29315“The last four decades have seen a considerable increase in the scale and diversity of such policies across developed countries. An early developer, by EU standards, was the UK although, even here, SMEP [SME policy] during the 1970s comprised a mere handful of programs, and EP [Entrepreneurship policy] was nonexistent. Yet within three decades, the UK had more than a thousand such programs” (Lundström et al., 2014, p. 942).

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297Public-Steering and Private-Performing

Sectors: Success and Failures in the Swedish

Finance, Telecoms, and City Planning

Sectors

Klas A. M. Eriksson and Rasmus Nykvist

Abstract Mariana Mazzucato embraces state-directed public/private investment in innovation to achieve goals that society as a whole would beneﬁt from. The idea is that the state should direct and the private sphere perform the innovation needed. We argue that this view is biased toward successful examples of innovation created by public sector steering and the private sector performing. Generally, vested interests are created by these kinds of public-steering–private-performing innovations, which hinder or malinvest resources through their interests or information problems when market forces are put out of play. We present examples that explore the process of two successful deregulation cases and one failed case to highlight differences in the processes leading to the different outcomes; the most important being the existence of institutional entrepreneurs acting as typical change agents in the successful cases and the lack thereof in the failed example. These cases highlight the importance of both passive incumbents and proactive entrants for enabling institutional change. We contrast these examples with the public-steering and private-performing framework.

Keywords Innovation · Deregulation · Institutional change · Industrial policy · Entrant incumbent

K. A. M. Eriksson (*) Department of Economic History and International Relations, Stockholm University, Stockholm, Sweden Hoover Institution, Stanford University, Stanford, CA, USA The Ratio Institute, Stockholm, Sweden R. Nykvist House of Innovation, Stockholm School of Economics, Stockholm, Sweden The Ratio Institute, Stockholm, Sweden e-mail: rasmus.nykvist@hhs.se