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 Advanced Introduction to

National
Innovation
Systems
CRISTINA CHAMINADE
Professor of Innovation Studies, Department of Economic History, School of
Economics and Management, Lund University, Sweden

BENGT-ÅKE LUNDVALL
Professor of Economics, Department of Business and Management, Aalborg
University, Denmark, and Professor, Sciences-Po, Paris, France

SHAGUFTA HANEEF
PhD Student, Department of Business and Management, Aalborg University,
Denmark

Elgar Advanced Introductions

Cheltenham, UK • Northampton, MA, USA

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 © Cristina Chaminade, Bengt-Åke Lundvall and Shagufta Haneef 2018

All rights reserved. No part of this publication may be reproduced, stored in a

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Published by
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 Contents

List of figures ix
List of tables x
List of boxes xi
About the authors xiii
Preface xv

1 Introduction 1
1.1 Introduction 1
1.2 Why is the national system of innovation
important? 1
1.3 When did the concept appear? 3
1.4 What new insights were gained with the national
innovation system concept as compared to earlier
work within innovation studies? 3
1.5 How the national innovation systems concept
inspired other innovation system scholars 4
1.6 Different approaches within the national innovation
system literature 6
1.7 How do the different approaches relate to
innovation policy? 8
1.8 Alternative and related concepts to national
innovation systems 10
1.9 Is it useful to focus upon the national level in
a context of economic globalization? 12
1.10 The structure of the book 13

2 The origin and the early evolution of the national

innovation systems concept 15
2.1 Introduction 15
2.2 Who coined the concept? 16
2.3 Christopher Freeman’s contribution to the national
innovation systems concept – ‘Technology, trade,
competitiveness and catching up’ 18

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 vi ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

2.4 Lundvall and the Aalborg group – ‘from user-

producer interaction to national innovation systems’ 22
2.5 Other predecessors – Schumpeter and the
innovation system concept 25

3 The theoretical core of the national innovation systems

concept 27
3.1 Introduction 27
3.2 The theoretical insights of innovation studies 28
3.3 The inspiration from four ‘Grand Theories’ 31
3.4 Three assumptions motivating the analysis of
national systems 36
3.5 Conclusions 39

4 How to analyse national innovation systems – the

qualitative approach 41
4.1 Why empirical studies of innovation systems
are useful? 41
4.2 Quantitative or qualitative analysis of national
innovation systems? Advantages and limitations 41
4.3 Qualitative analysis of national innovation systems
over time – the economic history influence 43
4.4 Comparing contemporary national innovation
systems in different spatial settings 47
4.5 The functional approach 49
4.6 Conclusions 53

5 How to analyse national innovation systems – the

quantitative approach 54
5.1 Introduction 54
5.2 Data sources 54
5.3 Data analysis 61
5.4 Conclusions 67

6 National innovation systems and economic development 68

6.1 Development as a multifaceted phenomenon 68
6.2 National innovation systems and economic
development – a framework 69
6.3 National innovation systems and the dynamics of eco-
nomic development – catching up, forging ahead
and falling behind 73
6.4 Conclusions 78

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 CONTENTS vii

7 National innovation systems and inclusive development 80

7.1 What is inclusive development? 80
7.2 Inclusive innovations and social innovations 82
7.3 Inclusive innovation systems 86
7.4 Conclusions 88

8 National innovation systems and environmentally

sustainable development 89
8.1 Introduction 89
8.2 Understanding sustainable development as a
nested model 90
8.3 Sustainable innovations 94
8.4 Sustainable innovation systems 99
8.5 Transformation of national innovation systems for
environmentally sustainable development 101
8.6 Conclusions 105

9 Innovation policy and national innovation systems 107

9.1 Introduction 107
9.2 Science, technology and innovation policy 107
9.3 Why should governments intervene at all in
innovation processes? The question of policy
rationales 109
9.4 National innovation system policies and economic
development 115
9.5 National innovation systems, policies and
transitions towards inclusive and sustainable
innovation systems 119
9.6 Conclusions 120

10 Globalization of innovation and national innovation

systems 122
10.1 National innovation systems in the current wave of
globalization 122
10.2 How national innovation systems are linked
globally 123
10.3 The crucial role of national innovation systems in
the era of globalization 129
10.4 Globalization as an uneven and interconnected
process 135
10.5 Conclusions and further research 136

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 viii ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

11 Challenges for the research on national innovation

systems 139
11.1 Introduction 139
11.2 The transformation of national production systems 139
11.3 The transformation of knowledge production and
learning systems 140
11.4 The political economy of knowledge production –
between subordination and autonomy 142
11.5 National strategies and global progress 142
11.6 Global changes and the importance of the nation
state 143
11.7 System transformations and sustainable
development 144
11.8 Embracing radical (and incremental) change 145
11.9 Addressing the ‘dark’ side of innovation 146
11.10 Understanding the heterogeneity of national
innovation systems 147
11.11 Reaching out! 149

References 151
Index 169

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 Figures

3.1 Theoretical and empirical foundations of the national

innovation systems concept 31
6.1 Learning, work organization and economic structures 71
6.2 National innovation systems, income traps and
catching up 76
8.1 Sustainable development as a nested model 93

ix

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 Tables

1.1 Difference between narrow and broad definitions of

national innovation systems 9
5.1 Sources of data for the analysis of national systems
of innovation 62
7.1 Navigating the conceptual maze of inclusive innovations 83
8.1 Navigating the conceptual maze of sustainable
innovations 97
8.2 Main characteristics of national innovation systems in
different stages of sustainability transitions 102
9.1 List of various examples on the use of national
innovation systems in policy reports 118
10.1 Varieties of mechanisms for the globalization of
national innovation systems 130

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 Boxes

1.1 Our definition of national innovation system 2

1.2 National innovation systems vis-à-vis other concepts 10
2.1 National innovation systems as an alternative to the
neoclassical perspective on trade, growth
and competitiveness 17
2.2 Freeman and Lundvall – the stories intertwined 24
3.1 Different dimensions of novelty 30
3.2 Long-term social relations, uncertainty and innovation 35
4.1 Similar quantitatively but qualitatively very different
national innovation systems 44
4.2 Innovation systems in the South 46
4.3 Freeman’s comparative historical analysis of national
innovation systems 48
4.4 Different authors, different set of functions 50
5.1 Overview of the main manuals for the collection of data
on science, technology and innovation 56
5.2 The DISKO and the SAPPHO projects 59
6.1 A typology of innovation systems and degree of economic
development 74
6.2 Economic development in Korea 77
7.1 Innovation and inclusiveness of the informal sector 81
7.2 Inclusiveness at the bottom of the pyramid 84
7.3 Product inclusive innovations in the health sector 85
8.1 Are we too late? 92
8.2 Low carbon innovations 95
8.3 Institutional innovations and sustainability – the case of
Costa Rica 98
8.4 Transition towards renewable energies in China 104
9.1 Identifying systemic failures and alignment with policies –
the case of Thailand 112

xi

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 xii ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

9.2 Science, technology and innovation policies in Central

America 116
10.1 ICT and human capital mobility in India 126
10.2 Global value chains in globalization 128

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 About the authors

Cristina Chaminade is a full Professor in Innovation Studies at Lund

University. She holds a Bachelor and Doctoral degree in Economics
from the Autonomous University of Madrid. She is an expert in inno-
vation systems, particularly innovation systems in emerging econo-
mies. She has actively worked on innovation in developing countries
such as China, India, South Africa, Thailand, and Brazil for over 15
years. She’s been an advisor to international organizations such as the
European Commission, UNCTAD, OECD and UN-ECLAC.

She has published in international journals, refereed books and hand-

books in the fields of innovation, development studies and knowl-
edge management such as Research Policy, Industry and Innovation,
Innovation and Development and European Planning Studies. She is
one of the editors of the Handbook of Innovation Systems in Developing
Countries, published by Edward Elgar in 2009.

Bengt-Åke Lundvall is Professor in Economics at the Department

of Business and Management at Aalborg University, Denmark, and
Professor at Sciences-Po, Paris, France. His research is organized
around a broad set of issues related to innovation systems and learning
economies. In close collaboration with Christopher Freeman, Bengt-
Åke Lundvall developed the idea of innovation as an interactive pro-
cess, in the first half of the eighties and the concept of National System
of Innovation in the second half (Lundvall, 1985, 1988). From 1992–95
he was Deputy Director at DSTI, OECD. Lundvall co-ordinated the
IKE-group in Aalborg between 1977–2011 and the Danish network
DRUID 1996–2001. Between 2002 and 2016 he coordinated the
worldwide research network Globelics. In 2016 he published his most
important contributions in ‘The learning economy and the economics
of hope’.

xiii

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 xiv ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

Shagufta Haneef is a PhD Fellow at the Department of Business and

Management, Aalborg University, Denmark. She has also been a part
of the Globelics Secretariat and Africalics activities in Denmark. Her
main area of interest is innovation and development and currently she
is working on the role of Universities in inclusive development as part
of her PhD project.

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 Preface

This book is part of the Advanced Introduction series at Edward Elgar

and, as such, the intention is to provide newcomers with a simple,
yet comprehensive picture of the past, present and future of research
in National Innovation Systems. Chapters follow a similar structure.
With a brief introduction, each short chapter summarizes the state of
the art in the different sub-themes and presents the main messages as
a way of concluding. For those who wish to go deeper into a particular
topic, each chapter suggests a list of recommended readings. We have
included numerous boxes with examples from all over the world. Our
aim has been to ensure that there is a good representation of examples
from developed and developing countries, from large and small coun-
tries and for different continents.

This book is the outcome of collaboration between three scholars

belonging to different generations and coming from different parts of
the world. We hope that this combination is reflected in a good mix of
old and new ideas and of different perspectives on the issues raised. We
learned a lot from working together and especially from the discus-
sions that we maintained during our ‘book retreats’.

The national system of innovation concept is not brand new anymore.

It has become a standard reference in the literature on innovation and
the concept is now used by policy makers all over the world. Some
scholars have proposed that it is so not relevant anymore. Nonetheless,
we believe that the issues raised in this book are highly topical. In 2016
and 2017, the world witnessed how heated national and international
debates confronted narrow nationalist perspectives (key words are
Trump and Brexit) with visions of the current form of globalization as
the only possible way ahead (as illustrated by the new neoliberal wave
in Latin America).

xv

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 xvi ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

We hope that our book can serve as an antidote to both. One main
message is that ‘free trade’ and unregulated international financial
flows may not always be to the benefit of citizens living in countries
with weak national innovation systems. Another main message is
that there is a need to establish new forms of global governance to
cope with issues such as global warming and growing inequality at the
global level. While the national innovation systems concept evokes
a perspective where nation states compete on the basis of a strong
knowledge base we conclude that global challenges require new forms
of international cooperation where lead countries share knowledge
with countries with weak innovation systems.

While the responsibility for any errors and omissions is only ours, the
book takes inspiration from many different scholars and communities.
We are particularly grateful for the inspiration from working with col-
leagues in Globelics – the global network on economics of learning,
innovation and competence building systems ([Link]
org). We are also grateful for the support from the Department of
Business and Management at Aalborg University and the Department
of Economic History at Lund University. A special word of thanks goes
to Björn Johnson from Aalborg University who provided a critical eye
and gave useful comments to a late version of the manuscript.

Support from the Marianne and Marcus Wallenberg Foundation

(MMW 2012.0194) and the Horizon 2020 project Makers (Marie
Sklodowska-Curie Actions – Grant agreement number 691192) for
Professor Chaminade is gratefully acknowledged.

Aalborg and Lund, August 2017

Cristina, Bengt-Åke and Shagufta

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 1 Introduction

1.1 Introduction

The aim of this book is to introduce students as well as policy makers in

developed and developing countries to the national innovation systems
concept. Innovation studies is an evolving interdisciplinary field and
we have taken this into account. We use a language that can be under-
stood by students and scholars from different disciplines within social
science and engineering and for each chapter we have proposed a brief
list of suggested further readings.

Throughout this book, we will address the following questions. What

is a national system of innovation? Where did the concept come
from? How has it developed? What is the theoretical core of the
concept? Who makes use of it? Why is it useful? How to measure it
and how to use it in research? How can it be applied to countries at
different income levels? What are its main limitations? Is it meaning-
ful to study national innovation systems in a context of globalization?
And what are the future challenges for developing it in research and
policy?

This introductory chapter provides the reader with some first ideas
about the topics and issues that will be addressed in more depth
throughout the book.

1.2 Why is the national system of innovation

important?
The concept of National Innovation Systems is built on the research-
based insight that innovation is an interactive process where different
kinds of knowledge are combined through communication within and
across organizational borders. Research has demonstrated that firms
absorb ideas from users, suppliers and knowledge institutions and that

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 2 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

BOX 1.1 OUR DEFINITION OF NATIONAL INNOVATION

SYSTEM

. . . an open, evolving and complex system that encompasses rela-

tionships within and between organizations, institutions and socio-
economic structures which determine the rate and direction of
innovation and competence-building emanating from processes of
science-based and experience-based learning. (Lundvall et al., 2009b,
p. 7)

the innovation process involves interaction with many different kinds

of actors (Kline and Rosenberg, 1986; Lundvall, 1985).

An innovation system encompasses all the organizations and insti-

tutions involved in this process and the national innovation system
gives special attention to those institutions and organisations which
are located in or rooted in a nation state. The system is open and one
crucial characteristic of the national innovation system is its capacity
to absorb and use knowledge developed abroad.

The national innovation system concept was introduced by evolution-

ary economists who found that neoclassical economics did not offer
satisfactory explanations on what determines economic growth and
international competitiveness. The most important weakness of neo-
classical economics is actually that its basic assumptions on equilib-
rium and rational expectations block our understanding of innovation
and learning processes.

In all countries governments refer to the international competitiveness

of the economy as a major policy concern. Often this refers to the need
to reduce the price of export goods through weakening trade unions
with the aim to keep wages low. The focus on the national innovation
systems offers a different understanding of competitiveness based on
competence and interactive learning. It takes into account research
and historical studies demonstrating that competitiveness reflects
non-price factors and especially the strength of the national knowledge
infrastructure.

Taking a long historical view, we can see how some national econo-
mies that started at the same income level have developed at very
different speeds. Some remain poor and others become rich. The world

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 INTRODUCTION 3

economy has witnessed shifts in economic leadership such as when

Germany and the US took over leadership from the UK. The national
innovation system concept is useful when it comes to understanding
why growth rates differ. But, as we will discuss in Chapters 7 and
8, national innovation systems are not only important to understand
income growth but also to achieve inclusive and environmental sus-
tainable development.

1.3 When did the concept appear?

The national innovation system concept is quite recent. It was first

used in an unpublished paper by Christopher Freeman (1982, 2004)
where he linked the concept to a critical discussion of the free trade
doctrine and referred to Friedrich List as a predecessor of the concept.
It was next used in a booklet by Lundvall (1985) where it referred to the
linkages between university and industry. Freeman used the concept in
the title for his book on Japan (1987) and in 1988 Freeman, Lundvall
and Nelson each presented a chapter on national innovation systems
in Dosi et al. (1988). Lundvall (1992) brought together contributions
analysing different dimensions of the innovation systems while Nelson
(1993) compiled a number of national case studies using the concept
(Sharif, 2006).

The previously mentioned authors had in common that they were

critical to public policy inspired by standard economics and on the
basis of their analysis they pointed to alternative policy prescrip-
tions. When the Organisation for Economic Co-operation and
Development (OECD) began to adopt the concept in the beginning
of the 1990s it became widely used by international organizations
and by national governments. Governments in Finland and Canada
were among the first to use the concept as a basis for strategies for
economic growth.

1.4 What new insights were gained with the national

innovation system concept as compared to earlier
work within innovation studies?

First and foremost it offered an explanation of why growth rates

differ and why countries can build an absolute advantage in trade or
structural competitiveness.

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 4 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

But it also gave inspiration for scholars studying innovation processes.

It sent a strong signal that innovation theories should move from
technology push and demand pull perspectives, respectively, towards
a perspective of interaction and networking. It also signalled that inno-
vation policies could not rely on linear models where investments in
science were assumed to automatically result in innovation and eco-
nomic growth.

The main novelty in relation to innovation studies and innovation

policy was the message that innovation had more diverse origins
besides science and that experience-based learning taking place
within the production system was as important as the learning
coming out of interaction between enterprises and research institu-
tions. This was reflected in Freeman’s first contribution from 1982
as well as in Lundvall (1985). In Freeman’s book on Japan (1987) the
focus is upon organizational and inter-organizational characteristics
of the Japanese economy. This broader understanding of the innova-
tion process was developed further in Lundvall (1988) and especially
in Lundvall (1992).

Another lesson to be learned from the systemic perspective is that con-

text matters and that the idea of international benchmarking looking
for ‘best-practice’ policy in a specific field to be generally applied across
national systems is inadequate, as we will discuss in Chapters 5 and
9. While comparing national systems may inspire institution building
and policy strategies (learning by comparing), there is no reason to
believe that what works well in one system will work equally well in a
different system.

Finally, the new perspective stimulated attempts to develop

more adequate indicators. The Oslo Manual took inspiration from
the early work on national innovation systems, as will be discussed in
Chapter 9.

1.5 How the national innovation systems concept

inspired other innovation system scholars

The first contributions on national innovation systems (Dosi et al.,

1988; Freeman, 1982, 2004; Lundvall, 1985, 1988, 1992) stimulated a
wide set of academic work on innovation and led to a branching of the
innovation system concept.

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 INTRODUCTION 5

Economic geographers were among the first to adopt the idea of inno-
vation as an interactive process located in geographical space, intro-
ducing the regional innovation system concept (Asheim and Isaksen,
1997; Cooke, 1996; Storper, 1995). This concept combined the work on
regional industrial clusters and industrial districts with ideas presented
in the work on national innovation systems. There is much conceptual
overlap between the two literatures when it comes to understanding
processes of innovation and interactive learning.

Carlsson and Stankiewicz (1991) introduced the concept of techno-

logical innovation system. Their focus was upon how the interaction
between organizations evolves over time as new technological systems
emerge, develop and become more settled. While they refer to the
work on national systems, they point out that the geographical exten-
sion of a technological system may be variable as the technological
system evolves.

Another example of branching was the work on the sectoral system of

innovation (Breschi and Malerba, 1997). Here, the innovation system
perspective was used to enrich industrial economics and industrial
dynamics. The starting point was a Schumpeterian classification of
sectors with emphasis on differences between them in terms of tech-
nological opportunities and appropriability conditions. The system
perspective was used to analyse the evolution of how firms in a sector
interacted with a wider set of organizations and institutions.

The intention behind the national innovation system concept was

that it should inspire national policy strategies for economic growth
and competitiveness. The three related system concepts do not have
this ambition. Instead, they address specific subsystems within (and
sometimes beyond) the national innovation system. The technologi-
cal system gives insights useful for science, technology and innova-
tion (STI) policy makers in charge of fostering a specific emerging
new technology and has been recently used by scholars working with
sustainability transition. The regional system perspective gives useful
insights for policy makers in charge of regional development. The sec-
toral perspective offers important insights on the role of technological
factors for those in charge of industrial policy.

In terms of theoretical perspectives, the regional system approach

has the most overlap with the national innovation system approach –
the difference is mainly one of level of analysis. The sectoral system

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 6 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

approach brings in an evolutionary microeconomic perspective but it

puts less emphasis on organizational learning. The theoretical frame-
work used for the technological innovation system is of special interest
since its focus on emerging new technologies stands in contrast to the
emphasis on cumulative and incremental interactive learning rooted
in the existing production system in the national innovation systems
literature.

In this book we will present theoretical and practical contributions

that make direct references to the national level. But literature at all the
three levels mentioned – technology, region and sector – have made
important contributions when it comes to enriching the analysis at
the national level. This is true in terms of conceptual ideas which have
flowed between the different communities. It is also true for applied
studies where comparisons of technological, regional and sectoral
systems operating in different national contexts have been effective in
helping to clarify the characteristics of national systems.

1.6 Different approaches within the national

innovation system literature

From the very beginning different scholars who gave birth to the con-
cept (Freeman, Lundvall, Nelson and Edquist) operated with different
definitions. They shared the same view on the systemic interdepend-
ence and interaction of organizations which are rooted in or located
in a specific country and which shape innovation. But their definitions
differed regarding what organizations and institutions to include as
components in the system.

There is thus an important distinction between narrow and broad

definitions of national innovation systems and that reflects different
theoretical and political perspectives (Table 1.2). Narrow definitions
of national innovation systems such as the ones by Edquist (1997) and
Nelson (1993) focus upon the interaction between firms and research
institutions and they may be seen as extensions of an older concept,
‘the national systems of science’. Broad definitions such as the one
developed by Lundvall (1988, 1992) include user-producer interaction
and interactive learning processes taking place inside firms, including
learning by doing. They present the innovation system as rooted in ‘the
national production system’ (Freeman, 1987). The distinction can be
linked to different perspectives on knowledge and innovation.

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 INTRODUCTION 7

1.6.1 The narrow definition is focused upon the role of national

research institutions
The narrow definition gives attention to science-based learning
and codified knowledge while the broad definition also includes
experience-based learning and tacit knowledge. While the narrow
definition puts emphasis on processes of search and exploration, the
broad definition includes learning processes that are outcomes of rou-
tine activities. They also tend to differ in terms of the views on the
innovation process. The narrow perspective gives special attention to
radical innovations and emerging technologies while the broad defini-
tion regards the innovation process as including not only incremental
innovation but also the diffusion and use of new technologies.

When we refer to the ‘narrow’ definition, it does not imply that what
is included is not important or only relevant for some countries.
The research system is very important for countries at all levels of
development, big as well as small. Christopher Freeman points to the
introduction of research and development (R&D) laboratories in pri-
vate firms in Germany and the US as a fundamental reason for why
these countries could take over the role as world leaders in technol-
ogy and in terms of competitiveness and level of income. An impor-
tant reason for the success was the linkages that were built between
the public knowledge infrastructure and the enterprise sector. The
private firms could benefit from public investments in health and
military research. Public and private research plays an important role
not only in lead countries engaged in developing front technologies
with the aim to remain world leaders. For small and medium-sized,
second rank, high-income countries developing a research system is
a prerequisite for being able to absorb new technologies developed
abroad and for adapting such technologies to the national context.
Some of the most successful Asian economies have invested heavily
in science and technology and they have developed new patterns
of interaction between the public knowledge infrastructure and the
enterprise sector.

1.6.2 The broad definition includes national institutions

shaping human resources and learning
The broad definition of the national innovation system reflects a
broader definition of the innovation process itself. It assumes that
innovation is a process that includes the diffusion and use of new

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 8 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

technologies as well as the formation of new ideas and the introduc-

tion of new technologies. The speed and direction of the innovation
process reflects interactive learning within and across organizational
borders. Interactive learning is seen as a social process and the
form and content of human interaction will reflect the experience
and educational background of managers, scientists, engineers and
workers.

Therefore, the broad definition of the innovation system includes

national institutions and organizations that shape human resources
and learning processes. Some of those institutions are formal organi-
zations engaged in education and training and they aim directly at
shaping competences. Others are informal and constitute frameworks
for experience-based learning. The nation specificity of family patterns,
civil society activities, the labour market dynamics and organizational
learning at the workplace shape people’s competences and their mutual
relationships and thereby influence interactive learning as well as the
innovation process.

To illustrate, recent research shows that international differences in

forms of organizational learning reflect differences between national
education, labour market and welfare systems (Holm et al., 2010).
It has also shown that innovation performance at the national level
reflects differences in how employees work and learn and that such
differences are more dramatic than differences in the institutions and
science system that are the focus for the narrowly defined innovation
system approach (Arundel et al., 2007).

1.7 How do the different approaches relate to

innovation policy?

The narrow definition of innovation systems inspires science and tech-

nology policies that aim at linking research institutions to users in
the private and public sector. While strong and durable relationships
between users and producers of research results may be beneficial for
movement along a trajectory, they may also result in lock-in when
there is a radical shift in technological trajectory. Here, the task of
policy is more demanding and complex. In such periods, inspiration
from the literature on technological innovation systems may be rel-
evant since it has developed conceptual frameworks for innovation
policies aiming at fostering new technologies.

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 INTRODUCTION 9

Table 1.1 Difference between narrow and broad definitions of national

innovation systems

Narrow Broad

Building pillar National Science System Knowledge is the most

important resource
and learning the most
important process in the
economy
Main authors Nelson (1993) and Edquist Friedrich List (1841 [1959]),
(1997) Freeman (1987) and
Lundvall (1988, 1992)
Focus Science-based learning, STI and DUI learning and
radical innovations and user-producer interaction
firm-level STI learning and incremental
innovations
Policy implications Promotion of science- Framework conditions to
based learning and R&D improve learning
expenditure across organizational
borders, taking into
account the institutions
effecting learning,
promote experience-
based learning and tacit
knowledge and diffusion
of technologies

The broad definition of innovation systems inspires a wider set of

policies including industrial policy and policies related to compe-
tence building such as education and labor market policy. Such
policies have an impact upon the design of institutions and organi-
zations related to learning by doing, using and interacting (DUI).
Since the focus is on the link between innovation and national
aggregate performance, it gives weight not only to radical innova-
tions but also to incremental innovation, diffusion of innovation and
effective use of innovations, as we will discuss in more detail in
Chapter 9.

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 10 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

1.8 Alternative and related concepts to national

innovation systems

In the literature, there are a number of concepts that have a certain

degree of overlap with the national innovation systems concept either
in its broad or narrow definition, notably the notion of National
Learning Systems (Viotti, 2002), National Entrepreneurial Systems
(Ács et al., 2014), the Triple and Quadruple Helix (Etzkowitz and
Leydesdorff, 2000), the National Business System (Whitley, 1994) and
the Innovation Ecosystem (Moore, 1993). In Box 1.2 we summarize
the main commonalities and differences with the national innovation
systems concept but before going through them, it is important to
be aware that each of these – alternative and somehow competing –
concepts emerge from different disciplines and attempt to explain dif-
ferent phenomena than innovation and competitiveness at a national
level.

BOX 1.2 NATIONAL INNOVATION SYSTEMS VIS-À-VIS

OTHER CONCEPTS

National Learning Systems: The national learning system

approach has been proposed by Viotti (2002). He argues that
the national system of innovation approach is inadequate for
late industrializing economies. He emphasizes that in the late
industrializing economies, the process of technical change is not
innovation but learning and absorption of technologies already
existing in the industrialized economies. Therefore, this approach
proposes that the late industrializing economies should be ana-
lysed as ‘national learning systems’ instead of national innova-
tion systems. While his critique might be correct in the case of
the narrow approach to national innovation systems, it is less so
when it comes to the broad definition which puts knowledge and
learning at the core of the national innovation systems and thus
is applicable both for developed and developing countries, as will
be further discussed in Chapter 6.

National Systems of Entrepreneurship: Defined by Ács et al. (2014,

p. 11) as ‘a dynamic and institutionally embedded interaction
between entrepreneurial attitudes, activities, and aspirations, by
individuals, which drives the allocation of resources through the
creation and operation of new ventures’. This approach to

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 INTRODUCTION 11

entrepreneurship calls for employing the systemic perspective

to entrepreneurial activities and emphasizes the contextual
embeddedness of the entrepreneurship processes. It argues that
entrepreneurship should be treated as a systemic phenomenon
instead of as a black box. In this way, it attempts to explain the
differences between the countries and regions in terms of eco-
nomic performance on the basis of individual entrepreneurial
activities. The national system of entrepreneurship differs from
the national innovation systems perspective in focusing upon
allocation rather than innovation.

Triple Helix, Quadruple Helix and N-Tuple of Helices: The triple

helix approach proposed by Etzkowitz and Leydesdorff (2000)
puts the university as a knowledge-producing agent at the core
of innovation activity as opposed to the national innovation
systems approach where firms are seen as leading the innova-
tion process. The triple helix model also regards innovation as
a systemic process and, inspired by molecular biology, it refers
to university-industry-government relations as the three heli-
ces of the strand (Leydesdorff, 2012). The triple helix analysis
operates on the basis of neo-evolutionary and neo-institutional
perspectives linking the three sub-dynamics, namely, university,
industry and government as a basis for analysis. It is applied
at the sectoral, regional, national and transnational levels. The
concept diverges from the national innovation systems concept
in neglecting organizational and inter-organizational learning.

National Business Systems: Whitley (1994) proposed the concept

of national business systems on the basis of variations in the
economic organization experiences in East Asian economies. It
is argued that there is a strong relation between social institu-
tions and how firms and markets interact, all constituting the
distinctive business systems. The interactions between firms
and markets vary across various institutional settings. The key
characteristics of the national business systems are summarized
under three headings that form the components of the business
systems, namely, (1) the nature of firms as economic actors: (2)
the inter-firm relations in the markets; and (3) the nature of
control systems within firms. On the other hand, in the national
system of innovation the main components are organizations,
institutions and the network interactions between them, while

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 12 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

knowledge and interactive learning processes are at the core of

the system. Moreover, the national innovation system has dif-
ferent branches with respect to the level of analysis (regional,
sectoral, sub-national), whereas national business systems have
five major kinds based upon institutional setting and economic
organization (centrifugal, partitioned, collaborative, coordinated,
state dependent).

Innovation Ecosystems: The concept of ecosystems is mainly used

in management research literature (Moore, 1993) to refer to a set
of producers and users contributing to an organization’s perfor-
mance as an ecosystem around that organization. In the innova-
tion ecosystems, the focal centre is the firm and its suppliers
and customers who exist in an institutional and organizational
environment from a value creation perspective.

1.9 Is it useful to focus upon the national level in a

context of economic globalization?

Among scholars who share the view that innovation is important for
economic development, the most controversial dimension of the con-
cept refers to the national level. It is quite obvious that interactions
related to innovation have always involved agents in different countries
and that it is equally obvious that this kind of interaction has become
increasingly widespread. Scientific institutions collaborate across bor-
ders, firms are multinational and suppliers of technology are located
abroad. This is richly illustrated by scholars working on technological,
regional and sectoral innovation systems. To disregard these kinds of
interactions would be misleading.

There are different arguments for why it is important to keep a focus

upon national innovation systems. The most fundamental is that as
long as political governance remains predominantly localized at the
level of the nation state, there is a need for an analytical framework
that can produce insights on which national policies aiming at growth,
development and competitiveness can be built.

Another argument is based upon empirical research showing that

national economies, even big ones, differ in terms of specialization,
institutions and mode of innovation. The fact that there is only little

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 INTRODUCTION 13

and slow convergence in these dimensions makes it legitimate to take

the national system as the analytical unit.

The third argument refers to the broad definition of the national

innovation system and to the localization of different kinds of knowl-
edge and different modes of learning. As specified above, the broad
definition includes formal and informal institutions that shape human
resources and those remain nation specific to a higher degree than
those directly involved in linking science to innovation.

A more complex argument refers to the fact that historically nation

states have served as frameworks for innovation-based growth.
Globalization of the economy including the deregulation of financial
transactions, transnational flows of knowledge, capital and people chal-
lenge the historical role of national institutions and organizations. It is
crucial to understand the specific challenges this implies for national
institutions and governance.

New modes of global governance may in the future surpass the current
role of nation states as frameworks for political governance and should
that happen the analytical focus upon national innovation systems may
become obsolete. But current developments including the crisis for
European integration do not signal that we are close to that point yet.

1.10 The structure of the book

After this introduction, Chapter 2 will look in more detail at the origins
of the concept.

Chapter 3 presents discussions on the theoretical status of the concept.

Chapters 4 and 5 are about how to study innovation systems. Chapter
4 is on the use of qualitative methods as represented in case studies,
comparative studies and historical studies. In Chapter 5 the focus is
upon the use of indicators and quantitative methods.

Chapters 6, 7 and 8 relate the national system of innovation to eco-

nomic, inclusive and environmentally sustainable development,
respectively.

Chapter 9 is about the use of the concept in the policy sphere while
Chapter 10 takes a closer look at the literature that confronts the

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 14 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

national innovation system concept with the ongoing processes of

globalization.

Chapter 11 summarizes and suggests proposals for future research.

Recommended readings
Lundvall, B.-Å. (2010). Post script: Innovation system research: where it came from and
where it might go. In: Lundvall, B.-Å. (ed.), National Systems of Innovation: Toward
a Theory of Innovation and Interactive Learning, London: Anthem Press, pp. 317–38.
Sharif, N. (2006). Emergence and development of the National Innovation Systems con-
cept. Research Policy, 35, 745–66.
Soete, L., Verspagen, B., and Ter Weel, B. (2010). Systems of innovation. In: Hall, B.H.
and Rosenberg, N. (eds), The Economics of Innovation, Vol. 2. Amsterdam: North
Holland, pp. 1159–80.

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 11 Challenges for the research on
national innovation systems

11.1 Introduction

The national innovation system is, as explained in Chapter 3, a histori-

cal as well as a theoretical concept and therefore it needs to be revisited
and perhaps even reconstructed as historical circumstances change.
New contexts challenge the assumptions underlying the concept and
new problems call for a refocusing of the analysis. In this chapter we
discuss how such changes may inspire future research agendas.1

11.2 The transformation of national production

systems

The broad version of the national innovation system is based on the

assumption that there is co-evolution between the national production
system and the national innovation system. First, it is assumed that the
specialization in national capabilities is reflected in the specialization
of the national production system. Second, it is assumed that pro-
duction activities will give rise to learning processes that bolster and
further develop the specialization of national capabilities.

In a context of growing importance of global production and innova-

tion networks, there is a need for innovation scholars to critically revisit
these assumptions. While the basic principles behind the assumptions
may still be valid, the meaning of specialization and the indicators to
capture specialization need to be rethought, as more and more activi-
ties within the same production chain are located in different national
production systems. Historically, we are used to thinking about spe-
cialization in terms of ‘industries’ each with a common technology
and a common final product. How can we capture national specializa-
tion in production and knowledge in a context of increasing global
fragmentation of production in value chains and networks? Is there
an emerging hierarchy between national systems of innovation where

139

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 140 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

firms in high-income countries specialize in functions (R&D, Design,

Finance, Branding and Distribution) rather than products while it may
still be relevant to assume that the specialization of emerging coun-
tries’ innovation and production systems co-evolve?

These questions can be illuminated by linking production and trade

statistics to data on specialization in research, patenting and licensing.
They can also be analysed through applying the concepts of technologi-
cal systems and sectoral systems in case studies of specific technologies
or sectors. Technological systems operate with ‘functions’ or ‘activities’
as units of analysis and therefore the concept is well adapted when it
comes to understand changes in the global division of labour that lead
towards a specialization in terms of functions rather than products.

Furthermore, the concept of production system gives associations

mainly to the production of tangible goods and to manufacturing. In
a world where international transactions increasingly involve trade in
knowledge-intensive services there is a need to rethink basic concepts
and to give more attention to innovation in sectoral systems of innova-
tion for services like finance, communication, education, health and
entertainment.

11.3 The transformation of knowledge production and

learning systems

Another basic assumption underlying the broad definition of national

innovation systems is that tacit knowledge is important for processes
of innovation and that human interaction is crucial when it comes to
combining different kinds of knowledge, as we outlined in Chapter 3.
Christopher Freeman coined the concept ‘the factory as laboratory’ to
indicate the importance of experience-based learning in processes of
innovation (Freeman, 1987). There is a need for researchers to revisit
this assumption in the light of new technologies and new modes of
innovation.

The increasing use of modern technologies related to advanced

ICT, artificial intelligence, robotics, 3D printing and big data will be
reflected in changes in the production of knowledge and the innova-
tion process. More and more experimentation takes place in closed
laboratory spaces with little human intervention. Testing new com-
binations in the form of pharmaceutical products through the use of

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 CHALLENGES FOR THE RESEARCH ON NATIONAL INNOVATION SYSTEMS 141

computers goes far in this direction. Such testing can in principle take
place anywhere and at any time.

New service innovations such as Airbnb, Uber, e-commerce and

advanced tourist booking systems create new definitions and forms
of interaction between service providers and users. One fundamental
research question is how these changes influence the production and
use of knowledge in the context of innovation. More specifically, there
is a need to study to what degree they affect the involvement of users in
processes of innovation. Are we moving towards new modes of innova-
tion where localized user-producer interaction is substituted by the
use of big data on user behaviour? More generally, is the DUI mode of
innovation (experienced-based learning) becoming less relevant? We
have reasons to believe that the answers to these questions will depend
upon both the technology and stages in the innovation process.

New network technologies may open up new avenues of development

for the least developed economies that are the weakest in terms of
knowledge base and access to education and learning. Such technolo-
gies may bring positive change to the global landscape of knowledge
exchange and learning. Through the availability of online MOOC-based
platforms (Coursera, edX, Udemy, to name a few) geographical distances
are becoming less significant and users have the opportunity to learn
about almost any trade and subject from some very prestigious colleges
and universities. Similarly, YouTube and blogs have drastically contrib-
uted to the knowledge body where professionals, lead users and bloggers
post all kinds of information and experiences about products as well as
knowledge of academic disciplines. This exchange of knowledge through
virtual spaces and new platforms might be considered as an addition to
the exchange of tacit knowledge through face to face interactions.

New actor constellations and new patterns of innovation interaction

are on the rise. While innovation has traditionally been the realm of
companies or researchers, civil society is becoming more active in
the innovation system, often providing solutions to social problems.
Similarly, while most technology and innovations are generated in the
formal sector, a great deal of knowledge creation also takes place in the
informal economy. These innovations might co-exist within existing
infrastructures for knowledge production and learning or they may
challenge existing systems. How is the knowledge generated in the
fringe of the system absorbed and utilized? What are the enablers for
an increasing fluidity of actors, constellations and systems?

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 142 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

11.4 The political economy of knowledge production –

between subordination and autonomy

A possible negative consequence of the political focus upon

innovation-based economic development is that policy makers intro-
duce framework conditions for knowledge producers, including univer-
sities, that make them subordinate to powerful economic and political
interests. The knowledge institutions have important social and cul-
tural functions that go beyond the promotion of economic objectives.

Furthermore, subordination may undermine important dimensions of

innovation. While the quality of knowledge production may benefit
from interaction with advanced users of knowledge, a lack of autonomy
undermines the capacity to produce radically new ideas and open up
new paradigms.

Research shows that creativity thrives with intrinsic incentives and

that it suffers when it becomes dominated by extrinsic pressure and
incentives. Many major innovations have been the outcomes of ser-
endipity and often the absence of close managerial or political control
have been a necessary condition for such breakthroughs.

It is a challenge for research to analyse how national institutions bal-

ance between short-term exploitation and subordination of national
knowledge production, on the one hand, and the promotion of autono-
mous creation of new ideas in the long term. A strong focus on military
objectives will typically undermine autonomy while more diversifica-
tion in funding mechanisms as well as in the knowledge infrastructure
may be give room for more autonomy.

11.5 National strategies and global progress

In standard economics it is assumed that free markets and competition

between private actors aiming at profit contributes to the creation of
wealth and economic growth. But it is also realized that unregulated
competition will involve negative externalities for society and for the
environment and that this gives governments a legitimate reason to
intervene with regulations and public investments. The current world
system dynamics may be seen as the outcome of competition between
nation states and it is important to understand how combinations of
national strategies affect global wellbeing.2

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 CHALLENGES FOR THE RESEARCH ON NATIONAL INNOVATION SYSTEMS 143

The research on national innovation systems has given insights for

national innovation policy makers to promote ‘competitiveness’. The
increased focus of policy on knowledge as a factor of production may
lead to a form of international competition where more resources
are allocated to investment in knowledge. However, it may also lead
to innovation mercantilism where the readiness to share knowledge
between nations is undermined and more resources are allocated to
protect knowledge. To explain how different forms of national conduct
combine into global outcomes is a major challenge for research.

Conflicting approaches to innovation and knowledge production

between nations slow down progress at the world level and lead to
political frictions that may take on violent forms. The current deregu-
lated rule of finance moves the focus away from real production and
from innovation and it leads into new global crises. Accelerating
innovation without giving it a new direction may further undermine
environmental sustainability and contribute to global warming.
Combinations of income inequality and growing social and cultural
gaps threaten to stimulate nationalism and racism and it may result
in political leadership that focus attention on discrimination of ethnic
groups and on external enemies.

Today it has become increasingly obvious that a world economy where

each nation state exclusively focuses on promoting their own eco-
nomic objectives will lead to crises in international politics, finance,
environment and society. Therefore, there is a need for research to
study attempts to redirect the objectives set for national innovation
systems.

11.6 Global changes and the importance of the nation

state

We live in a world where public governance and state power remain

located at the level of nation states and where the issue of national
citizenship determines individuals’ rights, duties and living conditions.
This stands in contrast with the changing pattern of location of innova-
tion processes where regionalization and concentration of innovation
activities in major cities goes hand in hand with more innovation inter-
actions taking place across national borders. It is a major challenge for
innovation system research to study the contradictory co-evolution
of the location of public governance and economic processes. One

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 144 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

fundamental dimension of openness relates to the flow of people

across national borders. It relates not only to brain gain and brain
drain. It may also be an important mechanism bringing institutional
convergence between national systems.

As indicated above, the formation of global production chains and

the development of new technologies are reflected in more open but
less coherent and less cohesive national systems of innovation. A very
important research issue is how these changes are reflected in world
development. Is the current stagnation in the world economy a pass-
ing phenomenon or does it reflect chronic and structural problems?
Can new technologies serve as platforms for a new long-term upswing
and what role would there be for national initiatives and international
cooperation, respectively, in this context?

To understand how new forms of international collaboration and

governance can be made to interact with new initiatives at the level
of the national innovation system is a major task for research. And it
requires that economists join forces with scholars working on interna-
tional relations, development, history, political science, sociology and
sustainability, to name a few. More specifically, there is a need to focus
research on the potential of building global institutions that promote
knowledge sharing and innovation that is inclusive and sustainable.

11.7 System transformations and sustainable

development
Another issue refers to the social and ecological sustainability of
national systems of innovation. As we have seen, the original motiva-
tion to develop the national innovation system concept was to offer
an evolutionary understanding of catching up and competitiveness.
One of the main characteristics of the current form of globalization is
growing income inequality not only between national systems but also
within national systems.

At the same time, global warming has now finally been recognized as
a real threat to the viability of the globe and the sustainability of the
planet is under severe threat. Is it possible to design national innova-
tion systems that address these new challenges without reducing the
emphasis on economic growth as objective? Or do we need to subdue
economic growth objectives to social and environmental sustainability

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 CHALLENGES FOR THE RESEARCH ON NATIONAL INNOVATION SYSTEMS 145

and strive for development rather than growth? How would national
innovation systems need to look like under the new paradigm? Can we
address the challenges of sustainable development without profound
radical transformations of the national innovation systems?

Reorienting national innovation systems towards inclusive develop-

ment and environmental sustainability will require the formation of
new political forces and alliances at the national and international
level, with new actor configurations and power structures and most
importantly new or substantially changed production and knowledge
production systems. There is growing consciousness about those
threats in the elite but there are also strong interest groups that prefer
the current unsustainable mode of growth. Analysing cases of suc-
cessful transformation of national innovation systems is therefore a
challenge for innovation system research. Is it possible to envisage
a move towards open systems oriented towards social and environ-
mental sustainability? How can national innovation systems mobilize
different technological innovation systems to enact structural change?
And which kind of institutional change is needed?

Furthermore, cities are increasingly becoming the place where trans-

formations towards sustainability are taking place. Therefore, the rela-
tions between national systems of innovation and urban systems of
innovation become more important. And so do the relations between
national policies and regional or local policies. An important question
to investigate is how can national policies enable rather than constrain
local policies aiming at the transformation of the local system of inno-
vation towards a sustainable system.

11.8 Embracing radical (and incremental) change

An important issue related to addressing the challenges of increased

fragmentation of production, the changing nature of innovation and
increased global conflicts anchored in unequal distribution of the costs
and benefits of growth, social welfare and environmental impacts is
to what degree national systems support, respectively, incremental
and radical change. The original contributions did make distinc-
tions between learning, searching and exploring, implying both path
dependency and path breaking. But the emphasis was upon path
dependency and upon how existing relationships would frame techni-
cal and organizational change.

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 146 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

To what extent is this perspective adequate in the new context? Can

national innovation systems in high-income countries remain com-
petitive on the basis of incremental innovation and absorption of new
technologies from abroad or do they need to combine such a strategy
with engaging in radical and disruptive innovations? Can national
innovation systems in low-income countries catch up only through
incremental innovations and gradual processes of competence build-
ing? Can any national innovation system at all address the challenges
of environmental sustainable development without introducing radical
institutional, social and technical changes?

In addition, which types of policies (and politicians) are needed in

order to enact radical change? As we have discussed in this book,
current innovation policies tend to reinforce incremental change.
Supporting radical change requires a change of perspective on the role
of government from being a reactive intervener to a more proactively
involved agent. This perspective points to a need to move towards
mission-oriented policies and an entrepreneurial state. Does the cur-
rent political system allow for the long-term perspectives necessary to
implement radical change and does the current generation of policy
makers have the capabilities to support the formation of a new para-
digm in innovation policies?

11.9 Addressing the ‘dark’ side of innovation

From the outset, national innovation system scholars were fun-

damentally concerned with economic development and societal
challenges. However, over the last decades we see an increased
detachment between innovation and development in research
on innovation. An increasing amount of empirical work aims at
understanding innovation per se, somehow implicitly assuming that
innovation is always good and automatically leading to development
(Soete, 2013). We believe it is time to reinforce the original research
directions and intentions and reconnect innovation studies with
global challenges like growing inequality, poverty, food scarcity and
climate change.3

There is a need to critically discuss how innovation contributes posi-

tively by providing partial solutions to these global challenges but also
negatively by aggravating them further. The community of scholars
belonging to science-technology-society (STS) has long acknowledged

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 CHALLENGES FOR THE RESEARCH ON NATIONAL INNOVATION SYSTEMS 147

the ‘dark’ side of innovation. They have, for instance, showed how
science and technology policy serve specific powerful groups in society
while excluding others. They have raised critical questions to unduly
optimistic interpretations of innovation as progress and shown that
innovation has a negative side.

To make the analysis of national innovation systems more realistic,

scholars should give due attention to power relationships between and
within national systems. Innovation processes are often understood as
exclusively involving the elite (capitalists, managers, scientists, engi-
neers and policy makers). This elite perspective may be exposed to
critical scholarship. How do vested interests result in innovations that
do not respond to the needs of ordinary people? How can institutions
and organizational forms inclusively offer citizens, consumers and
workers an active role in shaping the direction of innovation?

11.10 Understanding the heterogeneity of national

innovation systems

As we argued in Chapter 3, it is not meaningful to develop a general

theory about nation states and countries. The United Nations rec-
ognizes 193 countries. This list of states is extremely heterogeneous
in terms of size, income level and degree of cultural homogeneity.4
The spatial and historical contexts in which their innovation systems
have evolved are different. How can we theoretically develop the
national innovation system approach without losing the richness
of country specificity? One way to tackle the issue of heterogene-
ity is to develop taxonomies that group similar countries together.
Taxonomies may reflect the strength of the knowledge base, the
connectivity between elements within the system and the openness
of the national system.

In the least developed countries, there is, for instance, very little organ-
ized R&D, in emerging economies the R&D activities in the business
sector still remain weak while most OECD countries are characterized
by a combination of substantial research activities within the public
knowledge infrastructure and the business sector. There are rich inter-
national data sets on R&D, patenting, licensing and formal education
levels that can be used to classify the strengths of national innovation
systems in relation to STI learning. It is much more difficult to classify
the systems in terms of DUI learning and in terms of connectivity

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 148 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

between the elements of the national system. To develop methods and

data to do so is a major challenge for research.

In the Global South, the incentives to invest in research in general and

in innovation systems in particular are with few exceptions almost
non-existent. To explain why institutions are weak and why policy
makers struggle to build the core elements of innovation system pose
one of the greatest challenges for innovation systems research. The
focus of research may be on the time horizon and management capaci-
ties among policy makers. Other challenges are to understand the role
of the big informal sector activity in relation to the innovation process
and to work on developing more relevant and reliable data for con-
ducting research activities.

National innovation systems differ also in terms of how they link up

with the world economy and in how they engage in transnational inter-
actions that shape processes of innovation. Some countries depend
on natural resource exports but remain weakly linked to the global
economy, others have become dependent on the export of low wage
manufacturing and on participation in global value chains, some get
rich on oil and minerals and some combine a diverse production
structure with outsourcing. Taxonomies should reflect how national
systems of innovation are integrated in the world production and
innovation system – maybe through different technological innovation
systems or sectoral systems, as we discussed earlier.

By comparing national systems within taxonomic groups and

through analysing how national systems are transformed (moving
from one group to another) research may give new insights for
the role of innovation in economic development as well as in the
transformation of the World System. Such analysis should take into
account the interdependence of national innovation system. Some
national innovation systems are much more important than others
when it comes to shaping global developments. The role of China
in global growth processes has been of dramatic importance in the
last three decades. The fact that China combined opening up the
economy with building a strong national innovation system was cru-
cial for its outstanding growth and for its impact on global poverty
reduction. India may in the near future become a new catalyst of
global economic development. To understand how some strategi-
cally important national innovation systems shape world dynamics is
a crucial research task.

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 CHALLENGES FOR THE RESEARCH ON NATIONAL INNOVATION SYSTEMS 149

11.11 Reaching out!

The current challenges can only be addressed when and if there is a

clear commitment to cooperation, knowledge creation and compe-
tence building in the true spirit that inspired the emergence of the
national innovation system concept. There is a need to reach out to dif-
ferent communities in academia, to firms and policy makers to engage
in a fruitful dialogue to address the current challenges of development
in an increasingly globalized and ‘technified’ world.

The need for competence building and learning is crucial for all seg-
ments of socioeconomic and political systems. Policy makers must
include learning and competence building in their development
agenda, starting with their own competences. Firms have to invest
in developing the competences of their workers and enabling dif-
ferent forms of learning. Individuals need to take responsibility for
their own lifelong learning. In an ideal world, knowledge and learning
opportunities should be available to all, independently of the place of
birth. This ideal world is still far from reality and the privilege of the
few. Networks like Globelics are among the many different ways to
bring together researchers and practitioners from the Global South
and Global North to discuss together how to address these global chal-
lenges for the benefit of all.

There is great potential in cross-fertilization between what often

appears to be distinct and separate communities of scholars when it
comes to answering the overarching questions for future research on
national innovation systems. How do innovation processes in differ-
ent sectors, locations and technologies contribute to economic, social
and sustainable development in different types of more or less open
national innovation systems? How to move beyond national systems
in the direction of global knowledge sharing and global innovation
systems? We hope that this book and the questions posed in this chap-
ter will inspire current and future generations of researchers all over
the world to develop new research agendas on national innovation
systems for sustainable development in an interconnected world.

NOTES
1 One famous example of how historical circumstances get reflected in the revision of theory is
Schumpeter’s theory of economic development. His original theory on economic develop-
ment (Schumpeter Mark I) takes the individual entrepreneur as the central agent of change. In
Schumpeter (1939) innovation is still the main driver of development but now the individual
entrepreneur has been substituted by big oligopolistic corporations with dedicated R&D efforts.

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 150 ADVANCED INTRODUCTION TO NATIONAL INNOVATION SYSTEMS

2 But there are important differences when it comes to analyse the aggregate outcome of what,
respectively, firms and governments do. The first difference is that governments operate with com-
plex objectives that go beyond economic performance. The second difference is that governance at
the global level is much weaker than at the national level.
3 Globelics, the international network of scholars ([Link] has developed a
research agenda where inclusive and sustainable innovation for development is at the core.
4 This methodological problem of coping with heterogeneity is not unique for national innovation
systems. It appears in other areas. Technologies, sectors and regions are equally diverse. Under the
heading of ‘the firm’ we may find giant corporations such as IBM together with the self-employed
owner of the hot dog stand. It is also worth noting that most macroeconomic models operate at the
national level without much critical reflection about the problem of transferring the models from
one national context to another.

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 Titles in the Elgar Advanced Introductions series include:

International Political Economy International Human Rights Law

Benjamin J. Cohen Dinah L. Shelton

The Austrian School of Economics Entrepreneurship

Randall G. Holcombe Robert D. Hisrich

Cultural Economics International Trade Law

Ruth Towse Michael J. Trebilcock

Law and Development Public Policy

Michael J. Trebilcock and Mariana Mota B. Guy Peters
Prado
The Law of International Organizations
International Humanitarian Law Jan Klabbers
Robert Kolb
International Environmental Law
International Tax Law Ellen Hey
Reuven S. Avi-Yonah
International Sales Law
Post Keynesian Economics Clayton P. Gillette
J.E. King
Corporate Venturing
International Intellectual Property Robert D. Hisrich
Susy Frankel and Daniel J. Gervais
Public Choice
Public Management and Randall G. Holcombe

Administration Private Law

Christopher Pollitt Jan M. Smits

Organised Crime Globalisation

Leslie Holmes Jonathan Michie

Nationalism Behavioral Economics

Liah Greenfeld John F. Tomer

Social Policy Cost-Benefit Analysis

Daniel Béland and Rianne Mahon Robert J. Brent

Consumer Behavior Analysis Environmental Impact Assessment

Gordon Foxall Angus Morrison-Saunders

Entrepreneurial Finance Comparative Constitutional Law

Hans Landström
Second Edition
International Conflict and Security Law Mark Tushnet
Nigel D. White
National Innovation Systems
Comparative Constitutional Law Cristina Chaminade, Bengt-Åke Lundvall
Mark Tushnet and Shagufta Haneef

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