Does education reform enhance the innovation performance of a country?

Education like a nature ecosystem: 'Quantity' versus 'Quality' – ‘Predator’ versus ‘Prey’…

Education reforms for high-tech companies…

Based on the 7th EMRBI Conference ‘Future of Entrepreneurship’, where GILE Experts Lauzikas et al. (2014) presented the paper ‘Impacts of the fear of failure on the Dynamics of entrepreneurship in CEEC belonging to the EU’, education plays a critical role on value-added generated by business and economies. Mykhailyshyn and Kondur (2018) add, that education system should be driven by various types of innovation (such as educational, scientific, technological, infrastructural, economic, social, legal, administrative, and etc.), which are necessary for educational organizations to become competitive leaders in global markets.

During the learning program in Vietnam (2018), organized by the Lithuanian education agency ‘Mokymų ekspertai’ and the Maltese education company ‘GILE Experts Limited’, part of the learning trip was held in one of the leading Vietnamese high-tech companies ‘Namson Laser’. Experts from Lithuania and Vietnam agreed that the success of technologically advanced firms depends on the innovation climate, because the quality of work life facilitates creativity and innovation, lifelong learning, motivation, and cooperation with various stakeholders.

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While relying on the experience of Lithuania, within their chapter of the book ‘Entrepreneurship in Transition Economies, Societies and Political Orders in Transition’ (Sauka A., Chepurenko A. (eds)) Miliute and Lauzikas (2017) emphasized, that effects of education may manifest via cultural and social norms (including factors, such as fear of failure, social trust and collaboration synergy, corruption and nepotism levels or orientation to social innovation), attitude and perception (which is liaised with perception of opportunities and capabilities or social image) or knowledge and skills, which are critical to effectively/ efficiently and creatively perform in the market.

The informal interactive meeting in Namson Lasers (2018) also focused on capabilities: technological capabilities in the areas of robotics, artificial intelligence, mobile technologies, digital platforms and etc.; communication skills via social medias and digital marketing, open-source innovation platforms and digital hubs; trans-disciplinary skills, such as capability to sell high-tech products or the use of technologies in creative industries; big data management and business intelligence techniques, along with unique competitive advantages of working in international projects ( while collaborating with various stakeholders or contributing to shared-value economy and Corporate Social Responsibility).

Quantitative criteria, such as expenditure in education, foreign investment in education services or investment in R&D are critical; however, countries which undergo education reforms (for instance, Lithuania) should not diminish the role of qualitative criteria, such as the quality of education service, education of educators, orientation to creative leadership and entrepreneurship, and internationalization level. According to Charlton (2018), who reveals her views on the experience of the most educated countries in the world (based on the OECD data from World Economic Forum, 2016), the most educated countries in term of population with tertiary education (South Korea with 70%, Canada with 60,6%, Japan – 60,1%, Lithuania with 54,9%, and the United Kingdom with 52%) had a rather different transformation experience in terms of their education policies. For example, according to Charlton (2018), South Korea focused on graduates in engineering, manufacturing and construction; Japan managed to attract only c.a. 34% of funds from public sources (compared to 70% of OECD average), Lithuania had been gradually increasing its expenditure on tertiary education over the past 15 years to reach the OECD level, while the UK spent the largest share of its wealth on primary to tertiary education. In 2017, South Korea, Canada, Japan and Lithuania (with 70%, 60,9%, 60,4% and 55,6% respectively) maintained the Top 5 positions in terms of numbers of educated people; while Russia joined this group with 57,6% (OECD, 2018).

Notwithstanding the fact that In 2016 the public expenditure on education out of GDP (5,2%) in Lithuania exceeded the average of the EU 28 (4,7%; Eurostat, 2018), this Baltic country invested only 1% in R&D as % of GDP, compared to 4,3% in South Korea or 3,4% in Japan (based on Unesco Insitute for Statistics  data (2018) for 2016) and spent twice as less as the average of OECD in 2016 (2,3%, OECD, 2018). A relatively low public expenditure in R&D of the top educated county reflects two challenges this Baltic country might face: the quality of education or knowledge diffusion from educational organization to companies. This is tightly related to country’s performance in terms of patents: in 2017, Lithuania possessed 214 patents, 31,773 trademarks and 3,484 industrial designs registered (WIPO, 2018), compared to 285 patents, 37,036 trademarks and 6,365 industrial designs in a relatively smaller economy of Estonia or 5,328 patents, 10,812 trademarks and 324.13 industrial designs in Ireland (WIPO, 2018).

A similar argument might be provided by comparing Lithuania, according to entrepreneurship and innovation rankings: Based on GEM 2014, Lithuania was considered as efficiency-driven economy bit by bit transiting to innovation category. This transition requires a solid supply of educated people who can work in the most prominent areas of the economy (for instance, lasers, mechatronics, IT, biotechnologies or nanotechnologies). GILE Experts anticipate that this pressure is going to increase, along with a fast improvement of this Baltic state in terms of innovation, as based on European Innovation Scoreboard 2018, Sweden, Denmark, Finland, the Netherlands, the UK, and Luxembourg belong to the club of innovation leaders, while Lithuania, Malta, Latvia and France are among the fastest growing innovators.

Taking into account the modest R&D performance and insufficient capability to effectively/efficiently transmit the knowledge to companies, this Baltic state should pay more attention to qualitative aspects of education policy within a new reform. Focusing on expenditure on education, in particular, in the area of wages or numbers of universities, is an important factor, but many other quality-related criteria should be taken into account to make the education system more sustainable and competitive in global markets.

When education organizations create value-added (via cooperation with various stakeholders and digitalization) and innovative activities are carried on, it gets easier to provide business with a sufficient number of graduates who possess knowledge and skills necessary to boost the innovation performance and enhance high-tech industries or simply contribute to cutting social exclusion in the most vulnerable parts of society. As it was stated by Đặng Ngọc Quý (2018), who is MD of Namson Lasers, the company is capable to unleash its innovation potential thanks to various projects with universities and schools, social initiatives, tight cooperation with more traditional industries, such as textile, and a set of HR initiatives, such as training abroad or projects with other stakeholders. Moreover, the present and future employees should be technologically more advanced in order to perform in global markets, driven by technological improvement, shared value economy, Corporate Social Responsibility, digitalization, and networking. Thus, instead of relying on a rather limited R&D transfer mechanism, the laser companies in Vietnam create the micro R&D infrastructure themselves, which might evolve into national R&D transfer system within high-tech industries in the nearest future. Đặng Ngọc Quý (2018) emphasized the role of high-tech and low-tech combination: lasers might increase the value-added of traditional industries; however, a healthy strategic partnership among different industries should be established, and trans-disciplinary skills are necessary.

GILE Experts suggest a formula of a successful modern university: it should focus on 4 main dimensions. The first dimension is related to the competitiveness: via attraction of funds and investment (which would enable education system to offer competitive salaries), application of innovative corporate marketing/sales and business intelligence techniques within recruitment of foreign students, creation of entrepreneurship-related programs or introducing more technological aspects to existing education programs (such as big-data management, artificial intelligence, mechatronics or IT). This direction might facilitate the dynamics of entrepreneurship and ecosystem of stat-ups while enhancing management capabilities (via trans-disciplinary training, where education experience should be backed by solid track record in business and internationalization via various projects).

The second dimension is centred on the quality of education (for instance, employment of leading professors, education for educators, monitoring of education process or creative leadership). The third aspect refers to the development and expansion of intellectual club (via stronger efforts of publishing in the top ranked scientific journals, participation in the leading international researches, such as GEM, or conducting practical research for companies). It should also be liaised with digital platforms, distant learning, mobile technologies, digital marketing, open-source innovation, shared value economy, and various international projects.

Collaboration with the world’s leading education organizations is another dimension to be worth focusing on. GILE Experts recommend having at least one strong international educational partner with merged or double-degree programs and strategic relationships with the most innovative companies. It should be in parallel to contributions to the R&D transfer system which is one of the most important factors differentiating innovation-driven economies from efficiency-driven economies. Education reforms should guarantee an adequate supply of graduates for the most prominent technological industries, while education organization should become innovative and proactive, being more visible and attractive in global markets. It is not an easy task to complete within public education systems that lacked competitiveness and were dependent on public expenditure, and it will not happen overnight, as it is related to cultural and social norms; thus, it should be considered as a long-term success criteria.

It is unlikely to reach success in education reforms having no accountability and sustainability: when the opportunity to learn from the past mistakes is eliminated. GILE Expets argue that the changes should start from clear and effective political priorities, which might empower the management of education organizations; moreover, the requirements while appointing education leaders should be much stricter, and corporate experience in sales of any knowledge-based services should be taken into consideration. Without absorptive capacity it will be very difficult to develop and perform; thus, employees of education organizations should be integrated into the process of the development of education policies and strategies; to continue, the innovation climate of organization should be realigned with the most important directions and strategic targets of the reforms, and a new set of effectiveness/ efficiency, creativity and quality criteria should be set, followed by training and training transfer mechanisms. Thus, the bigger public expenditure on education and slightly higher salaries are important, but not sufficient to succeed in education reforms.

All in all, apart from a somewhat stronger focus on quantitative success factors, the education reforms in CEEC should be centred on the combination of quantitative and qualitative criteria; thus, they should address and put in action more qualitative aspects of education improvement with a bigger economic and social value-added in the longer run. The reforms should be smooth and efficient in order to not diminish the innovation progress of a country.