Our analysis suggests that, as Rosenfield has argued, industrial policy can help provide a context in which manufacturing firms can be competitive in high-cost economies. The central issue is innovation: manufacturing depends on it to create value, and industrial policy must increasingly encompass innovation policy. Seen from a systems-of-innovation perspective, the role of industrial policy is to overcome systems failures, facilitate interaction and cooperation between firms and other agents in the system, and incentivize innovative behavior. Effective, innovation-based ‘ecosystems’ create the setting in which manufacturing firms can be competitive – not necessarily by carrying out production tasks, but by creating value from the unique and valuable capabilities that arise from connecting their distinctive manufacturing technological core to the capabilities of other agents in the system.
OM must adapt its conceptual toolkit so as to incorporate and theorize networks wider in scope and more fluid than the firms, supply chains and markets with which it is familiar. It must also understand more fully what the implications of such a world are for the jobs, skills and roles of people working in operations. Senior operations managers must learn how to take account of and benefit from the opportunities afforded by an active industrial policy. Finally, OM practitioners and academics alike must play their part in the creation and development of industrial policy, so that OM concerns and principles are incorporated alongside those of technologists and economists.
This intersection of OM and industrial policy suggests a rich research agenda. We have begun to show what an innovation-centered, extended operation looks like and how intermediate research organizations can help it to work. But there is a great deal more to reveal about the practices,
36
institutional arrangements and operations roles of such collective endeavors. Furthermore, in the relatively limited international operations literature, there is an opportunity to develop much greater understanding of how the institutional architecture and industrial policy of different countries affect and are affected by manufacturing location decisions: this would complement recent studies using the lens of ‘culture’. Finally, there is a big job to do in raising the level of engagement of OM practitioners and scholars in the industrial-policy development process itself, particularly as industrial policy becomes more active and targeted, and increasingly directed at the detailed level – the competitiveness of firms and their operations.
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44 Appendix: Some distinctive features of the UK Economy
The UK economy has some distinctive features that need to be taken into account when attempting to