Dynamics of Innovation Systems Marko Hekkert Simona Negro Utrecht University Department of innovation and environmental sciences

Innovation systems is powerful heuristic framework Highlights the systemic nature of innovation processes No innovation in isolation Very well diffused under policy makers It has potential to contribute to ‘system innovations for sustainable development’

However, it is still associated with conceptual diffuseness System boundaries are problematic Definition of institutions varies Most of all: it lacks rigor; it is hardly fit to come up with specific hypothesis about specific variables in the innovation system. So: it needs to be improved

One way to increase rigor and specificity is relating it to general systems theory (Edquist 2005) Natural science approach for studying (dynamics of) systems One of the characteristics of a ‘system’ is that it has a function; it is performing or achieving something The main function of an innovation system (what is supposed to achieve) is the generation and diffusion of innovations. The term ‘function’ should not be read as functionalism in the sociology sense

Several authors study IS in relation to the (sub)functions of the IS that they consider important. These functions relate to what needs to be achieved by (in) the system to create and diffuse innovation

This cumulative outcome can be studied. The way a certain system function is fulfilled is determined by many activities of agents and by different institutions These agents do not act purposely to fulfill a system’s function, but act based on strategies to meet their own (or public) needs. Free will but also bounded by institutional settings The way all these activities cumulate determines the functioning of the innovation system This cumulative outcome can be studied.

This line of research is important since Different scholars have picked up this way of studying innovation systems This line of research is important since It provides a starting point for formal hypotheses about innovation system functioning in relation to innovation output It provides a theory on IS dynamics: Virtuous and vicious cycles .

Problem 1: Different lists of functions are used in literature Problem 2: detailed mapping method to map function interaction Goal of our paper: Testing one set of system functions Testing whether cycles really take place Studying which type of interactions often take place / reoccurring patterns

Method: event history analysis / process method 10 cases analyzed (all sustainable technological innovation systems)

System Functions Biomass Digestion NL Biomass Digestion D Biomass Gasification Biomass Combustion Biofuels PV Total % per SF Function 1: Entrepreneurial Activities 12 21 11 9 20 13 Function 2: Knowledge Development 22 8 17 30 Function 3: Knowledge Diffusion 14 4 5 28 Function 4: Guidance of the Search 27 25 34 37 40 Function 5: Market Formation 1 24 Function 6: Resource Mobilisation 6 3 Function 7: Advocacy Coalition

Also based on the 6 narratives, we conclude that all seven functions are important factors that strongly influence IS dynamics.

Virtuous and vicious cycles Strongly groing IS show continuous process of positive interaction between system funtions Sometimes temporal vicious cycles take place, but are quickly terminated / taken over by virtuous cycles More problematic functioning IS show alternating cycles; virtuous – vicious. Some developments end due to vicious cycles Poorly functioning IS show hardly any positive interaction between SF. Also over large time periods several functions are missing

Trends / Reoccurring patterns Very preliminary results Guidance very important: often starting point of IS dynamics, often also starting point of new vrituous cycle Guidance often leads to (soft) knowledge development (via resources formation). Then whole range of different patterns Entrepreneurial activities have a pivotal role in IS. Many other functions lead to EA but in turn also many SF are triggered by EA. Legitimation / lobby / advocacy coalitions proved to be critical in changing existing legislation / creating alignment – requires well organised entrepreneurs Market formation is often final barrier / driver

Implications More insights in these patterns may help to improve innovation policy – now instruments often strongly financially dominated (Anna Wieczorek) May help to improve entrepreneurial strategies – provides insights in how to include the IS in business / innovation strategy