An International Research Handbook
PRIME Series on Research and Innovation Policy in Europe
Edited by Ruud E. Smits, Stefan Kuhlmann and Phillip Shapira
Chapter 5: Rationales for Public Policy Intervention in the Innovation Process: Systems of Innovation Approach
Cristina Chaminade and Charles Edquist INTRODUCTION Why government should intervene to support R&D and innovation is a question that can be traced back several decades (Arrow 1962; Nelson 1959), yet is still current. Despite the extensive literature on innovation, the rationales for public intervention in innovation are still subject to intense debate, especially related to new theoretical perspectives such as the system of innovation (SI) approach. Innovation policy can be defined as 'the public actions that influence innovation processes, i.e. the development and diffusion of (product and process) innovations'. 1 The objectives of innovation policy are often economic ones, such as economic growth, productivity growth or increased employment and competitiveness. However, they may also be of a non-economic kind, such as cultural, social, environmental, or military. As in any policy, the objectives of innovation policies are determined in a political process and not by researchers. Innovation policy design is a question of the division of labour between, on the one hand, the actions of private firms and, on the other, the actions of public organisations - with regard to factors influencing innovation processes. For example, large-scale and radical technological shifts rarely take place without public intervention, while incremental innovation is normally carried out by firms without any explicit support from the government. To discuss the division of labour between private and public actors in innovation is the same as discussing the rationales, reasons or criteria for public policy intervention. That is, when, how and why should government intervene in...
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