Published 15 May 2020

Third Generation Innovation and Growth Policy: Introductory Overview and Problematisation

The Government's goal for innovation policy is to strengthen the Swedish innovation climate along with the conditions for industry’s renewal. What is occasionally called the third generation innovation policy constitutes a shift away from traditional industry research programs to, instead, focusing on major societal challenges.

The purpose of this study is to describe and analyze the theoretical assumptions for transformative change, i.e. major systemic changes in a sector of the economy, such as a technology shift, and subsequently discuss their implications for governance. We have studied the extent to which a number of innovation initiatives in Sweden and Europe, presented in recent years, represent third generation innovation policy. We have also analyzed the extent to which these innovation initiatives can be expected to lead to transformative change.

We have identified several factors that can be expected to promote transformative change. The presence of protected niche experiments and the management of resistance from established actors controlling the existing socio-technical regime are some examples. Our assessment is that the third-generation innovation policy, with its stated system-altering political ambitions (directionality), is difficult to implement in practice. Instead, both political goals and the conditions for their implementation may ultimately be defined by actors within the dominant socio-technical regime, i.e. among those who control the established systems where technology, organization and human activity are inseparably intertwined. Investments in transformative change can under similar circumstances strengthen rather than weaken the sector that would have to undergo a transformation.

Of the concrete innovation policy initiatives that we have studied, we believe that most do not comply with the established definition of third generation innovation policy. In most cases, this is due to different market and coordination failures. Collaboration between universities and larger companies seems to be an important idea behind the efforts that have been made but directionality has often been limited. The programs primarily aim to increase research and development in the economy as well as to increase the competitiveness of the national economy through the strengthening of the existing socio-technical regime.

Of the initiatives we have studied, the Strategic Innovation Programs (SIP) differ in part from the other programs. Actor constellations are broader and the implementation of the programs is carried out by the actors rather than by the authorities. Clear steps have also been taken to coordinate the activities of the authorities in this area. We consider several of these changes to be positive and rooted in the research literature in the field.

Our study shows that the programs studied are not developed to achieve transformation. The policy documents and decisions behind the initiatives clearly illustrate that this was not the original intention either. Our conclusion, therefore, is that, for example, SIP should not primarily be evaluated as to whether or not they lead to transformative change, mainly because they were not initially developed for this purpose. Our assessment is that it is difficult for politicians and authorities to design such a policy in a way that benefits actors outside existing interest groups.