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Innovation, Growth and Social Cohesion

The Danish Model

Bengt-Åke Lundvall

Written by the scholar who, together with Chris Freeman, first introduced the concept of the innovation system, this book brings the literature an important step forward. Based upon extraordinarily rich empirical material, it shows how and why competence building and innovation are crucial for economic growth and competitiveness in the current era. It also provides a case study of a small, very successful European economy combining wealth creation with social cohesion.
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Chapter 8: The Learning Organization

The Danish Model

Bengt-Åke Lundvall


A recent OECD report emphasized that the average productivity growth for the entire economy can largely be explained by examining the activities of the individual firm.1 In the majority of the countries studied, more than half of total productivity growth stemmed from changes at the level of the individual firm (OECD 1998a, p. 111). The PIKE (Productivity and International Competitiveness) project, which examined the reasons for the productivity decline in the Danish manufacturing sector during the mid 1980s, also concluded that the internal conditions in a firm were particularly effective in explaining this negative development. More specifically the blame could be placed on the lack of adaptation of qualifications and organizational forms in connection with a rapid introduction of new technology, particularly information technology (Gjerding et al. 1990). International analyses as well as the DISKO project indicate that there is a clear connection between firms’ organizational development and their productivity levels. The current focus among economists and in international organizations such as the OECD on how firms design and redesign their organizations represents a shift in perspective. The traditional assumption in standard economic analysis has been that firms by definition act in their best interest and that they are equally able to find out what is best practice. This assumption that firms act as well-informed, rational optimizing agents has conflicted with the growing effective demand for external advice from consultancy firms with regard to organizational changes (quality circles, just-in-time, lean production and so on). In the 1996 survey of firms...

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