6Without Entrepreneurship? The Pipe Dream of Mission-Oriented Innovation Policy” (Larsson 2022), which argues that fundamentally, the state cannot act as an entrepreneur because it faces no real risk, does not address a real market, and cannot be evaluated. Larsson deconstructs the idea of mission-oriented policies and concludes that these policies do not work in practice because of the impossibility of dispersed actors with differing priorities and incentives to, in practice, agree on the mission undertaken or on how it should be accomplished and evaluated.

7Introduction

From these chapters we learn that what may sound good on paper in terms of collective missions and directionality are often—but not always—at odds with the received wisdom of individual action and coordination in open democratic societies.

Chapters “Building Local Innovation Support Systems: Theory and Practice”, “Reducing Higher Education Bureaucracy and Reclaiming the Entrepreneurial University”, “Cultural Ideals in the Entrepreneurship Industry”, “Evaluating Evaluations of Innovation Policy: Exploring Reliability, Methods, and Conflicts of Interest”, “Do Targeted R&D Grants toward SMEs Increase Employment and Demand for High Human Capital Workers?” contain empirical examples of innovation policies in terms of creating entrepreneurial ecosystems, making universities more innovative, and nurturing the innovativeness of new and small enterprises. In “Building Local Innovation Support Systems: Theory and Practice”, Dan Hjalmarsson (2022)—an innovation scholar turned public decision-maker with decades of experience in designing and evaluating innovation policies—applies his ideas to the region of greater Umeå in northern Sweden and discusses what we can learn from decades of policy support to enhance innovation and entrepreneurship in seeking to foster university-industry collaboration. He concludes that successful policymaking is about creating the right incentives, avoiding picking winners, and direct efforts in ways that do not interfere with competition.

In “Reducing Higher Education Bureaucracy and Reclaiming the Entrepreneurial University”, Siri Terjesen (2022) leverages academic research and policy practice from her position as an associate dean to discuss ways in which current top-down policies hamper rather than encourage experimentation and mindful decision-making at higher education institutions, a crucial set of institutions in any innovation paradigm. She argues that bureaucratization and top-down governance stifle innovation both at universities and in corporations. Terjesen describes the worrying trend of increases in bureaucracy and reports on successful anti-bureaucracy policies and practices such as calculating ‘bureaucratic mass’ and the implementation of new technology.

In the chapter “Cultural Ideals in the Entrepreneurship Industry,” Anna Brattström (2022) outlines the increasingly prevalent paradox that although there appears to be much innovative activity in “local ecosystems,” in tangible ways there is little innovative output. Leveraging in-depth data on entrepreneurs, associations, and public sector activities in Skåne, Sweden, she argues that entrepreneurship and “being innovative” has become a cultural ideal that both firms and policymakers sympathize with and enact as a form of social signaling, but with often limited tangible output. In “Evaluating Evaluations of Innovation Policy: Exploring Reliability, Methods and Conflicts of Interest”, Elias Collin, Christian Sandström, and Karl Wennberg (2022) take a closer look at how innovation policies are evaluated and by whom. They conclude that the vast majority of evaluations in Sweden tend to be positive but that these statements are usually not backed by studies of effects. This section concludes with chapter, “Do Targeted R&D Grants Toward SMEs Increase Employment and Demand for High Human Capital Workers?” in which Sven-Olov Daunfeldt, Daniel Halvarsson, Patrik Tingvall, and Alexander McKelvie (2022) report the results of a counterfactual study into the effects of targeted innovation support. Their most significant result is the absence of any statistically significant K. Wennberg and C. Sandström

8effects on employees, turnover, or profit. Bearing administrative costs in mind, these findings suggest that the overall impact of such support structures may often be negative for the economy. These chapters showcase how innovation policies are executed in practice, with what impact—both direct and indirect, long term and short term—and how they are commonly evaluated. We learn about practical challenges related to the design, execution, and evaluation of innovation policy in practice.

Chapters “Third-Generation Innovation Policy: System Transformation or Reinforcing Business as Usual?”, “Less from More: China Built Wind Power, but Gained Little Electricity”, “The Failures of the Entrepreneurial State: Subsidies to Renewable Energies in Europe”, “Directionality in Innovation Policy and the Ongoing Failure of Green Deals: Evidence from Biogas, Bio-ethanol, and Fossil-Free Steel” showcase alternative approaches to innovation policy such as transformative policies and missions, focusing specifically on top-down approaches toward more ecologically sustainable economies. Lessons from recent transformative policy programs in the European Union, China, and Swedish regions are discussed. The chapter by John-Erik Bergkvist, Jerker Moodysson, and Christian Sandström (2022), “Third-Generation Innovation Policy: System Transformation or Reinforcing Business as Usual?,” provides a discussion of some ongoing attempts around the Western world to accomplish innovation and renewal through large collaborative schemes. Based on case studies across the European Union, the authors conclude that these collaboration policies are likely to favor established interest groups rather than contribute to industrial transformation. Chapters “Less from More: China Built Wind Power, but Gained Little Electricity”–“Directionality in Innovation Policy and the Ongoing Failure of Green Deals: Evidence from Biogas, Bio-ethanol, and Fossil-Free Steel” provide empirical evidence that problematize recent green industrial policies. In the chapter, “Less from More: China Built Wind Power, but Little Electricity Came,” Jonas Grafström (2022) reports evidence of failed wind power policies in China. Similarly, Carlo Amenta and Carlo Stagnaro (2022) document that European subsidies to renewable energy have had limited positive effects on the natural environment and done little good for the economy in the chapter, “The Failures of the Entrepreneurial State: Subsidies to Renewable Energies in Europe.” The chapter by Christian Sandström and Carl Alm (2022), “Directionality in Innovation Policy and the Ongoing Failure of Green Deals: Evidence From Biogas, Bio-ethanol, and Fossil- Free Steel,” reports on historical cases of policy failure regarding innovation and sustainable development. Documenting the costly failures of biogas and ethanol efforts in Sweden, the authors identify the underlying mechanisms and apply them to the ongoing development of supposedly fossil-free steel. Sandström and Alm (2022) argue that large pools of “free” public money directed toward specific technologies may distort incentives and make firms immune to risk, which in turn results in reckless investments into specific technologies that may have little potential.

The final section of the book discusses how we can turn the page and move on from ideas such as an entrepreneurial state toward more holistic innovation policy anchored in what we have learned from almost a century of such policies. Chapters “Policy Instruments for High-Growth Enterprises”, “Public-Steering and Private- Introduction

9Performing Sectors: Success and Failures in the Swedish Finance, Telecoms, and City Planning Sectors”, “The Digital Platform Economy and the Entrepreneurial State: A European Dilemma” compare more or less successful innovation policies and describe what we can learn from them about how institutionalized sectors can be transformed. In “Policy Instruments for High-Growth Enterprises”, Alex Coad, Peter Harasztosi, Rozalia Pal, and Mercedes Teruel (2022) provide an in-depth review of decades of knowledge accumulated on high-growth enterprises; their impact in terms of innovation, change, and job creation; and how policy instruments can, or cannot, be used to encourage the emergence and direction of such enterprises. Among other things, they highlight the importance of getting incentives right, and the coordination and consistency of policies over time. This evidence-based approach is perhaps less spectacular than the moonshot policies of the entrepreneurial state, but likely to be more effective in the long term. In the chapter “Public-Steering and Private-Performing Sectors: Success and Failures in the Swedish Finance, Telecoms, and City Planning Sectors”, Klas A. M. Eriksson and Rasmus Nykvist (2022) discuss showcase three in-depth longitudinal cases of sectoral transformation, documenting the difference in innovation and competitiveness between the sectors that have been liberalized and city planning, which resembles more of a planned economy. In doing so, they also highlight the critical role of vested interest groups in blocking attempts at policy renewal. Relatedly, they highlight that innovation policy needs to deal better with incumbent interest groups. In the chapter “The Digital Platform Economy and the Entrepreneurial State: A European Dilemma,” Zoltan J. Acs (2022) shows how the nature of digital markets causes a dilemma for top-down policies seeking to steer innovation in directional ways. Comparing the state of the rapidly growing digital platforms and their impact in the United States, East Asia, and the European Union, he argues that the absence of competitive European tech firms is a direct function of the ideas and policy recommendations related to The Entrepreneurial State. Literature on innovation systems has emerged and been diffused among policymakers in Europe. American industrial policy tends to put a more direct emphasis on entrepreneurial ventures, and according to Acs, this is the primary reason why Europe is lagging behind. In the book’s final chapter, “Collaborative Innovation Blocs and Mission- Oriented Innovation Policy: An Ecosystem Perspective,” Niklas Elert and Magnus Henrekson (2022) compare and integrate insights from mission-oriented innovation policy with an older innovation paradigm: that of collaborative innovation blocks. By highlighting how some aspects of “mission interventions” may be beneficial if enacted prudently and with the consideration of the institutional contingencies underpinning innovative activities in various contexts, the chapter discuss how more holistic and resilient innovation policies can be articulated to leverage the strengths of today’s rapidly growing innovation ecosystems.

10K. Wennberg and C. Sandström

Why Is the Entrepreneurial State so Popular?

The Entrepreneurial State gave policymakers what they needed, when they needed it. With economies struggling to recover and increased demands for sustainability, they were in great need of solutions or at least actions that seemed credible. The book provided a flattering message to politicians and government agencies, highlighting them as heroes and visionaries. As we have seen in the current volume, it is far from evident that this is the case. As already noted by Lerner (2009) in Boulevard of Broken Dream, history is full of policy failure in the area of innovation and entrepreneurship. Several recent cases of