This paper proposes a new model for innovation policy, which supports the generation and exploitation of new ideas.

Key findings:

• Innovation policy would work better if it were modelled on experimental science, and focused on minimising the uncertainty entrepreneurs face in discovering opportunities and constraints.
• Innovation should be conceived as a process of discovery – the creation and exploitation of new ideas by entrepreneurs is by nature radically uncertain.
• The paper proposes a new model for innovation policy that clearly distinguishes it from industrial policy.

Innovation policy has become a major preoccupation of modern government.

However, this paper argues, it requires a fundamental shift in the role of the state. Innovation policy has desirable effects distinct from those sought by industrial policy: most notably the discovery of knowledge. The authors therefore suggest institutional changes that shift innovation policy towards a more experimental conception of the role of the state in facilitating entrepreneurship, and thereby innovation.

Authors:
Hasan Bakhshi, Alan Freeman and Jason Potts