Innovation, aside from being coined as the blueprint for success by the Turnbull government, can greatly benefit the local economy. Recently, Bloomberg released their US Innovation Index which added proof to the link between education, research, and innovation. Out of the fifty states, Massachusetts was crowned the top state for innovation in 2015. Prompting the question, what can Australia learn from the innovative state?
Increasingly, it has been noted that firms draw upon their environment to innovate. For instance, research models from Cohen and Leventhal (1990), Lundvall (1992) and Edquist (1997) all support this ideology. In Bloomberg’s analysis, it was noted that the Massachusetts Institute of Technology (MIT) provides a “ripple effect for the local economy.” MIT grads have reportedly founded about 400 start-up companies over the past few decades. This can create a ‘cluster’ of companies which are attracted to the strong business environment, and in turn, propel the labor market and growth.
Certainly, innovation can stimulate demand throughout the local economy through expenditure linkages. A new firm in a local economy, for instance, means a greater number of employees who demand local services, such as hairdressers and restaurants. Hence, innovation is not only beneficial for entrepreneurs, but the local economy at a whole. However, how can Australia emulate this when our innovation culture has been shown to be lacking?
Massachusetts, like Australia, faces challenges comparable to Australia’s lack of scale and distance from the foreign market. Boston, in particular, has created a purpose built innovation hub and the area’s “secret sauce” is a shared sense of purpose and a culture of collaboration, according to Microsoft’s “Accelerating Australia’s innovation ecosystem” report.
As the Bloomberg report reveals, local connectivity has had a fundamental impact on innovation and its economic value. Undeniably, innovation is a complex process with many feedback mechanisms. Therefore, for an establishment to innovate, it needs to have access to an appropriate institutional and cultural framework which enables interactive learning. Much of this learning is based on flexible labor markets and legislative frameworks.
Evidently, the Turnbull government’s innovation agenda has come at the right time – although the majority of the changes have yet to be put in place. The innovation agenda seeks to shift the culture in Australia, grow digital engagement and increase women in the STEM fields.
Are you interested in discussing innovation further?
Our InnovationCAFE 2016 is approaching and will aim to explore the importance of innovation in Australia’s economic future. Our InnovationCAFE 2016 is approaching and will aim to explore the importance of innovation in Australia’s economic future. Discover more at: InnovationCAFE 2016: Your Invite to the Must-Attend Innovation Conference of 2016.