Academic journal article Innovation: Organization & Management

Innovation Systems and Policy Design: The European Experience

Academic journal article Innovation: Organization & Management

Innovation Systems and Policy Design: The European Experience

Article excerpt

Nowadays, innovation policies are a key issue in all developed countries used to promote economic growth and social welfare. There is a growing interest from scholars and policymakers in a better understanding of how the innovation process encompasses the different players, what the optimal mobilization of resources is, and how the generated knowledge can reach society and business. The policymaker's action coexists at various levels, since the implementation of innovation policies comes from different spatial environments and orientations.

However, the implementation of innovation policies is not exempt from difficulties, mainly concerning its preceding formulation (Abramovsky et al. 2004). Due to this complexity, it is suitable to describe the innovation rationale before focusing on the definition and design of innovation policies. The literature concerning the concept of innovation rationale encompasses different approaches, such as the neoclassical, the endogenous growth theory, the neo Marshallian and finally the systemic institutional theories, which put forward the concept of innovation system.

To step forward to the innovation policy design, policymakers can also lean on different academic approaches such as the market or system failures approach (Smith 1999), the functional perspective (Edquist 2005), and the innovation system activities (Chaminade & Edquist 2005).

Though there are manifold examples of the implementation of innovation systems and the characterization of innovation policies in different environments, we point out the experience at European level. The necessity of harmonizing innovation policies at different layers, due to the existence of a common coordinating mechanism of innovation policies at European level, makes the EU an optimal place for analysing the existing innovation systems and policy frameworks.

Summing up, the purpose of this paper is twofold; on the one hand to make a literature review on innovation rationales, the systemic institutional approach and policy implementation, while on the other hand the aim is to analyse practical experiences of policy design which provide examples of the application of the referred theories.

The present article is organised as follows: succeeding this introduction, the theoretical background of innovation policy rationales is provided in section 'innovation rationales and policy frameworks'; the design of innovation policies is treated in section 'the design of innovation policies under the systemic institutional approach'; section 'an approach to innovation policy design: The case of the European Union' aims at providing an outline of the European experience in the design of innovation systems and the implementation of innovation policies, while section 'conclusions' closes the work with main conclusions.


The concept 'rationales' is defined as more or less formalised models implicitly or explicitly drawing upon academic theories or concepts that could inform policy design, implementation and evaluation (Laranja et al. 2008). Rationales are applied to science, technology and innovation policies to shed light on the logic framework of intervention on those fields. The study of innovation rationales has been carried out from different academic approaches: neoclassical, endogenous growth theory, neo-Marshallian, and systemic institutional approach.

From a neoclassical perspective, science, technology and innovation policies are considered as a mean to overcome and compensate market failures, assigning to policymakers the role of an optimizer attempting to maximize social benefits (Metcalfe & Georghiou 1998).

Schumpeterian endogenous growth theory relaxes the neoclassical assumptions of perfect competition. From this point of view, R&D and technology are no longer considered something given and freely available. So, there is a chance to increase R&D returns (Romer 1994) and incentivise partial monopolistic gains from R&D investment (Scherer 1965). …

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