The market failure and the systemic failure rationales in technological innovation systems
AbstractIn this paper we analyse the conceptual relationship between the market failure rationale and the systemic failure rationale as justifications for policy intervention within an innovation systems (IS) analytical framework. Current policy analyses in the IS literature are characterised by two contrasting theoretical positions regarding the way in which both rationales are conceptually interrelated. In one strand of the literature, the market failure rationale is considered as a valid although insufficient justification for policy intervention that therefore needs to be complemented by the arguments put forward by the systemic failure rationale. This perspective implicitly presents the systemic failure framework as a more general approach than the market failure perspective. On the other hand, a number of IS policy contributions explicitly reject the market failure approach and consider it a flawed argument for government intervention. In this theoretical view, the systemic failure approach is thus proposed as a more appropriate, alternative innovation policy rationale. Despite their relevance as the theoretical bases that currently underpin actual innovation policy design, an analysis of the robustness and conceptual coherence of these contrasting perspectives has not been provided so far. In this work, we set the analytical steps we deem required for this analysis, and investigate under which premises the relationship between the market failure and the system failure rationales proposed by these two policy perspectives is valid from a theoretical point of view.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Elsevier in its journal Research Policy.
Volume (Year): 42 (2013)
Issue (Month): 5 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/respol
Innovation policy; Market failure rationale; Systemic failure rationale; Technological innovation systems; Micro meso macro evolutionary framework;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eppstein, Margaret J. & Grover, David K. & Marshall, Jeffrey S. & Rizzo, Donna M., 2011. "An agent-based model to study market penetration of plug-in hybrid electric vehicles," Energy Policy, Elsevier, vol. 39(6), pages 3789-3802, June.
- Erik Arnold, 2004. "Evaluating research and innovation policy: a systems world needs systems evaluations," Research Evaluation, Oxford University Press, vol. 13(1), pages 3-17, April.
- Unruh, Gregory C., 2000. "Understanding carbon lock-in," Energy Policy, Elsevier, vol. 28(12), pages 817-830, October.
- Metcalfe, J S, 1995. "Technology Systems and Technology Policy in an Evolutionary Framework," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 25-46, February.
- Jason Potts, 2001. "Knowledge and markets," Journal of Evolutionary Economics, Springer, vol. 11(4), pages 413-431.
- Dodgson, Mark & Hughes, Alan & Foster, John & Metcalfe, Stan, 2011.
"Systems thinking, market failure, and the development of innovation policy: The case of Australia,"
Elsevier, vol. 40(9), pages 1145-1156.
- Dodgson, M. & Foster, J. & Hughes, A. & Metcalfe, J.S., 2009. "Systems Thinking, Market Failure, and the Development of Innovation Policy: The Case of Australia," ESRC Centre for Business Research - Working Papers wp397, ESRC Centre for Business Research.
- Mark Dodgson & Alan Hughes & John Foster & J.S. Metcalfe, 2010. "Systems thinking, market failure, and the development of innovation policy- The case of Australia," Discussion Papers Series 403, School of Economics, University of Queensland, Australia.
- Geels, Frank W., 2002. "Technological transitions as evolutionary reconfiguration processes: a multi-level perspective and a case-study," Research Policy, Elsevier, vol. 31(8-9), pages 1257-1274, December.
- Metcalfe, John S. & Foster, John & Ramlogan, Ronnie, 2003.
"Adaptive Economic Growth,"
Centre on Regulation and Competition (CRC) Working papers
30637, University of Manchester, Institute for Development Policy and Management (IDPM).
- Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-31, March.
- Laranja, Manuel & Uyarra, Elvira & Flanagan, Kieron, 2008. "Policies for science, technology and innovation: Translating rationales into regional policies in a multi-level setting," Research Policy, Elsevier, vol. 37(5), pages 823-835, June.
- Aghion, Philippe & David, Paul A. & Foray, Dominique, 2009.
"Science, technology and innovation for economic growth: Linking policy research and practice in 'STIG Systems',"
Elsevier, vol. 38(4), pages 681-693, May.
- David, Paul & Aghion, Philippe, 2008. "Science, Technology and Innovation for Economic Growth: Linking Policy Research and Practice in "STIG Systems"," MPRA Paper 12096, University Library of Munich, Germany.
- Roald A.A. Suurs & Marko P. Hekkert & Ruud E.H.M. Smits, 2009. "Understanding the build-up of a Technological Innovation System around Hydrogen and Fuel Cell Technologies," Innovation Studies Utrecht (ISU) working paper series 09-10, Utrecht University, Department of Innovation Studies, revised Jun 2009.
- Cohendet, Patrick & Meyer-Krahmer, Frieder, 2001. "The theoretical and policy implications of knowledge codification," Research Policy, Elsevier, vol. 30(9), pages 1563-1591, December.
- Eliasson, Gunnar & Fölster, Stefan & Lindberg, Thomas & Pousette, Tomas & Taymaz, Erol, 1990. "The Knowledge Based Information Economy," Working Paper Series 256, Research Institute of Industrial Economics.
- Malerba, Franco & Orsenigo, Luigi, 2000. "Knowledge, Innovation Activities and Industrial Evolution," Industrial and Corporate Change, Oxford University Press, vol. 9(2), pages 289-313, June.
- David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-37, May.
- Ulrich Dewald & Bernhard Truffer, 2011. "Market Formation in Technological Innovation Systems—Diffusion of Photovoltaic Applications in Germany," Industry and Innovation, Taylor & Francis Journals, vol. 18(3), pages 285-300.
- Bergek, Anna & Jacobsson, Staffan & Carlsson, Bo & Lindmark, Sven & Rickne, Annika, 2008. "Analyzing the functional dynamics of technological innovation systems: A scheme of analysis," Research Policy, Elsevier, vol. 37(3), pages 407-429, April.
- J.S. Metcalfe, 2002. "special issue: Knowledge of growth and the growth of knowledge," Journal of Evolutionary Economics, Springer, vol. 12(1), pages 3-15.
- Markard, Jochen & Truffer, Bernhard, 2008. "Technological innovation systems and the multi-level perspective: Towards an integrated framework," Research Policy, Elsevier, vol. 37(4), pages 596-615, May.
- Cooke, Philip & Gomez Uranga, Mikel & Etxebarria, Goio, 1997. "Regional innovation systems: Institutional and organisational dimensions," Research Policy, Elsevier, vol. 26(4-5), pages 475-491, December.
- Bas ter Weel & L. Soete & B. Verspagen, 2010.
"Systems of innovation,"
CPB Discussion Paper
138, CPB Netherlands Bureau for Economic Policy Analysis.
- Marengo, L, 1992. "Coordination and Organizational Learning in the Firm," Journal of Evolutionary Economics, Springer, vol. 2(4), pages 313-26, December.
- Metcalfe, Stan & Ramlogan, Ronnie, 2008.
"Innovation systems and the competitive process in developing economies,"
The Quarterly Review of Economics and Finance,
Elsevier, vol. 48(2), pages 433-446, May.
- Metcalfe, Stan & Ramlogan, Ronnie, 2005. "Innovation Systems and the Competitive Progress in Developing Economies," Centre on Regulation and Competition (CRC) Working papers 30672, University of Manchester, Institute for Development Policy and Management (IDPM).
- Andersson, Bjorn A. & Jacobsson, Staffan, 2000. "Monitoring and assessing technology choice: the case of solar cells," Energy Policy, Elsevier, vol. 28(14), pages 1037-1049, November.
- Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
- Metcalfe, J S, 1994. "Evolutionary Economics and Technology Policy," Economic Journal, Royal Economic Society, vol. 104(425), pages 931-44, July.
- Carlsson, Bo & Jacobsson, Staffan & Holmen, Magnus & Rickne, Annika, 2002. "Innovation systems: analytical and methodological issues," Research Policy, Elsevier, vol. 31(2), pages 233-245, February.
- Malerba, Franco, 2002. "Sectoral systems of innovation and production," Research Policy, Elsevier, vol. 31(2), pages 247-264, February.
- Richard R. Nelson, 1959. "The Simple Economics of Basic Scientific Research," Journal of Political Economy, University of Chicago Press, vol. 67, pages 297.
- John Foster, 2000. "Competitive selection, self-organisation and Joseph A. Schumpeter," Journal of Evolutionary Economics, Springer, vol. 10(3), pages 311-328.
- Carlsson, B & Stankiewicz, R, 1991. "On the Nature, Function and Composition of Technological Systems," Journal of Evolutionary Economics, Springer, vol. 1(2), pages 93-118, April.
- Negro, Simona O. & Hekkert, Marko P. & Smits, Ruud E., 2007. "Explaining the failure of the Dutch innovation system for biomass digestion--A functional analysis," Energy Policy, Elsevier, vol. 35(2), pages 925-938, February.
- Kurt Dopfer, 2013. "Economics with a Phylogenetic Signature," Papers on Economics and Evolution 2013-06, Philipps University Marburg, Department of Geography.
- Yoguel, Gabriel & Pereira, Mariano, 2014. "Industrial and technological policy: Contributions from evolutionary perspectives to policy design in developing countries," MPRA Paper 56290, University Library of Munich, Germany.
- Matthijs Janssen & Carolina Castaldi & Alexander Alexiev, 2014. "Dynamic capabilities for service innovation: conceptualization and measurement," Working Papers 14-07, Eindhoven Center for Innovation Studies, revised Mar 2014.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.