Leveraging local know-how through public-private partnerships

Coming from Finland, where Nokia has been at the very core of a successful national innovation policy, I was surprised by the limited collaboration between the State of California and the tech giants in the region.

I used to live a mile from Nokia’s HQ. When others dreamed about becoming ballerinas, I wanted to be the next CEO of Nokia. Nokia is way past its days of glory now, but it’s role in the Finnish society is indisputable. In 2000, it accounted for 4% of Finland’s GDP and a third of Finland’s R&D expenditure. Nokia has always had a two-way role in the Finnish innovation system: i) it utilizes resources from the innovation ecosystem, and ii) diffuses innovation outside the company. (1)

In the 1990s the cooperation between the state, Nokia, and universities was driven by the national Finnish Center of Expertise program, which helped Nokia to set up competence centers in the cities of Helsinki, Oulu, and Tampere. The primary vehicle for government support has been Tekes, the Finnish Funding Agency for Innovation, and grants often require collaboration between a multitude of actors (2). The Nokia collaboration network has typically consisted of at least 50 strong person-links including university researchers (3). In 2000 there were about 300 companies in Nokia’s first tier partner network (2). Nokia’s R&D was driven both by its own needs and the basic research ambitions of universities, and this collaboration resulted e.g. in academic publications on subjective and physical image quality (3).

When comparing university collaborations in the US and Finland Chakrabati and Lester explain: “Policies and practices differ significantly between the two countries. Companies, particularly large companies, in the US, are reluctant to become involved in university relationships that encompass their core technology. Public agencies in the US also shy away from any projects that may benefit a specific firm.” (4, p. 640). In Finland, the public-private collaboration provided the basis for the original development of NMT-technology, which helped Nokia become a leader in mobile phones in the 1990s (3).

However, the downside was too much dependency on one company and one sector: Nokia and telecommunications. When Nokia ran into difficulties the whole country was in dire straits. Now the focus has shifted to actively integrating the activities of established companies, startups, universities, and the government. Slush, Europe’s leading startup and tech conference, has become the figurehead for this new strategy. A new area for development is cyber-security, with Nokia again being a key actor.

The state of California has worked together with tech giants such as Apple, Google, Microsoft and Facebook to improve privacy protections for millions of app users around the world (see for instance: https://oag.ca.gov/news/press-releases/attorney-general-kamala-d-harris-secures-global-agreement-strengthen-privacy and https://oag.ca.gov/news/press-releases/attorney-general-kamala-d-harris-announces-expansion-california%E2%80%99s-consumer. The next set of challenges that the State of California, and many others including Finland, is faced with is related to cyber security concerns. Mr. Cruz highlighted the State of California’s work in collaboration with federal agencies to improve cyber security defense in his presentation. To truly tackle some of the biggest tech challenges this far I believe that the State of California should leverage the private know-how in the region.

The contrast between the role of private companies in California versus Finland is well illustrated by the book California Government and Politics Today (5), which does not even mention any of the tech companies in the region (except for a note on Amazon), and does not discuss the relevance of business ecosystems. The main concerns outlined for California are related to budgetary and environmental concerns. Public-private partnerships could help to solve those as well. A report by PwC found that PPPs could save up to 20% in the context of infrastructure projects (6), whereas Albino et al. (7, p. 304) quite interestingly found that “Results show that inter-organizational collaborations with actors both within and outside the supply chain (government agencies and NGOs) are beneficial for a company’s overall environmental performance, the management of its environmental footprint, and a company’s environmental reputation.”

Carr (8) claims that public–private partnerships are referred to as the ‘cornerstone’ of the US cyber-security strategy. Nevertheless, it is still unclear what these entail in practice. Spencer et al. (9) argue that states maximize power, opposed to profits, and should recognize the country-specific potential and limits of that power in new industry creation. This is especially challenging when it comes to cyber-security, as the private sector develops it strategy with a very different framework compared to the government’s ‘public good’ conception (8).

Hoping to see more PPPs with the State of California, without developing a too strong dependency to one actor as we saw in Finland, I strongly believe that partnership between quite heterogeneous actors is the best way to solve some of the world’s most pressing challenges including cyber security (8) and environmental issues (5).

 

Sources:

1. Ali-Yrkkö, J. (2010). Nokia and Finland in a Sea of Change. Taloustieto Oy.
2. Ali-Yrkkö, J., & Hermans, R. (2002). Nokia in the Finnish innovation system (No. 811). ETLA Discussion Papers, The Research Institute of the Finnish Economy (ETLA).
3. Nyman, G. S. (2015). University-business-government collaboration: from institutes to platforms and ecosystems. Triple Helix, 2(1), 2.
4. Chakrabarti, A. K., & Lester, R. K. (2002). Regional economic development: comparative case studies in the US and Finland. In Engineering Management Conference, 2002. IEMC’02. 2002 IEEE International (Vol. 2, pp. 635-642). IEEE.
5. Field, M. (2012). California Government and Politics Today. 14^th edition. Pearson/Longman.
6. PwC (November 2016). Public-private partnerships in the US: The state of the market and the road ahead. Retrieved at: https://www.pwc.com/us/en/capital-projects-infrastructure/publications/public-private-partnerships.html.
7. Albino, V., Dangelico, R. M., & Pontrandolfo, P. (2012). Do inter-organizational collaborations enhance a firm’s environmental performance? A study of the largest US companies. Journal of Cleaner Production, 37, 304-315.
8. Carr, M. (2016). Public–private partnerships in national cyber‐security strategies. International Affairs, 92(1), 43-62.
9. Spencer, J. W., Murtha, T. P., & Lenway, S. A. (2005). How governments matter to new industry creation. Academy of Management Review, 30(2), 321-337.

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