Pantano( 2025) scrutinises the concept of absorptive capacity as the missing link in Australia’ s innovation performance. He comments that links between industry and universities or other researchers are relatively weak and shallow, reducing joint engagement in the adoption of research knowledge and the creation of valued new products and services.
Research translation is a significant gap that severely limits absorptive capacity and innovation outcomes. Pantano recommends programs that build absorptive capacity in firms; equip universities to support adoption not just discovery; and foster roles and processes that bridge research and practice.
Collaboration skills Proficiency in collaboration is key to building innovation capabilities. More than networking, adding to lists of contacts or exchanging information, collaboration is characterised by regular dynamic interactions with diverse individuals and organisations, shared interests and recognition of opportunities to cooperate, and vehicles for debating issues, sharing knowledge and taking joint action.
Collaboration involves building trust, balancing a common purpose with specialised and complementary capabilities, managing relationships, negotiating conflicting opinions and outlooks and working together to solve problems through cross-fertilisation of knowledge and expertise.
Effective collaborations are the building blocks of innovation eco-systems. They bring together multiple actors, intermediary organisations and sources of capital and talent to strengthen and sustain a wide range of innovation capabilities, not just the products of research and technology advances.( Howard, 2025f; Kennedy, 2024a).
Management capability and business acumen There are many examples of innovative businesses whose success has little to do with technology breakthroughs. These enterprises are more likely to be cases of business model innovation. Business model innovation is a recipe for transformational change in response to market gaps. This serves to provide customers with superior value, to lift productivity and earn a premium for the business from doing so.( Kennedy, 2025; Kennedy, 2023).
Howard( 2025 d) provides case examples such as Microfinance( Grameen Bank), Circular Economy models, Airbnb, Doctors Without Borders, the Open Source Software movement.
Even if the adoption of technology is central to the enterprise’ s operations, technology does not automatically result in innovation, unless it is surrounded by other necessary assets including market insights, sources of capital, responsive regulatory rules, innovation testing facilities, standards-setting regimes.
In short, technical skills need to be matched by creativity, management capability and business acumen. These latter skills make at least an equal contribution to abilities such as critical thinking, design, marketing, risk management, user problem solving and customer service.
Innovation capability is likely to be stronger when it results from cross-disciplinary activities and action where technical capability and human and social needs converge.
INNOVATION ACTION AGENDA Economic developers can reclaim innovation to benefit their communities by following‘ the road less travelled’. Given the dominant attention to innovation defined as R & D, advanced technologies, commercialisation and entrepreneurial start-ups, there is an opening for a humancentred innovation action agenda that delivers both social and economic progress.
This is an agenda for capability building focused on solving major problems and pursuing promising opportunities. The actions on learning, collaboration and business acumen highlighted to date are an effective starting point.
In addition, action is warranted on the twin imperatives of support for a robust innovation eco-system in Australia and a focus on place-based innovation in local communities.
These two action areas are significant because, together, they can have multiplier effects on building wideranging innovation capabilities. Further, they provide for innovation strategies which focus on a common and coherent purpose, while simultaneously allowing for variety in innovation projects and places- customised for specific conditions, opportunities and obstacles.
Supporting innovation eco-systems This paper takes the view that R & D and innovation are different, but both need to be in balance to unlock innovation capabilities and their benefits. Robust innovation eco-systems are the connective tissue between the two.
Innovation eco-systems are dynamic networks across organisations and sectors, where the whole is greater than the sum of the parts.
Their effectiveness is not just due to proximity and volume of interactions. They succeed because of the quality and density of their interactions, competency as bridge builders and commitment to a shared challenging mission.( Howard, 2025 e).
Robust innovation systems go beyond formal alliances; they allow for serendipitous collisions of ideas and safe spaces for participants to experiment with new and better ways for their businesses and communities to prosper.
Innovation eco-systems are a source of transformative change, the active ingredient for productivity gains.
This is useful intelligence for economic developers to take the lead on nurturing innovation eco-systems in their areas.
Look Local Another potent action to boost innovation capabilities and performance is to‘ look local’, that is, focus on place-based innovation in local communities.
Paradoxically, for Australia to boost its achievements and impact as an innovative nation, it may have to act firstly at the local community level. Local communities have the potential to chart the path of future prosperity based on broader innovation initiatives.
Changing attitudes to first resort public sector leadership and the comeback of community following the pandemic have elevated the importance of local placebased innovation action.
Local communities can serve as test beds or living labs for more ambitious innovation policies and programs. The call to localism could include experiments on:
• Joined-up innovation policy making and program delivery across agencies
VOL 18 NO 3 2025 26 www. edaustralia. com. au