Designing and implementing policies for transformative change in Europe: ideas, policy mixes, actors

In the sustainability transitions literature (see, among others: Schot and Steinmueller 2018; Boon and Edler 2018; Kattel and Mazzuccato 2018), the concept of ‘transformative change’ refers to socio-technical system change able to generate an alignment between innovation objectives and contemporary, emerging social and environmental challenges. Identifiable under the umbrella term of ‘grand challenges’ (Kuhlmann and Rip 2014), these latter concern issues such as climate change, pollution, reduction of equality and poverty, and they match the UN Sustainable Development Goals published in 2015, which push for inclusive and sustainable production systems and consumption.¹ It is therefore not surprising that, in recent years, this approach has been acknowledged and supported by the OECD (2015) – then becoming the topic of policy discussions in several contexts, and with the expectation that science, technology and innovation policies are the main instruments with which to meet the aforesaid challenges (see, among others: Steward 2012; Weber and Rohracher 2012).

This alignment between innovation objectives and social and environmental challenges is envisaged within the same innovation policy literature that calls for a new, third frame – the so-called transformative change approach to innovation (Schot and Steinmueller 2018). Compared to the previous two frames identified as co-existing and dominant within the innovation policy literature in recent decades (Soete 2007), the basic idea underlying the ‘transformative change’ approach is that innovation is the main driver with which to create a better world of more sustainable and inclusive societies with policies that can lead to higher labor productivity and both economic and green growth (Boon and Edler 2018; Kattel and Mazzuccato 2018). Innovation policies are in fact expected to reduce inequality through the creation of the new job opportunities that both growth and income redistribution can generate. At the same time, this growth needs to be pursued simultaneously with public investment in clean technologies, a cleaner environment, and reduced pollution. A paradigm-shift is thus expected, and it requires a radical change of policy direction from short-term economic growth towards a new form of system-change-oriented policy-making and a holistic approach to innovation policy – now definable as ‘innovation policy 3.0’ (Karo and Kattel 2016).

It is now established within the academic literature (see, among others: Casula 2022; Schot and Steinmueller 2018; Smits, Kuhlmann, and Shapira 2010; Fagerberg 2016) that the study of transformative change increasingly requires an interdisciplinary approach to the analysis of current policy-making dynamics related to science, technology and innovation. This interdisciplinary perspective – which involves governance, development, and historical studies beyond the traditional economics and innovation ones – is justified by the nature and the main characteristics of this emerging approach to innovation. A set of interrelated points seem to be particularly true in this regard.

Firstly, the design and subsequent implementation of effective policies for transformative change are primarily expected to increase the capabilities of the state actors (Campomori and Casula 2022) – and to do so contextually with a strong role of the national and sub-national governments in pursuing sustainability transitions and in developing and supporting experimentation and policy innovation in order to transform socio-technical systems as whole, and then a change of the system in all its dimensions. This results in the introduction of new support bodies such as public agencies and committees (Edquist 2019), as well as the establishment of new coordination mechanisms that include experimentation, reflexivity, and learning to support transformative innovation processes (Braun 2008). Accordingly, traditional governance structures are expected to shift in the direction of a correct balance among central coordination, hierarchy, inter-agency coordination, and bottom-up participation in order to ensure greater legitimacy for paradigm-shifting. Moreover, transformative change requires a change of mind-set among all the private and public actors that, at different levels, are involved in policy-making. The development and subsequent implementation of transformative policies, therefore, cannot be achieved without a strong multi-level and multi-actor dialogue among fledgling transformative coalitions able to create new spaces for public debate (Campomori and Casula 2021), and to co-produce innovation values (Casula, Leonardi, and Zancanaro 2022; Kirs, Karo, and Ukrainski 2021). These (necessary) transformative coalitions consequently require new relationships among the public actors and organizations, and between the market and civil society. Finally, system transition requires a coherence among the multiple innovation tools and policy instruments adopted within a specific national and/or sub-national context. In fact, in order to better address these multiple societal and environmental challenges of the new millennium, a horizontal coordination between innovation and sectoral policies is required simultaneously with the adoption of ‘policy mixes’.

In recent years, policies for transformative change have found fertile ground in Europe, also thanks to the strong emphasis that the European Union (EU) puts on the notion of national innovation policy in a context of transformative change. Various initiatives, in fact, have been launched by the EU institutions to support the development and consolidation of transformative innovative practices and policies (see, among others: European Commission 2012, 2018a, 2018b, 2018c, 2019). Besides repeatedly stressing the importance, at the domestic level, of national innovation policies in a context of transformative change, these EU initiatives have encouraged inter-sectorial activities by identifying innovation as the main instrument with which to respond to the main challenges of the third millennium through a set of well-chosen ‘grand challenges’ within the EU – in particular the transition to a low-carbon and inclusive economy. This orientation has been confirmed by the more recent initiatives put in place by the EU to cope with the consequences of the COVID-19 pandemic, given that the Recovery Plans of the Member States are associated with a digital innovation and a green transformation. This emphasis on the link between innovation objectives and grand challenges goes hand-in-hand with the idea that new governance solutions to ensure policy coordination are necessary at both the national and sub-national levels. Hence, the notions of ‘open science’ and ‘open innovation’ are frequently used within the EU debate to advocate for the full mobilization and involvement of stakeholders, end-users, and citizens in order to increase the degree of co-creation and to open new spaces for discussion.

This Special Section comprises five empirical studies that contribute to the discussion on how policies for transformative change are effectively being designed and implemented in Europe. They do so by considering: the ideas underlying the reforms adopted; the mix of policy tools and instruments used for transformative innovation; and the characteristics (and respective relationships) of the main actors involved in the policy-making process. Rather than questioning what transformative innovation policy is, and what its main characteristics are, this Special Section reflects on how transformative change is concretely happening. For this purpose, it comprises a set of empirical analyses on different contexts, jurisdictions, and aspects that compose this emerging approach to innovation studies.

The article by Laasonen, Kolehmainen, and Sotarauta (2020) analyses change in Finnish innovation policy over the past two decades. The authors provide an original framework with which to better categorize and explain the various factors and characteristics that influence current innovation policy, such as policy instruments, specific policy programs, structural and institutional changes, etc. An analytical tool with which to analyze different approaches of actual implemented innovation policy is then provided. It is based on four different simplified approaches to innovation policy implementation resulting from the level of innovation policy intervention (‘large scale system level interventions’ vs. ‘grass-root level intervention’ axis) and the level of customization of innovation policy (‘general’ vs. ‘customized’ axis). This framework has the merits of complementing earlier theoretical approaches to innovation policy 3.0 – which mainly concerned instruments and rationale – and of giving the international community an analytical tool with which to explain and compare policies and instruments across national and sub-national contexts. This framework is then applied to the case of innovation policy in Finland in order to show how the landscape of innovation policy implementation has changed, as well as to provide suggestions about emerging ideas and directions that structure current innovation policy 3.0. The study’s findings support the hypothesis of the ‘widening’ and ‘deepening’ nature of innovation policies, and a systemic innovation policy so ubiquitous that it is increasingly difficult to recognize what it contains, who is responsible for it, and how its impact can be measured.

The article by Kirs, Karo, and Ukrainski (2021) draws on the concepts of sustainability transitions and transformative innovation policy in order to provide an overview of the system and policy change concerning bioeconomy policies in the EU countries, which are frontrunners in this respect. The authors focus on the key characteristics of the policy design processes and specific change agents that enable the formulation and legitimization of proactive bio-economy strategies. Through comparison among six Western EU countries (Finland, Ireland, Denmark, Sweden, Austria, and the Netherlands), the authors analyze governance issues in the transition context. They argue that governance strategies, structures and participatory policy-making processes are crucial for understanding and supporting bioeconomy transitions. Notwithstanding the EU framework and the European Commission’s ambition for Europe to become ‘the world’s first climate-neutral continent by 2050' (European Commission 2019), the article shows that the requisite factors for systems to transit towards a bioeconomy are context-dependent. More specifically, they are threefold: dynamic change agents; participatory processes to co-design the overall vision of how this transition should come about; and the societal legitimacy of bioeconomy. In doing so, the article also provides guidelines for latecomers from the CEE region. Moreover, it enriches the theoretical and empirical debate on how transformative change is happening in different contexts by analyzing the role that the current political-administrative environment can play in both developing a new political mind-set and building new governance structures for transformative transition.

Silva-Flores and Murillo (2022) analyze the ecosystems of innovation, and in particular the role that various public and private actors play in transformative transition and within the relative policy-making processes. This article, therefore, focuses on the above-mentioned notions of ‘open science’ and ‘open innovation’ – as the main prerequisites for pursuit of a transformative transition in current societies; notions that contribute to building a general framework in which to study public measures related to innovative models for societal transitions by questioning how it is possible to mitigate or overcome the challenges and obstacles to the development of social innovative practices and policies in growing ecosystems. An empirical investigation of the actors involved in specific projects implemented in Barcelona (Spain) and Guadalajara (Mexico) shows a set of factors related to the internal dynamics of these ecosystems that obstruct innovation, such as the lack of a critical mass, the fragmentation of actors’ efforts, and the lack of citizen participation. These findings are then combined with those of the main current literature on innovation in order to develop an original analytical framework that provides a classification of three different strategies with which to address the issues that growing ecosystems face when they implement transformative innovation for inclusive societies. These three strategies respectively refer to the construction of a common framework of action by the various public and private actors involved in the ecosystem, as well as the consolidation of ad-hoc mechanisms and instruments able to both connect scientific knowledge with citizens and to increase citizen participation in innovative projects for inclusive societies.

The article by Navío-Marco, Bujidos-Casado, and Rodríguez-Fernández (2022) contributes to this Special Section with a reflection on how industrial policies in Europe are introducing a social component into their industrial transition as result of the EU initiatives launched in recent years within the framework of territorial cohesion policies designed to mitigate the social impacts that this transition may have on European regions. Attention to the social component of policies for transformative change is therefore at the core of this article, which reflect on whether and how, in the context of industrial transition in Europe, these possible social problems are addressed and mitigated, as well as whether the current industrial transition processes will lead to a decrease in inequalities within EU countries and regions. Starting from a review of the state of the art, and an analysis of 12 pilot schemes launched by the European Commission in recent years, the authors propose some agenda indications for academics and practitioners to facilitate the launch and implementation of efficient policy programs able to reduce spatial disparities when regions undergo an industrial transition that involves ordinary people as well. At the same time, their analysis suggests that it is necessary for both the employers and the other actors interested in this transformative transition to embrace the need for a similar change simultaneously with their local contextualization through active public participation. In this regard, Navío-Marco and colleagues conclude that the contemporary conception and practice of industrial policy is much less about top-down incentives than it is about consolidating stable collaborations between the public and private sectors so that they can co-produce appropriate policy mixes where policies for economic development are off-set by policies for comprehensive collective wellbeing. According to the authors, the adoption of similar policy mixes can ultimately have a positive impact on the level of institutional trust in the European institutions.

The last article in this Special Section, by Kowalski, Lewandowska, and Rószkiewicz (2021), focuses on how cooperation among industry, academia, and government (the so-called Triple Helix model, which is a specific component of the transformative change perspective) influences the innovative activities of individual firms. The article, therefore, contributes to this Section by providing information about the concrete and diverse impacts that the governance dynamics of transformative change can have on current innovation policies. The article focuses on the impact of intra-cluster and inter-cluster cooperation on the innovation performance of a selected group of Polish enterprises as result of the adoption of EU funds for innovation activities. The analysis finds a positive relationship between cooperation and firms’ innovation performance by empirically testing the notion of ‘behavioral additionality’; and it provides recommendations and evidence for the managers of innovative firms on the additional effects that public funds for innovation policies can have also in the context of non-cluster innovation cooperation – a concept that is still limited in many EU countries and regions.

In conclusion, the five articles composing this Special Section contribute, in different ways, to the academic debate on how policies for transformative change are designed and implemented in Europe at different levels, spanning from the consolidation of national innovation policies and systems to the consolidation of practices and procedures at local level. These articles show that the policy ideas underlying innovation policies 3.0 can be strongly influenced by a pre-existing landscape, with the latter ultimately influencing the possible mix of policy tools used to support transformative transition, and the way in which actors’ collaborations come about. Current innovation policies and practices need to be understood as complex activities, with numerous trade-offs that must be resolved. At the same time, there are some margins for learning and experimentation, and they are made possible by the bottom-up development of functioning ecosystems. The multi-actor and multi-dimensional set of policy approaches characterizing current innovation policies therefore seems to be a consequence of the multiple, heterogenous, and complex grand challenges that national and sub-national governments must deal with today. In this changing context, a balanced combination of top-down and bottom-up practices is becoming a condition sine qua non to face these challenges. Despite these analytical and theoretical advances on how transformative change is currently happening in Europe, more empirical work is required to show both the lessons learned in transformative innovation policy-making, and the challenges that innovation policy 3.0 poses for policy implementation. This Special Section collection of studies is therefore an invitation to continue in this direction, and it implicitly advocates an acceleration of the implementation of new and heterogenous policies for transformative change across different European contexts and jurisdictions so that Europe becomes more sustainable, civic, and green.

Notes

1 Cfr. https://www.un.org/sustainabledevelopment/sustainable-development-goals/.