Using the Systems Approach in Policy Making

The Innovation Systems Conceptual Approach goes beyond research and development (R&D) to explain innovation dynamics. Newness does not have to be predicated upon R&D alone. It encompasses the institutional elements that strongly influence the growth dynamics; standards, norms, rules, regulations and customs. The organization is not the sole vector of technological innovation.
There is a framework for innovation to be a collective achievement. It can be used by international organizations and by various countries because draws attention to the systemic features of the process and the variation across countries. It cautions against simple policy prescriptions that don’t account for national differences among competing systems. There is not a one-size-fits-all model which can be applied to all countries. Innovation systems policy is dependent upon historical trajectories and path dependencies associated with any given country although another country at a similar level of technological and innovative development can be used as a model.

The correct level of analysis may be difficult to establish. Many times, the National Innovation Systems Approach (NIS) is used but, in large countries, there are regions that are distinctly different from one another. For instance, in China, the southern region is particularly innovative compared to the western region. In that case, it may be preferable to use a regional level of delineation rather than the national level. In other contexts, it might be better to use a technological level of analysis. Some technologies share more commonalities compared to regions and they would be more worthy of study as group. Many analysts have suggested that multinational corporations control much of the science and technology (S&T) and innovative activity that we see emerging throughout the world. For this reason, it doesn’t always make sense to look at the national level as a delimiting criterion. A multi-national corporation, where and how it's conducting its S&T activities, could be the focus of study.

The Innovation Systems Conceptual Approach is still just a concept rather than a formal theory. A theory has powers associated with it and can predict outcomes. This particular approach has not been proven to accurately forecast the result of corrective measures. Some argue that it's too broad, ambiguous, and conceptually diffuse. Also, with so many factors playing a role, assigning relative weights to particular relationships is clearly difficult. It's not very neatly operationalizeable. In practice, when policy makers use this approach, they look at specific components and linkages within a system and the specifics can actually be more easily fine-tuned than by looking at the total system.

Another disadvantage is because this approach is applied to individual countries on a case-by-case basis, elements of one system may have little in common across geographic boundaries yet the way in which it prescribes corrective measures is to use an advanced economy as a model. Carrying out effective trans-national comparisons is quite difficult. Sources of diversity between countries are size and population. Larger countries have different regions that may or may not be strong, in terms of innovation. Level of development is another source of diversity. Developing economies are not comparable to the most advanced and most mature economies of the world. Furthermore, given the uniqueness of each country, the respective role of each actor in an innovation process is not comparable to another. In underdeveloped countries, the government tends to play a larger role in terms of innovating. Businesses, public and private research organizations, and the government all play differing roles depending on the country's level of development. Similarly, the quality and intensity of the linkages between the various actors are different depending on country.

In spite of these disadvantages, The Innovation Systems Conceptual Approach provides a tool for analyzing country-specific features of the innovation process. It offers a very good guide for formulating innovation and technology policy. It highlights interactions among various actors and the workings of the whole system rather than the performance of each individual component. It recognizes that a business, although it is the locus of innovation, does not function in isolation. The entire system influences the effectiveness with which businesses innovate.
from Coursera course, Science and Technology and Society in China. Week 3. by Naubahar Sharif, The Hong Kong University of Science and Technology