Innovation Policy as Creating Markets, Not Only Fixing Them
Successful innovation policies are those that actively create and shape markets, not only fix them. In the past this has been achieved through “mission-oriented” policies aimed not at fixing market failures or minimizing government failures, but rather on maximizing the transformative impact of policy. Countries around the world are currently striving to achieve innovation-led growth that is both inclusive and sustainable. For this to happen, public policy needs to support innovation and direct future activities. Innovation policy must focus on building more “symbiotic” (less parasitic) innovation “ecosystems.” This chapter discusses new types of policy questions needed to address the collective, uncertain, and persistent nature of innovation and posits four key areas: directing public policy, evaluating public policy, organizational change to accommodate risk taking and exploration, and the socialization of risks and rewards.