Summary Innovation Systems (GEO1-2208):
Lecture 1: Introduction to Innovation systems
Technological Innovation System (TIS) = a network of agents that, under a particular institutional
infrastructure, is involve in the generation, diffusion, and utilization of technology
TIS goal: develop, diffuse, and use innovation
TIS analysis goal: assess, identify problems, and improve innovation system’s performance
Innovation = does not take place in isolation but is a collective act, influenced by many factors
Typically, it is difficult to make a radical innovation a commercial success without financial policy support. This
holds particularly for sustainable innovations because it creates a lot of benefit for society or some health
solutions. They create benefits for society but not for the individually investor, also market failure.
3 system characteristics
1. System shares a goal/main function
o TIS: development and diffusion of focal technology
2. Two constituents: components and interactions
o The same for any type of IS
3. There are observable boundaries to the system: all the organisations supporting the technology
o Geographical (Regional IS / National IS)
o Technological (TIS)
o Sectoral (SIS)
o Societal function (MLP = sociotechnical system)
Working prototype Commercial application Fast market increase Market saturation
Diffusion →
Pre-development Development Take-off Acceleration Stabilization
Systemic policy framework proposal
1
,Lecture 2: National innovation systems (NIS) and IS structure
National Innovation System (NIS) = a network of agents that, under a particular institutional infrastructure, is
involve in the generation, diffusion, and utilization of technology within a particular nation
NIS goal: to achieve economic growth
Developments leading to National Innovation Systems (NIS)
Linear model: important to know the basis of innovation thinking (simplistic framework)
o Research → development → production → marketing
o Technology push model: no demand (Concorde)
o Promising technology and marketing help overcome all obstacles
o Linear process, steps follow up smoothly (true?)
o Linear model-based policy unsuccessful: considered no feedback loops
Chain-Link model: started including feedback loops and learning
The chain link model of innovation
Invention and innovation are demand driven
Innovation is a learning process involving multiple inputs
Steps less linear but with feedback loops, many actors involved
Knowledge (both in-firm and available elsewhere)
Innovation system
Why develop NIS?
Developed to foster economic growth to compete with emerging economic nations:
80s-90s: international trends threaten competitiveness
Innovation is important for economic growth
History matters in IS develop over time and create path dependencies
2
,4 structural components
1. Organizations (actors): formal structures that are consciously created and have an explicit purpose
o For example: suppliers, producers, distributors, banks, VC’s, governments, NGO’s
o National differences: public R&D (US) versus corporate R&D (JPN)
2. Infrastructure / materiality / technology: the physical objects that support innovation
o For example: roads, refuelling stations, internet, smart phones, etc.
o Confusion: knowledge & investment infrastructure
3. Networks: strong versus weak ties which are key to knowledge exchange
o For example: production chains, collaborative R&D
4. Institutions (rules of the game): sets of common habits, norms, routines, established practices, rules or
laws that regulate relations and interactions between individuals, groups, and organizations
o Formal (hard) institutions: rules that are codified and enforced
o Informal (soft) institutions: tacit rules, shaped by collective interaction
- Normative rules: social norms and values with moral significance
- Cognitive rules: collective mind frames
Codified versus tacit knowledge
Lundvall (1992): The most fundamental resource in the modern economy is knowledge and, accordingly, the
most important process is learning
1. Codified knowledge: knowledge that you can write down (manual)
2. Tacti knowledge: based on experience (bike riding)
Nature of knowledge → implications for interactions
Innovation systems
Government
Supply Intermediary Demand
side infrastructure side
Knowledge and Investment Infrastructure
1. Supply side
Includes the whole supply chain of products and services
Supportive infra & complementary technologies
Resource Basic resource Simple Assembled Sales &
Assembly
production component component maintenance
Re-use & recycling
3
,2. Demand side
Different consumer wants and needs segmented market. Often an innovation must penetrate certain
market segments first to create economies of scale, learning processes and product improvements
before it moves to other market segments
o For example: Tesla is first high-class market and now for the mainstream market
Culture affects uptake of innovation
o For example: Italy is relatively fashion sensitive
Innovations may require new consumer behaviours
o For example: charging your electric car
What role can users play in the innovation process?
1. Signal preferences and needs
2. Help signal problems with new products
3. Sometimes identify and develop salutation to problems (mountain bikers)
4. Sign petitions or protest
5. Crowdfunding (co-financing)
3. Knowledge & investment infrastructure
What percentage of Dutch research takes place in?
- Universities (education, research, spread knowledge) and medical centres (25%)
- Research institutes (15%)
- Companies of which 77% large companies (60%)
Different research institutes (beside universities):
Large Technical Institutes (GTI’s)
Ministerial research institutes (KNMI)
4. Government
Different types of government policy instruments: regulations, R&D subsidies, sales incentives, fiscal
policies, and buyer (PPI), Finance (InvestNL)
Policy made at different levels: local, provincial, national, regional (EU), global
Different ministries: economy, education, environment, justice, work, taxes, travel etc.
Government is advised by agencies: planbureau voor leefomgeving, rijksdienst ondernemend NL
5. Intermediary infrastructure
Organizations that bring different actors together: Innovation alliance of government, private sector,
universities, and research centres
Lobby organizations (Formula E-team)
Interrelations between components
→ Institutions set restrictions for actors
→ Actors influence each other and institutions
Where will the future of IS go?
Mission-oriented Innovation System
4
, Problem-oriented Innovation System
5
, National, regional of global IS?
Regional IS advocates (Silicon Valley):
o Big regional innovation differences
o Regional differences in institutions
o Knowledge spill overs & exchange are local
o Supra-regional: too much diversity and complexity
National IS advocates:
o National language, culture, networks, education, policy
→ Determines innovation patterns
Global IS advocates:
o Globalization effects very impactful and overlooked
Strengths and weaknesses of NIS
Strengths
+ Holistic and interdisciplinary: includes organisational, social, economic, and political factors
o Different disciplinary perspectives: economic history, economics, sociology, regional studies
+ Learning processes: producing and recombining knowledge
+ Independence and non-linearity: actors’ interactions important and complex (non-linear)
+ Product and process innovation: NIS concept also allows for analysis of technological and non-
technological innovation
+ Role of institutions: determinants of innovation
Weaknesses
- Conceptual diffuseness
- System boundaries: what to include?
o Keep definition open: boundary object
- Not a formal theory
o No hypothesized causal relation between variables
o Analytical tool for empirical studies
But now: more and consistent research (basis for theorizing) and some diffuseness clarified
Main definitions Innovation systems
- Activities/system functions = those factors/determinants that influence the main goal
- Clean Concrete Innovation (CCI) = are needed to meet long-term emission targets
- Constituents of SI = components + interactions between components
- Components = actors, institutions, technology/infrastructure (list differs)
- Institutions = sets of common habits, norms, routines, established practices, rules or laws that
regulate relations and interactions between individuals, groups, and organizations (rules of the game)
- Process innovation = new ways of producing goods and services → technological or organizational
- Product innovation = new/better material goods as well as new intangible services
- SI goal or function = to develop, diffuse and use innovation
- System of Innovation (SI) = all interdisciplinary determinants that influence the SI’s goal
Recap: (National) Innovation Systems
The three characteristics of an innovation system
IS-actors: all entities (firms, governments, consumers, etc.) that contribute to the goal of the IS
Institutions: rules of the game
The goal of the IS: develop & diffuse innovation (general def)
Strengths & Weaknesses of IS (Edquist paper)
Conceptual diffuseness: different words for the same thing and different meanings for the same word
6
Lecture 1: Introduction to Innovation systems
Technological Innovation System (TIS) = a network of agents that, under a particular institutional
infrastructure, is involve in the generation, diffusion, and utilization of technology
TIS goal: develop, diffuse, and use innovation
TIS analysis goal: assess, identify problems, and improve innovation system’s performance
Innovation = does not take place in isolation but is a collective act, influenced by many factors
Typically, it is difficult to make a radical innovation a commercial success without financial policy support. This
holds particularly for sustainable innovations because it creates a lot of benefit for society or some health
solutions. They create benefits for society but not for the individually investor, also market failure.
3 system characteristics
1. System shares a goal/main function
o TIS: development and diffusion of focal technology
2. Two constituents: components and interactions
o The same for any type of IS
3. There are observable boundaries to the system: all the organisations supporting the technology
o Geographical (Regional IS / National IS)
o Technological (TIS)
o Sectoral (SIS)
o Societal function (MLP = sociotechnical system)
Working prototype Commercial application Fast market increase Market saturation
Diffusion →
Pre-development Development Take-off Acceleration Stabilization
Systemic policy framework proposal
1
,Lecture 2: National innovation systems (NIS) and IS structure
National Innovation System (NIS) = a network of agents that, under a particular institutional infrastructure, is
involve in the generation, diffusion, and utilization of technology within a particular nation
NIS goal: to achieve economic growth
Developments leading to National Innovation Systems (NIS)
Linear model: important to know the basis of innovation thinking (simplistic framework)
o Research → development → production → marketing
o Technology push model: no demand (Concorde)
o Promising technology and marketing help overcome all obstacles
o Linear process, steps follow up smoothly (true?)
o Linear model-based policy unsuccessful: considered no feedback loops
Chain-Link model: started including feedback loops and learning
The chain link model of innovation
Invention and innovation are demand driven
Innovation is a learning process involving multiple inputs
Steps less linear but with feedback loops, many actors involved
Knowledge (both in-firm and available elsewhere)
Innovation system
Why develop NIS?
Developed to foster economic growth to compete with emerging economic nations:
80s-90s: international trends threaten competitiveness
Innovation is important for economic growth
History matters in IS develop over time and create path dependencies
2
,4 structural components
1. Organizations (actors): formal structures that are consciously created and have an explicit purpose
o For example: suppliers, producers, distributors, banks, VC’s, governments, NGO’s
o National differences: public R&D (US) versus corporate R&D (JPN)
2. Infrastructure / materiality / technology: the physical objects that support innovation
o For example: roads, refuelling stations, internet, smart phones, etc.
o Confusion: knowledge & investment infrastructure
3. Networks: strong versus weak ties which are key to knowledge exchange
o For example: production chains, collaborative R&D
4. Institutions (rules of the game): sets of common habits, norms, routines, established practices, rules or
laws that regulate relations and interactions between individuals, groups, and organizations
o Formal (hard) institutions: rules that are codified and enforced
o Informal (soft) institutions: tacit rules, shaped by collective interaction
- Normative rules: social norms and values with moral significance
- Cognitive rules: collective mind frames
Codified versus tacit knowledge
Lundvall (1992): The most fundamental resource in the modern economy is knowledge and, accordingly, the
most important process is learning
1. Codified knowledge: knowledge that you can write down (manual)
2. Tacti knowledge: based on experience (bike riding)
Nature of knowledge → implications for interactions
Innovation systems
Government
Supply Intermediary Demand
side infrastructure side
Knowledge and Investment Infrastructure
1. Supply side
Includes the whole supply chain of products and services
Supportive infra & complementary technologies
Resource Basic resource Simple Assembled Sales &
Assembly
production component component maintenance
Re-use & recycling
3
,2. Demand side
Different consumer wants and needs segmented market. Often an innovation must penetrate certain
market segments first to create economies of scale, learning processes and product improvements
before it moves to other market segments
o For example: Tesla is first high-class market and now for the mainstream market
Culture affects uptake of innovation
o For example: Italy is relatively fashion sensitive
Innovations may require new consumer behaviours
o For example: charging your electric car
What role can users play in the innovation process?
1. Signal preferences and needs
2. Help signal problems with new products
3. Sometimes identify and develop salutation to problems (mountain bikers)
4. Sign petitions or protest
5. Crowdfunding (co-financing)
3. Knowledge & investment infrastructure
What percentage of Dutch research takes place in?
- Universities (education, research, spread knowledge) and medical centres (25%)
- Research institutes (15%)
- Companies of which 77% large companies (60%)
Different research institutes (beside universities):
Large Technical Institutes (GTI’s)
Ministerial research institutes (KNMI)
4. Government
Different types of government policy instruments: regulations, R&D subsidies, sales incentives, fiscal
policies, and buyer (PPI), Finance (InvestNL)
Policy made at different levels: local, provincial, national, regional (EU), global
Different ministries: economy, education, environment, justice, work, taxes, travel etc.
Government is advised by agencies: planbureau voor leefomgeving, rijksdienst ondernemend NL
5. Intermediary infrastructure
Organizations that bring different actors together: Innovation alliance of government, private sector,
universities, and research centres
Lobby organizations (Formula E-team)
Interrelations between components
→ Institutions set restrictions for actors
→ Actors influence each other and institutions
Where will the future of IS go?
Mission-oriented Innovation System
4
, Problem-oriented Innovation System
5
, National, regional of global IS?
Regional IS advocates (Silicon Valley):
o Big regional innovation differences
o Regional differences in institutions
o Knowledge spill overs & exchange are local
o Supra-regional: too much diversity and complexity
National IS advocates:
o National language, culture, networks, education, policy
→ Determines innovation patterns
Global IS advocates:
o Globalization effects very impactful and overlooked
Strengths and weaknesses of NIS
Strengths
+ Holistic and interdisciplinary: includes organisational, social, economic, and political factors
o Different disciplinary perspectives: economic history, economics, sociology, regional studies
+ Learning processes: producing and recombining knowledge
+ Independence and non-linearity: actors’ interactions important and complex (non-linear)
+ Product and process innovation: NIS concept also allows for analysis of technological and non-
technological innovation
+ Role of institutions: determinants of innovation
Weaknesses
- Conceptual diffuseness
- System boundaries: what to include?
o Keep definition open: boundary object
- Not a formal theory
o No hypothesized causal relation between variables
o Analytical tool for empirical studies
But now: more and consistent research (basis for theorizing) and some diffuseness clarified
Main definitions Innovation systems
- Activities/system functions = those factors/determinants that influence the main goal
- Clean Concrete Innovation (CCI) = are needed to meet long-term emission targets
- Constituents of SI = components + interactions between components
- Components = actors, institutions, technology/infrastructure (list differs)
- Institutions = sets of common habits, norms, routines, established practices, rules or laws that
regulate relations and interactions between individuals, groups, and organizations (rules of the game)
- Process innovation = new ways of producing goods and services → technological or organizational
- Product innovation = new/better material goods as well as new intangible services
- SI goal or function = to develop, diffuse and use innovation
- System of Innovation (SI) = all interdisciplinary determinants that influence the SI’s goal
Recap: (National) Innovation Systems
The three characteristics of an innovation system
IS-actors: all entities (firms, governments, consumers, etc.) that contribute to the goal of the IS
Institutions: rules of the game
The goal of the IS: develop & diffuse innovation (general def)
Strengths & Weaknesses of IS (Edquist paper)
Conceptual diffuseness: different words for the same thing and different meanings for the same word
6
