The Next Production Revolution and Institutions For Technology Diffusion

The Next Production Revolution
Implications for Governments and Business

© OECD 2017
PART II
Chapter 7
The next production

revolution and institutions
for technology diffusion
by
Philip Shapira and Jan Youtie
Manchester Institute of Innovation Research,
Alliance Manchester Business School, University of Manchester
School of Public Policy, Georgia Institute of Technology
Enterprise Innovation Institute, Georgia Institute of Technology
Institutions for technology diffusion facilitate the spread and use of new knowledge and methods that can assist
companies in adopting new manufacturing technologies. Such institutions also help companies to achieve
objectives ranging from improved production efficiency to product development, strategic planning, and
training. This chapter examines publicly oriented technology diffusion institutions and their rationale,
organisation, and services. Case studies of varied approaches are presented, including dedicated field services,
technology-oriented business services, applied technology centres, information exchange, and demand-side
incentives, and effective practices and operational insights are distilled. Key policy suggestions include the need
for greater recognition that strong institutions for technology diffusion, in conjunction with complementary
framework measures, are essential for widespread deployment of the next production revolution. Technology
diffusion institutions should be encouraged to share and refine their practices, build collaborative partnerships,
and address missions of sustainability and responsibility. Particular attention is required to assist small and
medium-sized enterprises (SMEs) and to address governmental failures in technology diffusion.
243
II.7. THE NEXT PRODUCTION REVOLUTION AND INSTITUTIONS FOR TECHNOLOGY DIFFUSION
Introduction
Institutions for technology diffusion will be vital in spreading the use of next-
generation production technologies. If institutions and mechanisms for technology
diffusion are weak, and firms and industrial systems lag in absorbing and effectively using
the new technologies and approaches, then the next production revolution could stall. But
these institutions also need to change and innovate to achieve diffusion effectively and
responsibly. This chapter examines the nature and role of institutions for technology
diffusion. It also explores how these institutions are changing, and may need to change, to
respond to and influence the development of next-generation production technologies.
Over the coming decade, major transformations are anticipated in how the world makes
and uses manufactured goods and services (Kagermann, Wahlster and Helbig, 2013;
Foresight, 2013; Buffington, 2016). The technological drivers of this “next production
revolution” include burgeoning developments in information and communications (such as
big data, cloud computing, and the Internet of Things [IoT]), the rise of digital and additive
(3D) manufacturing, and the emergence of new bio- and nanomaterials that offer novel
functionalities (OECD, 2016). Parallel changes are expected in manufacturing business
models, with greater openness, flexibility, customisation, user engagement, interaction, and
attention to value-added services and sustainability, as well as adjustment in how
manufacturing firms are organised, who they employ, and where they are located (OECD,
2010a; Chesbrough, Vanhaverbeke and West, 2014; Wu et al., 2015; Prendeville et al., 2016).
For advanced economies, there is the hope that the next production revolution can revitalise
older industrial regions and strengthen national industrial competitiveness through “smart”
factories with the agility, efficiency, and intelligence to raise productivity and obviate the
need for offshoring (Alessi and Gummer, 2014; Brennan et al., 2015; NAE 2015; The White
House, 2016). For emerging economies, advances in manufacturing technologies and
methods offer fresh opportunities to engage in higher-value and more sustainable
production (Birtchnell and Hoyle, 2014; Rauch, Dallasega and Matt, 2016).
In past decades, predictions of major technological transformations in industry have not
always been realised (Youtie et al., 2007), as with expectations of automated factories in the
1950s or the spread of molecular machines in the 1980s. Bottlenecks that constrain, or at least
slow down, radical technological ideas can include economic viability, financing, market
demand, strategic fit, technical readiness and time-to-implementation, the power of
incumbent technologies and the appearance of unexpected alternatives. The latest
expectations about technological transformation in manufacturing certainly face such issues.
Additionally, in the coming period, the promise of the next production revolution could be
moderated, if not stymied, if it fails to address a series of fundamental societal and
institutional challenges. A number of these challenges are already evident, such as concerns
regarding human workers being replaced by robots, fears about autonomous machine decision
making, cyber security and data privacy, and public risk and ethical apprehension towards
aspects of biological engineering (see Chapter 8, as well as the discussion in OECD [2016]).
244 THE NEXT PRODUCTION REVOLUTION © OECD 2017

The role of technology diffusion institutions is particularly important in enabling

SMEs to upgrade and derive benefits from the transformation of manufacturing. Just as the
nature of production is evolving, so should the approach to technology diffusion, as
diffusion itself becomes more complex, involves more participants, and occurs over
accelerated timeframes and greater scales. This rising complexity must lead to an
increased emphasis on networked approaches and renewed efforts to anticipate and
address issues of governance in institutions which facilitate technology diffusion. If
institutions for technology diffusion can adapt and innovate, taking on roles that address
societal as well as economic and technological issues, this could positively contribute to
the socially responsible implementation of the next production revolution.
This chapter examines institutions for technology diffusion, their rationale, how they
are organised, and the services they provide. Existing and new institutions are discussed,
with a focus on publicly oriented mechanisms. The discussion builds on a typology of
publicly oriented technology diffusion mechanisms. The typology includes dedicated field
services, technology-oriented business services, applied technology centres, technology
information exchange, demand-based behavioural change, and open knowledge-sharing.
Case studies of selected institutions are presented.
Tested approaches to fostering technology diffusion already exist, such as agent-based
intervention, brokering, mentoring, collaborative projects, and referral services, which are
able to assist firms in adopting and absorbing new manufacturing technologies and
methods. These tested approaches continue to have utility and validity. New approaches
are also emerging, including open-source knowledge transfer and community building.
Some longstanding institutions that adopt a conventional paradigm of established public
programmes to provide services to clients are also able to address new production
technologies and take on new functions. Alongside these existing models are new
institutions for technology diffusion which typically arise out of emerging technologies
and which serve as mechanisms for knowledge exchange, experimentation, and
application. Both kinds of institution have important and complementary roles.
The chapter concludes with policy recommendations for strengthening institutions of
technology diffusion. In this regard, policy making clearly needs to ensure the integration
of technology diffusion and its institutions into the implementation of the next production
revolution. There is an inescapable tendency to emphasise exciting research advances and
the potential of novel technologies. However, major economic and societal value will only
occur if these technologies are responsibly designed and deployed together with users and
other stakeholders, and if these technologies can be scaled up, diffused, and improved in
use. Indeed, advantages will tend to flow to the companies and systems that are most
effective in deploying new technologies and business models. Policy makers tend to
acknowledge the critical importance of technology diffusion at a high level, but to overlook
technology diffusion in the subsequent allocation of attention and resources. It is
important to redress this situation.
Programmes to upgrade existing firms (the majority of firms) must be appropriately
resourced, alongside programmes to promote advanced technology development and start-
up enterprises. Where institutions for technology deployment are weak or non-existent, they
should be reformed, or new institutional capabilities created. Experimentation, learning, the
development of relevant new skills and business models should also be encouraged in
institutions for technology diffusion. Insights from pilot activities should be incorporated into
THE NEXT PRODUCTION REVOLUTION © OECD 2017 245

existing and new technology diffusion institutions. Similarly, service practices and
approaches should be systematically reviewed to ensure that these are effective and
customised for the communities served, to ensure knowledge exchange, and to ensure the
scale-up of new approaches as needs evolve. Management mechanisms should be developed
to reform (or replace) technology diffusion institutions that are resistant to change. There are
practices that policy makers should seek to avoid. Perhaps the first of these relates to the
inclination to concentrate attention and resources on policies to back research breakthroughs
and exciting laboratory technologies and to overlook, or at least poorly support, the industrial
scale-up and diffusion of new technologies. Furthermore, efforts to diffuse new technologies
often target predictable early adopters. These adopters tend to be large multinationals, high-
technology start-ups, and the small number of companies involved in technology
development. Policy attention should not just be placed on these likely early adopters, but
also on the much larger number of existing SMEs. Indeed, a substantial part of the success of
the next production revolution will depend on take-up by SMEs.
Reflecting on the rationale for policies to support institutions for technology diffusion is
also important. Such policies should not be pledged as programmes that can restore lost
manufacturing jobs. Technology diffusion institutions can help firms today to adjust their
business approaches and to adopt new technologies, products, and strategies. Upgrading the
ability of manufacturing communities to absorb next production revolution technologies will
take time (five to ten years or more). This means that technology diffusion institutions need
to be empowered and resourced to take longer-term perspectives.
The systematic and networked nature of many aspects of the next production
revolution demands a high level of co-operation among producers, users, and other actors.
Firms, suppliers, users, and intermediary institutions should be included in collaborative
strategies for diffusion. Accordingly, technology diffusion institutions, which have often
worked at an individual project level, now need to adopt strategies and actions that can
work in multi-actor collaborations. They also need to address missions of sustainability
and responsible research and innovation.
Finally, it is vital to undertake an ongoing review and analysis of organisational
designs and models for technology diffusion under the evolving conditions of the next
production revolution. In so doing, evaluation metrics should give more weight to longer-
run capability development, rather than short-term incremental outcomes. Sharing good
practices is also essential. Policy and management approaches should stimulate technology
diffusion institutions to upgrade their current methods and to trial promising new
approaches as the innovation landscape evolves.
What are institutions for technology diffusion and what do they do?
While technology is a term that is often associated with machines and devices, our
understanding of technology has to be broader, encompassing the organisation and
application of knowledge for practical purposes.1 Technology may be embodied, as in
machinery, or disembodied, in the form of know-how, methods, and processes. The diffusion
of technology can be viewed as the process by which innovations and new technologies
disseminate and get taken up.2 Institutions for technology diffusion are intermediaries,
structures and routines that facilitate the adoption, spread and use of knowledge, methods,
and technical means, ranging from improving the efficiency of existing production facilities
and introducing new process technologies to product development, strategic planning and

training. A technology diffusion institution may combine a tangible presence (e.g. facilities),
capabilities (people, expertise, communications), and partnerships (with technology
developers and users) alongside “soft” aspects where tacit knowledge is shared via informal
interactions (specialists, other companies).
While an innovation system invariably contains multiple sources of technology
diffusion, such as universities, professional societies, and the media, the focus in this
chapter is on public or quasi-public institutions, or parts of those institutions, that
prioritise technology diffusion roles. These institutions are a significant, although at times
undervalued, component of the mix of research and development (R&D), technology,
business support, human capital, regulatory and related policies that nations and regions
use to foster economic development and innovation. Technology diffusion is differentiated
from technology transfer, although these two practices are related and can complement
one another. Technology transfer implies the conveying of a technology from its developer
to a user, with a prime example (in the public sphere) being the establishment in the
United States (under the Bayh-Dole Act of 1980) of university and federal laboratory
technology transfer offices to license federally funded intellectual property to companies.3
In this context, technology transfer is the transfer of ownership rights of the outputs from
R&D under contractual arrangements between a public organisation and an assignee.
Technology diffusion is more embracing in scope and intensity: while it can include
technology transfer, it also includes active outreach to firms to assist them to use their
existing technologies and processes more efficiently, to provide guidance, expertise and
training to upgrade the absorptive capabilities and performance of these firms, and to help
diagnose problems and address them, including through applied projects.
Dedicated technology diffusion institutions include industrial extension programmes,
technology-oriented business services, applied technology centres, and also university
technology transfer offices. Additionally, networks, partnerships, and open-source
collaborations are increasingly important in orchestrating technology diffusion. The
effectiveness of these institutions depends on the absorption capability of firms for new
knowledge and technology services (Cohen and Levinthal, 1990) and to the extent of demand
for innovation and new technology (Edler, 2016). Technology diffusion institutions do
contribute to efforts to build absorptive capability, e.g. through training, information
exchange, and mentoring. Similarly, efforts have been made to facilitate absorption through
such mechanisms as innovation vouchers that encourage potential users to engage with
knowledge or technology suppliers (OECD, 2010b). In turn, both the development and take-
up of new technology is influenced by broader factors in the innovation and policy systems
of regions and nations. For example, Hekkert et al. (2007), identify seven interrelated
innovation system functions that are critical for understanding the dynamics of
technological change: the presence of active entrepreneurship, knowledge development
processes, knowledge diffusion networks, search guidance, market formation, financial and
human capital resource mobilisation, and orientation to change. Other analysts have
highlighted the importance of socio-technical regimes and multi-level frameworks in the
elaboration of technological transitions (Geels, 2002).
Innovation systems have particular national characteristics and needs and vary
(including at regional levels) in the organisation of their functions. Hence, contrasts can be
expected in the design and operation of technology diffusion institutions between and
within different innovation systems. At the same time, institutions for technology diffusion,
depending on such aspects as their leadership, strategy, scale, and relationships, can

correspondingly have an influence on innovation system functions. This can occur

through providing guidance about new technologies, linking companies with sources of
finance for manufacturing modernisation, or signposting new market opportunities for
innovative product development. Institutions for technology diffusion can also serve as
conveners by connecting individual firms with the sometimes myriad and complex array of
programmes and providers within multifaceted innovation systems. The relationships of
technology diffusion institutions to their host innovation systems can be continuous, in the
sense of pursuing tried and tested approaches to technological upgrading and supporting
incremental change. The significance of such a continuous role should not be
underestimated: SMEs often move slowly in adopting new technologies and, when they do, a
step-by-step approach is appropriate from resource, capability, and risk management
perspectives. Yet, institutions for technology diffusion may also have to take on
discontinuous strategies, developing innovative mechanisms and approaches that are
particularly relevant for deployment of major new technologies, particularly where those
technologies also require associated socio-technical system changes. For example, in
enabling the deployment of automated factory systems, a new partnership of users, vendors,
customers, and intermediary institutions may be needed to facilitate new digital design and
data sharing systems, address issues of job restructuring and retraining, and introduce
integrated management and inventory arrangements.
Rationales for institutional intervention

The major benefits (as well as the consequences) of technological advancement
materialise when those technologies are diffused and applied.4 This is a critical point: policy
deliberation on emerging technological transformations often focuses on the future models
and exciting innovations in R&D laboratories, and on a handful of promising prototypes. But
significant and broad impacts, be they economic, environmental, or societal, will only accrue
with diffusion. Moreover, the feasibility and performance characteristics of emerging
technologies and associated business models can be advanced where learning from
diffusion among users and customers feeds back to developers through iterative design,
build and test processes (Fleck, 1997; Govindarajan and Trimble, 2004; Baden-Fuller and
Haefliger, 2013).
However, in practice, diffusing technologies is not straightforward: there can be multiple
challenges and failures that limit, confound or block the adoption and effective use not only
of leading-edge but also current best-practice manufacturing technologies and methods.
This in turn can lead to sub-optimal performance in terms of critical manufacturing process
variables, such as productivity, quality, yield, waste, energy use, response time, feasible batch
size, and costs, and also in terms of capabilities to design and develop innovative products
and add value to users and customers (Box 7.1). Sub-optimal manufacturing performance
not only impacts individual firms (including ultimately their survival) but also can have
adverse effects on industrial supply chains and sectors, regional clusters, and national
economic competitiveness, and serve as a constraint on the ability to afford, absorb and
deploy new technologies and methods. The challenges and consequences of lags in
industrial upgrading are especially evident among existing manufacturers, particularly SMEs
(NAPA, 2003; National Academy of Engineering, 2012). For example, results from the US
Census of Manufacturers, conducted every five years, suggest that value-added per
employee in SMEs (defined as manufacturers with fewer than 500 employees) has generally
been 60% of that of their larger counterparts over the 1992-2012 period (US Census Bureau,

2016). The OECD report The Future of Productivity, which compares manufacturers in multiple
countries, finds a significant gap in the labour productivity growth of manufacturers
between a leading set of frontier firms and the majority of non-frontier firms. Frontier firms,
which tend to be larger, more profitable, and younger, enjoyed average annual growth in
labour productivity of 3.5% compared to 0.5% for non-frontier firms between 2001 and 2009
(OECD, 2015). The diffusion of technologies and techniques, which includes enhancing the
capacity of firms and their supply chains to re-engineer their systems, can help to raise
productivity levels. The McKinsey Global Institute estimates that 55% of potential
productivity gains in developed countries comes from catching up to best practice, with 45%
coming from pushing the frontier outwards; the potential productivity gain from catching up
is even more pronounced in developing and emerging economies (Manyika et al., 2015).
Box 7.1. Lags in technological upgrading in manufacturing

Why is it that more manufacturers do not upgrade their technologies and processes to
move closer to performance and productivity frontiers? Explanations conventionally focus on
a mix of contributory market, public, and system failures. These include constraints in input
and process factors, such as lack of access to capital, skills, knowledge, and management
capabilities, as well as by information deficiencies and asymmetries. Enterprises (especially
SMEs) frequently lack information, expertise and skills, training, resources, strategy, and the
confidence to adopt new technologies. Suppliers and private consultants can experience high
transaction costs in trying to diffuse technologies to many small firms. Public institutions,
such as universities and national research centres, are often focused on publications, leading-
edge technologies in laboratories, and high-technology start-ups; existing SMEs often find
such institutions complicated and unwieldy to engage with, notwithstanding their increased
efforts to be more business-facing. Finance for scale-up and implementation is not always
forthcoming, with the risk that companies will under-invest. Moreover, industrial companies
have systems, routines, and attitudes that are already operating and embedded. These
existing systems are often resistant to change. This may be due to competency traps, where
the company has expertise and experience in its current methods and is reluctant to change
even if new methods are superior, or because an industry segment or supply chain is “locked
in” to an inferior approach due to network effects or behavioural embedding. Importantly,
while the continued use of “less than best practices” can be due to legacies, preferences, and
the ongoing influence of past investments, such “sub-optimal” path-dependent practices can
still be profitable for the immediate term. Yet, in continuing to use these practices, they can
constrain moving to higher levels of performance and longer-run capabilities to be
competitive while maintaining good wage levels and working conditions. For example,
manufacturers may retain older, less efficient capital equipment, particularly in older plants,
because it is cheaper in the short run rather than installing new machinery that would enable
greater customisation capabilities, energy savings, and data collection and analysis for
process improvement (Hagerty, 2013). These supply-side issues can interact with demand-
side constraints, where users in intermediate and end markets are reluctant or slow to deploy
the products of innovative new technologies, again for reasons such as network failures
(e.g. no critical mass of users), information, capital and other system constraints (Geels, 2002;
Edler, 2010, 2016).
Public and system failures that constrain industrial upgrading provide core rationales
for supporting institutions and mechanisms for technology diffusion. While certain
constraints to upgrading can be alleviated through indirect financial instruments, such as

grants, loans, and tax incentives, a central part of the mission of institutions for technology
diffusion is the provision of direct guidance and support. This kind of engaged and expert
assistance is particularly important in helping to overcome information gaps, breaking down
entrenched path-dependent practices, and in assisting firms and value chains to develop
upgrading strategies. Support from technology diffusion institutions seeks to guide and
support enterprise capabilities and to assist them in justifying and adopting investments in
new technology. Technology diffusion institutions can also work with industrial segments or
supply chains that are locked in to outmoded approaches and where change requires the
stimulation and support of collective action. For example, the maintenance of mechanical
processes in manufacturing can be overlooked until there is a breakdown, while companies
may avoid making changes in the process because they have stored inventory, which
facilitates production continuity but adds cost. Introducing advanced sensors and
communications to provide early signals of wear and relay real-time data back to service
providers could eliminate this problem, but would require collaboration among machinery
makers, users and maintenance service providers to agree on common protocols. A
technology diffusion institution could facilitate a solution through a collaborative project
and support adoption by lead users, as well as advising on technological options.
In the fast-moving environment of next-generation production technologies, the
conventional market failure rationales for institutional intervention are likely to become
even more important, as potential users are challenged to sift through burgeoning
amounts of information and to support decision making in the context of rapidly changing
technologies and requirements for expertise. Additionally, there are also likely to be
increasingly strong systemic rationales for supporting not only current institutions for
technology diffusion but also for developing new ones that reflect the characteristics of
emerging production and technological developments. Technology roadmaps such as
Germany’s “Industry 4.0” and the United Kingdom’s Synthetic Biology Roadmap have
helped lay out pathways for systemic and pervasive industrial transformations. These
scenarios will come to fruition only if diffusion is fully integrated and implemented at
scale. However, many existing institutions are geared for the 20th century, when R&D was
seen in a linear way, with diffusion tacked on. Intensified considerations of the need for
responsibility in innovation and of targeting global challenges raise further system
challenges for technology diffusion institutions. In the future, technology diffusion
institutions will need more engagement in missions that not only support diffusion to
individual firms, but also link to networks of suppliers, users, and customers. These
approaches will increasingly need to incorporate mechanisms for the responsible design,
integration, and use of emerging technologies.
Types of technology diffusion institutions

In broad terms, as discussed above, institutions for technology diffusion are
intermediaries, employing structures and routines that facilitate the adoption, spread and
use of knowledge, methods, and technical means. Although institutions for technology
diffusion share the general challenge of addressing market, public, and system failures,
there are differences in how these institutions are commissioned, organised and operated.
These differences reflect not only the mix of specific failures and targets that each
institution is tasked to deal with, but also national, regional, and sectoral variations in
innovation system landscapes, policies, and practices. Publicly oriented technology
diffusion institutions may be managed by, or associated with, universities, government

agencies, and non-profit or for-profit organisations. Their missions may be targeted at

transferring leading-edge technologies, deploying known methods to new users, or a mix
of these approaches. Again, depending on their mission and orientation, technology
diffusion institutions may operate, or be linked with, R&D laboratories, demonstration and
training facilities, and exchange and meeting spaces. While technology diffusion will be a
primary focus, in many cases technology diffusion institutions engage in a range of
activities and partnerships to support their mission, including with other organisations
involved in innovation, technology, business, and skills development.
Yet, notwithstanding such multiple combinations in their form and function, it is
possible to distinguish categories of these institutions by signature elements of their
approach to diffusion and by the modes through which they operate. To illustrate the array
of technology diffusion institutions, six exemplary types are identified (Table 7.1). These
range from dedicated field services and technology-oriented business services that extend
expertise, guidance, and other resources to firms, to applied and advanced technology
centres which have the capabilities to undertake business-facing R&D. The typology includes
knowledge exchange and demand-based instruments that serve as intermediaries and
stimulators for technology diffusion, and also open technology mechanisms which represent
new, often virtual, ways to link technology development and diffusion. These six categories
are not mutually exclusive: for example, field services are offered by some applied
technology centres, while advanced technology centres also engage with knowledge transfer
networks. Moreover, this typology is not exhaustive – other categories could be incorporated.
However, the range of institutional types encompassed makes it possible to demonstrate the
variety of approaches to technology diffusion currently in use, to discern insights about
effective approaches and practices, and to consider how these institutions are addressing
challenges presented by the next production revolution. The next sections of the chapter
discuss these key institutional types in further detail.
Table 7.1. Typology of institutions for technology diffusion

Diffusion mechanisms Operational modes (primary) Examples
Dedicated field services Diagnostics, guidance, and mentoring Manufacturing Extension Partnership (US)
Technology-oriented Advice linked with finance Industrial Research Assistance Program (Canada)
business services Capacity development I-Corps (US)
Applied technology centres Contract research, collaborative applied Fraunhofer Institutes (Germany)
research, prototyping and standards Manufacturing USA (US)
Kohsetshushi Public Technology Centers (Japan)
Targeted R&D centres Advanced research on emerging technologies Campus for Research Excellence and Technological
intertwined with commercialisation missions Enterprise (Singapore)
Knowledge exchange and Technology community networking Knowledge Transfer Networks (UK) Innovation Vouchers
demand-based instruments Knowledge transfer incentives (multiple countries)
Open technology mechanisms Shared technology library BioBricks/Registry of Standard Biological Parts (US)
Virtual networking
Source: Authors’ analysis.
Dedicated field services

Dedicated field services work with SMEs to help them adopt modern, proven
manufacturing technologies and techniques using industry-experienced specialists,
commonly in an engineering domain. The services are usually organised in a decentralised
manner, with specialists working at the manufacturing site on projects aimed at solving
the company’s problems and needs. Dedicated field services offer varied forms of

assistance, including help with quality systems, lean manufacturing, energy conservation,
environmental protection, health and safety, computer systems and software applications,
and product development and marketing. These services usually offer assessment of the
company in question, the development of an in-depth project, and the tailoring of relevant
training. Dedicated field services can provide services in-house and/or refer companies to
other providers including private consultants, government programmes, human resource
development organisations, and applied research equipment and facilities centres.
Operational funds for these services are often based on a mix of client fees and core public
support (Shapira et al., 2015).
The US Manufacturing Extension Partnership (MEP) is a dedicated field service
programme targeting SMEs. Established in 1989, the MEP evolved throughout the 1990s into
a national network of centres in each US state plus Puerto Rico, with each centre often having
field offices at different locations around the state depending on the size of the state. Some
centres are organised as private non-profit entities, some as non-instructional units of
universities, and others as state government programmes. The National Institute of
Standards and Technology (NIST), under the US Department of Commerce, administers the
MEP. NIST has provided one-third of the funding for these centres matched in a 3:1 ratio with
non-federal sources. The federal contribution to the MEP budget was about USD 130 million
in fiscal year 2016. In January 2017, the American Innovation and Competitiveness Act
changed the federal share of MEP funding to 50%.5 The centres provide a pragmatic set of
services related to process improvement, product development, marketing, training, and
sustainability services such as energy conservation and environmental management. Most
centres also connect manufacturing SMEs with other private and public assistance sources.
Governance is based on a co-operative agreement between NIST and the individual centre.
National and centre-level advisory boards also operate, comprised primarily of SMEs. The
MEP programme serves 7 000 to 8 000 SMEs nationally through around 12 000 projects. There
is an extensive evaluation process composed of customer and activity reporting,
independent client surveys, annual reporting, review by expert panels, and special studies,
measuring attributable cost savings, sales, capital investment, jobs, productivity and other
economic impacts.
Technology-oriented business services

Technology-oriented business services are services designed to help start-ups and
small firms by melding business assistance with financial support. They address
weaknesses in the links between business technology upgrading efforts and financial
capital. Two programmes that exemplify this category are Canada’s Industrial Research
Assistance Program and the US Innovation Corps (I-Corps).
The Industrial Research Assistance Program (IRAP) was established in the early 1960s by
the National Research Council (NRC) of Canada. IRAP is centrally co-ordinated with a
decentralised network of field offices and is administered by the NRC (Shapira et al., 2015).
The programme uses former executives to work with companies, offers funding for applied
R&D projects to SME clients through non-repayable contributions, and collaborates with
partner organisations to provide services to entrepreneurs. The programme operates offices at
its own and partner organisations in five regions, with most of the offices concentrated in the
provinces of Quebec and Ontario. Nearly half of IRAP’s annual budget of around USD 90 million
supports the advisory services and the rest is used to deliver applied R&D funding. The
programme does not charge companies for services. It engages in ongoing relationships with

a portfolio of client firms. IRAP also provides funding to public sector organisations in remote
locations to help them to provide services. Roughly 10 000 firms a year are served of which
one-third typically receive non-repayable contributions. Eligible companies are SMEs in
product-oriented categories, primarily in information and communication technologies
(ICTs), materials and manufacturing, construction, agriculture and food, energy and
environment, and life sciences. Customers receiving non-repayable contributions must
complete status reports and project and impact assessments. In addition, the programme is
subject to a legislatively mandated external assessment every five years.
I-Corps is a programme started in 2011 by the US National Science Foundation (NSF) to
accelerate start-up activity from science-based research. I-Corps is based on the “Lean
LaunchPad” curriculum at Stanford University, developed by Steve Blank (2013). The idea
behind I-Corps is to train teams, comprised of an NSF principal investigator, an
entrepreneurial lead (typically a student or postdoctoral researcher) and a mentor. The
programme employs lean customer discovery techniques – these are systematic methods to
understand what customers most value and to test products or services that best address
their needs. The training uses Alexander Osterwalder’s Business Model Canvas (Osterwalder
and Pigneur, 2010), requiring teams to develop a hypothesised business model for one or more
applications of their research. Teams are required to leave the laboratory and talk to roughly
100 potential customers and partners about their proposed product or service in the context
of the hypothesised business model, making changes (also known as pivots) to this business
model in response to the feedback they receive. After a three-day “boot camp” (an intensive
short course), possible modifications following the feedback are considered. Each team then
makes a choice as to whether or not to pursue the application as a start-up or as a licensing
opportunity, known as the “go-no go” decision. Anecdotal evidence from early I-Corps cohorts
indicated that a lack of supporting services and infrastructure at their home universities
limited cohorts’ success. This led NSF to create an ecosystem around I-Corps of what are
termed “nodes” and “sites”. Nodes are regionally distributed locations at universities that
provide training, while sites provide entrepreneurship and commercialisation support at the
university to I-Corps teams, often on their home campus to enable team formation.
VentureWell, originally known as the National Collegiate Inventors and Innovators Alliance
(NCIIA), operates a National Innovation Network, managing a database of I-Corps activity,
engaging in community building, and performing ongoing evaluations of the programme.
There are no comparison group studies of I-Corps, but initial assessments report a
three-fold increase in familiarity with the business model canvas after the training. The
NSF budget for I-Corps was USD 30 million in fiscal year 2016 (US NSF, 2016). Team awards
of USD 50 000 cover expenses associated with training and customer discovery. Sites
receive up to USD 100 000 for three years. Nodes receive USD 2 million to USD 4 million over
a three-year period to provide training. Interest in I-Corps has spread to other US federal
agencies including the National Institutes of Health, the Department of Energy, the
Department of Defense, the Department of Homeland Security, and the Small Business
Administration. Similar lean customer discovery methods have spread globally, e.g. to
SynbiCITE in the United Kingdom, which uses these methods to accelerate the
commercialisation of synthetic biology applications (SynbiCITE, 2016).
Applied technology centres

Applied technology centres conduct contract R&D for companies, state and local
governments, and other types of organisations. Applied technology centres can be part of

larger comprehensive organisations. A prominent example is the Fraunhofer Society – a

private non-profit network of about 60 research institutes in Germany that carry out contract
research for the government (at national and state levels) and business organisations
(Fraunhofer, 2016). Established in 1949, the Fraunhofer Society falls under the German
Ministry of Education and Research but largely manages its own operations. Each Fraunhofer
institute specialises in a particular technology or sector. The institutes use a mix of in-house
researchers and students to perform their research. Services include joint pre-competitive
research, bilateral applied research with individual firms, prototyping, and pre-production
and co-operative technology transfer arrangements. Fraunhofer services tend to be large,
highly customised, high-value projects. One-third of the Fraunhofer budget comes from core
institutional sources in amounts exceeding USD 700 million. The remainder of the budget
derives from work with private industry and public sector agencies. Fraunhofer institutes
can provide services to clients outside their regions and there are institutes located in the
United States under the aegis of Fraunhofer USA. The institutes produce publications,
patents, research contracts, licences, and start-up companies. Other groupings of applied
technology centres include TNO in the Netherlands, the GTS Institutes in Denmark, SINTEF
in Norway, and Technalia in Spain (Solberg et al., 2012; Shapira et al., 2015).
Manufacturing USA, formerly known as the National Network for Manufacturing
Innovation, is an initiative to develop a Fraunhofer-like system in the United States focused
on applied research and the commercialisation of key manufacturing technologies
(US NNMI, 2016). The network is comprised of institutes anchored by a private non-profit
organisation. The first institute, dealing with 3-D printing, was founded in Youngstown, Ohio
in 2012. Core funding for the institutes comes from various agencies, depending on the
mission of the institute, including the Department of Defense, the Department of Energy, the
Department of Commerce, the National Aeronautics and Space Administration, and NSF.
Core multi-year funding of some USD 60 million is matched by a mix of sources, including
memberships for multinational and smaller private sector companies, universities, and non-
profit organisations. Membership benefits include royalty-free access to intellectual property
(IP) depending on the organisation’s membership fee level, participation in institute R&D
projects, and influence on the research agenda of the institute. Many of the institutes deal
with significant standards issues, particularly in efforts to manufacture products involving
complex systems. For example, one of the projects of the Digital Manufacturing and Design
Innovation Institute is to develop a digital manufacturing commons for data sharing,
analysis, modelling, tooling, and building. Being able to draw on the expertise of a
membership consortia facilitates this institute’s ability to marshal input and participation
from the relevant community (DMC, 2016).
Targeted R&D centres

While applied technology development centres focus on business-oriented projects,
driven by high levels of business engagement and governance, targeted R&D centres are
driven largely by researchers themselves with a mission of leading-edge emerging
technology research combined with a mandate to generate economic impact. Increasingly,
such centres are also tasked with tackling societal challenges through the development
and diffusion of their targeted technologies. Targeted R&D centres are typically located at
universities, with significant support for their research themes provided by government
research sponsors pursuing policies to advance specific emerging technologies that are
anticipated to have significant economic and societal impacts. There has been increased

and more explicit consideration of such economic and societal aspects in several recent
flagship R&D initiatives in emerging technology domains. Among national examples, NSF
has sponsored 17 Nanoscale Science and Engineering Centres in the United States, each in
specific areas of emerging nanotechnology, under a framework (the 21st Century
Nanotechnology Research and Development Act6) that emphasised not only advanced
research but also the incorporation of new technologies into products, the development of
skills and tools, and responsible development (Fisher and Mahajan, 2006; Rogers, Youtie
and Kay, 2012). In the United Kingdom, six Synthetic Biology Research Centres have been
sponsored under a national programme to advance research capacity, foster industrial
linkages and the commercialisation of synthetic biology, develop training, and promote
attention to responsible research and innovation (UK Synthetic Biology Roadmap
Coordination Group, 2012; Shapira and Gök, 2015).
Targeted R&D centres can involve multiple universities and other stakeholders, and
multi-institutional approaches often involve international relationships. Singapore’s
Campus for Research Excellence and Technological Enterprise (CREATE) is one such
approach that combines targeted research and commercialisation with international
partnerships. 7 Developed by the Singaporean government, CREATE uses research
partnerships between Singapore’s two major research universities and ten prestigious
research universities in the United States, Europe, the Middle East, and Asia to develop new
production technologies linked to the city-state’s major societal challenges (CREATE, 2016).
CREATE began in 2006 under the auspices of the National Research Foundation of
Singapore. CREATE established a USD 250 million research facility adjacent to the National
University of Singapore (NUS) University Town (UTown) campus in support of this research.
In addition, each foreign partner university received roughly USD 100 million to perform
the applied research, 75% to 80% of which is allotted to the Singaporean university partner
– typically NUS or Nanyang Technological University (NTU) – for researchers and equipment.
The research university arrangements have been structured to last for a five-year period,
renewable for an additional five years.
The programme originally designated ten foreign universities as collaborators: the
Swiss Federal Institute of Technology, Zurich; the Massachusetts Institute of Technology
(MIT); the Technical University of Munich; the Hebrew University of Jerusalem; Ben-Gurion
University; the University of California, Berkeley; Peking University; Shanghai Jiao Tong
University; and Cambridge University. Each research project involves two senior
investigators: one usually from NTU or NUS (although other Singaporean universities may
participate) and the other from the foreign partner university. The projects fall into four
interdisciplinary areas: human systems (such as tropical and infectious diseases),
environmental systems (such as water management), urban systems (such as driverless
vehicles), and energy systems (such as building efficiency). The programme uses several
mechanisms to ensure that commercialisation is established in Singapore. Each partner
university must establish a Singaporean limited liability company to receive and manage
the research funds. All foreign university research centre directors must be based in, or
spend the majority of their time in Singapore, while all senior investigators of the partner
universities must adhere to a one-year residency requirement in which at least
six consecutive months are spent in Singapore. Additionally, the Singapore Technology
Licensing Office manages all IP. Management of the programme involves key performance
indicators mutually agreed to by the National Research Foundation and the foreign
university.

Knowledge exchange and demand-based instruments

Increasing attention has been paid in recent years to the development of intermediary
institutions to facilitate technology diffusion processes. There has also been an expansion
in the role of demand-side instruments that can incentivise firms to initiate interactions
with technology diffusion intermediaries and with sources of technology on the supply
side. Such “boundary-spanning” mechanisms are recognised as being vital to the iterative
brokering, mediation, and diffusion of knowledge about new technologies and methods
among and between firms and research and technology organisations (Aldrich and Herker,
1977; Tushman, 1977; Kaufmann and Tödtling, 2001; Virani and Pratt, 2016). There are
many varieties of these mechanisms, with the growth not only of technology transfer
networks but also knowledge exchange and co-production networks, and the increasingly
inventive use of behaviour-oriented incentives to encourage firms to cross boundaries to
learn about new approaches.
Explicit public policies to foster networks among firms to advance innovation through
information exchange and collaboration began in Italy in the 1970s, extending to Denmark
in the 1980s, and to many other OECD countries in subsequent years (Cunningham and
Ramlogan, 2016). A current example is the United Kingdom’s Knowledge Transfer Network
(KTN), a mechanism funded by the publicly sponsored innovation agency Innovate UK.
KTN supports networks of companies, universities, investors, non-profits and other
interested actors to exchange and collaborate in targeted areas of technology. Specialist
KTN staff serve as catalysts for network activities, which currently cover activities in 16 key
sectors including biotechnology, creative industries and the digital economy,
manufacturing, materials, and sustainability and the circular economy. The KTN also
brings together about 20 special sectoral interest groups, on such topics as the flexible
manufacturing, energy-efficient computing, robotics, and synthetic biology.8 The KTN
delivers its activities through facilitating online exchanges among network members,
organising open events, collaborating with knowledge centres (e.g. in materials chemistry
or process innovation), facilitating access to funding competitions, and organising
taskforces and roadmaps. In 2015-16 KTN reported more than 77 000 members, over
400 events involving in excess of 20 000 participants, more than 120 roadmaps and analyses,
many thousands of individual meetings, and assistance with 455 funding proposals and
about 120 funding events. The annual budget of the KTN is about GBP 15.8 million.
Knowledge exchange networks typically bring together participating members within
and across a value chain of interest, e.g. developers and potential users of an emerging
technology, or firms and technology organisations engaged in a particular sectoral supply
chain. Such networks can be national or international, but they can also have regional
dimensions. Where there is a strong regional dimension to technological knowledge
exchange, networks may merge with, or evolve into or from, cluster initiatives that broadly
link agglomerations of firms and other innovation system actors within particular
geographical localities. In Germany, more than 450 regional cluster networks have been
identified, many sponsored by federal and state government alongside other privately led
clusters (Clusterplatform Deutschland, 2017). Active technological sectors (with the number
of regional clusters as of January 2017) include the environment (79), energy (69), information
and communications (69), production (66), materials (48), the automotive industry (41),
biotechnology (41), and electrical engineering, measurement, and sensors (34).9 These
cluster networks support firms to engage with other firms and institutions in technology
development and diffusion activities and to link these to new product development,

marketing, and internationalisation strategies. One of the spurs to the development of this
dense and diverse array of exchange networks was the Kompetenznetze (Competence
Networks) programme, established in the mid-2000s by the then Federal Ministry of
Economics and Technology. This programme encouraged the formation and recognition of
more than 100 regional networks, including in life sciences, food processing, medicine,
renewable energy and information technology, in locations throughout Germany (BMWi,
2010). In 2012, this programme was amalgamated into the German cluster platform jointly
sponsored by the Federal Ministry for Economic Affairs and Energy (BMWi) and the Federal
Ministry of Education and Research (BMBF). As part of this platform, BMWi sponsors a
“go-cluster” programme that provides for a cluster certification procedure, access to public
funding, participation in cross-network activities, and guidance from an external support
agency. There are about 100 designated go-clusters in Germany, involving some
13 000 members including 8 500 companies, mostly SMEs, as well as universities, Fraunhofer
Institutes, other non-university research and technology centres, and business organisations.
A recent evaluation finds that linking together these complementary resources with firms
through regional network clusters has encouraged the generation and implementation of
innovations (Ekert, Schüren and Bode, 2016).
In these and similar networks, key practices include shared industrial, technological,
or regional interests, open membership, core capabilities to foster information exchange,
collaborative activities, and projects, a business orientation towards translating and
deploying future-oriented technologies, and effective governance and management (see
also BMWi, 2010; Cunningham and Ramlogan, 2016). Knowledge exchange networks can
also take on functions related to co-production, where companies working often with
technology institutions jointly undertake development projects and pool design,
production, training, and marketing tasks typically among a spatially proximate cluster of
network members. Smart city and industry networking programmes have been initiated in
several European countries and elsewhere. One example is Brainport Eindhoven in the
Netherlands where leadership, increased knowledge exchange and new co-production
interactions have stimulated revival in an old industrial port region (Horlings, 2014). An
initiative sponsored by two United Kingdom research councils is exploring opportunities
for “redistributed manufacturing” where advanced manufacturing technologies deployed
in localised and clusters of flexible firms can offer a competitive and sustainable edge over
conventional globalised supply chains (Pearson, Noble and Hawkins, 2013). Promising
cases are being explored by these networks, including in health care and medical products,
and in consumer goods and big data, while other networks are examining the potential
gains to redistributed manufacturing of 3D printing and makerspaces (Freeman, McMahon
and Godfrey, 2016; Moreno and Charnley, 2016; Zaki et al., 2017).
A complementary mechanism to these knowledge exchange intermediaries and
initiatives is the use of incentives to foster demand-side interest and stimulate new
boundary-crossing relationships that can accelerate technology diffusion among firms,
especially SMEs. Such incentives can take the form of innovation vouchers that SMEs can use
to purchase time and other assistance from research and technology institutions and other
vendors of business assistance. These combine matchmaking with modest financial
incentives to stimulate interest, demand, and behaviour change in enterprises to encourage
interaction with universities, research organisations, specialised consultants, and other
sources of technology and knowledge (Bakhshi et al., 2015). Innovation vouchers are
promoted at both national and regional government levels. Innovation vouchers have been

sponsored in the Netherlands, Ireland and the United Kingdom (among more than
20 European countries underwriting innovation voucher schemes) as well as in Australia,
Canada, the People’s Republic of China (hereafter “China”), India, Singapore, and the United
States (DG ENTR-Unit D2, 2009; Langhorn, 2014; CORFO, 2016). The value of the incentive is
usually small (ranging from about EUR 3 000 to under EUR 10 000) and may require a cash or
in-kind match from the SME. The incentive is not meant to subsidise the cost of a major
project: it generally can support just a few days of time. Rather, the voucher is designed as a
behavioural inducement to encourage SMEs to talk with people in other organisations to
explore new technological and business options, to undertake initial work, and to scope
follow-on steps and project options. Innovation voucher schemes may be targeted to eligible
SMEs in certain sectors (e.g. in manufacturing or advanced services), emphasise particular
technologies (including ICT), or aim to foster links with specific domains of academic or
private sector expertise. Although vouchers by themselves are not sufficient to completely
alter how SMEs approach innovation, available evaluations (including with randomised
control) suggest that innovation vouchers encourage firms to initiate new relationships and
projects (Cornet, Vroomen and van der Steef, 2006; OECD 2010; Sala, Landoni and Verganti,
2015; Bakhshi et al., 2015). Good practices associated with innovation voucher schemes
include effective public management, well-organised brokering to link firms with sources of
expertise, minimal administrative burden on participants, suitable marketing, and
capabilities to initiate follow-on projects (OECD, 2010b).
Innovation vouchers are one example of the demand-side instruments that can be used
to foster the diffusion of technology. Other instruments include the targeted use of public
procurement, tax incentives and other subsidies to lower the cost of new technologies for
users, awareness raising, training, the fostering of interactions between users and producers,
and regulation that supports the deployment of new technologies (Blind, Petersen and Riillo,
2016; Edler, 2016; Uyarra 2016). Some of these are “soft” mechanisms that use indirect,
informational, or behavioural approaches, while others involve direct financial support. If
policy seeks to accelerate the diffusion of the technologies associated with the next
production revolution, it is likely that such demand-side approaches will need to be
increasingly integrated into, as well as delivered alongside, the activities of institutions for
technology diffusion.
Open technology mechanisms

Open-source methods of diffusion of new production technologies have emerged in
recent years, mirroring the rise of open-source developments in the software industry. An
example is the BioBricks Foundation, which was founded in 2006 by Stanford University
professor Drew Endy.10 A private non-profit foundation that is pioneering open-source
models of technology transfer in synthetic biology, BioBricks seeks to overcome the danger
that this emerging field will be dominated by IP protection and secrecy, which could then hold
back application, diffusion, and further development. BioBricks has created several
programmes to foster open innovation in the field of synthetic biology. OpenWetWare is a
wiki application that began in 2007 for sharing information among laboratories around the
world about protocols and courses and other information relevant to the synthetic biology
community. OpenWetWare has more than 20 000 users. Following a foundational synthetic
biology conference held at MIT in 2004, BioBricks sponsors a global synthetic biology
conference (SBx.0) for community building, alternating between locations in the United States,
Europe, and Asia. The most recent was SB6.0 held at Imperial College in the United Kingdom

in 2013 (with more than 700 attendees). SB7.0 is in Singapore in 2017. In 2008, BioBricks began
a “request for comment” process that has led to a technical standards framework for standard
biological parts to enable these parts to “fit” with one another as they are exchanged.
BioBricks has developed a voluntary researcher agreement – the BioBricks Public Agreement –
to set out the conditions under which users could employ biological parts. Since 2015, the
organisation has promulgated an Open Materials Transfer Agreement (OpenMTA) to address
weaknesses in current materials exchange agreements such as limits on commercial
participation. Also underway is bio.net, a peer-to-peer information technology platform
aimed at enabling the monitoring and exchange of biomaterials.
The BioBricks Foundation was funded with small grants from the US NSF and National
Institutes of Health until 2015, when it received a three-year USD 3.9 million grant from the
Helmsley Charitable Trust’s Biomedical Research Infrastructure Program to create bio.net
(Helmsley Charitable Trust, 2016). This funding enabled BioBricks to hire a managing
director, a legal and technology transfer director and a software specialist, while enabling
it to subcontract software development to Stanford University. BioBricks is starting a
membership programme to provide long-term funding.
BioBricks also has a relationship with the International Genetically Engineered Machine
(iGEM) Foundation and the International Open Facility Advancing Biotechnology (BIOFAB).
iGEM began as an MIT class in 2003 taught by Endy and other colleagues and was designed to
teach students to develop biological devices. Randy Rettberg, then an MIT researcher and one
of the initial BioBricks board members, spun off iGEM as a separate foundation and now
serves as its president. iGEM runs the iGEM Competition for student-based teams to develop
devices from standard biological parts (and which also requires consideration of risk and
societal implications). IGEM also operates the Registry of Standard Biological Parts, which is
used by the student competitors and others to advance innovation in synthetic biology, and
the Labs Program, which provides access to biological parts to students outside of the
competition. In 2015, the iGEM Competition had more than 5 000 participants in more than
200 international teams. BIOFAB is a production facility developed to design and produce
more curated, higher-quality standard biological parts for public sharing. BIOFAB is
sponsored by the US NSF and is a partnership of BioBricks, the Synthetic Biology Engineering
Research Center at Berkeley, and Lawrence Berkeley National Laboratory. The biological parts
are available in a “library” to academic groups and companies, leveraging the BioBricks public
agreements to specify the terms for use of these biological parts.
In addition to multiple open-source software platforms, other open technology
mechanisms have been formed in such areas as robotics, manufacturing hardware, and
operational standards for automation in industry. As technologies and production systems
become increasingly sophisticated, integrated, and data-driven, such mechanisms are
likely to become increasingly important to foster large-scale co-ordination among multiple
organisations. Additionally, open technology mechanisms offer flexible and relatively low-
cost pathways for both new entrants and incumbents seeking to scale-up and diffuse
emerging technologies.
Institutions for technology diffusion: Trajectories of change and challenges

Institutions for technology diffusion operate broadly across the innovation systems
landscape, with varied targets and diverse organisational forms and functions, as the
examples above illustrate. Some institutions for technology diffusion are long-established
and deeply embedded in their respective innovation systems, while others are evolving or

newly emerging. In the context of the next revolution in production, new institutions will
be needed to creatively promote knowledge exchange, organisational change, capacity
development, and demand for technology diffusion in emerging technological areas and in
new business models. At the same time, it is also important for established institutions for
technology diffusion to upgrade and orient their approaches to address the specific
challenges and opportunities presented by next-generation technologies.
Institutions for technology diffusion are part of larger systems of innovation; how
technology diffusion institutions contribute to, relate with, and leverage their larger systems
will depend on the structures and policies enacted in host environments. At a broad policy
and system level, a range of relevant factors influence the performance of technology
diffusion institutions. These include policies and practices for R&D, university-industry
collaboration, finance for business investment, skills, labour markets, infrastructure, IP,
trade, fiscal, and macroeconomic policy, as well as the level of system attention to
technology diffusion policies (OECD, 1998; Bozeman, 2000; OECD, 2015; Kochenkova, Grimaldi
and Munari, 2016; Caiazza and Volpe, 2017). An essential task, through attention to policy
mix (Flanagan, Uyarra and Laranja, 2011), is the co-ordination of innovation system
framework policies and indirect mechanisms with policies towards institutions for
technology diffusion. In particular, both broader frameworks and specific policies should
encourage meso- and micro-level strategies that can ensure the effective design and
operation of technology diffusion institutions. Here, a series of good practices have been
identified. These are raised in the case examples and also further discussed in other studies
(see e.g. Shapira et al. [2015]).
An essential good practice is an organisational setting which supports capable
management of institutions for technology diffusion. As discussed, the organisational
settings for publicly-oriented institutions for technology diffusion can include universities,
technology centres, economic development and government agencies, and non-profit
corporations. Organisational settings vary according to the innovation systems landscape
in different countries, and developed systems can have multiple organisational
arrangements that may be centralised or decentralised. The key point, however, is to
ensure that whatever organisational arrangements are employed, they enable effective
operations, which also means that there should be arrangements for both internal and
external performance reviews that can prompt adjustments in services and management,
and where necessary, modifications to the organisational setting. Other relevant meso-
and micro-level practices for technology diffusion institutions include an explicit client
base of firms (which could be broadly across sectors or targeted to specific industries),
sufficient programme scale to reach significant numbers of firms within this base, and a
structured approach to services to optimise available resources. Additional good practices
for technology diffusion institutions include the use of personnel with industrial
experience, links to other facilities and service partners, and a base of core funding to
ensure stability. In developed industrial and technological ecosystems, there may be
multiple institutions for technology diffusion with distinct missions. Across this system
landscape, capabilities are needed to upgrade existing firms (typically SMEs) to current
levels of technological modernisation, as well as to enhance leading-edge technological
capabilities in existing and new firms where that is appropriate, and to work with firms
through individual, group, and network modes (Park, 1999; Shapira et al., 2015).
It is critical that institutions for technology diffusion, and their host innovation
systems, establish approaches that match current good practices. If there is currently an

effective base for technology diffusion, institutional adaptations and innovations to diffuse
emerging technologies can build on this. If the current base is weak, renewed efforts to
upgrade and initiate technology diffusion institutions may be required. In either case,
institutions for technology diffusion will need to take on board what is known about
effective policies and practices. They will also have to adapt and innovate to reflect
characteristics that may be accentuated in, if not drive, the next revolution in production.
This will help to ensure that institutions for technology diffusion are fit for purpose, as the
technological, industrial, and governance context for their operations changes with the
next revolution in production.
As noted in the opening parts of this chapter, key features of the next production
revolution include the transformative role of ICT, the rise of digital manufacturing, far-
reaching changes in materials and economic foundations, and the emergence of new
business models with a greater emphasis on user engagement, sustainability, and
responsible innovation (OECD, 2016). Of course, attempts to foresee future developments in
technology, business, and policy inevitably have to be qualified, as the next revolution in
production could unfold in multiple ways. With that caveat in mind, and building on case
examples discussed in this chapter and on broad insights from the literature, eight key
aspects of technological, economic, and policy change are identified that are intrinsic to
the next revolution in production. These should be considered by technology diffusion
institutions and policy makers (Table 7.2). These aspects of change, with examples, are
discussed below.
Table 7.2. Technological, economic and policy changes associated with the next
production revolution and implications for technology diffusion institutions
Change aspect Implications for technology diffusion institutions
Digitalisation Integrate diffusion of digital technologies in all aspects (including design, materials, production,
products, communication, services).
Iterative and rapid emergence of new Mobilise capabilities for rapid and customised responses. Adapt and innovate organisational
technologies and business models business models to reflect new needs and opportunities.
Move from project models and formal planning approaches to flexible methods, more group
assists, greater sharing.
New capability requirements Build up capabilities of firms and local innovation ecosystems for technology absorption.
Enhance capabilities of institutions in emerging technologies and their integration.
Increased role for collaborative Bring together multiple actors, including universities, research centres, and private sector
technology partnerships organisations to collectively address research translation, scale-up and technology deployment.
Global rise of new knowledge clusters Develop boundary-crossing and international linkages and partnerships.
Vital importance of sustainability Embed longer-term considerations of environmental sustainability in technology approaches.
Growing attention to responsible Embed attention to responsible research and innovation in technology approaches.
research and innovation
Catalytic roles for policy Leverage policy and government support through catalytic roles, partnerships and demand-side
and government stimulation.
Source: Authors’ analysis.
Digitalisation. Digital information technologies will be at the core of future technology

development and adoption. Analogous to the rise of open sharing of research articles and
data is the emergence of libraries promoting sharing of technology building blocks. An
example already highlighted is BioBricks, which promotes an open-source standard first
developed at MIT to enable sharing and enhance usage of synthetic biology parts through
the Registry of Standard Biological Parts. The registry is populated primarily with
submissions from the iGEM Competition, although a more specialist and higher-quality

public library, BIOFAB, has also been established. These open-source mechanisms exist
against a backdrop of traditional proprietary biotechnology approaches. Likewise, the
Digital Manufacturing and Design Innovation Institute, part of Manufacturing USA, is
using a digital commons approach for development of manufacturing software tools.
These examples highlight the burgeoning roles of institutions for technology diffusion not
only in diffusing and helping to integrate digital technologies into individual
manufacturing companies, but also in developing new collaborative and virtual models
across industry sectors and networks to accelerate the use of innovative digital
approaches.
Iterative and rapid emergence of new technologies and business models. Institutions for
technology diffusion have conventionally adopted linear, project-based models of
interacting with companies, often based on formal planning approaches and systematised
procedures. While such approaches are likely to continue as a standard for working with
enterprises, it is anticipated that the next revolution in production will stimulate, and
require, institutions for technology diffusion to increasingly take on more flexible,
discovery-based, approaches. A related implication is the need to mobilise capabilities for
rapid and customised responses, to increase the pace and relevance of technology
diffusion approaches. Signals are already apparent that institutions for technology
diffusion are grasping these challenges, with the growing role of flexible and customised
methods, more group assists, and greater emphasis on collaborative iteration. An example
is the I-Corps programme, established by the US NSF and now increasingly disseminated
by other agencies and organisations. I-Corps accelerates the commercialisation of science-
intensive research using training influenced by “lean customer discovery” and “business
model canvas” concepts. Teams of researchers and budding entrepreneurs are encouraged
by programme mentors to undertake ongoing and reflexive interactions with customers
and partners. These flexible interactions encourage the early reshaping of technological
and business models to meet market demands and opportunities (Weilerstein, 2014).
BioBricks, in encouraging collaborative exchange, learning and sharing in its community,
is also fostering an iterative approach.
New capability requirements. An essential feature of the next production revolution is
not just the emergence of new technologies and business models, but also the
convergence and integration of these technologies and business models. For example,
digital and physical technologies will increasingly be amalgamated, e.g. in the software
engineering of new biomaterials, while fusions of design, manufacturing, logistics and
services are expected. Producers will need to acquire new skills in emerging technologies
and in the systematic integration of these technologies, as well as in such areas as
industrial networking and co-production. In turn, technology diffusion institutions will
need to enhance expertise in emerging technology domains and their integration, and
pursue strategies that will assist in upgrading the absorptive capabilities of firms and their
industrial ecosystems to engage with the next production revolution. Technology
diffusion institutions can address these capability challenges in several ways. In the US
MEP initiative, attention is paid to internal staff training and human resource planning,
with centres also employing flexible arrangements to use third-party service providers
who can be varied as technical needs change. In Germany, the Fraunhofer Society and its
institutes offer a range of advanced training programmes to business including in new
technologies. Fraunhofer and its institutes also transfer knowledge through extensive
collaborations with companies, and supports its researchers to spin out and set up their

own companies. Additionally, the close relationships of Fraunhofer institutes with

universities facilitates the engagement of early-career researchers in projects with
companies: this brings new technical skills into projects and subsequently aids diffusion
as these early-career researchers gain expertise in industrial applications and
subsequently take up positions with companies. The US I-Corps Sites programme offers
universities a new structured and supported method for research commercialisation: this
franchising model represents a further way of scaling up capabilities for new approaches
to technology diffusion.
Increased role for collaborative technology partnerships. Collaborative partnerships (in the
context of technology diffusion) involve the bringing together of multiple actors, including
universities, research centres, and private sector organisations, to collectively address tasks
of applied research, translation and technology deployment. While such partnerships have
a long tradition, next-generation production technologies have stimulated the rise of new
partnerships that cross sectoral boundaries and which are designed to address the “scale-
up” gap between research and commercial production. These technology partnerships also
provide opportunities for tacit as well as formal knowledge exchange, the pooling of
capabilities and specialties, agreement on common protocols, and leveraging sponsorship
sources through calls for private funds to match public funding. An example is
Manufacturing USA, which uses private non-profit organisations as the hub of a network of
company and university organisations to develop standards and prototypes in areas such as
additive manufacturing and digital manufacturing and design. Partnerships typically have
a specific emerging technology focus, as in the case of Manufacturing USA which in early
2017 links 14 manufacturing innovation institutes, with each institute formed from
multiple public and private sector partners and concentrating on a particular advanced
technology. 11 Similarly, in the United Kingdom, a network of 11 Catapult Centres
established through Innovate UK seeks to transform leading-edge research into new
products and services, again with each centre composed of multiple partners from the
university, public, and business sectors and combining a mix of public and private
revenues.12 Collaborative technology partnerships may be organised through national
networks and initiatives, but they often have important regional dimensions and may
involve international partners and partnerships (as discussed below). The next production
revolution will probably demand the greater use of collaborative partnerships for
technology diffusion to systematically address the translation of complex emerging
technologies and to draw on both public and private resources.
Global rise of new knowledge clusters. The next production revolution will mobilise a
range of clusters of knowledge and innovation around the world. These include locations
in developed economies in Europe, North America, and East Asia, but also in rapidly
emerging economies. In China, new initiatives are underway to upgrade manufacturing,
with a focus on innovation and advanced manufacturing technologies.13 In multiple city-
regions in China, including in Beijing, Shanghai, and Shenzhen, there are substantial
clusters of leading-edge research, companies and entrepreneurs actively engaged in
innovative manufacturing approaches (Bound et al., 2016; Saunders and Kingsley, 2016).
Dynamic regional innovation clusters have grown or are emerging in India, Brazil, and
other parts of the world (Dutta and Lanvin, 2013; Engel, 2014). Institutions for technology
diffusion have generally operated within national and regional jurisdictions, although
some institutions have established international locations. Fraunhofer Institutes have
developed locations outside of Germany, in part to offer services to German-managed

global supply chains but also to access specialised technological expertise in other
countries. In addition to operating branded centres abroad, another strategy is the
involvement of international organisations and companies not as clients but as partners
in technological collaboration and diffusion. For example, the United Kingdom’s Cell and
Gene Therapy Catapult has reached an agreement with the Kanagawa Prefecture of Japan
to foster the application and commercialisation of regenerative medicine and cell therapy
in both Japan and the United Kingdom, which includes facilitating market access for
British firms in Japan, and for Japanese firms in Britain and Europe.14 As discussed earlier
in the chapter, Singapore’s CREATE programme partners with domestic and foreign
universities to facilitate research capacity development and commercialisation in applied
areas that address societal challenges facing the city-state such as urban congestion,
tropical diseases, and access to energy sources. As knowledge and innovation clusters rise
around the world, institutions for technology diffusion will increasingly need to find ways
to access and engage in knowledge and technological exchange with counterparts in these
locations.
Vital importance of sustainability. Sustainability is an increasingly important feature of
next-generation production. Indeed, many aspects of next-generation production, such as
the deployment of biomaterials to replace petrochemicals, the use of nanotechnologies in
more efficient renewable energy solutions, and the development of redistributed
manufacturing approaches that reduce transportation requirements, promise greener and
more sustainable processes and products. These should contribute to addressing global
challenges related to the environment, energy, and greenhouse emissions. Yet, in addition
to addressing global goals, attention to sustainability can return benefits directly to
companies and consumers, through reducing waste and materials usage, lowering life-
cycle costs, and prompting process and product innovation. In the United States, the MEP
offers services to assess energy usage and put forth recommendations for reduced
consumption, to identify process improvement opportunities, and to assist with
compliance with environmental regulations. This assistance includes compliance with
energy standards such as the energy management standard ISO 50001 and environmental
management standards in the 14000 series. At a wider level, the United Kingdom’s Energy
Systems Catapult helps firms to develop and capture commercial opportunities across the
energy system.15 Attention to environmental sustainability is likely to be a growing feature
of technology diffusion activities in the next production revolution.16
Growing attention to responsible research and innovation. Responsible research and
innovation aims to anticipate the societal, ethical, and legal, as well as the environmental,
health and safety implications of new science and technology. It also seek to avoid or
modulate adverse effects, and foster inclusive approaches to, and outcomes from,
research and innovation (EU, 2012; Owen, Stilgoe and Macnaghten, 2012). Particularly in
Europe and the United States, attention to processes of responsible research and
innovation, especially in emerging technologies such as nanotechnology, synthetic
biology, and digital technologies, artificial intelligence and automation, has increased in
recent years (Owen, Bessant and Heintz, 2013; McBride and Stahl, 2014; Gregorowius and
Deplazes-Zemp, 2016; Michelson, 2016). Such technologies comprise core technologies of
the next production revolution. Technology diffusion institutions, alongside other public
and private actors involved in the next production revolution, will need to embed and
operationalise processes of responsible research and innovation in their activities. While
this involves awareness of relevant laws, regulations, and protocols, including at

international and national levels, responsible research and innovation is much more than
a compliance task. It involves (to draw on a United Kingdom framework) processes of
anticipation – of potential economic, social, and environmental impacts; reflection – on
implications, motivations, uncertainties and dilemmas; engagement – opening up
deliberation and dialogue; and action – to influence the research and innovation process.17
Attention to responsible research and innovation in the UK Synthetic Biology Roadmap,
and its subsequent embedding in the United Kingdom’s Synthetic Biology Research
Centres, offers an implementation example. The critical issues that arise as responsible
research and innovation is operationalised will depend on the technology. For example, in
deploying new information technologies in companies and in networks of producers and
users, there will need to be attention to data protection, privacy, and security. New medical
technologies may raise complex ethical issues. Life cycle and environmental factors need
particular consideration in the application of new renewable energy technologies.
However, across the range of technologies involved in the next production revolution, all
raise economic, social, and environmental issues in one form or another. One common
concern is about equity considerations in dealing with displacement effects of emerging
technologies on segments of the population that might lose their jobs or see their jobs
transformed. At broad levels, institutions of technology diffusion have an important role
in working with technology developers, policy makers, companies, publics, and others in
their communities to encourage early consideration of responsibility in research, design
and initial development. Additionally, in the deployment of specific technologies,
institutions for technology diffusion should build specific steps and actions into projects
and service plans for responsible innovation to ensure attention to any adverse effects and
seek to avoid or mitigate potential difficulties. An example of how this might be done for
the I-Corps programme raises a set of public value questions that teams can ask as part of
their discovery process (Youtie and Shapira, 2016).
Evolving roles for government. It is common to look to government, usually the national
government, as the director, manager and source of funding for institutions for technology
diffusion. This role for government endures, since without public intervention and
funding, market failures will lead to under-investment in technology diffusion, as
discussed earlier in this chapter. In particular, in national innovation systems where
institutions for technology diffusion are currently weak or disorganised, direct public
intervention and sponsorship is likely to be necessary to promote upgrading and effective
service delivery. Yet, building on a broader movement that began some years ago to deliver
public policy through other mechanisms, such as public-private partnerships, the next
production revolution will raise needs and opportunities to further evolve government
roles in fostering technology diffusion. Policies to support technology diffusion as part of
the next production revolution will involve the fostering of roles and agents that serve as
catalysts, brokers, and stimulators to engage other public and private organisations to
collaborate and leverage resources and to join together to pursue pathways for new
technology adoption and responsible innovation. Manufacturing USA, as already
mentioned, represents an approach in which non-profit organisations in the United States
must partner with private industry, universities, and other non-profits through
membership arrangements. This helps to secure funding, but most importantly brings
together the portfolio of expertise and capabilities required for advanced technology scale-
up and deployment. Attention to spanning the policy mix in the diffusion of next-
generation technologies will demand the greater engagement of actors that can help to

address financial, information security, regulatory, environmental, human resource and

societal requirements. Piloting creative new approaches and institutions for technology
diffusion, especially in key emerging technologies, will be vital, as will a willingness to
experiment and foster discovery and iteration of new methods. Additionally, policy will
surely place greater emphasis on the demand side, while also addressing societal and
global challenges. Greater roles in technology diffusion and its co-ordination at regional
and city levels will emerge, especially with enhanced efforts to channel the next
production revolution in ways that redistribute manufacturing towards promoting local
revitalisation and sustainability.
Overall, as production technologies transform, existing approaches to technology
diffusion will need to be improved, and new diffusion models will be have to be fashioned,
to facilitate efficient, effective and equitable deployment. New models are probably going
to be more collaborative and open, with more diverse funding and creative approaches to
building capacity and diffusing technology. These approaches can be adopted both by
existing and new institutions. Innovation systems that have the foresight, flexibility, and
drive to more rapidly enhance and refine their institutions for technology diffusion will be
more likely to gain a competitive edge from the next production revolution. Systems that
have weak or lagging institutions for diffusion could well be at a disadvantage, irrespective
of their strengths in basic science.
However, challenges are evident for the diffusion of new production technologies and
for the development of next-generation institutions for technology diffusion. Promising
new technologies and models will come up against incumbent approaches deeply
embedded in existing industrial facilities and ecosystems. For example, the fully integrated
and automated factories proposed in the 1980s were not realised to the extent predicted
due in part to the difficulty of incorporating existing supply chains and because of
shortened product life cycles. Introducing new ways to integrate and diffuse technology
can take time, patience and the ability to experiment. Yet many governments want visible
results quickly, without risk. Additionally, while new production technologies are
frequently promoted for their public value and their ability to address societal challenges,
the funding and evaluation models under which many public technology diffusion
institutions work lead to prioritising client counts and fee revenues rather than public
values per se. There can be a focus on disseminating the latest advanced technology, when
many enterprises and users lack absorptive capabilities for highly sophisticated methods.
Such cases warrant pragmatic approaches to technology diffusion, coupled with long-term
relationships that can build capabilities for more advanced strategies. Path dependencies
in technology diffusion institutions themselves may also present roadblocks, leading to
failure to upgrade expertise, services, and business models. Concerns over governmental
accountability, combined with ongoing public austerity in many economies, could likewise
mean that current institutions will be reluctant to risk change. This could slow the
emergence of better institutions for technology diffusion.
Moreover, while effective institutions for technology diffusion are vital for deployment
of the next revolution in production, especially for SMEs, these institutions cannot do
everything. The scale, scope and quality of the diffusion of the next revolution in
production also depend on national and regional innovation system frameworks. Elements
involved here include provision for upgrading finance, infrastructure and education,
including vocational training.

Policy recommendations
As discussed throughout this chapter, policy making needs to ensure the integration
of technology diffusion and its institutions into the design and implementation of the next
production revolution. While there is an inescapable emphasis on the exciting research
advances and potential of the latest round of innovative new technologies, major economic
and societal value will only be obtained if these technologies are responsibly designed and
deployed in conjunction with users and other stakeholders, and if these technologies can
be scaled up, diffused, and improved in use. Upgrading and reshaping the capabilities of
technology diffusion institutions and integrating these institutions into next production
revolution strategies are essential steps. Specific policy recommendations that would help
to achieve these objectives are presented in Box 7.2.
Box 7.2. Policy recommendations: Institutions for technology diffusion

in the next production revolution
Recognise that effective institutions are essential for the widespread deployment of
the next production revolution. Where such institutions exist, their role and mission
must be integrated into next production revolution strategies. Where they are weak or
non-existent, new institutional capabilities should be formed or created. The emergence
of new institutions for technology diffusion should be nourished, experimentation and
learning supported, and the development of relevant new skills and business models
enhanced.
Refine and share effective practices for technology diffusion. Institutions for technology
diffusion should be encouraged to systematically review their service practices and
approaches, to ensure that these practices are effective and customised for the
communities they serve, to trial and scale up new approaches as needs evolve, and to
exchange knowledge about practices. This requires policy attention to strategy,
resourcing, operational support of management, personnel training, assessment and
evaluation, and knowledge exchange.
Build collaborative understanding and joint action in the deployment of the next
production revolution. Next-generation production involves change in firms, but also
necessitates engagement and co-ordination in value chains, sectors, and clusters. This
is more than a technical mission. There is a need to engage firms, suppliers, users, and
intermediary institutions in collaborative strategies to leverage the system and network
attributes associated with the next production revolution. These collaborations will
need to span regional, national, and international boundaries.
Ensure complementary innovation system framework policies, indirect measures, and
demand-side incentives to embed and amplify the effects of institutions for technology
diffusion. It is vital to give attention to issues of policy mix and to organisational linkages
to ensure that research and technology development are joined with diffusion, and that
technology diffusion is integrated with related policies (including for finance,
infrastructure, skills development, and procurement).
Address missions of sustainability and responsible research and innovation in the
design and deployment of the next production revolution. Attention to economic,
societal, and environmental considerations has to be integrated into the policies of
institutions for technology diffusion. This will involve engagement with clients,
stakeholders and publics, as well as greater use of foresight and anticipatory approaches.

Box 7.2. Policy recommendations: Institutions for technology diffusion

in the next production revolution (cont.)
Ensure the needs of SMEs are addressed in technology diffusion. While institutions for
technology diffusion work with many types of firms, particular attention is needed to
help SMEs navigate the next production revolution. A foundational task is to build the
absorptive and transformational capacities of SMEs to engage with, and benefit from,
the next production revolution.
Address governmental failures in technology diffusion interventions. Ensure that
programmes working to upgrade existing firms (the majority of firms) are appropriately
resourced, in addition to programmes that support advanced technology development
and start-up enterprises. Develop management mechanisms to reform (or replace)
technology diffusion institutions that are path-dependent and resistant to change. Ensure
that government evaluation measures give more weight to longer-run capability
development, rather than short-term incremental outcomes. Promote design/build/test
approaches that can experiment with new models of technology diffusion, and encourage
the incorporation of insights from these pilots into existing and new technology diffusion
institutions.
As a corollary to the recommendations detailed above, with their focus on

strengthening the roles and alignment of technology diffusion institutions in the
transformation of manufacturing, there are also practices that policy makers should seek
to avoid. Perhaps the first of these relates to the inclination to concentrate attention and
resources on policies to back research breakthroughs and exciting laboratory technologies
and to overlook, or at least poorly support, the industrial scale-up and diffusion of new
technologies.
Furthermore, the diffusion of new technologies will not be accomplished only by
strengthening technology transfer from universities, which tends to be focused on early-
stage science. Similarly, it cannot be accomplished by turning to general business assistance
programmes that provide tax breaks, loans, or conventional strategic planning services. The
diffusion of technologies requires effective intermediary mechanisms of human interaction
and the exchange of tacit knowledge. Moreover, while electronic communication and web-
based resources are now indispensable aids, technology diffusion cannot be accomplished
solely by posting assessment tools or briefing documents on the Internet: it requires
experienced specialists with the knowledge and relational skills to understand problems and
develop customised solutions.
Perhaps the most common pathway taken with diffusion of new technologies is to
target them to likely early adopters. These adopters tend to be large multinationals, high-
technology start-ups, and the small number of companies dedicated to the development of
technologies. Policy attention should be placed not only on these early adopters, but also on
the much larger number of existing SMEs. Not all SMEs can or will seek to modernise, but
there are many SMEs that technology diffusion institutions can prompt and support to adopt
new manufacturing technologies and approaches. A substantial part of the success of the
next production revolution will depend on take-up by SMEs, and this will have leveraging
effects on supply chains and regional clusters where SMEs predominate.
The stated rationale for policies to support institutions for technology diffusion is also
important. In particular, such policies should not be pledged as programmes that can

restore lost manufacturing jobs or rapidly revive old industrial regions. Technology
diffusion institutions can help firms today to adjust their business approaches and to
adopt new technologies, products, and business strategies. This can help individual firms
to stay in business and strengthen their abilities to offer good jobs (although new
technologies may result in shifts in the profile of jobs and their tasks). It is likely that the
major positive effects of technology diffusion institutions on upgrading the capabilities
and performance of manufacturing communities to absorb next production revolution
technologies will take time to materialise (five to ten years or more). Institutions and firms
need time to build deep relationships and undertake collaborations. Indeed, the full
outcomes of technology diffusion interactions, if they are substantial, will take significant
efforts over many years to appear. This means that technology diffusion institutions need
to be empowered and resourced to take longer-term perspectives. While it is desirable that
services and programmes have flexibility, instability or short-term perspectives for the
institutions themselves is not likely to support effective practice.
This chapter has argued that effective institutions for technology diffusion are
essential for the widespread deployment of the next production revolution. The policy
system tends to acknowledge this point at a high level, but then overlook technology
diffusion in the subsequent allocation of attention and resources. It is important to redress
this situation. Advantages will tend to flow to the companies and systems that are most
effective in deploying the technologies and business models of the next production
revolution. This chapter has also reinforced the need for complementary innovation
system framework policies, indirect measures, and demand-side incentives to embed and
leverage institutions for technology diffusion.
Building collaborative understanding and joint actions to deploy the next production
revolution will also be an important task and challenge for institutions for technology
diffusion. The systematic and networked nature of many aspects of the next production
revolution demands a high level of co-operation among producers, users, and other actors.
Technology diffusion institutions, which have often worked at an individual project level,
now need to increasingly adopt strategies and actions that can work in multi-actor
collaborations. These institutions need to span boundaries, be they at regional, national, or
international levels, to access knowledge and forge new joint actions. Moreover, these
institutions need to address missions of sustainability and responsible research and
innovation in helping to deploy the next production revolution.
The adoption of new technologies and business models will probably be more prevalent
and faster among larger companies, with an important role for disruptive start-up firms.
However, a core mission of a system of technology diffusion is to ensure that existing SMEs
are involved, that strategies and services are appropriate and affordable, and that more of
these firms are encouraged to upgrade their absorptive and transformational capabilities.
There is a need to address governmental failures in technology diffusion interventions.
These concern the attention and resources allocated to technology diffusion, the need to
ensure that evaluation systems are appropriately focused on longer-term rather than
short-run measures, and the importance of piloting creative and experimental approaches
and then building insights from these efforts into existing and new institutions for
technology diffusion.
Finally, it is also vital to undertake ongoing review and analysis of effective organisational
designs and new models for technology diffusion under the evolving conditions of the next

production revolution. Yet, this involves more than undertaking assessment and evaluation,
and sharing good practices, although these are all important. More fundamentally, there is a
need for policy and management approaches that will stimulate technology diffusion
institutions to upgrade their current methods and to trial promising new approaches, to
embed innovative technologies and responsible methods into their own operations, and to
enhance client and user absorptive capabilities.
Notes
1. It should be noted that this understanding of technology assumes that it is specifically or at least
ultimately under human command. There are, however, long-running debates about technological
control (see e.g. Winner, 1997), with increasing concerns more recently about autonomous
technologies (Bostrom, 2014).
2. For further exposition of technology diffusion and related concepts of knowledge and innovation
diffusion, see e.g. Geroski (2000), Everett (2003), and Stoneman and Battisti (2010).
3. Bayh-Dole Patent and Trademark Amendments Act of 1980, Pub. L. No. 96-517 (12 December 1980),
35 USC §§200-12.
4. Multiple factors are posited to understand how certain new technological designs become dominant,
particularly where there is rivalry and competition, including appropriability regimes and
complementary assets (see e.g. Teece, 1986). Nonetheless, as a rule, diffusion is essential to securing
returns (especially spillovers and societal as well as private returns) to the prevailing technology.
5. The American Innovation and Competitiveness Act of 2017, Pub. L. 114-329 (6 January 2017).
6. 21st Century Nanotechnology Research and Development Act of 2003, Pub. L. 108-153 (3 December
2003), 15 USC 7501.
7. This section also draws on insights gained through interviews in Singapore by J. Youtie in March
2016.
8. For information on the KTN see www.ktn-uk.co.uk/.
9. Information available at www.clusterplattform.de/SiteGlobals/CLUSTER/Forms/Suche/EN/Clustersearch_
Form.html? (accessed 12 January 2017).
10. Based on an interview with the senior counsel and director of BioBricks on 29 August 2016 and a
review of the BioBricks website, retrieved from https://biobricks.org.
11. www.manufacturingusa.com/ (accessed 12 January 2017).
12. https://catapult.org.uk (accessed 12 January 2017).
13. China has announced a national programme to upgrade manufacturing “Made in China 2025”
(State Council, 2015). See also http://english.gov.cn/2016special/madeinchina2025/ (accessed
12 January 2017).
14. Cell Therapy Catapult signs Memorandum of Understanding with Kanagawa Prefecture, Japan. https://
ct.catapult.org.uk/news-media/regulatory-news/cell-therapy-catapult-signs-memorandum-understanding-
kanagawa-prefecture (accessed 12 January 2017).
15. https://es.catapult.org.uk/ (accessed 12 January 2017).
16. Broader definitions of sustainability encompass environmental, economic, and social sustainability.
While this section focuses on environmental sustainability, topics related to economic and social
sustainability are discussed under the heading of responsible research and innovation.
17. Engineering and Physical Sciences Research Council, Framework for Responsible Innovation,
www.epsrc.ac.uk/research/framework/ (accessed 12 January 2017).

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The Next Production Revolution

Implications for Governments and Business

The next production

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The role of technology diffusion institutions is particularly important in enabling

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correspondingly have an influence on innovation system functions. This can occur

Rationales for institutional intervention

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Box 7.1. Lags in technological upgrading in manufacturing

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Types of technology diffusion institutions

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agencies, and non-profit or for-profit organisations. Their missions may be targeted at

Table 7.1. Typology of institutions for technology diffusion

Source: Authors’ analysis.

Dedicated field services

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Technology-oriented business services

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Applied technology centres

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larger comprehensive organisations. A prominent example is the Fraunhofer Society – a

Targeted R&D centres

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Knowledge exchange and demand-based instruments

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Open technology mechanisms

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Institutions for technology diffusion: Trajectories of change and challenges

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Source: Authors’ analysis.

Digitalisation. Digital information technologies will be at the core of future technology

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own companies. Additionally, the close relationships of Fraunhofer institutes with

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address financial, information security, regulatory, environmental, human resource and

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Box 7.2. Policy recommendations: Institutions for technology diffusion

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Box 7.2. Policy recommendations: Institutions for technology diffusion

As a corollary to the recommendations detailed above, with their focus on

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