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Critically evaluate the claim that National Innovation Systems (NISs) are THE most important influence shaping and promoting innovation. Discuss with particular reference to a NIS of your choice.

We need to start at the beginning. A National Innovation System (NIS) is defined in different ways in different books. My definition is simple: it is all the policies, structures, processes and relationships (many deliberate, some unintended, all the product of history) which bear on innovation. There are many such policies, structures, processes and relationships and they are difficult to map. No-one is expecting to provide an exhaustive guide to them all – merely to be able to define the concept and to discuss its importance.

Think of a NIS in this way: it is a target of the kind used in archery practice. At the centre is the core, the bull’s eye. Here you find the heart of the NIS, the centre where the policies and structures, processes and relationships are directly relevant to the promotion and support of innovation. Things found here might include corporate and personal taxation, tax relief on new products, patent law, Science Parks, government funding of R & D, university research grants and so on. In the outer rings of the target are other policies, structures, processes and relationships which are less directly related to innovation but still have some kind of relation to it. Lots of things can be located here as having some relationship to innovation. Think skills training, start-up grants, export support, even infrastructure. So many things can be seen as possibly, sometimes, part of a NIS that its boundary is fuzzy. So, after noting the problem of the periphery, best to stick to the bull’s eye.

Next point – a NIS – any NIS – sits inside a national culture which will shape attitudes towards business and wealth creation and which will, therefore, influence the NIS in various ways (levels of corporate and top rates of tax, for instance). Different countries, different cultures, different attitudes towards business. How would you characterise the UK’s culture in this respect?

In the UK as elsewhere, the majority of NIS-type policies are the responsibility of a major government department. In the UK this is the Department of Business, Innovation and Skills (the title speaks volumes – three areas under one departmental roof). If you are going to use the UK’s NIS as an example then go on-line and look around – you will learn a lot about this country’s NIS. Remember though that the UK is a Member of the European Union (EU). Our NIS sits inside guidelines and policies and priorities set by the EU – go on-line and look around the EU’s stance on innovation. What does it have to say about innovation?

The question pivots around the THE in the question. You know what a NIS is, you’ve described it and taken us on a walk around its complexities. Now is the time to answer the question. Are there other influences playing on innovation? You might mention the big background stuff we looked at – the Kondratieff waves, cycles of creative destruction driven both by the business cycle and technological innovation and the shift from Fordism to post-Fordism which underlines the importance of ‘new technology’. Of course, technology in every field is constantly evolving. Surely market forces and globalising forces ought to be included in any list – after all the market economy is a powerful engine of innovation whatever the level it operates at? Maybe the national culture is a powerful influence in relation to business innovation – as noted above it shapes attitudes and assumptions which might have a more potent influence on innovation than dropping the top tax rate from 50p to 45p. The availability of finance –what are the banks attitudes towards finance? Is venture capital available? You might mention Porter’s Diamond (we look at this in an up-coming lecture). The Diamond identifies the components, the roots, of a country’s competitiveness – the resources of various kinds which promote competitiveness (or not). What about the skill, knowledge and enthusiasm of entrepreneurs? Keep on thinking! There’s more you could add.

Now you need to weigh the evidence and the arguments. Is a country’s NIS THE most important factor? Is it among the most important but not THE most important? Is it one of a range of significant factors but no more important than, say, the resources identified in Porter’s Diamond? Make a judgement. There is no right answer. Just one final point. Perhaps the importance of a NIS depends on which NIS we are talking about? After all, NISs come in all shapes and sizes and degrees of effectiveness.

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