Executive summary 

This study focuses on exploring the relationship between agency and innovation. It examines the roles played by various agents and actors in steering the green transition, ranging from technological and institutional innovations to systems innovations. The discussion does not solely revolve around the impact of structures on agents or vice versa but also focuses on how agents instigate transformative change seen from various perspectives, both individually and in partnerships. The results of this study are presented in four parts, as follows: 

Our theoretical overview of innovation examines the evolution of academic thinking and policy development concerning innovation systems, the long-running debate on the relationship between structures and agency and the role of ‘place’ or geography within these. We also explore the academic discussion surrounding the emergence of a new paradigm in innovation policies – so-called ‘transformative innovation policies’, which focus on steering science, technology and innovation in directions that facilitate ‘transitions’ and meeting the sustainable development goals. 

At the centre of the structure-agency debate, we discover that efforts to define causality are challenged by a significant knowledge gap in terms of the micro-processes at work behind systems innovations. More specifically, we identify the need for a more nuanced understanding of how agency plays out in these processes in relation to structure. Through empirical research, we aim to bridge this gap by observing different types of change agents and systems dynamics and, in so doing, figure out what innovation policies may be overlooking.

Borrowing from Grillitsch & Sotarauta (2020), we apply the ‘trinity of change agency’ framework to study the different forms of agency set in motion to drive innovation and path creation. This framework sets out three different types of agency at work individually and simultaneously. These include 1) ‘innovative entrepreneurship’ building on an evolutionary tradition, focusing on entrepreneurship as an instigator of change and triggering industrial and economic transformation; 2) ‘Institutional entrepreneurship’ building on an institutional tradition and focusing on institutional structures and risk-taking institutions in laying out new growth paths and 3) ‘place-based leadership’, highlighting the role of multiple actors in pooling competences and resources to achieve individual or collective objectives. 

The empirical study delves into change agency in green innovations from a sectoral perspective, exploring two specific cases. The first examines the use of wood-based products, technologies and construction systems in multi-storey constructions in Sweden and Finland. We re-construct a historical sequence of events, developments and decisions deemed essential by experts in defining innovation and industrial path creation. While technologies seem to be the result of many years, if not centuries, of incremental innovations and political decisions (many of which are unrelated or only indirectly related to a specific technology), the case study reveals the presence of ‘structural inertia’ (understood as a general resistance to change within the system) in the construction sector, representing the main roadblock for the use of wood-based systems in modern multi-storey buildings. Nonetheless, key actors were eventually able to disrupt the market and institutional structures through the decisiveness of place-based ‘champions’ working closely together, in parallel to a process of systems integration and cross-fertilisation, in which different sectors shared knowledge, skills and labour force, leading to streamlined related processes, overcoming bottlenecks and increasing efficiency. These forces have seen the creation of a new, competitive market ecosystem.

The second case study focuses on the ‘protein shift’, by which we refer to innovation and industrial development processes aimed at reducing the environmental impacts of protein food products/systems. Here, competing sustainability narratives represent a major factor influencing consumer behaviour and giving direction to systemic change. We observe a low degree of cross-fertilisation across interconnected but also largely disconnected industrial and scientific ecosystems. Instead, the protein shift involves multiple parallel developments, leading to increased diversification of protein food products, industrial processes and supply chains. Institutional leaders have been active on a place basis but more significantly at a national and EU level. Despite a lack of a well-defined societal discussion regarding appropriate development pathways, the protein shift is unlikely to solely rely on a series of individual solutions but will more likely depend on a multi-pathway approach considering diverse ethical, economic and cultural aspects, as well as the opportunities afforded by both old and new technologies and practices in improving sustainability in food and protein systems. 

The empirical evidence presented in this study sheds light on how innovation processes occur under the banner of ‘green transitions’ and the relevance of different types of agency to these processes. A key realisation is that different technological and sectoral innovations often occur under fundamentally different conditions, i.e., context matters. In some cases, the main driver for innovation (and new development paths) may be a policy push; in others, a technology push (by private businesses) or a demand pull (by clients and consumers). Although the three types of agency are often simultaneously at work, case studies show that they may play different roles at any given time or place.

The current policy context and its orientation towards implementing the ‘green transition’ means that policy, regulation and public authorities at different territorial levels play a major role in setting directionality in innovation processes. Institutional entrepreneurship is evidenced not merely by, for example, public institutions adapting to emerging contexts (e.g., fixing market failures) but by actively shaping development processes. This challenges the assumption that the private sector is inherently innovative, consistently taking risks and pushing market boundaries. On the contrary, our empirical observations show that a substantial portion of private entities often resist change. 

Although public-sector actors play a crucial role in advancing new agendas (e.g., the protein shift), public policy does not happen in a vacuum. It is usually a response to a broader social recognition of a problem (e.g., climate change) and the myriad of other concurrent developments in science and the marketplace. The institutional context, both the formal and informal rules in place, may enable or hinder agency: determining the essential preconditions such as well-functioning markets, appropriate regulatory frameworks and access to labour, knowledge and capital while itself continuously learning and adapting to these frameworks. 

Our fieldwork revealed intense interactions across national, regional, technological and sectoral innovation systems. These are crucial for facilitating the green transition. Network-based (and often place-based) innovation requires all actors to embrace new ideas and welcome change. Nevertheless, the findings also point to the importance of an entrepreneurial perspective influenced by creative labour and opportunity recognition, as typified by Schumpeter (1942). Entrepreneurs, whether individuals or businesses, have the sensitivity to discern market opportunities, address technological gaps and assess the commercial viability of new products and solutions. Place-based leadership can be clearly discerned in the case studies in the way sub-national authorities, the private sector and academia actively contribute to overcoming challenges in established business ecosystems.

Bochma’s understanding of proximities helps us disentangle the puzzle of how structure-agency relations play out on the ground. Beyond geography alone, Boschma (2005) refers to ‘proximity’ as the ability to understand, adopt and adapt to identify novelty, interpret and exploit new knowledge. While it is easy to see how geographical proximity enables knowledge spillovers and innovation in both case studies, cognitive proximity, as in interactions among like-minded individuals, regardless of physical distance, appeared to be more important in delivering technological innovations. However, systems innovations seemed to be more clearly determined by institutional structures and the ability of different actors to exchange knowledge, collaborate to solve bottlenecks and enable path creation. Here, organisational, social and institutional proximities become particularly relevant in determining the closeness and influence between organisations, the nature of human interactions and the institutional arrangements. Different types of proximities converged more in the wood construction case than in the protein shift case, where developments are more geographically sporadic. 

Conclusion: 

Based on the empirical evidence, this study shows that systemic green innovations are non-linear, highly complex and are the result of the sum of various individual efforts and collaborations. We realise that change emerges at the interface between key players via collaboration, knowledge exchange and trust-building. Although many actions are not intentionally aimed at producing systemic changes (with the possible exception of targeted policies), these are not random actions but aim at seizing emerging opportunities. Directionality in innovation and path-creation is, therefore, not the same in all cases and leadership may shift over time from one actor to another, be it public authorities, businesses, hybrid organisations or individuals.