Editing IPCC:AR6/WGIII/Chapter-16 (section)

=== 16.3.1 Frameworks for Analysing Technological Innovation Processes ===

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The resulting overarching framework that is commonly used in the innovation scholarship and in policy analyses is termed an ‘innovation system’, where the key constituents of the systems are actors, their interactions, and the institutional landscape, including formal rules, such as laws, and informal restraints, such as culture and codes of conduct, that govern the behaviour of the actors ( [[#North--1991|North 1991]] ).

One application of this framework, ''national innovation systems (NIS)'' , highlight the importance of national and regional relationships for determining the technological and industrial capabilities and development of a country ( [[#Lundvall--1992|Lundvall 1992]] ; [[#Nelson--1993|Nelson 1993]] ; [[#Freeman--1995|Freeman 1995]] ). [[#Nelson--1993|Nelson (1993)]] and [[#Freeman--1995|Freeman (1995)]] highlight the role of institutions that determine the innovative performance of national firms as a way to understand differences across countries, while [[#Lundvall--1992|Lundvall (1992)]] focuses on the ‘elements and relationships which interact in the production, diffusion and use of new, and economically useful, knowledge’ – that is, notions of interactive learning, in which user-producer relationships are particularly important ( [[#Lundvall--1988|Lundvall 1988]] ). Building on this, various other applications of the ‘innovation system’ framework have emerged in the literature.

''Technological innovation systems (TIS),'' with a technology or a set of technologies (more narrowly or broadly defined in different cases) as the unit of analysis, focus on explaining what accelerates or hinders their development and diffusion. [[#Carlsson--1991|Carlsson and Stankiewicz (1991)]] define a technological system 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 utilisation of technology’. More recent work takes a ‘functional approach’ to TIS ( [[#Hekkert--2007|Hekkert et al. 2007]] ; [[#Bergek--2008|Bergek et al. 2008]] ), which was later expanded with explanations of how some of the sectoral, geographical and political dimensions intersect with technology innovation systems ( [[#Bergek--2015|Bergek et al. 2015]] ; [[#Quitzow--2015|Quitzow 2015]] ).

''Sectoral innovation systems (SIS)'' are based on the understanding that the constellation of relevant actors and institutions will vary across industrial sectors, with each sector operating under a different technological regime and under different competitive or market conditions. A sectoral innovation, thus, can be defined as ‘that system (group) of firms active in developing and making a sector’s products and in generating and utilising a sector’s technologies’ ( [[#Breschi--1997|Breschi and Malerba 1997]] ).

''Regional innovation systems (RIS) and global innovation systems (GIS)'' , recognise that the many innovation processes have a spatial dimension, where the development of system resources such as knowledge, market access, financial investment, and technology legitimacy may well draw on actors, networks, and institutions within a region ( [[#Cooke--1997|Cooke et al. 1997]] ). In other cases, the distribution of many innovation processes are highly internationalised and therefore outside specific territorial boundaries ( [[#Binz--2017|Binz and Truffer 2017]] ). Importantly, [[#Binz--2017|Binz and Truffer (2017)]] note that the GIS framework ‘differentiates between an industry’s dominant innovation mode... and the economic system of valuation in which markets for the innovation are constructed’.

The relevance of ''mission-oriented innovation systems (MIS),'' comes into focus with the move towards mission-oriented programmes as part of the increasing innovation policy efforts to address societal challenges. Accordingly, an MIS is seen as consisting of ‘networks of agents and sets of institutions that contribute to the development and diffusion of innovative solutions with the aim to define, pursue and complete a societal mission’ ( [[#Hekkert--2020|Hekkert et al. 2020]] ).

Notably the innovation systems approach has been used in a number of climate-relevant areas such as agriculture ( [[#Echeverría--1998|Echeverría 1998]] ; [[#Horton--2003|Horton and Mackay 2003]] ; [[#Brooks--2011|Brooks and Loevinsohn 2011]] ; [[#Klerkx--2012|Klerkx et al. 2012]] ), energy ( [[#Sagar--2002|Sagar and Holdren 2002]] ; [[#OECD--2006|OECD 2006]] ; [[#Gallagher--2012|Gallagher et al. 2012]] ; [[#Wieczorek--2013|Wieczorek et al. 2013]] ; [[#Darmani--2014|Darmani et al. 2014]] ; [[#Mignon--2016|Mignon and Bergek 2016]] ), industry ( [[#Koasidis--2020b|Koasidis et al. 2020b]] ) and transport ( [[#Koasidis--2020a|Koasidis et al. 2020a]] ), and sustainable development ( [[#Anadon--2016b|Anadon et al. 2016b]] ; [[#Clark--2016|Clark et al. 2016]] ; [[#Bryden--2017|Bryden and Gezelius 2017]] ; [[#Nikas--2020|Nikas et al. 2020]] ).

A number of functions can be used to understand and characterise the performance of technological innovation systems ( [[#Hekkert--2007|Hekkert et al. 2007]] ; [[#Bergek--2008|Bergek et al. 2008]] ). The most common functions are listed in Table 16.5.

'''Table 16.5 | Functions that the literature identified as key for well-performing technological innovation systems.''' Source: based on [[#Hekkert--2007|Hekkert et al. (2007)]] and [[#Bergek--2008|Bergek et al. (2008)]] .

{| class="wikitable"
|-
! '''Functions'''

! '''Description'''

|-
| Entrepreneurial activities and experimentation

| Entrepreneurial activities and experimentation for translating new knowledge and/or market opportunities into real-world application

|-
| Knowledge development

| Knowledge development includes both learning by searching and learning by doing

|-
| Knowledge diffusion

| Knowledge diffusion through networks, both among members of a community (e.g., scientific researchers) and across communities (e.g., universities, business, policy, and users)

|-
| Guidance of search

| Guidance of search directs the investments in innovation in consonance with signals from the market, firms or government

|-
| Market formation

| Market formation through customers or government policy is necessary to allow new technologies to compete with incumbent technologies

|-
| Resource mobilisation

| Resource mobilisation pertains to the basic inputs – human and financial capital – to the innovation process

|-
| Creation of legitimacy/counteract resistance to change

| Creation of legitimacy or counteracting resistance to change, through activities that allow a new technology to become accepted by users, often despite opposition by incumbent interests

|-
| Development of external economies

| Development of external economies, or the degree to which other interests benefit from the new technology

|}

Evidence from empirical case studies indicates that all the above functions are important and that they interact with one another ( [[#Hekkert--2009|Hekkert and Negro 2009]] ). The approach therefore serves as both a rationale for and a guide to innovation policy ( [[#Bergek--2010|Bergek et al. 2010]] ).

A much-used, complementary systemic framework is the Multi-Level Perspective (MLP) ( [[#Geels--2002|Geels 2002]] ), which focuses mainly on the diffusion of technologies in relation to incumbent technologies in their sector and the overall economy. A key point of MLP is that new technologies need to establish themselves in a stable ‘socio-technical regime’ and are therefore generally at a disadvantage, not just because of their low technological maturity, but also because of an unwelcoming system. The MLP highlights that the uptake of technologies in society is an evolutionary process, which can be best understood as a combination of ‘variation, selection and retention’ as well as ‘unfolding and reconfiguration’ ( [[#Geels--2002|Geels 2002]] ). Thus, new technologies in their early stages need to be selected and supported at the micro-level by niche markets, possibly through a directed process that has been termed ‘strategic niche management’ ( [[#Kemp--1998|Kemp et al. 1998]] ). As, at the landscape level, pressures on incumbent regimes mount, and those regimes destabilise, the niche technologies get a chance to get established in a new socio-technical regime. This allows these technologies to grow and stabilise, shaping a changed or sometimes radically renewed socio-technical regime. The MLP takes a systematic and comprehensive view about how to nurture and shape technological transitions by understanding them as evolutionary, multidirectional and cumulative socio-technical processes playing out at multiple levels over time, with a concomitant expansion in the scale and scope of the transition ( [[#Elzen--2004|Elzen et al. 2004]] ; [[#Geels--2005|Geels 2005]] ). There have been numerous studies that draw on the MLP to understand different aspects of climate technology innovation and diffusion ( [[#van%20Bree--2010|van Bree et al. 2010]] ; [[#Geels--2012|Geels 2012]] ; [[#Geels--2017|Geels et al. 2017]] ).

Systemic analyses of innovation have predominantly focused on industrialised countries There have been some efforts to use the innovation systems lens for the developing country context ( [[#Jacobsson--2006|Jacobsson and Bergek 2006]] ; [[#Altenburg--2009|Altenburg 2009]] ; [[#Lundvall--2009|Lundvall et al. 2009]] ; [[#Tigabu--2015|Tigabu et al. 2015]] ; [[#Tigabu--2018|Tigabu 2018]] ; [[#Choi--2019|Choi and Zo 2019]] ) and specific suggestions on ways for developing countries to strengthening their innovation systems (e.g., by universities taking on a ‘developmental’ role ( [[#Arocena--2015|Arocena et al. 2015]] ), or industry associations acting as intermediaries to build institutional capacities ( [[#Watkins--2015|Watkins et al. 2015]] ; [[#Khan--2020|Khan et al. 2020]] ), including specifically for addressing climate challenges ( [[#Sagar--2009|Sagar et al. 2009]] ; [[#Ockwell--2016|Ockwell and Byrne 2016]] ). But the conditions in developing countries are quite different, leading to suggestions that different theoretical conceptualisations of the innovation systems approach may be needed for these countries ( [[#Arocena--2020|Arocena and Sutz 2020]] ), although a system perspective would still be appropriate ( [[#Boodoo--2018|Boodoo et al. 2018]] ).

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