The Theory and Practice of Innovation Policy
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The Theory and Practice of Innovation Policy

An International Research Handbook

Edited by Ruud E. Smits, Stefan Kuhlmann and Phillip Shapira

This comprehensive Handbook explores the interactions between the practice, policy, and theory of innovation. The goal is twofold: to increase insight into this dynamic process, searching for options to improve the effectiveness and efficiency of both policy and innovative practice, and to identify conceptual or empirical lacunae and questions that can guide future research. The Handbook is a joint project from 24 prominent scholars in the field, and although each chapter reveals the insights of its respective authors, two overarching theoretical perspectives provide unique coherence and consistency throughout.
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Chapter 5: Rationales for Public Policy Intervention in the Innovation Process: Systems of Innovation Approach

Cristina Chaminade and Charles Esquist


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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