seven less developed RISs. They should be
refined and strengthened to become advanced RISs and
to constitute a competent NIS. Some policy implications
can be drawn for improving Korean regional innovation
systems and NIS as a whole.
First of all, active support by the central government
is needed not only in financing, but also in formulation
and implementation of RISs. As Korea has been a tra-
ditionally centralized country, it has not been easy for
the Korean central government to decentralize its S&T
policies. The central government should accept regional
governments as important partners in enhancing national
innovation capabilities. The central government must
recognize that RISs constitute the NIS, promote regional
innovation actors more actively in terms of various pol-
icy tools, and coordinate regional S&T activities under
the long-term vision of national development. It must
accept that the role of regional governments should be
increasing, as RISs are refined and well-functioned.
Second, Korean regional innovation systems should
be established around universities in a region, because
there is a relatively fair distribution of university inno-
vation potential among regions. Actually, RISs of
advanced nations have operated around technology-
intensive universities (Suss et al., 1992). However, we
should keep in mind that the university sector is still the
weakest sector in the Korean national innovation system,
because most universities have been more focused on
education than on R&D activities. Therefore, some
innovative policy measures, e.g. recruitment of pro-
fessors with practical experience and co-professorships
of well-qualified researchers in public research institutes,
should be introduced.
Regions Number
Seoul, Taejon, Kyonggi 3
Taegu, Inchon, Chungbuk, Chungnam, Chunbuk, Kyongnam 6
Pusan, Kwangju, Ulsan, Kangwon, Chunnam, Kyongbuk, Cheju 7
16
490 S. Chung / Technovation 22 (2002) 485491
Third, Korean public research institutes should be
diversified and distributed among regions. There are only
a small number of public research institutes in Korea,
even though they are very big. In particular, government-
sponsored research institutes, which are expected to play
an essential role in RISs, are located in Seoul and Tae-
jon. They should be diversified and distributed among
regions. More importantly, the governments should
increase the total number of public research institutes,
especially government-sponsored research institutes. If
it is not easy to increase and diversify them, branch
offices or research groups should be separated from them
and fairly located among regions according to their rel-
evance to region-specific S&T and industrial structures.
This is especially important not only because public
research institutes play a role of bridge between aca-
demic and industrial research in a region, but also
because there are missing link of public research insti-
tutes even in rather developed regions such as Pusan and
Kyongbuk. The lack of these institutes will hamper the
further development of these regions. In addition,
research capabilities of NLs, which are relatively fairly
distributed, should be strengthened, so that they could
become important innovation actors in Korean regional
innovation systems.
Fourth, some policy measures to activate interactive
learning between regional innovation actors should be
initiated by the central government. A RIS is composed
of innovation actors and relevant policy programs. The
former plays a role of hardware of the system, while the
latter a role of software. The software-oriented policy
programs would be more important for effective formu-
lation and efficient implementation of Korean regional
innovation systems, as Korea has not so much resources
for regional innovation activities (Chung et al. 1997,
1999; Chung, 1999).
Finally, regional development based on RISs must
lead to the development of the national economy. As
argued in this paper, the summation of RISs is the NIS.
Implementing competent RISs is a prerequisite for a
competent NIS. Therefore, reciprocal networks among
research institutes beyond regions, close cooperation
between the central and regional governments, and inter-
action between regional governments are very important.
It would be desirable to make a network among organi-
zations for S&T promotion in regional governments
under the strong support of the central government.
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 S. Chung / Technovation 22 (2002) 485491 491

Sunyang Chung is a Professor of Technology

Management at Sejong University, Seoul,
Korea. He received his PhD degree from the
University of Stuttgart, Germany, writing a dis-
sertation on the comparative impact analysis of
country-specific frame conditions on technology
policy for new production technologies between
Korea and Germany. During his study in Ger-
many, he carried out several research projects at
the Fraunhofer-Institute for Systems and Inno-
vation Research (FhG-ISI) in Karlsruhe, Ger-
many. He had worked more than 10 years at the
Science and Technology Policy Institute (STEPI) in Korea as a senior
research fellow. His research areas are technology management and pol-
icy, regional innovation strategies, environmental management and policy,
and the integration of the South and North Korean innovation systems.
He has published several books in Korea and Germany and has written
many articles for Korean and international journals.