Over the last 2-3 decades, the nature of innovation has changed dramatically, increasing its role in society more than in previous centuries. Gradually, it is becoming recognized that innovation represents the key mobilizer and decisive engine of change and economic growth of our societies. Prof. Charles Edquist from Lund University has defined it very clearly against the traditional linear pattern, emphasizing the role of innovation ecosystems and government policies.

Actually, the governments are paying much more attention to innovation than ever before, having realized its huge potential. Looking at business, as well as at other societal activities, one cannot disregard that successful managers now increasingly recognize that innovation determines the development and growth potential of a country and of each organization, in business, as well as elsewhere. Looking at all corporate investment, the share of resources devoted to innovation is high and consistently rising.

The primary reason for this important change is the new character of innovation, which is no longer following the rather predictable linear model (from academic research and individual inventors to organized innovation, connecting and even integrating various actors) but a new, modern innovation model, engaging all kinds of innovators, with the support of government policies and innovation-friendly legislation—creating a productive innovation ecosystem.

As a consequence, countries are becoming increasingly innovative, also as a result of public commitment and successful policies. According to the Global Innovation Index in 2025, the top 15 countries (among 139) were Switzerland, Sweden, the USA, Korea, Singapore, the UK, Finland, the Netherlands, Denmark, China, Germany, Japan, France, Israel, and Hong Kong.

The conclusion is clear and simple: without decisive policy emphasis on innovation, no progress is to be expected—and it is actually strange that only a minority of countries have so far fully understood this.

Innovation has become one of the most frequently invoked concepts in contemporary public discourse. It is praised as the engine of economic growth, societal progress, and technological transformation. Yet, precisely because of its near-universal endorsement, innovation often escapes the standard critical scrutiny. Prof. Edquist strongly emphasizes the difference between invention (discovery of something new) versus innovation (when a new product, service, or technology has been accepted by the market).

The prevailing narrative portrays innovation as a spontaneous, largely self-organizing process: emerging from creative individuals, thriving in flexible networks, and often enjoying support by government and other public or private entities—on their way to the market. While this narrative has helped to overcome outdated linear models of innovation, it has also produced a new simplification. By celebrating “ecosystems,” we often obscure the fact that innovation is neither neutral nor automatic but strongly shaped by institutions, policies, and power relations.

We should be aware that innovation ecosystems do not simply exist. They are designed, regulated, financed, and governed. Their structure reflects strategic choices: what areas and types of knowledge are supported, which actors are recognized, which risks are socialized, and which benefits are privatized. In this sense, innovation ecosystems are not only economic arrangements but also an equally important part of countries’ political processes and institutional environments.

Despite decades of systematic research on national and regional innovation systems, the governance/management dimension of innovation still remains underexplored. Public debate frequently oscillates between two extremes: either excessive faith in markets and entrepreneurial dynamism or, on the other hand, overly centralized policy interventions that fail to mobilize societal capabilities. Both approaches overlook the central challenge of our time: how to govern complex innovation ecosystems under conditions of uncertainty, societal complexity, rapid technological change, and mounting societal expectations.

The central premise of the performance of innovation ecosystems is simple but demanding: it depends less on isolated excellence but more on effective collaboration and the quality of innovation governance and management. This includes institutional design, policy coherence, regulatory capacity, and the ability to align innovation with long-term societal interests and goals.

The modern debate on innovation follows a critical analysis at the intersection of innovation, public policy, and institutional governance, focusing primarily on:

  • The role of public institutions as architects and stewards of modern innovation ecosystems.

  • In the interaction between national strategies and global innovation dynamics.

  • The governance failures, policy lock-ins, and unintended consequences.

  • In the comparative analyses illuminating structural differences between countries and regions.

Innovation today is inseparable from major societal transitions: digitalization, decarbonization, demographic change, and geopolitical fragmentation. These transitions place unprecedented demands on innovation systems and expose the limits of incremental policy adjustment.

The current discussion is addressing innovation as a strategic public concern, rather than a purely technological or managerial issue. The reason for that is that innovation should not merely be celebrated but should be fully understood, critically evaluated, debated, and properly governed.

Evidently, the level and success of innovation depend on people, from direct innovators to business managers, relevant politicians and senior administrators. At the same time, they are all substantially influenced by the regulations affecting the research and innovation processes and—last but not least—depending also on how innovation is actually treated by the members of society. In all innovative societies, the role of innovators is highly appreciated as actors and contributors to knowledge-based development and actors of positive societal change and progress. If till recently, advanced societies were referred to as “knowledge societies," now we should rather call them “innovation societies," based on a clearly distinguishable innovation culture and business outlook.

The quality of countries’ human capital is very important, but equally so is the efficiency of the regulatory environment, which needs to stimulate people’s activity and, indeed, creativity.