Examining Co-Evolving Policy and Innovation Systems Essay

Introduction

Innovations and policy systems are integral parts of the economic development process that is accompanied by structural transformation. Considering the interrelated nature of the above elements, there is a need to pay particular attention to incorporating science, technology, and innovation into policies. Such an approach can trigger change processes and technological learning, which, in turn, determine the success of sustainable development (Raven and Walrave, 2020; Rogge, Kern, and Howlett, 2017). A range of areas is impacted by the need to focus on the co-evolution of policy and innovations, including health and well-being, education, clean water, life below water and on land, poverty, inequality, climate action, clean energy, sustainable communities, as well as responsible production and consumption. Therefore, this paper focuses on the examination of the dynamics of the joint evolution of policy and innovation.

Examining the Co-Evolution of Innovations and Policy Mix

Reasons for Aligning Policy and Innovations

Sustainability-centered innovation systems can be defined as the networks of institutions that design, adjust and diffuse technologies to decrease the environmental impacts. It is critical to move from considering the business as a traditional model for profit towards applying sustainable strategies and a green economy. Ely et al. (2013) emphasize that there is a need for creating new institutions that should prioritize and encourage eco-innovations, which is especially pertinent to the private sector of business. The case of Rio+20 shows that the practices of indigenous peoples are representative of biodiversity preservation and promotion, which can be used as an example of facilitating entrepreneurship in developing countries (Ely et al., 2013). In this connection, corporate sustainability reporting is one of the initiatives that imply a transparent and comprehensive clarification of a firm’s solutions.

Hybrid approaches to linking policy and innovation systems emerge as the ways to ensure business sustainability. Compared to grassroots innovation and green industrialization approaches, they are largely non-governmental and crowd-sourced in nature (Edmondson, Rogge, and Kern, 2020). The cooperative motivations of hybrid approaches are driven by shared technologies and the intersection of local and global knowledge. Examples of hybrids in the UK include Big Barn, the Food Assembly, Farm Drop, et cetera. It becomes evident that the identified approach has the most convincing opportunities for transformational change across the sectors of the economy.

Speaking of policy implications, it is essential to state that their governance of co-evolving innovations is the key challenge. The hybrid approaches require paying attention to infrastructure and network facilitation, financial issues, indigenous capabilities, and regulation. Most importantly, the current unsustainable practices of systems should be revealed based on the design and implementation of policies and policy mixes (Edmondson, Rogge, and Kern, 2020). While taking into account social and environmental goals, the transformative potential of hybrids should be reinforced by democratic politics.

Policy Mix and Innovation Thinking in Sustainability Transitions

The literature on policy and policy mixes shows that the approach to investigating these issues was largely associated with the attention to governing bodies instead of the features of socio-technical systems. Kern and Rogge (2018) state that the inability of policymakers to design proper policies caused their iterations. In this connection, it should be stressed that the interdependencies between the mentioned systems and policies are more important than was considered earlier. Policy learning seems to play a decisive role in inducing technological change using examining various elements of innovation systems, even though the outcomes can be hardly anticipated. Currently, there is a lack of sufficient knowledge since the studies mainly focus on the positive results (Kern, Rogge, and Howlett, 2019; Kivimaa and Virkamäki, 2014). For example, it is stated that by fostering the overcoming of failure challenges, it is possible to achieve lower production costs and scale up the production.

The technological change that is induced by policy mix reflects the dynamics of co-evolution of innovation and policy. The article by Hoppmann, Huenteler, and Girod (2014) provides an example of how policy learning mechanisms can support the process of policy formation. The above authors claim that the formal institutionalization of learning procedures is more important than policy interventions. The regulatory changes influence policy dynamics, but often, the outcomes exceed those that were anticipated by policymakers. The case of the German study in the field of solar energy points to a significant technological change that was stimulated by the German feed-in tariff (FIT) scheme (Hoppmann, Huenteler, and Girod, 2014). These results show that policy interventions and technological change mutually affect each other (Kern, Kivimaa, and Martiskainen, 2017). Consequently, the resolution of emerging concerns should be approached based on the consideration of both components of change.

A novel analytical framework that focuses on the co-evolutionary nature of technology and policy assist in considering its dynamics. Edmondson, Rogge, and Kern (2020) explore the UK Zero Carbon Homes (ZCH) policy mix, focusing on such dimensions as the knowledge of industry, industry lobbying, technical standards, and uncertainty regarding costs. The above authors conducted an attempt to structure the dynamic interactions within the policy mix and socio-technical system. To address this goal, they applied a qualitative research design and provided a case study analysis. The results of this study point to an important role of credibility that acts as one of the most powerful factors of change. Specifically to ZCH, it was found that “there are no requirements to evaluate buildings post-construction, and the regulations are based on an ‘as-designed’ specification” (Edmondson, Rogge and Kern, 2020, p. 34). The performance of buildings was associated with replacing the materials with cheaper ones and the so-called ‘value-engineered’ elements. Consistent with Reichardt et al. (2016), Edmondson, Rogge, and Kern (2020) state that exogenous conditions impact both socio-technical and policy mix systems.

The resistance of the economy to scientific and technological innovations, the aging of fixed assets, as well as the slow decline in metal and energy intensity promotes the debate about the problem of working not only with social but also with technical systems that determine a person’s social life. The transition to a new approach to the development of society, science, technology, and production, dictates the need for non-monopolized structures that are ready for rapid, clear, coherent, and economically-beneficial cooperation (Kemp, Barteková and Türkeli, 2017). It entails the creation of vehicles that are more versatile, less costly, and environmentally friendly. The transition to a new socio-economic situation in the country presents new and higher requirements for the governance of scientific and technical activities and their effectiveness. The issues of defining vital systems become extremely important, among which technical systems play a special role, including benefits to humanity (Adil and Ko, 2016; Rogge and Reichardt, 2016). Their irregularity and inconsistence of existing policies current can cause tremendous harm and significantly impede progress in terms of sustainable transitions.

Given the abovementioned problem, it is necessary to discuss the creation and functioning of such a vehicle management system that would be an organic part of the whole mechanism for managing social production and the entire economy of the country. Under these conditions, the choice of scientifically based priorities for the development of science, technology, and production becomes a fundamental means of developing a strategy (Greenwood, Congreve, and King, 2017). The question arises of creating a mechanism for a comprehensively managed system of society, including technological change, which plays a leading role in socio-economic development (Greenwood, Congreve, and King, 2017; Rogge and Reichardt, 2016). Thus, an adequate high-quality and logical-mathematical approach to the management of technical systems is required.

On the one hand, the democratization of public life makes it possible to increase the role of citizens and non-governmental organizations in preparing important decisions in the field of nature conservation. There is no accident that it was environmental movements that were among the first to be included in the democratic process (Lacasa and Shubbak, 2018). Reforms create prerequisites for embarking on the path of sustainable development and allow formulating a new national idea and development strategy, which opens the way to harmonizing the interests of an individual, society, and state. On the other hand, now the actual situation is such that the problem of environmental protection, being ten years ago one of the priority state problems, is now tends to be on the periphery of priorities (Ma et al., 2018; Rogge and Reichardt, 2016). The authorities should finally comprehend the fact that the strategic path of national development is inconceivable without an organic combination of developed democracy, sustainable development, and environmental protection, and that these three components cannot exist and develop separately.

In this new quality, democracy, capable of realizing the goals of sustainable development, has several features that promote the transition to sustainable development in the short- and long- term. Qualitative changes must take place in democratic procedures both at the global and national levels. First, the democratic decision-making procedure by the majority requires a relatively long time for its implementation (Rogge and Dütschke, 2018). To convince the majority of the country’s population to consciously abandon the consumer mentality and adopt a rational environmental point of view is a complex and lengthy process that goes beyond the time of the onset of an environmental catastrophe. Second, there is no certainty that the majority of the population, during a hypothetical referendum on sustainable development issues, will vote in favor of a reasonable solution proposed by the intellectual elite, who realized the harmfulness of the path of sustainable development (Grubb, McDowall and Drummond, 2017). Most likely, the modern democratic procedure, majority, and representative lobbying mechanisms will protect the economic interests of the majority and not the spiritual values ​​of environmentalists.

The anthropocentric nature of the traditional development of law is unpromising for the transition to the path of sustainable development. According to Kwon, Jeong, and Yi (2018), legal relations should be substantially greened, gradually turning into social relations. There is a need for the legal regulation of new social relations in the sphere of interaction between society and nature (Zavadskas et al., 2016). Thus, the environmental function of the state is to improve environmental law. The international legal documents governing the transition to sustainable development on a global scale are not yet available. For example, the United Nations Conference on Environment and Development (UNCED) documents are advisory: there are mere agreements signed by the heads of government and leaders of states (Kwon, Jeong, and Yi, 2018). At the present stage, legal support for the transition to sustainable development should take place, first of all, within the framework of specific states, and secondly – at the international level. Within the framework of a particular state, it becomes possible to use more stringent regulatory mechanisms than contractual relations at the international level.

The transition of the state economy to an innovative type of development is impossible without the formation of a globally competitive national innovation system (Rogge and Dütschke, 2018). The latter can be understood as a set of interconnected structures engaged in the production and/or commercialization of knowledge and technologies, and a complex of economic, legal, and social institutions. They underlie the interaction of entrepreneurial, scientific, and non-profit organizations and structures in all the areas of the economy and public life (Grubb, McDowall and Drummond, 2017; Zavadskas et al., 2016). To create an effective national innovation system, it is necessary to increase the demand for innovations from most sectors of the economy since currently, innovation activity is concentrated in a narrow number of sectors, and technological renewal of production relies on technology imports rather than on developments.

It is also critical to overcoming the fragmentation of the created innovation infrastructure, since many of its elements are created, but does not support the innovation process throughout the process of generation, commercialization, and implementation of innovations. The goal of creating a national system for supporting innovation and technological development is a large-scale technological upgrade of production (Rogge and Dütschke, 2018). It can be based on advanced scientific and technical developments, the formation of a competitive national research and development sector that ensures the transition of the economy to an innovative development path (Kwon, Jeong, and Yi, 2018; Pan and Ning, 2015). The formation of innovative behavior models should be prioritized among the population and enterprises, along with support for the policy processes and the spread of innovation in all sectors of the economy. This will ensure scientific and technological leadership in areas that determine both competitive advantages and national security. The awareness of the dynamics of the policymaking process in the context of innovations infrastructure creates opportunities for increasing credibility and progress towards sustainable development transitions.

Feedback Mechanisms

Policies affect the process of transitioning towards sustainable development, while it is widely regarded that they result from political processes. According to a policy feedback theory, the current policies shape policymaking processes, serving as inputs in a systemic and cyclic procedure. Payne and Barker (2018) mention that policies impact public members, agencies, the political elite, and other interested parties. At the public level, policies can affect the attitudes of people regarding the role of the government and institutions or determine the level of political participation. In turn, at the elite level, policies encourage discussions on resources, institutional capacity, and financial constraints (Hoppmann, Huenteler, and Girod, 2014). In this connection, it is possible to assume that the feedback theory enriches the analysis of the co-evolution of policy and innovations, explaining the ways the existing policy designs influence the future policy mixes.

The insights from the literature shed light on the dynamics of feedback, allowing the scholars and readers to consider both positive and negative aspects. It is essential to state that the policy feedback theory is defined as a promising framework for analyzing the process where innovation and policy mix evolve simultaneously. Quitzow (2015) points to the fact that positive feedback is more likely to induce the self-reinforcement of the so-called virtuous cycle. The core of the identified framework examines the direction and rate of the impact made by policy mix on a socio-technical system. In particular, this theory clarifies the three types of feedback, including administrative, fiscal, and socio-political. In addition, importance is given to the role of the exogenous factors, such as political, economic, and social tendencies (Edmondson, Rogge, and Kern, 2020; Quitzow, 2015). For instance, the events that raise the attention to policy problems in combination with positive feedback increase the probability of promoting policy alteration.

In terms of the policy feedback framework, positive feedback promotes steady resource flows, and negative feedback leads to the limited capacity of policy mix to remain stable. The study by Edmondson, Rogge and Kern (2020) indicates the case of how positive feedback may turn into a negative one. The authors rationally state that the strong political commitment and proper resource allocation attracted support for innovations. Also, high-volume house-builders were attracted by the proposals of large eco-town creation, which was regarded as a great advantage. Similar effects are noted by Reichardt, Rogge, and Negro (2017), who emphasizes that if the actors of the market consider the transition to sustainability as an opportunity, they are more likely to be supported. The recession of the housebuilding socio-technical system deteriorated the market conditions, which led to the delay of projects. When the policy mix that was associated with the support of green initiatives was removed, the virtuous cycle changed to a vicious one (Edmondson, Rogge, and Kern, 2020). For example, the standards of the area were decreased, which meant that the companies had less encouragement to innovate their performance.

The academic literature shows that positive feedback is prone to become stable, which makes it much more difficult for firms to seek alternative options. In this regard, one can argue that the timing of policy mix implementation plays an important role in the success of a project. Consistent with Edmondson, Kern, and Rogge (2019), it is possible to assume that the environment is unpredictable, yet some responses can still be anticipated. The government reactions can drastically change the outcome of policy mixes and undermine positive effects. Accordingly, it allows for stating that the policymakers that aim to support sustainable development should strive to preserve credibility along with political commitment. This recommendation is based on the idea of “creating a new veto player, reducing the scope of the enacting government for retrenchment” (Edmondson, Kern, and Rogge, 2019, p. 32). The turbulent political conditions should be acknowledged as difficult, and the maintenance of credibility should ensure clear resource allocation and strong leadership in the field.

In a coupled model of world climate studies, research and development results and market needs compose the source of ideas (Howlett and Mukherjee, 2018). It means that there may be more than one direct path from research to the commercialization of innovation. Innovation is seen as a logically sequential yet not necessarily continuous process, while feedback loops may occur at any of the subsequent stages. For example, market testing of a new product may indicate a need for design refinement. If it is impossible to solve the identified problem within the framework of existing knowledge, there is a need for additional research (Howlett and Mukherjee, 2018; Yang, Pan, and Pan, 2019). The implementation of the coupled model of information interaction between scientific, industrial, and marketing activities allows for reducing the costs of companies.

Conclusion

In conclusion, it should be emphasized that the co-evolution of policy mix and innovation is a significant yet underexplored research area. Some studies that are critically reviewed in this paper demonstrate the attempts to identify the links between individual policies and their impact on socio-technical systems. The extension of the scope of analysis to policy mix, this paper discussed multiple policy effects and feedback mechanisms, thus conceptualizing how the changes in policies impact the emergence of innovations and vice versa. The theoretical and practical implications of understanding these impacts are associated with the contribution to fostering sustainable development. It is essential to implement the policy mix at both local and global levels to meet high-quality planning requirements and control the integration of policies and innovations in places. The co-evolution of the policy mix and technology should be explored in terms of policy design and implementation in further studies.

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