THE INNOVATION PERSPECTIVE

Similar to Cooke, the system perspective on innovations also operates with some distinctions between geographical -, sectorial - and/or technological interlinkages as central for the innovation outcomes.

The system perspective on innovation extends the traditional linear view of the innovation process as following a technological push from new scientific discoveries through industrial research and technological development to market diffusion and application.

Rothwell (1994) opposed such tech push understandings. He argues that several promising scientific findings has never made it to the market, while opposite several successful technologies have been the result of engineering trial and errors in respect to experienced needs rather than the result of basic scientific research.

Therefore, he adds a market (or demand) pull mechanism forming a simultaneously opposite effect on the direction of the innovation to the technological pull; making it an interactive, iterative process with both a tech push and demand pull feed-pack mechanism effecting each step of the innovation processes (Rothwell, 1994).

Lundvall (2011) supplement this arguing that such iterative innovation processes take part within specific societal, political and institutional settings affecting the various feedback mechanisms in multiple ways. Lundvall together with Freeman already in 1992 framed this as National Innovation System (NIS) emphasising that specific national political frames and policies are crucial for the actual innovation processes. This further implies that the state has a central role to play in terms of forming and directing such innovation processes through various ways of effecting the functioning of the system (Lundvall, 2011).

While originally applied as a lens for assessing different national innovation systems, the system perspective has further been applied in respect to regional-, industrial- and technological innovation systems emphasising that not only national differences influences the innovation process, but technical character and the dynamics of the particular sector also has significance. Looking specifically at the Danish Energy Innovation system Borup (2009) e.g. has assessed different sectorial/technological subsystems of the overall Danish national innovation system of energy technologies (Borup et al., 2009; Lundvall, 2011).

Applying a specific transition perspective, several scholars – using different theoretical distinctions – have emphasised that technological development often follows specific path or trajectory of incremental improvements of existing dominating technological solutions. Technological development takes place among the mutual interactions of several different actors within specific contextual and institutional settings. The technological innovations are both shaped by, but also reshaping, the different societal frames and institutional settings (co-producing), which together form specific technological-, economical-, social- and institutional lock-ins for the actual technological development. Such socio-technical lock-ins has been framed as e.g. technical-economic paradigms, socio-technological regimes or arenas of development (e.g. Kemp & Rotmans, 2005; Jørgensen, 2012 Garud, Kumaraswamy & Karnøe, 2010; Saviotti, 2005; Schienstock, 2005; 2011). Moving

society towards sustainable development requires a transition of these regimes or paradigms – unlocking the lock-ins to create a new path – or as Schienstock (2011) formulates it to move from a “path depended” development towards “path creation”.

The public is viewed as a central actor to interfere in those processes to foster such transitions of otherwise rather stable incremental developments. Similar to Porters distinctions between policies (at national and EU level) affecting the overall framework as well as policies (at local/regional level) to upgrade specific clusters, the transition literature also calls for public actions on multiple levels³⁸. A transition in development path need policies that alters the rules of the game in terms of adjusting the regulatory frames posing a change in the overall socio-economic landscape; adjustment in the specific institutional settings and supporting infrastructures in terms of “stretch and transform” the regimes and paradigms and/or redefining the “arena of development” wherein the configurations are established and maintained; as well as shielding, nurturing and even engaging in specific niche development and trials to support and provide alternatives to the current path dependent trajectories (Jørgensen, 2012; Kemp & Rotmans, 2005;

Schienstock, 2005;2011; Smith and Raven, 2012).

While the overall institutional frames are decided on a national or international level, the local political level is the ones administrating them and further the public actors centrally positioned to actually engage in the different transition processes (Jørgensen, 2012; Kemp & Rotmans, 2005; Schienstock, 2005).

Rennings (2000) has in respect to eco-innovation argued that policies and regulations have an effect on technological development and argues that this is crucial for the development of new and better solutions to counteract market failures – environment as externalities. He argues that policies and regulations can affect the technological development trough interfering in both the technological push as well as market pulls mechanism. Rennings therefor introduces public regulations as a third push/pull mechanism indicating that some policies influence the push for technological development while other influences the market pull. His perspective with this is dual in terms of both emphasising that environmental policies and regulations have a significant role in stimulating eco-innovations, but further that the innovation perspective should be emphasised when designing such policies and regulations (Rennings, 2000).

38 The Multilevel Perspectives is a specific framework for viewing the innovations processes as interdepending on various dynamics at multiple levels in terms of the overall socio-economic landscape, the dominating socio-technical regime(s) as well as different niche development (e.g. Kemp & Rotmans, 2005).

Extending on the demand side and market pull mechanism, Miles and Rigby (2013) introduce what they frame as Demand-Led-Innovation policies. They distinguish between two different objectives of such: 1) policies aimed to affect, promote and improve companies responsiveness in their internal development, innovation and design processes e.g. improving their capabilities to respond to market signals, user needs and –feedback etc. (demand-driven innovation policies); and 2) policies aiming at influencing and altering the demand conditions themselves and its stimulus for the direction of the innovation processes (demand-based innovation policies) (Miles and Rigby, 2013).

In respect to policies directed at changing the demand conditions Rosted et al.

(2009) has framed two different options of “smart regulation” and “intelligent public demand”. SMART regulation affect the market demands indirectly as companies seek solutions to fulfil the requirements, whereas intelligent public demands is a direct attempt to pose a specific market signal (Rosted, 2009).

Porter and van der Linde (1994) argues that strict (but smart³⁹) environmental regulation can – oppose to conventional assumptions – provide competitive advantages by directing companies to address existing inefficiencies as well as provide them with a first mover advantage given that strict regulations are followed by others countries or international arrangements. They introduce the concept of a double dividend as both improving the companies’ competitiveness and the environment – also known as win-win strategies in the pollution prevention literature (Porter and Van der Linde, 1994).

In respect to the public demand as driver for innovation, Edler et al (2012) distinguish between procurement that is responsive in respect to the diffusion of existing innovations versus procurement that is proactive in terms of triggering new innovation. The public can first and foremost contribute to creating lead markets by require standards that only a certain proportion of the available solutions can fulfil.

The public can however also specify needs that require innovation to find new solutions not yet available. The latter is referred as R&D procurement. Such R&D procurement can further takes various forms in terms of e.g. specific innovation

39 The use of the wording of SMART regulations is taking from scholars of Ecological Modernisation. Equally to Porters double dividend, Ecological Modernisation also emphasise a double win-win and the business rationality of eco-innovations. The point is that environment will become part of a modernisation of business. Several of the writers do however still point out that the public has a role in respect to direct companies in such directions. The SMART regulations is attempting to catch that the regulation should be conducted so that in induces the private actors to innovate and implement such win-win strategies in contrast to inflexible norms demanding specific costly solutions (e.g. Janicke and Jacob, 2005; Janicke, 2008)

partnering about the development and testing of new solutions and/or long run service contracts with requirements to continuous improve on specific parameters (Edler et al., 2012).

Extending on the concept of double dividend, Porter and Kramer in 2011 introduces the concept of “shared value”, arguing that companies should focus on strategies targeted at making money by providing goods or services that have a societal value.

Porter still emphasis that the public has a central role to play in respect to (Porter and Kramer, 2011):

• Point out areas of societal values – e.g. challenges that need to be addressed;

• Provide the regulatory framework that direct business towards such challenges, as well as

• Engage as a central partner for finding new business models directed towards such double dividend.

In the field of pollution prevention, the concept of ”double dividend”, win-win and new business models have been high on the agenda e.g. in the discussion of Sustainable Consumption and Production (SCP).

Under various concepts such as: Product Service Systems (product based services), Cradle-to-Cradle, Extended producer responsibility, industrial symbioses and Industrial Ecology etc. various business models are discussed aiming at decoupling the resource use of producing new products and services (e.g. Lindhqvist, 2000;

Manzini and Vezzoli, 2003; McDonough & Braungart, 2002; Malmborg, 2004;

Mont, 2002).

This involves e.g. to move the commercial focus to the service and use (the function) of the products rather than just selling the product. The idea is that this provides incentives to prolong and/or repair and update the product as carrier of the function that are sold. Examples include e.g. ESCO, Chemical leasing, professional leasing of ICT equipment (XEROX) etc. Other business models are to establish take-back systems that establish potential feedback loops between the product design and the product as waste etc. The industrial symbiosis concept centres on business models, where (neighbouring) companies are partnering about reutilisation of each other’s waste streams (Lindhqvist, 2000; Malmborg, 2004; Manzini and Vezzoli, 2001; McDonough & Braungart, 2002; Mont, 2002).