Academic chapter/article/Conference paper
There are two ways of meeting the challenges of restructuring: (1) as reactions to disruptions, market shifts or other types of turbulence that come as a surprise, or (2) proactively, by continuously enhancing the capacity to explore new opportunities and develop new products and areas of business through diversification and innovation (Mariussen et al., 2018). The reactive strategy often involves an over-reliance on the exploitation of existing technologies, markets and products; while the proactive strategy using innovation and a co-creation approach can lead to sustainable development and growth. To proactively restructure the economy, a country should search for the new domains of knowledge, business, industry to confer the ability and capacity to change before the economic situation becomes desperate. The search process is best undertaken jointly between the innovators, that is, innovation firms, entrepreneurs, researchers, and other parts of the innovation system, such as the government and organizations promoting innovation policy. This allows a stronger emphasis on exploration through partnerships between policy makers, entrepreneurs, and scholars, which is the core idea of the smart specialisation approach. This chapter discusses a proactive approach to economic restructuring and growth, specifically, smart specialisation. The study begins by introducing several approaches to, and strategies of, economic growth, such as diversification and the complexity model. The complexity concept in this model is one of complicated composition rather than complex systemic behaviour (Price, 2004; see also extensive discussions in Chapters 7 and 9 in this volume Aasen, 2018; Virkkala and Mariussen, 2018). To facilitate this point of departure the chapter uses secondary data from the Atlas of Economic Complexity (Hausmann and Pritchett, 2018) to illustrate a gap in these theories. Next, we use smart specialisation theory to explain this gap, and how its mechanism, the entrepreneurial discovery process (EDP), can contribute to economic growth in advanced countries. One of the important conditions for EDP to work is the ambidextrous capability of firms to explore new domains and exploit current strengths at the same time. Norway is used as an illustration case.