National Business Systems and National Systems of Innovation

It is well known that theoretical work academia as well as innovative efforts firms often follow parallel tracks and that quite similar new ideas, concepts, and products emerge almost simultaneously, without much direct communication taking place among the parallel efforts. This may also occur the social sciences periods when certain ideas are in the air and certain new phenomena and insights become more obvious to analysts. In this article, I bring out some fundamental similarities and differences between two sets of ideas that overlap important respects but where we find little cross-referencing. One relates to national business systems (NBS), the other to national innovation systems (NIS). The fact that there are few references between the two, although they deal with related issues, suggests a potential for cross-fertilization. Having contributed extensively to the literature on national systems of innovation (Lundvall, 1988, 1992), I ask: What can the innovation-systems approach learn from the work of Richard Whitley (1994a, 1994b, 1996) and his colleagues? And, vice versa, are there experiences from the field of innovation-systems studies that may be useful for the further development of the business-systems approach? I begin by comparing the two approaches terms of major differences and similarities. The Whitley approach may be commended for its attempt to be explicit regarding the elements constituting the national system and to specify their structural interconnections. But its neglect of international specialization, central to the innovation-system approach, causes it to underestimate the feedback impact of the business system on the institutional setup. The business-systems approach, while originally rooted sociology, increasingly has become based on economic theory and especially on a version of the Penrosian theory of the firm. This brings me to the interpretation made by Whitley (1996) of the firm, and I argue that it puts too little emphasis on learning and competence building and too much on risk sharing and on the application of existing competencies.