Contributions to Innovation Capability

Testing and inspection. Means of studying the characteristics, contents and/or quality-determining parameters of products, components, sub-stances, etc.

Certification. The formal substantiation that specified requirements relating to a product, process, system, person or body are fulfilled.

Conformity assessment has to identify those goods and services that con-form to a standard, and may label them in order to differentiate them from those that (likely) do not. This element of quality infrastructure comprises the activities of testing and inspection, which are the examination procedures to verify whether a product or service complies with a technical regulation or a standard, and certification, which is the formal substantiation that it conforms.

The important economic function is to reduce the asymmetric information in-herent to many economic transactions, by increasing the information available to the buyer of a product or service. It establishes a “visible link between stan-dards and the market” (DTI, 2007), thereby creating incentives for producers to upgrade their production processes.

Accreditation

Accreditation is the formal confirmation by an independent third party that a body is competent to perform certain tasks. The main role of accreditation is to evaluate and attest the competence of organizations or individuals to correctly perform conformity assessment services. It is a “means of building confidence in the work and the findings of testing and calibration laboratories and inspec-tion and certificainspec-tion bodies” (Wipplinger et al., 2006).

ac-Figure4.2:Contributionsofthequalityinfrastructuretodevelopment

tors and institutions that is called the IS, and particularly on the interaction and the mutual tuning of its system elements.

In order to assess an IS’s performance independently from its structure, various attempts have been made to list the most important activities. Johnson (2001) gives an overview on the ongoing discussion, comparing different ap-proaches and identifying basic functions that have been mentioned by most au-thors in the field. This taxonomy has been further systemized by Bergek et al.

(2008), according to which the following system functions need to be fulfilled:

KNOWLEDGE DEVELOPMENT,KNOWLEDGE DIFFUSION THROUGH NETWORKS,

RESOURCE MOBILIZATION, ENTREPRENEURIAL EXPERIMENTATION, MARKET

FORMATION,LEGITIMATION, andGUIDANCE OF SEARCH.

In the following, we shall track down how the different elements of qual-ity infrastructure, as a subsystem of the IS, contribute to the performance of several of these functions.

4.3.1 Contributions of Standardization

Formal standardization, as a collective act that assembles many stakeholders of a technology to agree on common definitions and specifications, serves various purposes with regard to the functioning of an IS. As a platform of communi-cation and coordination it contributes importantly to the function of KNOWL

-EDGE DIFFUSION. As an act of codification of shared knowledge that facilitates the exchange of information among interested parties, it moreover helps in-novative actors to align their interests and build advocacy coalitions in favour of new technologies. The multi-level perspective literature on socio-technical transitions (Geels, 2002, 2004) considers these dealignment and realignment processes as fundamental for technological niches to eventually become a dom-inant regime. Thus, standardization helps to overcome inertia and initial resis-tance to change from incumbent players, contributing to theLEGITIMATION.

Since resources are almost always limited, it is important that, when vari-ous technological options exist, specific foci are chosen for further investment (Alkemade et al., 2007). Variety-reducing standards are such a selection instru-ment that, if used correctly, can boost specific technological innovation provid-ing necessary coordination andGUIDANCE OF SEARCHto the actors of the IS. If new technologies can be implemented within a standard, this has most prob-ably significant consequences for their diffusion, and sometimes may even be the only way of making their application economically viable by allowing for the exploitation of economies of scale or network effects. Moreover,

compati-bility and interface standards by providing a codified technical basis can also open up new markets for technologies that draw on the standardized technolo-gies, thereby spurring complementary follow-up innovations.

Another main contribution of standardization activities is on the function of market formation. By specifying market requirements standardization supports demand articulation on the one side while on the other giving producers ori-entation regarding further needs for research and technological development and reducing their uncertainty concerning market preferences and (possibly upcoming) legal provisions. A well-functioning quality infrastructure allows governments to induce directed technological change using technical regula-tions that refer to standards. An excellent example is the Japanese Top Runner approach which identifies the most energy-efficient performance in the mar-ket for some targeted end-use products and turns its specifications into the level that all similar products must meet by a specified date. Standardization in this case incentivizes companies to develop new energy-efficient technolo-gies, giving them the opportunity to put pressures on their competitors by out-performing them, and induces the diffusion of newly available environmental technologies among the outperformed companies within the sector.

4.3.2 Contributions of Metrology

Metrology, the science of measurement, first of all serves the system function

of KNOWLEDGE DEVELOPMENT. ‘To measure is to know’ and ‘if you cannot

measure it, you cannot improve it’, are words attributed to Lord Kelvin, a nineteenth-century mathematical physicist: the provision of accurate infor-mation about product or process characteristics is an important input to re-search and development (R&D). Reliable feedback information about the con-sequences of small technical changes are a precondition for technological ex-perimenting and learning, hence supporting the creation and improvement of new technologies in general. An empirical study by Temple and Williams (2002) has demonstrated the high spillover effects from measurement technol-ogy into the wider economy of the UK, estimating an impact equivalent to around 2 per cent of GDP.

The ability to measure is the key to monitor and improve certain product or production characteristics. This fact may pose a restriction on the govern-ment’s ability to enforce the protection of public interests by the markets or guide technological change in a certain direction. Technical regulations are only feasible when their enforcement can be credibly based on reliable control

measurements. The quality of the metrological infrastructure therefore enables governments to better performGUIDANCE OF SEARCH determining the reach of some innovation policy instruments.

For companies it can be hard to enter into (international) quality compe-tition if there is no adequate metrological infrastructure locally available that allows them to control quality characteristics at a reasonable price. Even volun-tary standard requirements then may pose an entry barrier to foreign markets for those companies that have difficult access to the necessary measurement instruments. As a consequence, companies in countries with a weakly devel-oped quality infrastructure often have to face fierce price competition at inter-national markets instead of being able to differentiate their products through qualitative innovations.

4.3.3 Contributions of Conformity Assessment

A conformity assessment mechanism, as for instance a product certification scheme, aims to reduce the risk faced by the potential buyer concerning the true use value of a product. Since the adoption decisions for technolog-ical novelties are typtechnolog-ically subject to very high uncertainty, risk reduction through conformity assessment can have an important impact on the actual

ENTREPRENEURIAL EXPERIMENTATIONwith innovative products. As an

illus-tration, one could think of new construction materials that would only en-counter demand if their stability or their thermal insulation properties can credibly be proven to the potential buyer through a conformity assessment scheme.

In addition, the evidence of conformity is the most fundamental issue in what concerns so-called credibility goods: some (production-related) charac-teristics are not observable to the adopter of a product even after purchasing it, but add an ideal subjective value to it, for which the buyer is willing to pay a premium if he can be convinced of its factuality. Such ideal values could be related for instance to labour conditions, fair trade aspects, as well as to animal or environmental protection concerns. As an example, we may think of ‘green’

electricity. Innovators that perform superior with regard to these ideal values compared to conventional producers would not be able to capitalize on this fact without a credible conformity assessment scheme. The functioning of the conformity assessment element is thus fundamental for theLEGITIMATIONand

MARKET FORMATIONof this kind of innovations, for which the actual product

quality otherwise cannot be easily verified by the user.

4.3.4 Contributions of Accreditation

Accreditation is supposed to lend credibility to the whole system of national quality infrastructure, by securing the adherence of the accredited institutions to the principles of transparency, objectivity and impartiality. Furthermore it assures their integration within the international quality system by secur-ing traceability of measurements to international standards and promotsecur-ing the world-wide acceptance of their service activities.

Accreditation thus most directly contributes to the IS functions ofKNOWL

-EDGE DIFFUSION by establishing and fortifying international linkages and to the function ofMARKET FORMATIONby enhancing the trust in the use value of national innovative products, particularly within foreign markets. It can yet be argued that it indirectly amplifies all the contributions of the other quality infrastructure elements to the IS.