The impact of innovation policies on the performance of national innovation systems: A system dynamics analysis

There has been a growing significance for the National Innovation System (NIS) and its use as a tool for the competitive advantage of a country to date. In this paper, an NIS model has been developed with the use of system dynamics (SD) methodological approach. The objective of this model is to integrate the systemic approach, the computer modelling and the simulation discipline into a holistic dynamic consideration of the NIS. From this central structure, the paper analyzes the impact of innovation policies on the NIS performance. In particular the SD model is used as an “experimental tool” to conduct extensive what-if analysis scenarios with regard to alternative innovation policies. The effectiveness of policies is investigated through the dynamic behaviour of product innovation and process innovation which are obtained by simulation results. By using data from a European Union country with innovation performance below that of the EU27 average, the analysis of results reveals insights over a strategic time horizon.

► Modelling NIS with SD.
► Functional NIS approach.
► Holistic policies.