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

Theoretical perspectives 25
Systems change in long wave theory
Freeman also focuses on systems change in a broader sense in his analysis of
long waves in economic development (Freeman and Perez, 1988; Freeman
and Louca, 2001). The development of specific clusters of technologies fuels
growth in different economic eras and is accompanied by institutional
structures that support and enable exploitation of these clusters (Perez,
1983). Freeman and Perez (1988) take path dependence to a new level
beyond that of a technological system in their idea of a techno-economic
paradigm as a “cluster of interrelated technical, organisational and
managerial innovations, whose advantages are to be found not only in a new
range of products and systems, but most of all in the dynamics of the relative
cost structure of all possible inputs to production. In each new paradigm a
particular input or set of inputs may be described as the ‘key factor’ in that
paradigm characterised by falling relative costs and universal availability.
The contemporary change of paradigm may be seen as a shift from a
technology based primarily on cheap inputs of of energy to one predominatly
based on cheap inputs of information derived from advances in
microelectronic and telecommunication technology” (Freeman, 1988a: 10).
What Perez (1983) especially stressed was that systems change can only take
place through a combination of profound social, organisational and technical
innovations. This is not a smooth process because there are “strong vested
interests associated with the previous dominant paradigm and the regulatory
regime and cultural norms associated with (…it)” (Freeman and Louca,
2001: 148). While the expiring era was based on institutionalised mass
production and consumption, Fordist organisational forms, and hierarchical
structures, the upcoming era is characterised by networks: internal, local and
global (Freeman and Louca, 2001: 141). Thus, a new techno-economic
paradigm is gaining ground, creating a new constellation that synchronises
scientific, technological, economic, political and cultural developments. The
ideas put forward here are very significant for our analysis of the electricity
system, on the one hand because the shift to information technology and a
network society is a factor in shaping the development of the electricity
system, and on the other hand, because the focus on interaction between
technical, organisational, and institutional innovation is the starting point for
our analysis.
Sociotechnical change theory
Sociotechnical change theory advocates the integrated study of society and
technology and has provided insights on the way technology evolves in
society and social shaping of technology occurs (Bijker et al., 1987; Bijker
and Law, 1992; Williams and Edge, 1996; Rip and Kemp, 1998). It
considers technological change not as a rigid, categorised, process but as a