Innovation Systems, Innovation Ecologies: Innovation Policy and The World of Restless Capitalism

Our purpose in this paper is to provide a different perspective on the by now widely discussed idea of innovation systems. This perspective is designed to cohere with the problems faced by innovation policy makers as they seek to pursue the challenge of creating wealth from knowledge and to reflect the salient aspects of a modern capitalist economy. Two main themes, are at the centre of our approach, the nature of the connection between wealth and knowledge in capitalism and, secondly, the nature of innovation policy making. A systems perspective allows a distinction to be made between ‘innovation ecologies’ on which much of our discussion now depends. Included in innovation ecologies are the primary organisations such as universities and firms that generate and store knowledge as well as those intermediary organisations that serve as brokers between the primary agencies. Innovation systems are parts of the ecology that are connected and focused upon the solution of particular innovation problems. They are constructed for this purpose and depend upon various mechanisms to ensure the necessary connectivity and flows of information between the constituent members. The general thrust of this paper is to propose that an innovation systems policy is the proper domain of attempts to enhance the rate of innovation. We argue in terms of a double policy domain, on the one hand, concerned with the availability of the components of innovation systems and, on the other hand, with the potential for their self assembly into localized innovation systems that are focused on emerging problem sequences. The evolutionary economic approach to innovative competition, embedded in co evolving instituted frames of market and non-market arrangements provides the necessary understanding that innovation policy makers require to deal with restless capitalism and the ignorance economy.