Innovation and Institutions

Innovation and Institutions

A Multidisciplinary Review of the Study of Innovation Systems

New Horizons in the Economics of Innovation series

Edited by Steven Casper and Frans van Waarden

Innovation and Institutions is an extensive elaboration on the make up of systems of innovation. It examines why some countries are more innovative than others, why national styles of innovation differ, and goes on to explore why some countries make radical innovations but fail to successfully market them, whilst others making incremental innovations have more commercial success.

Chapter 8: A prototypical institution: law, regulation and innovation

Frans van Waarden

Subjects: economics and finance, economics of innovation, institutional economics, innovation and technology, economics of innovation, innovation policy

Extract

Frans van Waarden 1 NATIONAL SYSTEMS OF INNOVATION The ‘national systems of innovation’ literature (Freeman 1987; Dosi et al. 1988; Lundvall 1992; Nelson 1993, 1994; Edquist 1997; Freeman and Soete 1997) has given a prominent place to institutions. It has argued that the innovative capacity of nations depends on the system of institutions that they have in place to support or hinder innovation, and hence that differences in the innovative performance of nations can be traced back to differences in institutional make-up. However, in their terms institutions are mainly organizations, organizations that provide incentives and resources, possibilities and constraints for innovation. The authors of the contributions to the classic anthology of Richard Nelson (1993) discuss different organizations that make up these innovation systems, but they call them institutions. They mean the organizations or sets of organizations that produce or control the major resources for innovation: banks and other finance-providing organizations and financial markets, research organizations, training and educational organizations, unions and other organizations that form part of the system of labour relations, and organizations involved in technical standardization. They do recognize that the organizations and inter-organizational relations that make up the national systems of innovations are influenced by ‘institutions’, now used in a more specific meaning than above (where they mean organization sets), namely the ‘norms, habits, conventions and rules’ of a society. But these remain largely unexplored in this literature. This chapter elaborates on such institutions, in particular the most idealtypical ones, law and regulations, and investigate what role...

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