An inquiry into the underlying causes of the “European periphery paradox” using the framework of National Innovation Systems

This PhD thesis investigates underlying causes of the “European periphery paradox” by employing the National Innovation System (NIS) approach and the mixed methods methodology. The central contribution of the thesis is to the NIS literature and lies within providing new theoretical and empirical explanations for the underlying causes of systemic differences between Western and Eastern European innovation systems. The thesis is composed of three parts. The quantitative part proposes an empirical model that incorporates the innovation diffusion concept into the analysis of NIS dynamics. The model reveals significant differences in causal relationships between innovation generation and diffusion within five different groups of NISs globally. It also reveals various social, institutional and economic factors that possibly stimulate dynamics of the NISs. The qualitative part looks for deeper contextualised explanations for factors that influence transformation of NISs in transition economies. The case study points to various institutional inefficiencies as barriers to transformation. It reveals that institutional entrepreneurship could be one of the most effective mechanisms to stimulate institutional change through internal (within organisation) and through external (policy-making level) pressures. The conceptual part of the thesis contributes to a better understanding of the institutional change process by exploring the principal-agent model in the context of an entrepreneurial university and NIS. By incorporating the concept of innovation diffusion, the concept of institutional entrepreneurship and the principal-agent model, this thesis links macro, meso and micro levels in analysing the operations of NISs. It reveals the importance of active interrelationships between all actors of NIS and their abilities to generate, adopt and diffuse innovations locally. Furthermore, this thesis highlights the necessity of having entrepreneurial public institutions for countries seeking innovation-based growth. The thesis points to the importance of the human agency role, in particular, the role of institutional entrepreneurship, in the process of institutional change. The thesis also proposes a balanced individualised incentive system to motivate agents to contribute to the change from an ordinary to an entrepreneurial institution.