The Innovation Systems Approach: An Austrian and Ostromian Perspective

Abstract

The innovation systems (IS) approach-developed by Richard Nelson, Christopher Freeman and Bengt-Ake Lundvall, amongst others-has become perhaps the dominant approach in the academic literature for the study of innovation. It has also exerted considerable influence on policy. This paper examines both the theory underpinning the IS approach, which bears considerable affinities with Austrian economics, and also its policy implications. It is argued that the work of Friedrich Hayek and Elinor Ostrom in particular can be used to draw attention to some potential difficulties with the way in which the IS approach is often used to guide policy. Ideas drawn from Austrian economics, as well as the work of Elinor Ostrom, are used to help develop and improve the IS approach, both theoretically and in terms of its approach to policy.

Modern Approaches To Innovations And Innovation-Related Activities

“…If we turn to the approach of Christopher Freeman, then innovation can be defined as a non-linear process that provides a comfortable environment for the knowledge-intensive process and all organizations participating in it. Freeman also emphasized the need to study the process of innovation in a complex, implying the need to study the features of the diffusion of innovations in society and their impact on the formation of various fundamental industries (Fagerberg et al, 2011;Lewis, 2020).…”