Klein Woolthuis, Lankhuizen and Gilsing (2005) base their ideas, identified as the structural framework (Bergek et al. 2008; Wieczorek & Hekkert 2012), on the assumptions of SIS: that innovation does not occur in isolation, and that institutions are critical, and evolutionary processes play an important role in determining innovation outcomes. They acknowledge that imperfections can occur and seek to define these system imperfections, problems, or failures. The key distinction in their work is between system rules (institutions) and the actors in the system. The authors claim that this approach allows the analysis, justification of policy intervention and evaluation of innovation systems, identifying the causes of failures and the actors who need to be addressed to make change. This framework can be considered to contain theory because these propositions are all related to the success of an innovation system, are generalised to sectoral innovation, and are open to evaluation.
The framework of Klein Woolthuis et al. is based on the work of others who have made empirical observations and described the 'imperfections' of the innovation systems studied. Klein Woolthuis cites the work of Carlsson and Jacobsson (1997) who described failures in technological systems as failures of networking, institutions or systems (actors, regional or national systems), Smith's (1997) description of infrastructural and institutional failures and Edquist et al. (1997) description of institutional and interactional failure. One significant contribution of Klein Woolthuis' was to consolidate the described imperfections, and standardise their description. The second was recognising the distinction between 'rules' and 'players' which allowed system problems to be described in two dimensions, thereby, allowing problems to be clearly defined, and amenable to rational policy response.
In the first dimension Klein Woolthuis et al. define various types of actors:
• demand (consumers, large buyers)
• companies (large firms, multi-national corporations, small to medium enterprises, start- up companies)
• Knowledge institutes (universities, technology institutes)
• third parties (banks, venture capitalists, intermediaries, consultants, sector organisations employers)
though this list is not indicated to be exhaustive. Policy makers are also actors, but, in this model, are not defined as such because they are assumed to be the system analyst and policy developer.
In the second dimension rules (institutions) are categorised as:
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• infrastructural (information and communication technology, energy supply, roads, railroads, telecommunications, scientific and applied knowledge and skills, testing facilities, possibilities for knowledge transfer, patents, training, education)
• institutional (hard: formal written consciously created, and soft: informal, spontaneous and unwritten 'rules of the game')
• interaction (weak network failure due to poor connectivity between actors, strong network failure, such as group of actors dominated by one partner, an internal orientation and failure to seek new approaches)
• capabilities of the actors (lack of competence, capacity, or resources).
This 'SI-policy framework' is depicted by Klein Woolthuis and others (Arduino et al. 2013; Janssen 2009; Klein Woolthuis, Lankhuizen & Gilsing 2005; van Mierlo, Arkesteijn & Leeuwis 2010; van Mierlo et al. 2010) as a table (Table 2.1).
Table 2.1 The sectoral (structural) innovation system failure framework
(Klein Woolthuis, Lankhuizen & Gilsing 2005). Weaknesses in the system are identified as being at the intersection of an actor (the columns) and the system rules (the rows)
Actors (missing actors) Rules (system failures) Demand • Consumers • Large buyers Companies • Large firms • MNCs • SMEs • Start-ups Knowledge Institutes • Universities • Technology institutes 'Thirdparties' • Banks, VCs • Intermediaries , consultants • Sector organisations, employers Infrastructure failure: ICT, roads, railroads, telecom,... Institutional failure • Hard: laws, regulations ... • Soft: norms, values ... Interaction failure • Weak network failure • Strong network failure Capabilities failure
This framework has been used, sometimes with modification, by various authors in the analysis of SIS in Australian red meat (Pitt & Nelle 2008), Dutch agriculture (van Mierlo, Arkesteijn & Leeuwis 2010), Dutch healthcare (Janssen 2009), Dutch construction (Klein Woolthuis 2010),
Chinese information and communication (Zhang & Liang 2012) and Greek sea-port (Arduino et al. 2013) sectors. A number of authors comment positively on the usefulness (Janssen 2009), comprehensiveness (Pitt & Nelle 2008) and necessity (Klerkx & Leeuwis 2009) of such a framework. The wide scope of the framework is seen as providing valuable insight into interactions between entrepreneurs and the system (Janssen & Moors 2013). The framework was considered to be useful for mapping drivers and barriers to technology transfer for and helping to uncover the source of both successes and challenges in an innovation system (van der Vlies & Felix 2013).
The categories and identity of actors has been added to by several authors to acknowledge government (regulator, national, local) as a key actor group (Klein Woolthuis 2010), value chains (Pitt & Nelle 2008) and lead clients (Klein Woolthuis 2010) as demand creators, entrepreneurs and professionals (Janssen 2009) who may act like companies, and trade unions (Pitt & Nelle 2008) who may be significant third parties. Lamprinopoulou et al. (2014) suggest a typology of system actors in four domains: research, intermediaries, enterprises and innovation influencers.
The list of failures has been added to and redefined by several authors (reviewed by Negro et al. (2012)). Adaptive failures have been suggested as an additional failure type. Pitt and Nelle (2008) identify three kinds of adaptive failures: lock-in, internal orientation myopia, and transition. Lock-in failures were dismissed by Klein Woolthuis and Negro et al. as the result of other identified system failures, such as strong or weak network failure or a capability failure. Similarly, myopia is seen to be a type of strong network failure where insufficient attention is paid to development outside the network (Klein Woolthuis, Lankhuizen & Gilsing 2005). Transition weakness could be due to a weakness in any of the other elements. Therefore, all these adaptive failures may be considered as indicators or symptoms of other system failures. Pitt and Nelle (2008) also identify 'sector culture failure' which they characterise as lack of entrepreneurial orientation, inability to enter a new technological domain and lack of support for innovative start-ups. These failures may be soft institutional or capability failures. A group of transformational failures have also been identified by Weber and Rohracher (2012) that are relevant to socio-technical transitions.
Market failures have been specifically restored to the framework (Klein Woolthuis 2010; van Mierlo et al. 2010; Weber & Rohracher 2012) which results in a broad systems failure framework, since structural innovation failures were seen as supplementary to market failures (Klein Woolthuis, Lankhuizen & Gilsing 2005).
In addition to identifying and refining the lists of actors and failures, the use of the theory has been further developed in other ways. Pitt and Nelle (2008) add 'dimensions' to each failure and evidences for each category of system failure. This level of detail is a step towards clear criteria for the diagnosis of failure. van Mierlo et al. (2010) discuss the use of 'system instruments' that are interventions to address the system imperfections or failures. Arduino et al. (2013) points out that the analysis is conducted at a point in time, and that a temporal dimension in the
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analysis would lead to an understanding of how the innovation system needs to respond to stages of development. They also suggest that there are both positive and negative correlations between the performance of the innovation system and the activities of an actor towards a system element, rather than just thinking about 'failure' (Arduino et al. 2013). The basic "policy framework" has been enhanced with systems involving these latter two aspects with a descriptive focus on the leader of the innovation (public or private) and the type of innovation (technological, managerial or cultural) to produce a "Systems of Innovation Framework" (Roumboutsos, Kapros & Vanelslander 2014).
The sectoral (structural) failures framework has been critiqued by several authors for lack of enabling tools. Bergek et al. (2008) and Hellsmark and Jacobsson (2009) suggest that the structural theory does not adequately explain the dynamics of what occurs within an innovation system or whether actors are a positive or negative influence. Dantas (2011) suggests a lack of ability to explain system performance and points out that organisations may play multiple roles within the system, and an analysis focussed on organisations may not acknowledge this complexity. Jacobsson and Bergek (2011) criticise the theory for the lack of diagnostic indicators of failure, a criticism with which Wieczorek and Hekkert (2012) agree, adding that there is little literature on how to identify and address problems. Chaminade and Edquist (2006, 2010) claim that, despite the application of the SI approach little is known about how the system actually operates.