INNOVATION POLICY
GEO3-2225
[COMPANY NAME] [Company address]
,Contents
Lecture 1; innovation policy landscape.....................................................................................................................2
Lecture 2; challenges of innovation policy; technopolis group................................................................................5
Lecture 3; rationales..................................................................................................................................................7
Lecture 4; policy instruments..................................................................................................................................12
Lecture 5; guest lecture innovation policy..............................................................................................................18
Lecture 6; transformative innovation policy and missions.....................................................................................19
Lecture 7; introduction to science policy................................................................................................................26
Lecture 8 regional innovation policy.......................................................................................................................28
Lecture 9; intellectual property...............................................................................................................................33
Lecture 10; finance, innovation and sustainability.................................................................................................37
Lecture 12; demand driven.....................................................................................................................................39
Lecture 13; evaluation of innovation policy............................................................................................................42
Lecture 14; entrepreneurial ecosystems................................................................................................................46
Lecture 16; industrial and innovation policy in the netherlands............................................................................48
Lecture 17; History and future of innovation policy...............................................................................................54
2
,LECTURE 1; INNOVATION POLICY LANDSCAPE
Innovation drives economic growth and the ability to address societal challenges.
Europe, the Netherlands and R&D
- European Paradox: “Compared with the scientific performance of its principal competitors, that of the
EU is excellent, but over the last fifteen years its technological and commercial performance in high-
technology sectors such as electronics and information technologies has deteriorated.” (European
Commission, 1995, p. 5).
o While Europe is good at producing scientific knowledge, worse in following the innovation
that comes out of it compared to America
- R&D intensity is the amount of different innovations in one industry
- In NL we are not strong in R&D intensity industry.
o Our economy is more service based, less product based. Service contribution in R&D is not
counted.
o Innovation policy cannot be pinpointed to one governmental level.
o Not always nice to innovate because don’t get something out of it, patents can help.
Knowledge for example is a public good.
Complexities innovation
- Innovations are unpredictable and they emerge in complex systems with many actors, interests,
organizations and expectations.
- New knowledge and innovations can create new problems and disrupt economies. Innovations cause
new divisions of labor and a different distributions of wealth and risk.
- This course addresses the reasons (why/ for what), the methods (how), and the results (what)
obtained from government intervention in innovation trajectories.
What is innovation policy
- Government interventions that encourage and facilitate the generation, application, and diffusion of
new ideas (innovation)
- At different levels
What is a policy instrument
- a government measure or program that aims to change the behaviour and actions of the actors
involved in the whole process from generating new ideas into innovative market introductions and
solutions
- techniques developed in order to achieve goals set by policies
Why innovation policy (IP)
- Tackle societal challenges, not led by the market nor by society
- A lot of policy contribute to innovation but are not innovation policy
- Different approaches to innovation policy
o Narrow perspective considering invention only (focus is thus mainly on R&D)
o Holistic perspective, emphasizes the importance of looking at the entire innovation cycle
from the creation of novel ideas to their implementation and diffusion.
o Question whether to only look at innovation policies or to also account for other policies not
aimed at innovation but which have a large impact on innovation
- 3 main approaches;
o Mission-oriented innovation policy: providing new solutions that work in practice to specific
challenges that are on the political agenda.
2
, broad approach
o Invention-oriented innovation policy: concentrate on the R&D/invention phase, and leave the
possible exploitation and diffusion of the invention to the market
Narrow approach
o System-oriented innovation policy: on system-level features, such as the degree of
interaction between different parts of the system or the capabilities of the actors that take
part
The market failure approach to innovation policy
- Innovation depends on many factors: the state of knowledge, individual creativity, public policy,
economic institutions, and social norms. Innovation is inherently multi-actor.
- Innovation drives economic growth and the ability to address societal challenges
- Government should facilitate interactions in the “innovation system”
- What is innovation Innovation is understood as the introduction of new solutions in response to
problems, challenges, or opportunities that arise in the social and/or economic environment
o Carrying out of new combinations:
Introduction of a (for consumers) new good
Introduction of a (for the industry) new method of production
Opening of a (for the industry) new market
Conquest of a new source of supply of inputs
New organisation of any industry
o Invention is not innovation
o Discontinuous innovation: “Creative Destruction”
Creative destruction new things arise ten cost of other industries
- Markets as efficient resource allocators, 3 fundaments:
o There is a complete set of markets, so that all supplied/demanded goods and services are
traded at publicly known prices
o all consumers and producers behave competitively
o an equilibrium exists
- Reasons why firms underinvest in R&D:
o Uncertainty
Knightian uncertainty: there is not always a market for innovation
Discovery uncertainty = Can we invent it?
Technical uncertainty = Can we make it?
Market uncertainty = Can we sell it?
we have imperfect knowledge of future events
Risk: we do not know the outcome but we can measure the odds
Uncertainty: we do not have enough information to even measure the odds
accurately
o Spillovers: Most important source of innovation is new knowledge. Knowledge is public good
(free) → those who created the knowledge could not fully appropriate it → not enough
incentive to invest → underinvestment → market failure
2
GEO3-2225
[COMPANY NAME] [Company address]
,Contents
Lecture 1; innovation policy landscape.....................................................................................................................2
Lecture 2; challenges of innovation policy; technopolis group................................................................................5
Lecture 3; rationales..................................................................................................................................................7
Lecture 4; policy instruments..................................................................................................................................12
Lecture 5; guest lecture innovation policy..............................................................................................................18
Lecture 6; transformative innovation policy and missions.....................................................................................19
Lecture 7; introduction to science policy................................................................................................................26
Lecture 8 regional innovation policy.......................................................................................................................28
Lecture 9; intellectual property...............................................................................................................................33
Lecture 10; finance, innovation and sustainability.................................................................................................37
Lecture 12; demand driven.....................................................................................................................................39
Lecture 13; evaluation of innovation policy............................................................................................................42
Lecture 14; entrepreneurial ecosystems................................................................................................................46
Lecture 16; industrial and innovation policy in the netherlands............................................................................48
Lecture 17; History and future of innovation policy...............................................................................................54
2
,LECTURE 1; INNOVATION POLICY LANDSCAPE
Innovation drives economic growth and the ability to address societal challenges.
Europe, the Netherlands and R&D
- European Paradox: “Compared with the scientific performance of its principal competitors, that of the
EU is excellent, but over the last fifteen years its technological and commercial performance in high-
technology sectors such as electronics and information technologies has deteriorated.” (European
Commission, 1995, p. 5).
o While Europe is good at producing scientific knowledge, worse in following the innovation
that comes out of it compared to America
- R&D intensity is the amount of different innovations in one industry
- In NL we are not strong in R&D intensity industry.
o Our economy is more service based, less product based. Service contribution in R&D is not
counted.
o Innovation policy cannot be pinpointed to one governmental level.
o Not always nice to innovate because don’t get something out of it, patents can help.
Knowledge for example is a public good.
Complexities innovation
- Innovations are unpredictable and they emerge in complex systems with many actors, interests,
organizations and expectations.
- New knowledge and innovations can create new problems and disrupt economies. Innovations cause
new divisions of labor and a different distributions of wealth and risk.
- This course addresses the reasons (why/ for what), the methods (how), and the results (what)
obtained from government intervention in innovation trajectories.
What is innovation policy
- Government interventions that encourage and facilitate the generation, application, and diffusion of
new ideas (innovation)
- At different levels
What is a policy instrument
- a government measure or program that aims to change the behaviour and actions of the actors
involved in the whole process from generating new ideas into innovative market introductions and
solutions
- techniques developed in order to achieve goals set by policies
Why innovation policy (IP)
- Tackle societal challenges, not led by the market nor by society
- A lot of policy contribute to innovation but are not innovation policy
- Different approaches to innovation policy
o Narrow perspective considering invention only (focus is thus mainly on R&D)
o Holistic perspective, emphasizes the importance of looking at the entire innovation cycle
from the creation of novel ideas to their implementation and diffusion.
o Question whether to only look at innovation policies or to also account for other policies not
aimed at innovation but which have a large impact on innovation
- 3 main approaches;
o Mission-oriented innovation policy: providing new solutions that work in practice to specific
challenges that are on the political agenda.
2
, broad approach
o Invention-oriented innovation policy: concentrate on the R&D/invention phase, and leave the
possible exploitation and diffusion of the invention to the market
Narrow approach
o System-oriented innovation policy: on system-level features, such as the degree of
interaction between different parts of the system or the capabilities of the actors that take
part
The market failure approach to innovation policy
- Innovation depends on many factors: the state of knowledge, individual creativity, public policy,
economic institutions, and social norms. Innovation is inherently multi-actor.
- Innovation drives economic growth and the ability to address societal challenges
- Government should facilitate interactions in the “innovation system”
- What is innovation Innovation is understood as the introduction of new solutions in response to
problems, challenges, or opportunities that arise in the social and/or economic environment
o Carrying out of new combinations:
Introduction of a (for consumers) new good
Introduction of a (for the industry) new method of production
Opening of a (for the industry) new market
Conquest of a new source of supply of inputs
New organisation of any industry
o Invention is not innovation
o Discontinuous innovation: “Creative Destruction”
Creative destruction new things arise ten cost of other industries
- Markets as efficient resource allocators, 3 fundaments:
o There is a complete set of markets, so that all supplied/demanded goods and services are
traded at publicly known prices
o all consumers and producers behave competitively
o an equilibrium exists
- Reasons why firms underinvest in R&D:
o Uncertainty
Knightian uncertainty: there is not always a market for innovation
Discovery uncertainty = Can we invent it?
Technical uncertainty = Can we make it?
Market uncertainty = Can we sell it?
we have imperfect knowledge of future events
Risk: we do not know the outcome but we can measure the odds
Uncertainty: we do not have enough information to even measure the odds
accurately
o Spillovers: Most important source of innovation is new knowledge. Knowledge is public good
(free) → those who created the knowledge could not fully appropriate it → not enough
incentive to invest → underinvestment → market failure
2
