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Field: Innovationsförmåga

What effects does the third generation business policy program create?

The transition to a sustainable society is increasingly emerging as one of the most significant and intense political project of our generation. In light of this, a new policy for the transition has also quickly gained acceptance. This policy, based on the concept of societal challenges as an opportunity for continued development and economic growth, is now being rolled out with a force and scope that suggests a paradigm shift, on many levels.

Well, just what does “sustainable transition” mean? How does a policy whose ultimate purpose is to change in a more comprehensive way both basic production systems as well as societal norms and value systems govern? It can be stated here in summary that there has been relatively little debate on the basic assumptions of the policy. This is surprising in view of the efforts now being made. As a result, a number of practical questions now arise:

  • To what extent are the efforts and initiatives being considered relevant to and in line with the challenges that characterise sustainable transition as a dynamic process?
  • To what extent is the transformation taking place already today, without any political interventions?
  • Are there any alternative policies that might achieve the same, or an even better, outcome?
  • Are there any risks associated with the policy?

Based on this, the Swedish Agency for Swedish Agency for Growth Policy Analysis (Tillväxtanalys) initiated a major framework project in autumn 2019, “What Impacts do the Third Generation of Policies for Economic Growth Create?” (Vilka effekter skapar den tredje generationens näringspolitiska program?) – the overall purpose and intention of which has been to contribute to a better understanding of what we essentially regard as a policy of sustainable transition. This Report provides a stand-alone summary of the project, which has been presented in three separate interim reports.

Our fundamental starting point is that in practice sustainable transition constitutes a meta-policy, i.e. an overall political vision and direction, which is now expected to govern and coordinate a number of parallel political interventions. This metapolitical governance takes place in an interplay between three constantly interacting components which working together constitute the collective governance doctrine of the policy: 1) the contents of the policy; 2) its primary governance principle, and; 3) its institutionalised learning processes.

Based on this, the Report is organised around three questions:

  1. What are the basic theoretic assumptions of the programme behind the new sustainable transition policy
  2. What are the consequences of these basic assumptions in terms of governance and management?
  3. What challenges and opportunities does the new transition policy raise in terms of the functioning, design, methodology and practical implementation of the evaluation?

In regards to the basic programme theoretic assumptions, we note that the new transition policy:

  • reflects a development in which three policy areas – environmental policy, economic growth policy, and innovation policy – have gradually grown together in a meta-policy with sustainable transition as the overarching objective. Additional policy areas, such as labour market policy, education policy, and energy policy are now gravitating towards these.
  • has a number of special characteristics in the form of: 1) a pronounced movement in the direction of sustainability (directionality); 2) an emphasis on innovation via experimental activities and niche experiments as the primary mechanisms of change, and; 3) an ambition to involve the ultimate beneficiaries of the policy to a greater extent.
  • requires a comprehensive coordination of initiatives and the involved parties in the form of transboundary cooperation – which thus emerges as the policy’s primary principle of governance.
  • underlines evaluation and increased learning as a strategic component for the continuous development of the policy – as well as its practical implementation
    This also raises a number of question marks, which we believe will ultimately have implications for the practical implementation of the policy.
  • There is generally a need to further consider the concrete and existential elements of contextual changes and their significance for: 1) the emergence of alternative processes for innovation, and; 2) international innovation-driven collaborations
  • Similarly, there is a need to further consider the concrete and existential elements of transboundary collaborations, which: 1) does not in any way constitute a panacea but rather in some contexts can also be purely counterproductive; 2) often challenges established institutions and trends (e.g. confidentiality and procurement legislation, increased professionalisation, and increasing fragmentation of the governmental bureaucracy); 3) may serve different purposes depending upon the context, and; (4) therefore must be organised on the basis of the specific situation so that “form” actually responds to “content”.

This taken together has a number of practical implications for how the State can and should act in its active implementation of the meta-policy. The Report makes the following observations in this regard:

  • A first reflection concerns the need for the central government to continuously work with an overall vision and narrative for a sustainable transition, which : 1) unites the society’s stakeholders around a common goal, and; 2) becomes a form of benchmark against which, more informally and more continuously, the policy can also be evaluated. The narrative and vision taken together constitute one of the most distinctive instruments of meta-policies – which also underlines the power of informative instruments. They must however be regularly adjusted and constantly developed so as not to lose their power.
  • A second observation concerns the central government’s relationship with the business community with a view to stimulating innovation. Here, we believe, the central government should, at the aggregate level, first establish framework conditions for industry and increasingly build bridges between the various sectors – this in order to provide a clear directionality but without compromising market incentives for innovation. On the other hand, the central government should avoid detailed governance at the sectoral and programme level. Instead, here obstacles that can slow down innovation, such as of bottlenecks and perverse incentives, should be removed.
  • More specifically, we propose that the policy also initiates an open discussion without preconditions around platform economies and their role in a sustainable transition, as they better than any other business solution: 1) involve the demand side, and at the same time 2) contribute to the rapid expansion and scaling up of new innovative solutions.
  • Similarly, the central government should also consider a broadened international agenda to actively develop new markets. One such more articulate focus on the demand side then lies: 1) in line with a general trend towards innovation-driven international collaborations; while simultaneously establishing 2) new preconditions for traditional promotion; plus 3) additional incentives for innovation among Swedish companies in Sweden.
  • Furthermore, the central government should develop a clearer approach and strategy for evaluation along with more structured learning. Sustainable transition is essentially an evolutionary process, with many uncertainties and a high level of complexity. With this, the continuous evaluation work also becomes a central part of both current policy development and the actual governance of the policy. However, this strategic function presupposes that: 1) controlling and promotion evaluation is seen as complementary approaches to various different types of learning, and; 2) various different evaluation efforts are increasingly combined. With this comes naturally a need to increase both the knowledge and capacity around the evaluation, as well as the dissemination of its results.
  • The above, in turn, points to the need to more generally also actively provide the new skills and expertise required for a sustainable transition. More specifically, the central government has an important role to play in: 1) initiating and actively participating in a discussion surrounding alternative educational programmes and degrees that better respond to the new situation, and; 2) recognising, contracting and encouraging in their own actions a completely new type of professional, the main contribution of which is that they break set ways of thinking.
  • Finally, the central government must analyse, differentiate, and prioritise its efforts to support transboundary cooperation much more clearly. There are several reasons for this. First of all, it is a practical impossibility for the central government to be present in all contexts and stages. Furthermore there are a number of institutional barriers and trends that limit the possibility of joint collaboration. Finally, this coordination is often better managed by market mechanisms and other stakeholders. Instead, the critical question is when, and above all how, the central government, by means of explicit collaborative control, should initiate, encourage, and support various forms of transboundary cooperation.

In conclusion, the ambition of this framework project has been to facilitate a discussion about the contents of the policy, which we believe must be conducted at some point. Our analysis is therefore primarily about the basic assumptions of the policy– not about its impacts or current status. Our hope is that this Report can contribute to establishing readiness for future decisions in a thoroughly evolutionary process.

Publicerad: 2021-07-06

What effects does the third generation business policy program create?

Serial number: Rapport 2021:04

Reference number: 2020/83

Download the report "Sustainable change as a meta-policy" in Swedish

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3 of 3 partial studies has been published

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