Systems of Innovation: A Policy-Orientated View on Innovation
The system of innovation (SI) approach, notwithstanding its Schumpeterian roots (in particular the invention-innovation-diffusion trilogy), can be traced back to Friedrich List’s book Das nationale System der politischen Okonomie (1841 [1959]).
Defining a “system” as a set of interrelated units, in the SI framework, innovation is considered as the outcome of an interactive learning process in which many different elements are involved (see Lundvall 1992 [2010]: 2). The elements pivotal to the innovation process are firms, private and public institutions, universities, research laboratories as well as other educational institutions and organizations. The emphasis is on the generation, dissemination and use of new, economically useful knowledge. The interaction of elements in a SI proceeds through both formal and informal activities and will typically involve some uncertainty. While the former include, for example, innovative and research activities as well as financing aspects of the innovation process, the latter refer, for instance, to “learning by doing” or “learning by using” and other learning mechanisms which help to turn an invention into an innovation, and thus into new and economically useful knowledge.All SI approaches share the view that innovations and technological change are essential determinants of the long-term development of economies. While the focus was initially on the national level of analysis, globalization and an increased internationalization of the innovation process necessitated transcending a purely national perspective. Several other non-linear concepts evolved, regarding also the regional, the local and the sectoral levels. These different approaches do reflect, first, differences in the geographical dimension, contrasting the national level with a sub-national or supra-national level, and second, conceptual differences (see Carlsson et al. 2002).
The performance-orientated view on SI in terms of economic growth and productivity gains made the concept popular with policy-makers. For instance, the Organisation for Economic Co-operation and Development (OECD) and several national organizations involved in technology and innovation policy used the concept as a policy-orientated framework (for some case studies, see Nelson 1993).From a more theoretical perspective, the SI framework contains evolutionary elements. This can be seen, for instance, in the fact that a SI is considered as a historically grown system and is shaped by the specific cultural and social patterns with which it coevolved. Different types of innovations are considered as endogenous variables emerging through the dynamic interaction of the elements within a SI. And these dynamics involve continuous change arising from within the system.
The SI framework was also exposed to several criticisms. It was particularly objected that the approach lacks clarity and does not constitute a unifying theory. Yet, the pluralistic perspective underlying the study of SI can be regarded as an advantage. Lundvall (2007: 872) in this context stressed the wide-ranging scientific relevance of the SI concept within the academic community: “Economists, business economists, economic historians, sociologists and, not least, economic geographers have utilized the concept in their attempts to explain and understand phenomena related to innovation and competence building.”