The National Innovation System
This chapter documents and discusses the way that universities and government provide the science base necessary to fuel the process of innovation. The role of business enterprises is still central to innovation, but their effectiveness relies on support from universities and government. When consumers buy a new product, or benefit from process innovation that lowers prices, it might appear that the innovating firm has acted alone. In fact, the origins of the innovation may come from research done at a university and this could have been financed by government. As we saw in chapter 3, intellectual property has taken on an increasingly important role in recent decades, and this chapter discusses the increasing use of intellectual property by universities. Understanding the entire innovation system is vital to avoid misguided policies and, more generally, to maximize innovation and productivity growth. The complex, interrelated system that is behind innovation is often called the national innovation system.
The national innovation system essentially consists of three sectors:
industry, universities, and the government, with each sector interacting
with the others, while at the same time playing its own role.
Goto (2000, p. 104)
This quotation neatly summarizes the three-way interaction underlying any economy's ability to produce commercial innovations.1 Clearly, innovation by private business does not take place independently of other important actors and institutions. The three main groups of players and their principal roles are as follows.
1 Leydesdorff and Meyer (2006) analyze this set of trilateral relations in what they term
a “triple helix” model. The term “national system of innovation” is often thought to have
originated from an edited book by Lundvall (1992), although it has antecedents dating
back many centuries. Broad-ranging discussions are in Nelson (1993) and Freeman (1995).