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 6: Functionality of Innovation Systems as a Rationale for and Guide to Innovation Policy

Anna Bergek, Staffan Jacobsson, Marko Hekkert and Keith Smith


Anna Bergek, Staffan Jacobsson, Marko Hekkert and Keith Smith INTRODUCTION This chapter discusses an approach to the rationale and operations of innovation policy from a 'systems' perspective, focusing on functions performed by an innovation system. The systems approach stems from a key insight of innovation studies, which is that innovation by firms cannot be understood purely in terms of independent decisionmaking at the level of the firm. Firms' strategies are central to innovation, but strategic options are shaped and constrained by environmental factors such as collaborative patterns, regulatory systems and customary practices which persist in systemic ways and which influence how innovation may occur. These environmental conditions are often specific to technological, regional or national contexts, but they are also dynamic: their forms of operation change with political conditions, changing technological opportunities, economic integration processes and so on. The basic argument of systems theories is that system conditions have a decisive impact on the extent to which firms make innovation decisions, on the modes of innovation which are undertaken and on the success or failure of these. Much of the literature focuses on differences in the structure of systems and trans-national variations including across' institutions and organizations. However, from an innovation point of view, what also matters is functionality: that is, what do the components of an innovation system actually do, and what do they achieve? We argue that innovation processes involve various functions that n.eed to be fulfilled; they must be initiated (usually by some perception of an opportunity)...

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