Innovation and institutional change: the transition to a sustainable ...

Theoretical perspectives 17
as a cheap and abundant energy source. In the last decades, however, the
importance of demand-pull (market-driven) and systems oriented theories of
innovation have gained ground (Von Hippel, 1988; Lundvall, 1992; Nelson,
1993). This has led to a more balanced understanding of innovation where
both the science and knowledge base and the market are seen as important
factors in innovation processes. Moreover, the sequential nature of the
innovation process was seen as unsatisfactory, for example Rosenberg
(1982) shows that once a technology has reached the market place ongoing
innovation still is an important factor for improved performance. Through
learning by using the cumulative impact of small improvements can lead to
significant increases in productivity, such as in the case of electricity
generation where the fuel economy of centralised thermal power plants
improved from using seven pounds of coal to generate one kilowatt-hour in
1900 to less than 0.9 pound of coal in the 1960s (Rosenberg, 1982: 65). Also
Enos (1958) finds for petroleum refining that improving a process
contributes even more to technological progress than does its initial
development (in Rosenberg, 1982: 68). Processes of learning by doing and
learning by using are therefore crucial.
Innovation is not necessarily equated with change of a single technology.
Rosenberg (1982) points at the role of complementarities: a particular
technology can move forward because of inventions and improvements in
other technologies. Thus it may be fruitful to think of major clustering of
innovation from a systems perspective, such as has been the case in the
building of systems for electricity and lighting where a variety of
innovations played a role in making a working configuration, apart from
someone like Edison who combined innovations from a systems perspective
(Hughes, 1983). The result is that improvements in performance in one
technology will be of limited significance unless it is paralleled by
improvements in other parts or technologies (Rosenberg, 1982: 60).
A further insight is that the focus need not necessarily be on the level of
technology or system of technologies but more broadly on actors, networks
and institutions. For example, Berkhout et al. (2002: 19) conclude in
research of the European pulp and paper and PVC producing sectors that
“orders of magnitude improvements were achieved through the
accumulation of product and process changes over time, … while much of
the explanation for these changes can be found in the steady reconfiguration
of actors, networks and institutions” in and around these industries. Thus,
systems change cannot simply be equated with technological changes. Let us
consider for example the way the system of food system has changed by
focusing on the production and consumption of milk. Fifty years ago milk
production was close to an artisanal profession and consumers could almost
point out the cow they drank the milk from. Nowadays we have