The Dynamic Transformation of the Finnish Innovation System
New Horizons in the Economics of Innovation series
Edited by Gerd Schienstock
Chapter 2: Towards a theory of social innovation and structural change
* Timo Hämäläinen 2.1 INTRODUCTION The world economy is currently undergoing a major techno-economic transformation that is comparable to the first and second industrial revolutions. The rapid advance and diffusion of information and communication technologies (ICTs), the increasing global specialization of value-adding systems, new cooperative and skill-intensive forms of organization as well as the growing differentiation of demand patterns have challenged the old economic and social structures of industrialized countries. In this rapidly changing environment, the performance of socio-economic systems at different levels of analysis – organizational sub-units (departments, divisions), organizations (private, public, third sector), organizational fields, sectors and clusters, geographical subregions, national economies and supranational governance structures (EU, NAFTA, etc.) – depends on their capacity to renew their socio-institutional structures. A rapidly and coherently changing system can develop complementarities and synergies among its core elements and those of the environment. The dynamic match between the system and its environment can produce learning, scale and external economies that lead to an ‘increasing returns’ regime characterized by rapid productivity growth and sustainable competitive advantage (Arthur 1994; Kogut and Parkinson 1993; Lipsey 1997). On the other hand, slow, partial or incoherent structural adjustment may lock the system into a ‘decreasing returns’ regime of slow productivity growth and eroding competitiveness.1 The importance of structural adjustment capacity for economic performance underlines the need to understand the nature of socio-institutional change processes. Unfortunately, such systemic change processes have not been the focus of any branch of social sciences in recent decades. The rather stable postwar...
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