Systems of Innovation: Perspectives and Challenges

Abstract This article presents an overview and assessment of the systems of the innovation approach. It focuses mainly on national systems of innovation, but in addition it addresses sectoral and regional systems of innovation. This article addresses the emergence and development of the systems of innovation (SI) approach, its strengths and weaknesses, the criticism that it is “undertheorized,” the constituents of SIs, the main function and activities in SIs, the boundaries of SIs, and proposals for further research. It also discusses how the rigour and specificity of the SI approach could be increased. The innovation concept used in this article is wide and includes product innovations as well as process innovations. Product innovations are new—or better—material goods as well as new intangible services. Process innovations are new ways of producing goods and services.