The technological innovation system is a concept developed within the scientific field of innovation studies which serves to explain the nature and rate of technological change.R.E.H.M. Smits, Innovation studies in the 21st century, Technological Forecasting and Social Change 69 (2002) 861-883. A Technological Innovation System can be defined as ‘a dynamic network of agents interacting in a specific economic/industrial area under a particular institutional infrastructure and involved in the generation, diffusion, and utilization of technology’.B. Carlsson, R. Stankiewicz, On the Nature, Function, and Composition of Technological systems, Journal of Evolutionary Economics 1 (1991) 93-118.
The approach may be applied to at least three levels of analysis: to a technology in the sense of a knowledge field, to a product or an artefact, or to a set of related products and artifacts aimed at satisfying a particular (societal) function’.S. Jacobsson, A. Johnson, The Diffusion of Renewable Energy Technology: An Analytical Framework and Key Issues for Research, Energy Policy 28 (2000) 625-640. With respect to the latter, the approach has especially proven itself in explaining why and how sustainable (energy) technologies have developed and diffused into a society, or have failed to do so. Technology improves throughout the years, and so do we.
Background The concept of a technological innovation system was introduced as part of a wider theoretical school, called the innovation system approach. The central idea behind this approach is that determinants of technological change are not (only) to be found in individual firms or in research institutes, but (also) in a broad societal structure in which firms, as well as knowledge institutes, are embedded.C. Freeman, The 'National System of Innovation' in historical perspective, Cambridge Journal of Economics 19 (1995) 5-24.B.-Å. Lundvall, Innovation as an interactive process: from user-producer interaction to the national system of innovation, in: G. Dosi, C. Freeman, R. Nelson, G. Silverberg, and L. Soete (Eds.), Technical Change and Economic Theory Innovation as an interactive process: from user-producer interaction to the national system of innovation, Pinter, London, 1988. Since the 1980s, innovation system studies have pointed out the influence of societal structures on technological change, and indirectly on long-term economic growth, within nations, sectors or technological fields.
The purpose of analyzing a Technological Innovation System is to analyze and evaluate the development of a particular technological field in terms of the structures and processes that support or hamper it. Besides its particular focus, there are two, more analytical, features that set the Technological Innovation System approach apart from other innovation system approaches.
Firstly, the Technological Innovation System concept emphasizes that stimulating knowledge flows is not sufficient to induce technological change and economic performance. There is a need to exploit this knowledge in order to create new business opportunities. This stresses the importance of individuals as sources of innovation, something which is sometimes overseen in the, more macro-oriented, nationally or sectorally oriented innovation system approaches.M.P. Hekkert, R.A.A. Suurs, S.O. Negro, S. Kuhlmann, R.E.H.M. Smits, Functions of Innovation systems: A new approach for analyzing technological change, Technological Forecasting & Social Change 74 (2007) 413-432.
Secondly, the Technological Innovation System approach often focuses on system dynamics.R.A.A. Suurs, Motors of sustainable innovation. Towards a theory on the dynamics of technological innovation systems (Thesis), Utrecht University, Utrecht, 2009. The focus on entrepreneurial action has encouraged scholars to consider a Technological Innovation System as something to be built up over time. This was already put forward by Carlsson and Stankiewicz: ‘[T]echnological Innovation Systems are defined in terms of knowledge/competence flows rather than flows of ordinary goods and services. They consist of dynamic knowledge and competence networks. In the presence of an entrepreneur and sufficient critical mass, such networks can be transformed into development blocks, i.e. synergistic clusters of firms and technologies within an industry or a group of industries.’B. Carlsson, R. Stankiewicz, On the Nature, Function, and Composition of Technological systems, Journal of Evolutionary Economics 1 (1991) 93-118; page 111. This means that a Technological Innovation System may be analyzed in terms of its system components and/or in terms of its dynamics. Both perspectives will be explained below.
Structures The system components of a Technological Innovation System are called structures. These represent the static aspect of the system, as they are relatively stable over time. Three basic categories are distinguished:
Actors: Actors involve organizations contributing to a technology, as a developer or adopter, or indirectly as a regulator, financier, etc. It is the actors of a Technological Innovation System that, through choices and actions, actually generate, diffuse and utilize technologies. The potential variety of relevant actors is enormous, ranging from private actors to public actors, and from technology developers to technology adopters. The development of a Technological Innovation System will depend on the interrelations between all these actors. For example, entrepreneurs are unlikely to start investing in their businesses if governments are unwilling to support them financially. Visa-verse, governments have no clue where financial support is necessary if entrepreneurs do not provide them with the information and the arguments they need to legitimate policy support. Institutions: Institutional structures are at the core of the innovation system concept.C. Edquist, B. Johnson, Institutions and organizations in systems of innovation, in: C. Edquist (Eds.), Systems of Innovation - Technologies, Institutions and Organizations Institutions and organizations in systems of innovation, Pinter, London, 1997. It is common to consider institutions as ‘the rules of the game in a society, or, more formally, (...) the humanly devised constraints that shape human interaction’.D.C. North, Institutions, Institutional Change and Economic Performance, Cambridge University Press, New York, 1990. A distinction can be made between formal institutions and informal institutions, with formal institutions being the rules that are codified and enforced by some authority, and informal institutions being more tacit and organically shaped by the collective interaction of actors. Informal institutions can be normative or cognitive. The normative rules are social norms and values with moral significance, whereas cognitive rules can be regarded as collective mind frames, or social paradigms.W.R. Scott, Institutions and Organizations, Sage Publications, London, UK, 2001. Examples of formal institutions are government laws and policy decisions; firm directives or contracts also belong to this category. An example of a normative rule is the responsibility felt by a company to prevent or clean up waste. Examples of cognitive rules are search heuristics or problem-solving routines. They also involve dominant visions and expectations held by the actors.H. Van Lente, Promising Technology - Dynamics of Expectations in Technological Developments (Thesis), Twente University, Enschede, 1993.H. Van Lente, A. Rip, Expectations in Technological Developments: An Example of Prospective Structures to be Filled in by Agency, in: C. Disco and B. van der Meulen (Eds.), Getting New Technologies Together Expectations in Technological Developments: An Example of Prospective Structures to be Filled in by Agency, Walter de Gruyter, Berlin - New York, 1998. Technological factors: Technological structures consist of artefacts and the technological infrastructures in which they are integrated. They also involve the techno-economic workings of such artefacts, including costs, safety, reliability. These features are crucial for understanding the feedback mechanisms between technological change and institutional change. For example, if R&D subsidy schemes supporting technology development should result in improvements with regard to the safety and reliability of applications, this would pave the way for more elaborate support schemes, including practical demonstrations. These may, in turn, benefit technological improvements even more. It should, however, be noted here that the importance of technological features has often been neglected by scholars.R.A.A. Suurs, Motors of sustainable innovation. Towards a theory on the dynamics of technological innovation systems (Thesis), Utrecht University, Utrecht, 2009 p. 45-46.
The structural factors are merely the elements that make up the system. In an actual system, these factors are all linked to each other. If they form dense configurations they are called networks. An example would be a coalition of firms jointly working on the application of a fuel cell, guided by a set of problem-solving routines and supported by a subsidy program. Likewise, industry associations, research communities, policy networks, user-supplier relations etc. are all examples of networks.
An analysis of structures typically yields insight into systemic features - complementarities and conflicts - that constitute drivers and barriers for technology diffusion at a certain moment or within a given period in time.
Dynamics Structures involve elements that are relatively stable over time. Nevertheless, for many technologies, especially newly emerging ones, these structures are not yet (fully) in place. For this reason, mostly, the scholars have recently enriched the literature on Technological Innovation Systems with studies that focus on the build-up of structures over time. The central idea of this approach is to consider all activities that contribute to the development, diffusion, and use of innovations as system functions.A. Bergek, Shaping and Exploiting Technological Opportunities: The Case of Renewable Energy Technology in Sweden (Thesis), Chalmers University of Technology, Göteborg, Sweden, 2002. These system functions are to be understood as types of activities that influence the build-up of a Technological Innovation System. Each system function may be ‘fulfilled’ in a variety of ways. The premise is that, in order to properly develop, the system should positively fulfil all system functions. Various ‘lists’ of system functions have been constructed. Authors like Bergek et al.,A. Bergek, S. Jacobsson, B. Carlsson, S. Lindmark, A. Rickne, Analyzing the functional dynamics of technological innovation systems: A scheme of analysis, Research Policy 37 (2008) 407-429. Hekkert et al., NegroS.O. Negro, Dynamics of Technological Innovation Systems - The case of biomass energy (Thesis), Utrecht University, Utrecht, 2007. and Suurs give useful overviews. These lists show much overlap and differences reside mostly in the particular way of clustering activities. An example of such a list is provided below.
Note that it is also possible that activities negatively contribute to a system function. These negative contributions imply a (partial) breakdown of the system. In particular, domestic instability has been shown to exert downward pressure on innovation systems, while international threats and national security alliances have a significantly positive effect on national innovative performance.J. Schmid, M. Brummer, MZ Taylor, Innovation and Alliances, Review of Policy Research (2017)
Seven system functions As an example, the seven system functions defined by Hekkert are explained here: