Sectoral Systems of Innovation: Sectoral systems of innovation: basic concepts

Introduction Innovation takes place in quite different sectoral environments, in terms of sources, actors and institutions. These differences are striking. Let us take, for example, pharmaceuticals and biotechnology. Here science plays a major role, and several different types of firms are the protagonists of innovation, from large corporations to new biotechnology firms. Interaction between universities and venture capital is relevant. In this sector, regulation, intellectual property rights (IPR) and patents, national health systems and demand all play a major role in the innovation process. Quite a different set of actors, networks and institutions characterize innovation in telecommunications equipment and services, as a result of the convergence of previously separated sectors such as telecommunications, computers, the media and so on, and of the rapid growth of the Internet. In chemicals we see a different scenario: large innovators have shown great continuity in their innovativeness, and the scale of internal R&D has always been a major source of innovative advantage. In software, on the other hand, the context of application is relevant for innovation, and a vertical and horizontal division of labor among different actors has recently taken place. Finally, in machine tools incremental innovation is quite common, and R&D plays a less relevant role than in other sectors. Links with users and the on-the-job activity of skilled personnel is quite relevant. Differences in innovation across sectors also involve services, where products are closely related to processes, and knowledge embodied in equipment and in people is very important.