202the increased awareness of the need for systemic transformation in policy and focuses on the following questions: • How can such policy programs be designed to facilitate the type of transformative

change they are intended to accomplish? • What are the intrinsic barriers to transformation they must handle?

To address these questions we take a closer look at dominant theories regarding socio-technical transitions that have inspired the third generation of innovation policy. We compare these theories to cases of such innovation policy programs in different countries. Our overview sheds light on some remaining challenges and shortcomings of contemporary innovation policy, given its ambition to facilitate systemic transformation. We begin the chapter with a condensed review of the trends shaping the innovation policy literature over the past decades. Next, we turn to the more recent literature on socio-technical transitions, which has recently gained increased attention in the innovation policy literature. We pay special attention to the role of interest groups and the power struggles related to innovation and system transformation. Relatedly, we discuss the role of policy instruments and argue that innovation policies may end up supporting established technological regimes rather than favoring the emergence of competing solutions, unless the above challenges are acknowledged and properly addressed. We then turn to some empirical examples of innovation policies aimed at transformative change, which serve as illustrations of our arguments. The chapter ends with a concluding discussion.

2

Background

Innovation policy can be defined as initiatives by the public sector aimed at increasing the amount and impact of innovation in society (Edler & Fagerberg, 2017). While it is at times hard to apply such a broad definition to a system composed of interdependent actors (Nilsson & Moodysson, 2015), the definition is nevertheless useful within the scope of this chapter.