Why study national systems and national styles of innovation?

Many consider that product specialization reflects variations in factor proportions rather than in the knowledge base, but to focus purely on resource allocations would result in stagnant economic development. Therefore a vibrant economy is one where innovation takes place. This shifts the focus of attention away from rational decision-making to learning and recognition that the future has an uncertain outcome. Learning involves four institutional components: the time horizon of the agents, the role of trust, the actual mix of rationality, and the way authority is expressed. Research shows a strong correlation between specialization in trade and specialization in the knowledge base. The National Systems of Innovation approach concludes that important parts of the knowledge base are tacit and emerge from routine basic learning-by-doing, using and -interacting rather than from science and technology search activities. A sociological system approach is functional and deterministic, whereas an innovation style approach refers to patterns of behaviour. To understand the style of innovation better a four-fold taxonomy of knowledge is proposed: knowledge about facts, knowledge about principles and laws of nature, the skills and capability to do something, and knowledge about who knows how to do what. The mix of these four knowledge factors will characterize the style of innovation.