The Development of the Systemic Approach to Innovation

This chapter provides an overview and synthesis of the literature relating to the national innovation systems (NIS) approach. First, an overview of the historic development of the systemic approach to innovation is provided. It is influenced by the interactive learning and evolutionary theory as well by the concepts of capabilities and path dependency. Although the approach has developed from the mid-1980s, there are still a number of inconsistencies between different approaches toward innovation system. The main criticism relates to the difficulties of setting boundaries to the system; problems with providing dynamic view to the system and overall vagueness in operationalizing the innovation system concept. The chapter shows different ways proposed to overcome those weaknesses. Focusing on the functional side of the innovation system helps to eliminate or at least diminish some criticisms. The clearly stated functions of the NIS help to bound it and allows linking public policy measures to the areas where its functioning is not efficient and system failures exists. The chapter ends by focusing on the issues related to system failures as a reason for public sector interventions. Here concepts of failures such as infrastructural, capabilities, and governance failures are discussed. Framework for classifying system failures is also developed, which helps to answer the questions – where and when should the public sector intervene.