Changing Institutions

Institutions (including regulations) are constitutive elements of innovation systems. Some institutions are influenced by public actors, and they are elements of innovation policy. Focusing on (soft and hard) regulation, the chapter identifies the most salient regulatory areas from the perspective of the innovation system. When asking about the effects of regulation on innovation, the chapter argues that there are three key issues that need careful analysis, namely, whether regulation is effective and efficient in terms of reducing uncertainty and generating incentives; whether it is able to generate ultimately wider social benefits for the innovativeness of the system at large; and the extent to which regulation is adapting to new (social, economic, and technological) contexts and is socially legitimate and accepted. This provides guidance for the design and redesign of innovation policy, so that policy-makers analyse empirically the social dynamics actually generated by regulation rather than simply assuming deductively their effects.