Sustainability Transformation and the Transformative Capacity of Nation States: Implications of Innovation Policy

The need for radical transformations to respond to the environmental polycrises of climate change, biodiversity loss, and pollution has come to the forefront of political and academic debates. Nation states must have transformative capacity, meaning the ability to ignite, enable, and steer large-scale sustainability transformations. However, despite its importance, there
remains a significant gap in understanding how innovation policy influences
and shapes this transformative capacity. In this conceptual paper based on a
systematic literature review, we explore which capacities are needed to navigate the current transformations and how different innovation policies influence transformative capacity. We argue that the current Grand Challenges
put a double demand on nation-states regarding transformation breadth
and depth and highlight that the literature on transformative innovation
policies is biased toward some dimensions of the transformation. We propose a more holistic approach to innovation policy, which takes a dynamic
system perspective and evolutionarily conceptualizes transformative capacity.
We discuss the implications of this more holistic approach to innovation
policy. This approach reflects on how different capacities should be mobilized
through innovation policies throughout the transformation process