Classification and list reduction

The concept of functions in innovation systems was first proposed around the turn of the millennium by Johnson [133], and has been developed, adjusted and refined by many authors since then.

All of these authors have taken as axiomatic that the innovation systems being considered were operating in well-configured capitalist systems. As American Founding Father Alexander Hamilton recognised, capitalist societies must

“establish rule of law through enforceable contracts, respect private property, create a trustworthy bureaucracy to arbitrate legal disputes and offer patents and other protections to promote invention” (p. 345) [138].

With these preconditions assumed to be in place, the notable authors considering functions within Technological Innovation Systems have been Bergek et al. [139], Bergek and Jacobsson (cited in Bergek Bergek (2008) [92]), Carlsson and Stankiewicz [87], Galli and Teubal [140] and Hekkert et al. [95]. Each of these authors has developed a slightly different set of functions, whilst sharing the view that the “functions” are key processes which “directly influence the development, diffusion and use of a new technology, and thus the performance of the innovation system” [139]. These authors generally developed their lists of functions by

conceptualising the problem and with reference to other literature: little evidence was found of authors validating these functions lists with relevant stakeholders.

In an attempt to impose some order, Bergek et al. [139] developed a comparative table of the various definitions of functions which they mapped into their seven function definition. This section critically assesses that simplification. It has taken the approach of listing all of the functions defined by each of the authors in the Bergek et al. paper, of which there are 70, and identifying groupings into which these functions appear to fall. Eight groupings have been identified.

The complete list of functions proposed by authors reviewed by Bergek et al. [139]

has been extracted into Table 4-1. Each listed function has been considered and fitted into one of eight new groupings.

Seven of the emergent groupings are closely related to Bergek et al.’s seven functions, and are identical to those proposed by Hekkert et al. [95]. These are:

entrepreneurial activities, knowledge development, knowledge diffusion, guidance of the search, market formation, resource mobilisation, and legitimation.

An eighth grouping is “creation of incentives”, which appears as a function in three authors’ work and where it is defined as “provide incentives for entry” [133],

“creating incentives” [87], and “creating/changing institutions that provide incentives or obstacles to innovation” [141].

This eighth grouping is supported by the interviews undertaken in this research.

Function as defined by researcher Author

ref. Natural grouping

Knowledge development A Knowledge development

Knowledge diffusion A Diffusion and networking

Entrepreneurial experimentation A Entrepreneurial activities Influence on the direction of search A Guidance of the search

Market formation A Market formation

Development of positive external

economies A Legitimation

Legitimation A Legitimation

Resource mobilization A Supply resources

Create knowledge B Knowledge development Facilitate information and knowledge

exchange B Diffusion and networking

Create knowledge B Knowledge development

Identify problems B Knowledge development

Guide the direction of search B Guidance of the search Provide incentives for entry B Creation of incentives Recognise the potential for growth B Entrepreneurial activities Stimulate market formation B Entrepreneurial activities Facilitate information and knowledge

exchange

B Diffusion and networking Counteract resistance to change B Legitimation

Supply resources B Supply resources

Create human capital C Knowledge development

Direct technology, market and partner

search C Guidance of the search

Create technological opportunities C Knowledge development Diffuse technological opportunities C Diffusion and networking

Create market C Market formation

Diffuse market knowledge. C Diffusion and networking Facilitate regulation (may enlarge market

and enhance market access) C Guidance of the search

Enhance networking C Diffusion and networking

Legitimize technology and firms C Legitimation

Facilitate financing C Supply resources

Create a labour market C Supply resources

Incubate to provide facilities, etc. C Entrepreneurial activities Create products (materials, parts, compl.

products) C Knowledge development

Diffuse products (materials, parts, compl.

products) C Diffusion and networking

Create new knowledge D Knowledge development

Create knowledge D Knowledge development

Guide the direction of the search process D Guidance of the search Facilitate the formation of markets D Market formation Facilitate the creation of positive external

economies D Legitimation

Supply resources D Supply resources

Creating a knowledge base E Knowledge development Promoting entrepreneurial experiments E Entrepreneurial activities

Creating incentives E Creation of incentives

Creating markets or appropriate market

conditions E Market formation

Promoting positive externalities, or ‘free utilities’

E Legitimation

Provision of R&D, competence building F Knowledge development Creating and changing organizations

needed (e.g. enhancing entrepreneurship) F Entrepreneurial activities Articulation of quality requirements

(demand side) F Market formation

Creating/changing institutions that provide incentives or obstacles to innovation

F Creation of incentives

Articulation of demand F Entrepreneurial activities Prioritizing of public and private sources

(the process of selection) F Guidance of the search Formation of new product markets F Market formation Articulation of quality requirements

(demand side) F Market formation

Networking F Diffusion and networking

Creating/changing institutions that provide incentives or obstacles to innovation

F Guidance of the search

Financing of innovation processes, etc F Supply resources Provision of consultancy services F Supply resources

Incubation activities F Entrepreneurial activities R&D diffusion of information, knowledge

and technology G Diffusion and networking

Diffusion of information, knowledge and

technology. G Diffusion and networking

Professional coordination G Guidance of the search Design and implementation of institutions. G Guidance of the search Diffusion of scientific culture G Diffusion and networking Supply of scientific and technical services G Supply resources

Creation of technological knowledge H Knowledge development Regulation and formation of markets H Market formation

Articulation of demand H Market formation

Exchange of information through

networks H Diffusion and networking

Development of advocacy coalitions for

processes of change H Legitimation

Supply of resources for innovation H Supply resources

Table 4-1: Full list of functions (author's analysis)

Key to authors:

Key Author and citation A Bergek (2008) [92]

E Carlsson and Stankiewicz (2005) [87],

F Edquist (2006) [141]

G Galli and Teubal (1997) [140]

H Hekkert et al. (2007) [95]

Table 4-2: Key to authors in function analysis (author's analysis)

Hekkert et al’s and Bergek et al.’s functional definitions closely overlap, so it worth exploring their differences. This close overlap comes as little surprise, as Marko Hekkert was a contributing author on Bergek et al.’s [92] 2008 paper which originally defined the functions. The key differences lie in Hekkert et al.’s [95]

definition of knowledge development and knowledge diffusion as discrete functions, and their exclusion of Bergek et al.’s [92]. function of “development of positive externalities”.

The separation of Bergek et al.’s combined knowledge development/diffusion function by Hekkert et al. allows for a clear differentiation of the development of new knowledge through R&D activities, which can be restricted to a single participant in an emerging TIS, and knowledge diffusion which allows for such new knowledge to be shared between participants in the TIS.

The other key difference is the exclusion by Hekkert et al. of Bergek et al.’s final function – “development of positive externalities”. Even Bergek et al. [92] seem to be half-hearted in their commitment to this function, as - while they accept that renowned researcher and writer Michael Porter describes positive externalities as

“central to the formation of innovation systems” - they note that the processes by which these positive externalities emerge are “not independent of other functions”

but are indicative of healthy dynamics of an innovation system on a functional level.

Practitioners seeking to apply the functions approach in TIS, such as Negro et al.

[144] and Hannon et al. [97] have commonly adopted the Hekkert et al. [95]

functions definitions, which appear to have become authoritative.

This analysis confirms that all of the various functions identified by the authors

only to the decision to subsume “Creation of Incentives” within Hekkert et al.’s

“F4 – Guidance of the Search”, and these functions definitions may reasonably considered as an authoritative list.