innovation system

With the concept of innovation system, EE further specifies the concept of >entrepreneurship in a way that includes network>configurations in the analysis of entrepreneurial behavior and performance, whereas in standard approaches the entrepreneur is mostly regarded to be a single individual. The innovation system is an ordered pattern of >institutions, >technology and >power that is focused on the process of innovation in >markets. The empirical reference of the term can be diverse, reaching from micro-patterns of firm/university-networks to regional economies and, finally, National Innovation Systems. In this field, EE has a very close relation with Economic Geography, because network structures have an essential, though not exclusive >spatial dimension.

Innovation systems are one of the most important units in the evolution of markets in modern industrial economies, the emergence of which is explained by the >competitive advantages of certain structural characteristics of networks in space. Their structure is dependent on the specific interaction between the properties of knowledge evolving in the market process and the networks, that govern the development and use of technology. For example, the "Silicon Valley" phenomenon is a particular arrangement of collaborative and competitive relations between firms, which also have many interactions with research laboratories of universities. Furthermore, there is a peculiar way to finance entrepreneurial projects that lends structure to firm competition in terms of a tournament for follow-up finance which is governed by venture capitalists. Presumably, this innovation system is especially suited to foster innovation in the special field of software development and IT technologies. In other industries, there are other kinds of innovation systems, which, for example, are geared toward a strong role of in-house research in large corporations.


On the national level, innovation systems include the educational sector and the government's industrial policy, in particular. This perspective is oriented to long-run analysis. For example, the so-called "British decline" after the late 19th century can be explained by a particular interaction between social structure, education system, and an emerging mismatch of human capital with the needs of modern manufacturing. Here, the concept of >culture is also of help to get hold of the defining characteristics of the innovation system.

Basic References

An influential collection of papers on innovation systems is:
Charles Edquist, ed., Systems of Innovation. Technologies, Institutions and Organizations. London/Washington: Pinter, 1997
See also:
Edquist
One innovation system...

Semantic Field
space
market
competitive advantage   innovation system   entrepeneurship