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

Theoretical perspectives 57
permit givers and inspectors who are able to judge whether the delivered
information is appropriate but much less so whether a production process
could be significantly improved.
2.4.5 Theorising about the role of institutions in systems change
However useful the analysis of networks this needs to be accompanied by a
larger framework that explains evolution and change in networks. Networks
are shaped in processes of co-evolution, for example, they co-evolve with
their technologies, in the sense that networks shape the processes of
innovation and the evolving technologies shape the networks. Our interest is
mainly in the underlying mechanisms that can explain the direction and
speed of these processes of co-evolution. The role of institutions and rules is
central to these mechanisms: institutions explain how technologies are
handled and productively used, i.e. every technology comes with a certain
recipe, division of labour and mode of coordination (Nelson, 2002).
Institutions can be seen as pieces of fabric that solidify certain ways of doing
things and the nature of interactions between actors. These pieces of
institutional fabric develop with technology and their networks in a process
of co-evolution. Institutions are part of every day’s activities of actors, e.g.
when taking a used bottle back to a supermarket there are institutions in
place to make sure that deposit money is returned and that the bottles are reused
(such as agreements between a variety of companies, laid down in
contracts, with some kind of punitive scheme in case of defection).
Essentially, these institutions have developed to routines and we don’t have
to ponder over this every time we go to the supermarket. The nature of
institutions can also create formidable barriers for the introduction of new
innovations, especially when these require the creation of new linkages
between actors, networks and technologies, and ultimately the creation of
new routines. Walker (2000) introduces the term institutional entrapment to
explain the difficulty to get out of the nuclear trajectory because of the
embedded institutional, technological and economic commitments.
While institutions play an important role in providing stability to existing
systems, patterns of institutional change may provide the basis for processes
of systems change. A sociotechnical system consists of various elements that
are aligned and woven together. Institutional changes that represent change
in the way an element is structured in the system is followed by adaptive
changes in other parts of the system. In essence it is thus possible that a
sequence of changes is set into motion that may erode the institutional
structures that contribute to the system’s functioning and the underlying
practices and may give rise to new ways of doing things.