Systems of innovation: theory and Policy for the demand Side

Abstract

Abstract As an emerging current of thought in the economics of innovation, systems of innovation (SI) theorizing offers a non-linear perspective that is highly relevant to the formation of innovation policy. SI approaches are particularly appropriate to understanding the use of “demand side” policy instruments such as public technology procurement. In this article, we briefly summarize some general characteristics of SI approaches and relate them to broader theoretical developments in the economics of innovation. We explore one of the main characteristics of systems-oriented approaches to the study of innovation: the emphasis on interdependency and interactive learning. A number of theoretical antecedents to SI approaches are examined, and their main insights regarding the innovative role played by the demand side are elaborated. On this basis, some elements of a general policy perspective are identified.