Governance and implementation of third generation innovation policy through collaboration
This study is the second part of the Growth Analysis framework project on the so-called third generation innovation policy – i.e. an innovation policy where innovation is seen as a means of societal change rather than an end in itself. In Sweden, these ambitions of societal change are often aimed at transitioning towards sustainable development and strengthening competitiveness. More specifically, the report deals with the role that collaboration plays in such a policy. The aim is to describe both opportunities and challenges connected to collaboration as a means to steer and implement third generation innovation policy.
Two sides of the same coin
Collaboration can be understood in a broad sense as interactions between actors with different organisational affiliations. The interactions allow for a high degree of autonomy, where the basic general motive is to handle challenges better than if the actors had acted individually. Collaboration between different actors in society has long been seen as an important component of both innovation processes and a transition towards sustainable development, and so also in the third-generation innovation policy. Important arguments for collaboration include the potential to handle complex societal challenges through participation, dialogue, flexibility, learning and synergies between stakeholders and sectors. At the same time, there are conceptual tensions between, on the one hand, the voluntary nature and informal decision-making processes that characterise collaboration and, on the other, a more hierarchical societal governance based on political objectives and transparent administration. There is also a conceptual tension between, on the one hand, collaboration and, on the other, the competition in free markets that creates a fundamental pressure for innovation in business. These tensions raise the question to what extent and in which form collaboration should be applied in innovation policy.
Collaboration as practice and governance doctrine
In the first part of the report, we describe potential opportunities, challenges and risks associated with collaboration based on empirical and theoretical literature on network governance, innovation, sustainable development and collaboration as a professional practice. Based on this review, a number of questions are identified that we believe are central to understanding whether and how collaboration can promote innovation and a transition towards sustainable development. The questions concern, on the one hand, how the collaboration work can be directed with policy objectives and more hierarchical forms of governance, what values collaboration can bring to a mix of policy instruments and to what extent collaboration can reduce the uncertainties that are inevitable in innovation processes. The questions also address the practice of planning, designing and implementing collaborative processes, which largely determines whether potential values associated with collaboration are realised. These questions concern the legitimacy of actors who are represented in collaboration, the extent to which different perspectives are taken into account, whether there is scope for questioning prevailing norms and institutions and whether opportunities for practical experimentation are offered.
Case study on policy conducted
Drawing on the key questions identified in the literature review, the report also includes a case study of Fossil-free Sweden. This is a government initiative taken in 2015 with the aim of accelerating efforts to achieve the national environmental quality objective Reduced climate impact. A principal part of the mission of Fossil-free Sweden is to collaborate with business sectors around the development of roadmaps for a transition to a fossil-free energy system. In addition to climate policy ambitions, promoting innovation and competitiveness are important underlying motives for the initiative. We therefore see the initiative as an interesting example of third generation innovation policy implementation. Our case study focuses on the roadmaps for the electrical, maritime, automotive and aviation industries. It is based on document studies and semi-structured interviews with key people in Fossil-free Sweden's offices and at the industry associations that have been responsible for compiling the roadmaps. A small number of interviews with actors without direct involvement in the initiative, but with broad insights into collaboration and innovation policy, have also been conducted. Our ambition is not to evaluate Fossil-free Sweden but rather to use the initiative to illustrate and further elaborate the general reasoning on pros and cons of collaboration presented in the literature review.
Results in brief
The national climate policy framework has given Fossil-free Sweden a clear direction that the studied roadmaps follow when they describe how each industry can become fossil-free. The roadmaps contain few proposals for innovative technical solutions. Instead, they focus on conditions that the industries deem necessary in order to cope with the transition. The fulfilment of these conditions would rely to a considerable extent on public efforts and support, including for the continued development of fossil-free technology.
The internal collaboration in the industries during the work on the roadmaps has enabled learning and some of the proposals for adjustments to, for example, the regulatory framework and forms of government support can be seen as potential institutional innovations. No clear priorities between different technologies are set in the roadmaps of the transport industry, which can be explained in part by the fact that companies in each industry compete with different solutions.
At the time of writing, implementation of the roadmaps has not yet begun It is therefore uncertain to what extent the government will be able to implement the proposed measures and how trade-offs between proposals will be managed, even though the office of Fossil-free Sweden have suggested certain prioritisations. Implemented measures will possess legitimacy by virtue of being proposed by market players and expertise. In this respect, Fossil-free Sweden constitutes an innovative structure for implementation of climate policy. At the same time, a conventional preparation of the roadmaps in the Government Offices of Sweden will give political legitimacy to the formal decisions that will be taken based on the proposals.
We see several general implications for continued collaboration between government and business on innovation and transition for sustainable development:
- Our study addresses collaboration as a governance doctrine and as practice. Both perspectives raise key questions about how collaboration appears in innovation policy: What do the actors collaborate on, which actors collaborate, how and when do they collaborate? The dynamics of the questions are relatively rarely problematised in the context of innovation policy. Nevertheless, this is central to understanding the effects of policy. Therefore, we believe that collaboration in policy contexts should be treated as the complex phenomenon it is.
- Fossil-free Sweden shows how the direction of collaboration can be controlled with political goals and hierarchical policy instruments that create a pressure for transition and a demand for innovation. At the same time, such external control can reduce incentives for companies to participate if they see limited or no benefits in a transition.
- Fossil-free Sweden shows that consultations between government and separate industry sectors can create learning about institutional conditions for innovation and transition. It can also provide a basis for decision-making that clarifies differences in perspectives acrossindustries, and potentially reduce institutional uncertainty in innovation processes. However, the form of collaboration provides limited opportunities for cross-industry consensus and priorities. In the studied roadmaps, the input from the industries partly takes on the character of strategic party submissions.
- The fact that industry associations are points of contact with government has practical advantages and creates legitimacy because they formally represent a large number of companies. At the same time, they can only put forward proposals that all members accept. This means that disagreements within industries are not visible in proposals put forward by these companies, including conflicting interests of companies that compete among themselves with different technical solutions. Priorities and choices regarding, for example, different energy sources are then referred to a political level. This allows for transparency and legitimacy that collaborative projects are sometimes criticised for lacking, while potentially weakening endorsement in business.
- There is both a contradiction and complementarity between collaboration and more hierarchical governance doctrines. We believe that this needs to be given more attention in research and policy that advocates increased elements of collaboration based on idealised assumptions according to which actors can meet on equal terms and make consensus decisions on difficult issues. From a policy perspective, Fossil-free Sweden highlights that the specific design and practical implementation of collaboration is crucial for the outcome, and that specifying details of the design can provide government directives calling for collaboration with a stronger steering effect.
Governance and implementation of third generation innovation policy through collaboration
Serial number: PM 2021:03
Reference number: 2020/184