This chapter explores the interrelations between institutions, defined as stabilized interaction
patterns, and innovation, since successful innovation rests on the design of institutional contexts
and since inconsistent institutional contexts constrain or even impede successful innovation. Such
situations require processes of adjusting innovations to the institutional context (robust design),
circumventing resistant institutional contexts (peripheral dominance), or creating new institutional
contexts that fit the innovation process (institutional entrepreneurship). The chapter criticizes
studies that focus on formal legislation and regulation as indicators of national institutional
variety, while neglecting institutional practices and how these also differ at the sub-national
level. From a relational perspective, supportive innovation policies need to respond to
geographically and temporally varying institutional contexts even within a single legal and
regulatory regime. It is argued that policy needs to understand the interrelationships between
institutional practices and innovation, rather than viewing rules and regulations as determinants of
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