Service innovation across borders: Challenges and potentials of service innovation collaboration in Upper Austria and South Bohemia

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Service innovation across borders: Challenges and potentials of service innovation collaboration in Upper Austria and South Bohemia

In an increasingly globalized and competitive environment, it is essential that geographical regions pool available resources and create synergies in service innovation management in order to sustain an innovative edge. Collaborative innovation management entails substantial synergies, especially for connected regions. However, existing potentials of such a cross-border innovation collaboration system have hitherto been exploited only partially. In order to overcome several challenges, two regions, Upper Austria and South Bohemia investigated novel paths of innovation collaboration through the European Union research project SIP-SME aiming at supporting innovation processes mainly in Austrian and Czech SMEs. To this end, qualitative interviews with local innovation experts were conducted in order to assess the current situation with regard to innovation capacities and barriers in the Upper Austrian and South Bohemian region. Based on the data collected during the in-depth interviews, the authors analysed and identified potentials and challenges in the two regions, which affect the cross-border knowledge creation environment. Despite being neighbouring regions with almost non-existent physical borders, significant differences in the current state of the innovation climate in Upper Austria and South Bohemia were determined. The most significant barriers hindering the cross-border innovation collaboration activities between the South Bohemian and Upper Austrian regions were identified as the lack of trust and financial resources, language barriers, absence of personnel with skills and experience, the inability to identify suitable cooperation partners, and a low degree of awareness about the benefits of cross-border innovation collaboration. The findings of this paper are relevant for future design and creation of a borderless region and joint policymaking in Austria and the Czech Republic.

Introduction

Even though Upper Austria is one of the most export-oriented and innovative regions in the European Union, in order to maintain its competitive edge, it is crucial not only to keep up with the market trends but also to fully exploit its already existing innovation potential. On the other hand, the South Bohemian region, with its favourable location close to the Austrian and German borders and its expanding production capacities, faces a relatively low rate of growth due to the lack of high-tech manufacturing representation (JČK 2014). Both regions face specific problems and challenges, which have been limiting not only their regional growth potential but also possible cross-border collaborations.
With a constantly increasing pressure of globalization, companies and regions are forced to pool resources and form collaborations across borders in order to stay competitive. Nevertheless, borders remain a significant barrier limiting potentials in innovation activities. The benefits of geographical proximity are diminished by a substantial lack of national and international focus on the creation and further development of borderless regions. Many regional strategies for regions along international borders (including the „smart specialization” strategies designed for use of EU funds) don’t take this cross-border dimension into account, constituting a missed opportunity (OECD 2020). Regional policymakers and companies need to realize and acknowledge the so-called „co-optition” or „cooperation for competition”; the motion that the neighbouring region can be a collaboration partner in the face of global competition (OECD 2013).
To support cross-border innovation collaboration between Upper Austria and South Bohemia, the lead partner the University of Upper Austria, campus Steyr, together with project partners Business Upper Austria, South Bohemian University (EF JCU), and South Bohemian Science and Technology Park (JVTP) implemented a European Union research project SIP-SME (Service Innovation Processes in SMEs). The project focuses on SMEs, as they form the backbone of the local economies, however, engage only in unstructured and often unconscious innovation activities (Janssen, den Hertog and Kuusisto 2014).
The main output of the project, an online tool in German and Czech languages, was specifically designed for innovation-oriented SMEs in both regions to help them assess their existing innovation potential, as well as to guide them on their path to diminish any hurdles identified in their innovation management processes and to support their cross-border activities. In order to develop a tool, which meets particular regional needs and addresses existing problem areas, 10 in-depth interviews with innovation experts were conducted in Upper Austria and South Bohemia. This article presents the interview findings and analyses and discusses similarities and differences in the innovation realm in both regions. The theoretical basis of the article is grounded in a comprehensive literature review on the topic of innovation collaboration conducted in 2018 (Fratrič, Überwimmer and Füreder 2018).

Cross-border innovation collaboration

State borders not only pose a physical barrier but are diverse also in their „manifestations of social practice and discourse” (Paasi 1996). Nevertheless, regions along borders, which sometimes find themselves in a somewhat disadvantageous position, might focus on transforming this hindrance into an opportunity in a highly globalized world in a form of crossborder innovation collaboration. „Different measures of the benefits of innovation activities find that the strongest interactions take place in proximity” (OECD 2013). Formalized innovation collaboration helps to bundle finances and knowledge, reduces the time to market, and enables risk-sharing among organizations (Hertog 2010; Storey et al. 2016; Tyler and Steensma 1998). It is also one of the key strengths of the innovation potential of the Upper Austrian and South Bohemian regions as it has been focusing on forming international partnerships to cope with increasing competition (Janssen, den Hertog and Kuusisto 2014). In order to specifically analyse the cooperation possibilities, similarities, and differences between the innovation situations in Upper Austria and South Bohemia, the SIP-SME project partners prepared several benchmarking and comparison reports as well as conducted in-depth interviews with regional innovation experts. Numerous problematic areas restricting regional innovation potential were identified in both territories.

Evidence from in-depth expert interviews

The Austrian and Czech experts were chosen by project partners Business Upper Austria and the South Bohemian Science and Technology Park (JVTP), as they have been in long-term cooperation with local enterprises and experts and they were able to evaluate and select suitable respondents with in-depth knowledge about the topics examined. The project focus on SMEs, the backbone of the regional economies, was taken into consideration. In-depth interviews were chosen as a suitable data collection method, as it enables gaining detailed information about the issues analysed, as well as providing the possibility for respondents to share their thoughts and description of behavioural patterns. The guidelines for the interviews were standardized (40 questions in total) and focused on the innovation aspects and issues identified through a comprehensive literature review conducted by the project partners beforehand. The sample size of 10 respondents was determined by the project resources and limitations. Each interview took approximately 1.5 hours and was conducted either at the premises of the project partner or the enterprise. Forty open questions were discussed with the aim to analyse the innovation challenges and potentials in both regions, as well as to provide in-depth information about similarities and differences in the fields of regional innovation processes, preferred collaboration partners and common collaborative practices. Each interview was recorded, transcribed, and subsequently analysed. To capture diverse views, opinions, and knowledge, the project partners specified numerous attributes in 5 different categories, which the experts had to fulfil in order to be selected for the interviews. Following professions and positions were defined based on these criteria:
• Regional innovation policymaker
• Regional consultant for innovation processes
• Owner or manager of an SME, which is regionally recognized for its innovative activities
• Innovation leader of a specific industry in the region (not necessarily an SME, but has vast knowledge about the situation of SMEs regarding innovation)
• Manager of a small or medium-sized enterprise, not known for innovation, but willing to
innovate and acts regionally as the „critical voice” among SMEs

Based on the information gathered, the project partners were able to identify hurdles and barriers of cross-border innovation collaboration between the Upper Austrian and South Bohemian regions (Table 1).

Table 1: Challenges of cross-border innovation identified in Upper Austria and South Bohemia.
Source: Authors

The South Bohemian innovation experts noted that the regions face uneven starting points with regards to innovation; whereas in Upper Austria, innovative activities are supported by the regional authorities and programs available, South Bohemia was named as a more conservative region with a lack of funding for novel ideas in many areas of business. Moreover, the degree of business sophistication is generally lower compared to the Austrian counterpart. The main barrier identified in South Bohemia hindering its cross-border collaboration was the lack of finances to engage in innovation activities with foreign partners such as Austria, which has a higher level of costs (salaries, materials etc.). Additionally, the cross-cultural communication differences were named as a significant barrier between the two regions. Not only are there not enough personnel speaking foreign languages such as German or English, but the Czech experts also noted that the differences in communication style in business settings pose a substantial problem during cross-border talks and meetings when the company representatives could not identify the information and messages received from their respective partners. These differences might stem from, for example, variations in speech patterns. Whereas Austria is considered a low context country, the Czech Republic leans more to the high context spectrum. „In terms of cultural categorization, (Hall 1976) suggested a differentiation between high context (HC) and low context (LC) cultures to better understand differences in their communication patterns. While in HC cultures, speech patterns are affected by clearly structured social hierarchy and strong behavioural norms in which the deeper meaning of a message is usually embedded within the information or frequently even internalised in the person, LC cultures tend to expect that the majority of the information is part of the transmitted message” (Gaisch et al. 2016; Hall 1976).
The South Bohemian experts also quoted a lack of qualified workforce, which could engage in cross-border innovation collaboration activities with external partners. Due to the region’s position near the Austrian borders, a significant percentage of the Czech employees with relevant knowledge and language skills migrated to Austria, leaving Czech regions struggling to find sufficiently educated and experienced staff. However, it is essential to mention that this issue has been relevant also for Upper Austria, as according to the innovation experts, highly skilled workforce tends to migrate to larger cities such as Vienna, which threatens the future innovation capacities and capabilities of the Upper Austrian region. Furthermore, Czech companies found it difficult to navigate through the complex bureaucracy present in Austria. Lastly, an overall feeling of mistrust was recorded among the Czech representatives towards their Austrian counterparts, which significantly limits the potential of cross-border innovation collaboration.
On the other hand, the main issue observed by the Austrian innovation experts was the general lack of information about the Czech Republic; mainly in the spheres of local Czech networks supporting innovation and possible collaboration partners. Moreover, the language barrier between the regions was highlighted, mainly with regard to highly technical innovation projects where precise vocabulary is essential. Finally, a lack of awareness about the benefits of crossborder collaboration was recorded. According to several experts, Upper Austrian companies often perceive it unnecessary to collaborate with foreign partners as all the essential resources and information is available on the Austrian market.

Conclusion

The article presented findings from 10 in-depth interviews with Austrian and Czech innovation experts, which were conducted as a part of a three-year Interreg project SIP-SME (Service innovation processes in SMEs). For both Upper Austria and South Bohemian regions, the main reasons to collaborate on innovative projects remain pooling of resources to compensate for various limitations, as well as to access know-how, share ideas, and due to the fear of missing out. The problematic areas limiting any regional and international collaborations are the fear of imitation, legal problems and strict contracts between the parties, possible know-how leakage, and the overall lack of innovation and project management. Specific problems of the Czech companies trying to cooperate with Austrian businesses are cross-cultural communication problems, lack of trust, language barriers, lack of financial resources, absence of personnel with enough skills and experience, as well as complex Austrian bureaucracy.
The Austrian experts noted a general lack of information about the Czech business environment, existing networks supporting innovation in the Czech regions, as well as the inability to identify suitable cooperation partners, language barriers, and a low degree of awareness about the benefits of cross-border innovation collaboration. In order to overcome these identified issues, cross-border communication and a cross-cultural platform bringing the regions together could be beneficial. The underlying need for intercultural understanding and further development of language competencies seem to be the first steps in the creation of a borderless region with fruitful innovation collaboration activities. Moreover, the South Bohemian policies need to take into consideration the limited resources of regional SMEs, which are hindering new activities with foreign partners. Both regions should consider activities to attract adequately educated and experienced workforce in order to improve the competitiveness and innovation potential of the regions. Furthermore, information about existing innovation networks, platforms, and supporting systems, as well as about potentially suitable collaboration partners needs to be disseminated more effectively, as the information channels seem to be targeting SMEs in an insufficient manner.

Limitations and outlook

Due to the limited resources and time constraints, a limited number of in-depth interviews was conducted. A larger sample of participants would enable a more complex insight into the topics discussed. Furthermore, other Austrian and Czech regions could be included in the assessment to evaluate and identify possible regional differences and similarities. This would enable the researchers to create a more comprehensive outlook of the Austrian and Czech policies and activities and recognize state-wide patterns and barriers limiting cross-border innovation potentials, which would subsequently lead to an increased degree of national competitiveness in a highly globalized world.

Poznámky/Notes

The research was conducted as part of the Interreg AT-CZ SIP-SME (Service Innovation Processes for SMEs) project financed by the European Fund for Regional Development.

Literatúra/List of References

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Kľúčové slová/Key Words

service innovation, across borders collaboration, regional development, innovation management
inovácia služieb, cezhraničná spolupráca, regionálny rozvoj, manažment inovácií

JEL klasifikácia/JEL Classification

H76, M31

Résumé

Cezhraničná inovácia služieb: výzvy a potenciál spolupráce v oblasti inovácií služieb v Hornom Rakúsku a v Jihočeskom kraji

V stále globalizovanejšom a konkurenčnejšom prostredí je nevyhnutné, aby geografické regióny zhromažďovali dostupné zdroje a vytvárali synergie v oblasti riadenia inovácií služieb, aby si udržali inovatívnu výhodu. Spoločný manažment inovácií so sebou prináša značné synergie, najmä v prepojených regiónoch. Existujúce možnosti takéhoto systému cezhraničnej spolupráce v oblasti inovácií sa však doteraz využívali iba čiastočne. S cieľom prekonať niekoľko výziev skúmali dva regióny, Horné Rakúsko a Jihočeský kraj nové cesty inovačnej spolupráce prostredníctvom výskumného projektu Európskej únie SIP-SME zameraného na podporu inovačných procesov najmä v rakúskych a českých MSP. Za týmto účelom sa uskutočnili kvalitatívne rozhovory s miestnymi odborníkmi v oblasti inovácií s cieľom zhodnotiť súčasnú situáciu, pokiaľ ide o inovačné kapacity a prekážky v regióne Horného Rakúska a Jihočeského kraja. Na základe údajov zozbieraných počas hĺbkových rozhovorov autori analyzovali a identifikovali potenciály a výzvy v týchto dvoch regiónoch, ktoré ovplyvňujú cezhraničné prostredie vytvárania vedomostí. Napriek tomu, že susediace regióny nemajú takmer žiadne fyzické hranice, boli zistené významné rozdiely v súčasnom stave inovačnej klímy v Hornom Rakúsku a v Jihočeskom kraji. Najvýznamnejšie prekážky brániace cezhraničným činnostiam v oblasti inovačnej spolupráce medzi českým a rakúskym regiónom boli identifikované ako nedostatok dôvery a finančných zdrojov, jazykové bariéry, nedostatok personálu so zručnosťami a skúsenosťami, neschopnosť identifikovať vhodných partnerov spolupráce a nízka miera informovanosti o výhodách cezhraničnej inovačnej spolupráce. Zistenia tohto príspevku sú dôležité pre budúci návrh a vytvorenie regiónu bez hraníc a spoločnú tvorbu politiky v Rakúsku a v Českej republike.

Kontakt na autorov/Address

MA Alexandra Fratrič, Degree program Global Sales and Marketing, Upper Austria University of Applied Sciences, School of Management, Wehrgrabengasse 1-3, 4400 Steyr, Austria, e-mail: [email protected]

MMag. Dr. Michael Schmidthaler, Degree program Global Sales and Marketing, Upper Austria University of Applied Sciences, School of Management, Wehrgrabengasse 1-3, 4400 Steyr, Austria, e-mail: [email protected]

FH-Prof. DI Dr. Margarethe Überwimmer, Degree program Global Sales and Marketing, Upper Austria University of Applied Sciences, School of Management, Wehrgrabengasse 1-3, 4400 Steyr, Austria, e-mail: [email protected]

FH-Prof. Ing. Mag. Robet Füreder, Degree program Global Sales and Marketing, Upper Austria University of Applied Sciences, School of Management, Wehrgrabengasse 1-3, 4400 Steyr, Austria, e-mail: [email protected]

Recenzované/Reviewed

30. March 2020 / 1. April 2020