Introduction Globalisation is at the core of understanding the dynamics of contemporary capitalism. Increasingly there is strong agreement that innovation is the key factor in promoting competitiveness in a globalizing knowledge economy (Lundvall 2008; Porter 1998). Competition based on innovation implies choosing the high road strategy, which is the only sustainable alternative for developed, highcost regional and national economies. For a long time, such a strategy was thought of as being identical with promoting high-tech, R&D-intensive industries in accordance with the linear view of innovation. More and more, the recognition has evolved that a broader and more comprehensive view on innovation has to be applied to retain and develop competitiveness in the heterogeneity of Europe’s regions. This implies that regional advantage has to be constructed more on the basis of the uniqueness of the capabilities of firms and regions than solely on the basis of RD Barney 1991; Eisenhardt and Martin 2000; Malmberg and Maskell 1999). This reflects recent research pointing to the complexity of modern products and their innovation processes (Lam 2002), which requires a differentiated knowledge base perspective (i.e. distinguishing between analytical, synthetic and symbolic knowledge) to be fully accommodated (Asheim and Gertler 2005; Asheim et al. 2007). Such a broadbased innovation policy is in line with the innovation system perspective of defining innovation as interactive learning combining an STI (Science, Technology, Innovation) and a DUI (Doing, Using, Interacting) mode of innovation (Lorenz and Lundvall 2006). New research confirms that combining the two modes of innovation seems to be most efficient with regard to improving economic performance and competitiveness, i.e. firms that have used the STI mode intensively may benefit from paying more attention to the DUI mode, and vice versa (Berg Jensen et al. 2007). The ability of firms to search and combine knowledge from different sources seems to be stronger associated with innovativeness than either interfacing predominantly with customers or suppliers applying a DUI mode of innovation, orwith research system actors in STI-oriented processes (Laursen and Salter 2006). Thus, on the firm level, these two modes of innovation are co-existing, but they will be applied in different combinations depending on the dominating knowledge base(s) of the regional industry as well as the absorptive capacity and cognitive distance between actors on the firm and system levels. The unanswered question is, however, how the capacity of combining the two modes of innovation can be further diffused to and implemented in less innovative firms as well as on the regional level. The aim of this chapter is to analyse how policies and supportive organizational and institutional frameworks should be constructed to promote a combined and complex mode of innovation, using Nordic Centres of Expertise as the empirical case (Isaksen and Karlsen 2009).
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