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Innovation policy mix and instrument interaction: a review

Nesta Working Paper 13/20
Issued: November 2013
JEL Classification: 038
Keywords: Innovation policy mix, interplay of instruments

Abstract

This paper is part of the Compendium of Evidence on the Effectiveness of Innovation Policy Intervention.

This review briefly discusses and develops a concept of policy mixes. This concept acknowledges that policy actions inevitably interact in a stream of existing events and activities, including other policy interventions. Policy mixes are characterised by the policy domains they cover (as mixes may not be confined to one domain), the underlying policy agendas and rationales, the targets (actors, processes) and the instruments employed.

A systematic search in both literature databases and specialised evaluation and innovation policy databases reveals a rather thin base of evidence regarding deliberate policy mix design and intended or unintended interactions between instruments.

The empirical findings first concentrate on the interplay of individual instruments. For example, the review shows that the benefits of interventions to support R&D in firms can be improved if accompanied by complementary support in terms of HR and skills, managerial support or market introduction of new products and services. It also shows examples of instruments portfolios that are targeted towards specific technologies, highlighting the importance of a clear definition of the underlying catalogue of goals and their relative importance, a clear understanding of the effects of the instrument mix over time and the sequencing of interventions.

The review, second, finds a limited take-up of policy mix thinking, often reduced to one lead agency or ministry in one country. In addition, policy mixes most often develop when individual measures that are designed to address different systemic gaps over time. However, existing reviews at country level do not make any systematic attempt to analyse overall effects of the mixes.

In a final empirical section, our review presents evidence on four cases of deliberate policy mix designs in different countries. This shows the diversity of designs and emergence of policy mixes and the different ways in which ministries and agencies approach the issue of mixes.

The study concludes with the shortcomings of evaluation practice, which has far to go regarding the systematic capture of effects of mixes and interplay, partly due to a lack of awareness, partly due to methodological limits for the assessment of complex portfolios and interplays.

Authors

Paul Cunningham, Jakob Edler, Kieron Flanagan, Philippe Laredo

The Nesta Working Paper Series is intended to make available early results of research undertaken or supported by Nesta and its partners in order to elicit comments and suggestions for revisions and to encourage discussion and further debate prior to publication (ISSN 2050-9820). The views expressed in this working paper are those of the author(s) and do not necessarily represent those of Nesta.