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Neil Bradford and David A. Wolfe

Innovation in the knowledge-based economy is a complex, multifaceted process, one that challenges actors from government, business, education and communities to adapt through collaboration and learning. This chapter argues that it is the social characteristics that underlie the innovation process itself and the broader political arrangements and policy mechanisms that condition change and enable success. Rather than looking narrowly at economic institutions or state regulations, this perspective emphasizes the governance relations among firms, across sectors and between economic actors and governments. The concept of the “innovation system” captures the crucial role that knowledge plays in the economy and the importance of collaboration through institutional processes of social and policy learning operating at multiple geographic scales from the local to the supranational. Better understanding of the role that knowledge plays in the economy, coupled with new insights into governance and learning models, provides a framework to assess the alignment of public, private and community resources supporting innovation. Surveying processes of economic transformation underway in many local and regional innovation systems across OECD countries, the chapter offers ideas for strengthening knowledge platforms in the economy, community and government.

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Patrick Cohendet, Guy Parmentier and Laurent Simon

The place and role of managing creativity in organizations appears as a growing concern amongst scholars as well as practitioners. The aim of this chapter is to situate and analyze how managing creativity should fit into the organizational framework orchestrated by the interactions between the management of knowledge and the management of innovation. In this contribution, we question the traditional view that places creativity at the preliminary stage of the innovation process. Following pioneering works on the management of creativity, we suggest in the following that managing creativity is equivalent to managing ideas, and argue that the main theoretical obstacle is that at the present stage ideas are mostly “black boxes” in innovation theories. In an effort to “open this black box”, we come to the suggestion that a major change of perspective is needed in management: instead of viewing the management of ideas as an initial stage of the innovation process, we propose an integrated framework where the processes of ideation and innovation are not sequential but coupled, and where these strategic interactions are mediated by knowledge-management processes. Such a change of perspective suggests drastic impacts on the ways to manage organizations, which are discussed in the conclusion of this chapter.

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Ulrich Dewald and Bernhard Truffer

The recent emergence of renewable energy and other cleantech industries has attracted considerable attention in innovation studies. These have emphasized the core role of processes such as entrepreneurial activities, knowledge generation and regulatory support for research and development. Processes of market formation have either been neglected or considered in aggregate terms only. We therefore propose to analyze such market formation dynamics in more detail, drawing on the technological innovation systems framework. The conceptual approach is applied to the rapid expansion of photovoltaic markets in Germany over the past twenty years.

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Michel Callon

Marketization, which is gradually expanding the empire of commodities and imposing the financial world’s modes of evaluation on more and more sectors of activity, acutely raises the question of the role of markets in contemporary societies. The debates surrounding marketization have generated a set of contrasting arguments corresponding to different attitudes towards marketization: markets being synonymous with efficiency and democratic standards, markets as machines which destroy the social fabric, or markets perceived as fragile institutions threatened by conservative forces. The objective of this chapter is to contribute to changing the terms of the debate, in particular through reconsidering the way in which market and competition are closely associated. A thorough examination of the notion of market competition leads to a distinction of two ways of describing markets, depending on the role played by product innovations. In interface-markets, innovation strategies aim to reduce competitive pressure, while in market-agencements they are the expression of competition itself. In the former, the definition of market goods is secondary, whereas in the latter it is at the heart of the confrontation between economic agents. Empirical research on the innovation process confirms the greater realism of the market-agencement conception and leads to a new view of marketization and its implications. The competitive dynamics of market-agencements, which makes the establishment of new bilateral transactions and of product innovation the dominant rule, results in the constant expansion of the market sphere. The marketization process is thus at the core of markets’ functioning.

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Stephane Lhuillery, Julio Raffo and Intan Hamdan-Livramento

There is a growing interest in broadening the measurement scope of innovation to consider “creative” activities, suggesting that the usual indicators of innovation satisfy neither scholars nor policy makers. Conceptually, there is little difference between innovative and creative activity. However, it is difficult to know to what extent the current measures that capture innovation are relevant for creativity. Can the new measures for creativity benefit from the experience accumulated through R & D and innovation? Our chapter provides insights and lessons learned from using measures of innovative activities for scholars who are interested in capturing creative activities. We underscore the difficulties faced when measuring innovation and draw some parallels between these difficulties and the efforts undertaken to measure creativity.

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Harald Bathelt and Sebastian Henn

This chapter discusses national (NIS) and regional innovation systems (RIS) as approaches that have been successfully applied since the 1980s to describe patterns of innovation and knowledge creation within specific territorial boundaries. However, as will be argued, the relationship between both approaches has received little attention in the literature and remains under-conceptualized. To address this deficit, we utilize the notion of the ‘social system’, which describes the capability of a system to constantly reproduce itself, and conceptualize NIS as systems that are able to define the boundaries between internal and external structures and to drive and sustain distinct internal innovation dynamics. In contrast, RIS do not routinely share these characteristics, as ‘normal regions’ do not have a sufficient localized economic base and/or governance capacity to establish self-referential innovation processes. While the NIS approach is a conceptual tool to analyze and understand the nature of innovation systems at the national level, the RIS approach is better understood as a normative political device to mobilize innovation in localized contexts.

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Bengt-åke Lundvall

The term innovation system has become widely used by scholars from different disciplines and by policy makers from all parts of the world. This chapter presents the national innovation system as a ‘new combination’ that has evolved and been reinvented by connecting it to new fields of theory and empirical research by scholars operating in disparate fields of enquiry. We start by referring to the very first contributions that made use of the concept – Freeman (1982) who emphasized the link between innovation and international trade and Lundvall (1985) who emphasized network formation and interactive learning at the national level. We use these quite disparate, but complementary, contributions to discuss some of the future paths of evolution of the concept. At the end of the chapter we relate the two original contributions to the literature on global value chains and we argue that combining the understanding of interactive learning and national innovation systems with the global value chain perspective is one way to reestablish the critical potential of the original ideas that became diluted in connection with the wide diffusion of the concept. We also argue that combining the innovation system and the value chain perspective is useful when it comes to developing a more satisfactory understanding of how countries can evade the poverty trap and the middle-income trap.

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Participatory budgeting as a democratic innovation: Origins, expansion and limits

Promises and Limits of Democratic Participation in Latin America

Leonardo Avritzer

Participatory budgeting (PB) is the most important democratic innovation that emerged in the developing world during the third wave of democratization. The chapter evaluates participatory budgeting according to three criteria: (1) budget-making, (2) deliberative institutions and (3) citizen education. It shows that the most successful experiences that emerged during the 1990s in Brazil – Porto Alegre and Belo Horizonte – meet the three criteria. Based on these elements the chapter looks at the success and failure of the diffusion of PB. It looks at two contrasting cases in Brazil: the cases of São Paulo and Recife, and shows how the different positon of the political system in relation to participation generated success or failures in these two cases. Based on the two Brazilian cases two cases in Argentina, Buenos Aires and Rosário, are explored. The experiences of the two cities were radically different. Buenos Aires was a very politicized trajectory highly dependent of the Kirchnerismo that in the end opted to discontinue PB. Rosário was an experience that grew as mayors of the Socialist Party decided to empower grassroots structures of participation. PB in Argentina reproduced similar successes and failures to PB Brazil, inferring that the results of PB are not specific to a country but are more general to PB as a participatory innovation. Buenos Aires seems to be a case very similar to São Paulo. Thus, the two Argentinian cases together with the cases of São Paulo and Recife established a pattern of success and failure. This pattern implies that in order to be successful PB needs to achieve centrality in budgeting-making and be capable of redefining the city in participatory terms. The chapter shows how these criteria differentiated Recife and Rosario from São Paulo and Buenos Aires.

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Julien Pénin

In this chapter, which reviews some of the most recent literature about patents, we depart from the “second-best” approach that views patents as instruments solely dedicated to exclusion and to restoring appropriation. We instead present a vision of patents as structuring elements of open innovation; this is to say as instruments which help coordination between actors of the innovation process. This also leads us to focus on the problems that patents may induce for open innovation such as anti-commons, trolling (hold-up) or high transaction costs in sequential innovation. We conclude by discussing how to transform patent laws in a way that could limit these problems and thus make patents supportative of open innovation.

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Luciana D’Adderio

This chapter draws on a recent case of routines transfer within a high-technology, highly distributed organizational setting, to call for a more dynamic characterization of transfer as an emergent achievement involving the effortful recreation of routines at a new location. By building on recent advances in Routine Dynamics and Performativity Theory, I argue how routines can be usefully theorized as the (constantly challenged) outcome of ‘performative struggles’ among competing agencies and their performative programmes. This performative framework helps advancing a dynamic perspective on routines transfer while also focusing our attention towards the key role of artefacts and organizational communities on the transfer and replication of organizational routines.