This volume moves beyond macroeconomic conditions for innovation to microlevel processes involving individual and organisational agents and their interactions in the generation, utilisation, and diffusion of ideas, products, and processes. We use the concept of ‘innovation systems’, to take into account interactions between a variety of agents, various dimensions of innovation – going far beyond science and technology– and a variety of economic and institutional conditions. The analysis applies to innovation systems in general and gives an application to the Netherlands.

The main line in our policy approach is a trade-off between arguments for and against policy interventions. One reason for restraint in policy derives from the insights of Austrian economics (Hayek) that knowledge is diverse and is distributed throughout society, and that government should mobilise that knowledge rather than impose its own. A second argument against policy interventions, derived from an evolutionary position, is that innovation is highly unpredictable and full of surprises, which government should not try to second guess, and is a system phenomenon, with complex interactions that produce partly unintended consequences. On the other hand, there are market and system failures in innovation that government should address. The question then is how to do this while respecting unpredictability and the variety and distribution of knowledge. This yields a policy perspective that keeps innovation as open as possible.

We call for an innovation policy that is open in four dimensions: open with respect to collaboration with others, via open communication; open for surprises and changes of direction during innovation projects and research and development (R&D); open to new players (‘challengers’), in particular entrepreneurs; and open to the world beyond the own region or country concerned and beyond established industries, to prevent the confinement of innovation to individual regions, countries, and existing industries. The different chapters of this volume develop insights as to how these different forms of openness may be organised.

Radical, path-breaking innovation is rare. Most innovative activity lies in incremental innovation, diffusion, and imitation. A key question that is asked in policy is where we should choose to lead, creating radical innovation, and where we should simply follow. Should we ‘pick winners’ or ‘back winners’, or are both choices problematic?