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The term ‘National Innovation System’ was first used by Christopher Freeman in his book ‘Innovation in Japan’ in 1987. While there are several definitions of NIS there is no single universally accepted definition. One definition is, ‘ NIS is a set of distinct institutions which jointly and individually contribute to the development and diffusion of new technologies, and which provide the framework within which governments form and implement policies to influence the innovation process’. The various elements of NIS would be Government policies, research and development organizations, the education system, the financial support system and others.

A few definitions of NIS are:

“…the elements and relationships which interact in the production, diffusion and use of new, economically useful knowledge … and are either located within or rooted inside the borders of a nation state” Lundwall 1992

“… a set of institutions where interactions determine the innovative performance…of national firms” Nelson1993

“… the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies…” Freeman 1987

“… the national institutions, their incentive structures and their competencies, that determine the rate and direction of technological learning (or the value and composition of change generating activities) in a country.” Patel and Pavitt

“… that set of distinct institutions which jointly and individually contribute to the development and diffusion of new technologies and which provide the framework within which governments form and implement policies to influence the innovation process. As such it is a system of interconnected institutions to create, store and transfer the knowledge, skills and artifacts which define new technologies.” Metcalfe 1995

A Research Paper (Recent Trends in the Research on National Innovation Systems http://ideas.repec.org/p/aug/augsbe/0254.html) gives an overview on recent developments in the research on national innovation systems (NIS). Essentially, the Paper identifies three development lines. These are policy-oriented studies that frequently combine the NIS approach with the terminology of corporate benchmarking, contributions to formalize the concept of NIS through descriptive or analytical models, and NIS studies of countries beyond the group of highly industrialized economies. It follows from the analysis of these research trends that the concept has developed in distinctive directions. In international comparisons of innovation systems, heterogeneity in the structure of the systems is only marginally taken into account, an aspect that may reduce the explanatory power of such system-level comparisons.

A complete conceptual perspective on the history and development of the National Innovation System is given at
http://www.druid.dk/conferences/summer2005/papers/ds2005-423.pdf

A study by OECD (http://www.oecd.org/dataoecd/35/56/2101733.pdf) has suggested that interactions amongst the actors involved in technology development are as important as investments in R&D. An understanding of these systems and interlinkages between them, can help policy makers develop approaches for enhancing innovative performances in the knowledge based economies of today. The smooth operation of innovation systems depends on the fluidity of knowledge flows among enterprises, institutions and research organizations. It includes both, the tacit knowledge and know-how exchanged through informal channels and codified knowledge or information codified in publications, patents and other sources. The mechanisms for knowledge flows include joint industrial research, public/private sector partnerships, technology diffusion and movement of personnel.

According to Yoon major advantages of NIS are (a) it enables a country to understand clearly the factors that stimulate innovation and (b) it can be used as a framework in formulating company strategy on innovation.

Dynamics of NIS is also very important. Continuous improvements are a must for all innovation related activities. Without continuous improvement even the most striking innovation strategy will become uncompetitive in due course of time. And without innovation, any effort to improvement in a knowledge-based economy may end up at a dead-end. There is a great deal of innovative work behind continuous improvements and NIS framers require a firm understanding of the changing situation and make continuous modifications in the NIS.


Various elements of NIS would be Government policies, Research and Development organizations, education system, the financial support system and others.



According to a study by OECD, the concept of National Innovation Systems rests on the premise that understanding the linkages amongst the actors involved in the innovation process is key to improving technology performance. The innovative performance of a country depends to a large extent on how these actors relate to each other as elements of collective system of knowledge creation and use, as well as the technologies they use. (http://www.oecd.org)

While the National Information Systems would vary from country to country but the basic elements generally remain the same. The Government has the most influential role in the NIS as their contribution in enhancing investments at the national level and at the organizational level is ever increasing. A sound innovation policy framework that encouraged competitiveness and generates national wealth is essential for prosperity in this increasingly globalize world.