Innovation as a Systemic Phenomenon: Rethinking the Role of Policy

This paper looks at the policy implications of viewing innovation as a systemic phenomenon. The first section provides a brief overview of conceptual approaches used in the recent literature on innovation systems. The second part of the paper looks at learning and technological knowledge at the firm-level, and explores the ways in which different theoretical approaches affect our understanding of innovation processes. This discussion focuses on the contrast between ‘systems’ models of learning and the concepts of knowledge which underpin the current ‘mainstream’ rationale for public policy in this area. The third section discusses policy problems arising from this broad field of study, focusing on two issues: the rationale for policy intervention; and policy capabilities and ‘knowledge bases’.