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Recent academic and policy debate on innovation indicates that there has been some shift from a more traditional systems approach to ecologies and ecosystems. The latter are concepts transferred from the world of biology to the social world in order to explain the evolutionary nature of interrelations between different individuals, their innovative activities, and their environment. We evaluate the concept of knowledge ecology and the theory of innovation ecosystem on two fundamental grounds; firstly, on the grounds of theoretical plausibility and conceptual consistency; secondly, on empirical grounds of the case of public-private interrelations of biotech innovation in Cambridge. The argument is that the concept of knowledge ecology and the theory of innovation ecosystems can lead to problems of reductionism and functionalism. This is due to their development in abstraction from more grounded analysis of historical processes of the social division of labour. Knowledge and innovation need to be looked at in the context of historically founded processes of socioeconomic development. [ABSTRACT FROM AUTHOR]