Sustainable Development of National Innovation Systems

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This entry is adapted from the peer-reviewed paper 10.3390/socsci12040215

National innovation systems (NIS) are generally perceived as a set of interconnected organizations (or structures) that domestically produce and commercially implement scientific knowledge and technology. The development of any national innovation system is the key element for shaping up the scientific values in every country.

innovations scientific values social norms national innovation system

1. Introduction

National innovation systems (NIS) became the object of close study of many economists around the end of the 20th century (Proksch et al. 2019). The term itself was coined by the representatives of the school of evolutionary economics and the best-known and the most cited definition happens to be the one made by Lundvall (2010), who defined it as a system consisting of the elements and relationships interacting together in production, diffusion, and application of the novel and economically useful knowledge that is rooted or located in a given national state (Faissal Bassis and Armellini 2018).

Nevertheless, there were some representatives of the scientific school of evolutionary economics who always emphasized the importance of the legacy of Joseph Schumpeter in the study of innovation as a process of creating new knowledge because of the “creative destruction” associated primarily with the activities of entrepreneurs (Carayannis et al. 2020; Kesavan et al. 2022). However, when developing Schumpeter’s ideas, evolutionists focused on the features of the institutional structure which allows building effective interactions between actors and organizations which are parts of NIS. According to them, the specificity of institutions depends on the national characteristics of the ongoing economic and educational policy, culture, and social values (Solis-Navarrete et al. 2021).

The brief digression into history can also help to understand how science became the main source of industrial innovation and what conditions allowed the technological revolution to begin (Rosenberg and Birdzell 1986, 1990; Zambon et al. 2019; Yang and Gu 2021). The historical and sociological literature emphasizes that the process of innovative development significantly depends on changes in culture and the associated institutions (Pel et al. 2020; Rodríguez-Abitia and Bribiesca-Correa 2021). Therefore, Mokyr (2016) concludes that the economic narrative about innovative development should additionally be supplemented with a historical narrative that reflects national characteristics of this development in greater detail.

In the works of North (2005) who focused on the theory of institutional change, technological and institutional innovations are viewed as the ones that play a significant role in the development of the economic orders. First of all, institutions create strong incentives for creating new knowledge and transforming it into innovations. However, history also provides interesting examples where innovations were carried out in the absence of institutional incentives due to the irrepressible attraction of people to the creation of new knowledge and inventions (Živojinović et al. 2019; Tortia et al. 2020).

In North’s interpretation (North 2005), innovations are divided into technological, institutional, as well as organizational. Technological innovation largely depends on the success of institutional and organizational innovation (Perry 2020). Due to the institutional innovations, transaction costs are reduced, economic and social interactions are facilitated, and incentives are created, in particular, for the creation and implementation of technologies (Perry 2020). For example, North (1990) demonstrated that innovations related to the institution of intellectual property and the protection of this property in the form of patents served as an incentive for the growth of technological adoption in various types of business. Furthermore, the most important consequence of the development of the institutional environment and technologies was the spread of the increasing returns in ever larger types of production (Varadarajan et al. 2022). According to North’s concept, the increasing returns, along with market imperfection, represent a factor that forms the direction of institutional changes (Nureev et al. 2020).

Representatives of the evolutionary and institutional economic theory schools of thought advocate that institutional factors have a significant impact on the development of the NIS. However, in order to study the innovation systems of various countries, it is crucial to obtain the relevant data (Dahesh et al. 2020). Obtaining the data on the social values and related institutions is subject to certain limitations related to the very nature of institutions as rules and norms that structure repetitive interactions between people (North 1989). According to North (2005), institutions should be viewed through the prism of actors’ intentionality. Moreover, intentionality depends on the subjective perception of reality and the dynamics of both economic and social indicators of the development of the economic order. Therefore, obtaining relevant information about institutions faces the problem of objectivity and representativeness of the data used in this process.

Within the framework of various currents of institutionalism, either quantitative or qualitative data on institutions are predominantly used. Thence, in recent years, there has been a tendency within the framework of the new institutional economics to increasingly use the quantitative data that can directly or indirectly judge the quality of institutions and their impact on economic development (Greif 2006; Balatsky and Ekimova 2015). Within the framework of original institutionalism, the emphasis is traditionally placed on the use of qualitative data which are obtained as the result of discursive analysis, participant observation, and the analysis of historical sources (Nilsen and Sandaunet 2021).

There are several reasons why studying the Russian innovation system is relevant. First of all, Russia has a long and storied history of innovation, with many notable scientific and technological achievements throughout its history (Fedotova et al. 2022). However, the country has struggled to modernize and innovate in recent years, with many of its industries falling behind their international counterparts (Zysk 2021). Understanding the factors that have contributed to this decline is of great interest to scholars and policymakers. Russia is home to a large and highly skilled workforce, with a strong tradition of higher education and scientific research. The country has the potential to emerge as a significant player in the global innovation landscape, and understanding the factors that will contribute to this emergence is of great interest to scholars and policymakers (Barinova et al. 2022). In addition, Russia’s unique political and cultural context makes it an interesting case study for understanding the challenges and opportunities faced by emerging economies in the 21st century (Klarin and Ray 2019). Moreover, Russia has a complex and evolving relationship with the global economy, and understanding the factors that shape this relationship is of great interest to scholars and policymakers (Tsygankov 2019). As such, studying the Russian innovation system is of great interest to scholars and policymakers alike.

2. Perception of Scientific and Social Values in the Sustainable Development of National Innovation Systems

It is apparent that socio-economic development and technological innovation have been under the close scrutiny of the scientific academic literature for a very long time (Verbeek et al. 2002; Fortes et al. 2015; Zuo et al. 2021). Since the time of Karl Marx, the impact of technological innovations has been considered quite predictable and viewed in a positive context (Inglehart and Welzel 2005). The impact of technological innovations has been a central theme in the Marxist theory of history. Marx argued that technology was a key driver of historical change and that the development of productive forces played a crucial role in the evolution of social relations (Zhu and Mitcham 2020). However, since Marx’s time, the impact of technological innovations has been viewed as largely positive and predictable, a perspective that is increasingly being questioned in contemporary debates (Achmad 2021). For Marx, the development of technology was a central factor in the evolution of social relations and the production of wealth. In Marx’s view, technological innovations allowed for the creation of surplus value, which was appropriated by capitalists and used to expand production and increase profits. The development of technology also led to the displacement of labour and the creation of a reserve army of unemployed workers, which Marx saw as a fundamental contradiction of capitalism (Thompson and Laaser 2021). However, despite these critical perspectives, the impact of technological innovations has been largely viewed in a positive light in contemporary discussions. Technological innovations are seen as drivers of economic growth, productivity, and efficiency. They are seen as enabling new forms of communication, creating new markets and opportunities, and enhancing the quality of life for people around the world. Back in the 19th century, Marx could not predict the development of the knowledge society and the significant growth of the service sector (Clark and Gevorkyan 2020). On the one hand, the changes in social values and institutions are of an incremental nature, and, on the other hand, are poorly predictable, especially in the face of radical social and technological challenges (Miceli et al. 2021).

The interplay of social values, institutions, and innovation requires somewhat more detailed research that would employ qualitative data in order to gain an understanding of the nature of these relationships (Castro 2019). Of course, in the modern world, culture, values, and institutions become significant in terms of the prospects and pace of economic development, but there are also significant differences associated with national and regional characteristics. Understanding such features is impossible without deep immersion in the social environment where narratives circulate, as well as the help of actors who communicate and express their attitude and interpretation of ongoing events (Kryshtanovych et al. 2022).

In general terms, institutional formation is driven by shared values and beliefs that provide a common framework for action and interaction. Values shape the norms, practices, and behaviours of individuals, which in turn influence the formation and evolution of institutions (Risi et al. 2023). For example, the rise of modern democracy can be attributed to the values of liberty, equality, and justice that were central to the French Revolution.

Values play a key role in shaping institutional formation in two primary ways. First, values provide a shared language and set of beliefs that facilitate collective action and coordination. By establishing common values, individuals can work together towards common goals, creating institutions that are more effective and sustainable. Second, values help to define the goals and objectives of institutions, guiding their development and evolution over time. Furthermore, values and institutions are shaped by the historical and cultural context in which they arise (Ashwin et al. 2020). Different cultures and societies have distinct values and beliefs that shape the formation of their institutions. For example, Confucianism, with its emphasis on social order, hierarchy, and respect for authority, has influenced the development of institutions in East Asia.

Moreover, the historical context in which institutions arise can also shape their values and goals (Webb et al. 2020). For example, the development of democratic institutions in Europe and North America was influenced by the experiences of colonialism, slavery, and religious conflict, which led to a focus on individual rights and freedoms.

The growth of technological innovations is associated with the formation of institutions of science and education (Dahesh et al. 2020). Over the course of human history, only the last two hundred years have seen processes where the institutionalization of scientific activity and the increase in public spending on this activity have become powerful sources for the exponential growth of knowledge and its translation into technological improvements (Cavusgil 2021). Education, science, and innovation activities require significant resources and, above all, free time of actors which they could devote to these activities, perceiving them as useful and beneficial (Welzel 2013). Therefore, the profound changes associated with the formation of a knowledge society are associated with radical changes in the social organization of society and its key institutions, families, enterprises, as well as its self-organization (Maldonado-Villalpando et al. 2022).

In a society that is based on knowledge, the worldview of people is constantly changing. In today’s world, there is a shift from the “materialistic, mechanistic world of the factory to a world where ideas take center stage” (Inglehart 2018). In the knowledge society, connections of a new type are being formed, which are stimulated both by the new technologies and the emerging informal norms and institutions that stimulate the creative behaviour of actors (Kivimaa and Rogge 2022).

Creation of the suitable conditions for the development of innovations is connected with the three most important factors: (i) stability, (ii) competitiveness, and (iii) the possibility of launching mechanisms of increasing returns (Sołoducho-Pelc and Sulich 2020). All three factors are associated with the institutions that allow the regulation of the contradictions that arise in the process of system development. It is the institutions and the values associated with them that constitute the environment that determines the degree of adaptability of society during changes associated with non-equilibrium processes, for example, those associated with the action of positive feedbacks in the high-tech industries (Zhao et al. 2018).

When applied to NIS, the qualitative research is based on the approach of a recently emerging field known as “narrative economics”. Narrative economics originates from the pioneering work of two Nobel laureates—George Akerlof and Robert Schiller. For example, in 2016, an innovative article by Akerlof and Snower (2016) was published demonstrating the possibilities that the appeal to narratives can provide for studying events that took place in the past (for example, the features of the development of a planned economy in the USSR) (Akerlof and Snower 2016). The authors showed that through narratives one can gain important knowledge about the significant social contexts in which certain economic events took place, which can in turn significantly complement our understanding of the fundamental relationships that affect the behaviour of the economic actors.

At the same time, the term “narrative economics” was coined in 2017 by Robert Shiller in his policy paper that used the same title (Shiller 2019). This article has served as a driver for the emergence of a scientific direction which is reflected in the emergence of many original studies focused on the concept of narrative economics. Schiller gives a simple and very broad understanding of narrative as a simple story or easily expressed explanation of events that many people want to bring up in conversation or on news or social media because it can be used to stimulate the concerns or emotions of others, and/ or because it appears to advance self-interest (Shiller 2019). According to this approach, through narratives researchers can obtain information about how actors use narratives for justifying their behaviour which also implies an increased attention to the social context.

In addition, in other works of Schiller, there is a slightly different interpretation of narratives as being the simplified proto-models that actors can use in order to explain the patterns that are significant to them in their social interactions (Shiller 2019). Similar interpretations of narratives as proto-models are also common among the representatives of the original institutional economics (Whalen 2021). The approaches of narrative economics and institutional economics are surprisingly similar, if only in terms of their attention to the qualitative data and the importance of the social context for the analysis of the socio-economic interactions (Volchik 2017). Perhaps in the future there will be a convergence of the research methodology of narrative economics as well as the original and the new institutional economic theory in terms of the development of pluralistic institutionalism (Hermann 2018).

Furthermore, it is also possible to select (in a targeted way) the media and the sources that contain interview materials on the studied problem. This approach is in accord with the original institutional economics (OIE) and is also close to the concept coined by Schiller. Modern mass media contain a plethora of materials in which the actors of the national innovation systems reflect upon its development. These interviews can also contain a lot of biographical data of the actors which makes it possible to interpret the trends in the development of innovations through the prism of their personal experience and attitudes towards the existing institutions and ongoing processes of the institutional changes.

Russia has been making significant efforts to develop its national innovation system in recent years, but there are still several issues that need to be addressed. Similar to many other countries, Russia has recognized the importance of innovation and has been investing heavily in the development of its national innovation system over the past decade. Despite these efforts, the state of the Russian NIS remains far from ideal, and there are several issues that need to be addressed to improve its effectiveness (Lee et al. 2021).

The Russian NIS comprises a range of institutions, including universities, research institutes, innovation centres, and government agencies. These institutions are responsible for promoting and supporting innovation in the country. However, despite the significant investments made in these institutions, there are several challenges that are hindering the development of a strong innovation ecosystem in Russia (Tsygankov et al. 2021).

One of the main issues facing the Russian national innovation system is a lack of coordination and cooperation between the various institutions. There is a need for greater collaboration between universities, research institutes, and industry to ensure that research is relevant to the needs of industry and society. Additionally, there is a need for better coordination between government agencies to ensure that policies and initiatives are aligned and that resources are being used effectively (Paptsov et al. 2019).

Another issue facing the Russian NIS is a lack of entrepreneurial culture. Although there are a growing number of startups in the country, there is still a lack of entrepreneurial mindset among researchers and academics. There is a need to promote entrepreneurship and innovation within universities and research institutes, and to provide support for startups and small businesses (Lupova-Henry et al. 2021).

Overall, there is a clear need to improve the quality of research and development (R&D) in Russia. Although the country has a large pool of talented researchers and scientists, there is still a need to boost the quality of research and ensure that it is relevant to the needs of industry and society (as well as towards the outside world). This can be achieved through greater collaboration between universities and industry, as well as by promoting international partnerships and collaborations which might be quite problematic at the moment due to the current geopolitical situation in the world.

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1. Introduction

2. Perception of Scientific and Social Values in the Sustainable Development of National Innovation Systems

References