In the conventional view, innovation is something that just takes place idiosyncratically in “Silicon Valley garages” and research and development (R&D) laboratories. But in fact, innovation in any nation is best understood as being embedded in a national innovation system (NIS). Just as innovation is more than science and technology, an innovation system is more than those elements directly related to the promotion of science and technology. It also includes all economic, political, and other social institutions affecting innovation (e.g., the financial system; organization of private firms; the pre-university educational system; labor markets; culture, regulatory, and tax policies and institutions).
