Capturing the system-level effects of innovation policy: An assessment of publicly funded innovative entrepreneurship in Sweden

A new generation of innovation policies has placed renewed attention on understanding the innovation processes on the system level. On one hand, there is a growing demand for policy instruments addressing the need for system change. On the other hand, there is still a lack of understanding of how innovation policy instruments contribute to a system-level impact. We address this issue by taking a programme perspective and proposing an analytical framework for assessing three types of effects: first-order, second-order, and system-level. Our approach is inspired by the functions of innovation systems literature. We apply the analytical framework to the analysis of an innovative entrepreneurship instrument, the Swedish Innovation Agency VINNOVA's Innovative SME programme. We find that the public support programmes contributed significantly to SMEs' ability to influence system functions. Based on the findings, we argue that the analysis of innovation policy programmes should move beyond a narrow assessment of direct effects and consider more the second-order and system-level effects.