Innovation systems – from
analysis to policy
Keith Smith
Imperial College London/TIK Oslo
A basic question…
• To what extent is innovation performance of
an economy (regional or national) an effect of
individual entrepreneurship?
• How significant is the individual innovating
firm?
Some historical foundations
• The scientific revolution and industrialisation.
Role of knowledge institutions.
• The rise of mass education
• Late 19th century – the revolution in innovation
methods
• The creation of infrastructural institutions – in
metrology, oceanography, weather, geology,
chemistry, etc. By end C19 all industrialised
economies had these institutions. (NB Paul David
on US geological survey)
Some analytical foundations
• Collective invention. Time horizons and
geographical spreads.
• Technological evolution – increasing complexity
and scale, multitechnology firms, interactive
technological development (Babcock and the
inclined boiler – role of Singer etc)
• Clustered development – regional embeddedness
and labour markets, education, specialised
suppliers etc
Institutional frameworks
• New regulatory frameworks – health, safety,
labour laws, IPRs
• Financial and accounting law
• Corporate governance and ownership systems
• State-corporate interactions
• Resource law and allocation
• Infrastructure funding and regulation
Infrastructures
• Physical: roads, harbours, energy supply etc.
• Knowledge: universities, research institutes,
knowledge repositories
Infrastructures improve the capcity and
cohesion of the economy
Some empirical aspects of innovation
• The prevalence of interactive learning
• Persistence of supply chains and trade
relationships
• The pervasiveness of public-private
interactions, and the ‘developmental state’
• The existence and roles of knowledge
institutions
• The trajectories of ‘core’ or ‘macro’
innovations
‘Macro’ innovations – where do they
come from
• Railroads, shipping, etc
• The modern era – computing, pharma, large
commerical aircraft, jet transport, digital
telecoms, space-based communications, GPS,
the mobile telephone, health innovations
(lenses)
• The pattern here is interactive. Many originate
with public support, public institutions,
procurement, regulatory support.
Innovation systems
• Stable created structures of institutions,
organisations and infrastructures that provide
innovation components and shape the
innovation environment at regional, national
or supranational levels.
Innovation systems literature
• Friedrich List on German growth, Alfred
Marshall on industrial districts
• Lundvall, Nelson on descriptive approaches to
specific systems
• Edquist on components of systems
• Jackobsson et al on systems and policy
Systems and policy
• Policy makers attracted to systems approaches
because policies tend to be integrated suites
of instruments, not a single measure
• Problems then concern what set of
instruments, what relative balance between
them, what composition, what dynamics etc.
System functionality and policy
One approach is to think of functions of a wellperforming system. For example:
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Identifying opportunities
Allocating resources
Building competence and capability
Securing legitimacy
Creating infrastructures
A strategic framework: UK priorities
• Strengthening the sharing and disssemination of
knowledge (Issue: collaboration/competition)
• Supporting a coherent and integrated
knowledge infrastructure (Issue: science
base/Information infrastructure/Catapult centres)
• Encouraging business investment in all forms of
innovation (R&D tax credits, corporate
governance issues)
• Improving the innovative capacity of the public
sector (procurement/services/technology
selection)