Various researchers and policy analysts have made empirical studies of innovation systems in order to understand their current structure and trace their dynamics. However, policy makers often experience difficulties in extracting practical guidelines from studies of this kind. In this paper, we operationalize our previous work on a functional approach to analyzing innovation system dynamics into a practical scheme of analysis for policy makers. The scheme is based on previous literature and our own experience in developing and applying functional thinking. It can be used by policy makers not only to identify the key policy issues but also to set policy goals.

The concept and phenomenon of media innovation is gaining some attention in the academic community, policy circles and among practitioners. However, the phenomenon is still poorly defined and not well understood. This paper therefore first analyses how media innovation is framed in the literature on media economics and media management. Then it considers to what extent the standard analysis of innovation could be applied to the media field, considering, on the one hand, the traditional view on innovation policy and, on the other hand, some of the most common indicators of innovation. Based on this information, the paper suggests a novel conceptualisation of media innovation. Furthermore, an analysis of statistical indicators on R&D expenditure leads to three assumptions related to media innovation, namely (1) that the Media and Content Industries (MCIs) are much less innovative than the ICT industries, or/and (2) that R&D statistics do not properly capture the innovativeness of the MCIs, or/and (3) that the innovative activities in media and content are largely taking place elsewhere (for instance in the ICT sector). Whereas the statistical indicators point towards the second explanation, a small round of expert interviews in Flanders revealed that there is a case for assumptions (1) and (3) as well. First of all, it was shown that all forms of innovation defined in our typology exist in the media field, but not with the same importance. The most important ones from the media industries’ point of view seems to be the innovation related to the product, notably concerning the core (e.g. creation of new types of TV shows) and business model innovation. There is also technological innovation taking place in the media industries, for instance concerning new ways to access and interact with the content but this innovation comes from out the media sector (e.g. HD-TV, search engines) and at best the media industries try to adapt to this rapidly changing technological context.

The paper investigates the evolution of the successful mobile internet service i-mode in Japan, identifies the relevant explanatory factors, and provides implications for the further development of mobile data communications in Europe. In conclusion, the paper argues that there must be a balanced and efficient mix of industry coordination, service experimentation, and dynamic competition in order to provide a foundation for mobile data success in Europe.

Two data sets are contrasted: country-level data (R&D performed by business in a particular sector and country (BERD) and company-level data (R&D financed by a particular company regardless where R&D investment is performed). About half of the overall EU vs. US R&D gap is in the information and communications technologies (ICT) sector. In turn, this ICT R&D gap has two faces. Country data suggest that the gap is largely intrinsic: the EU displays lower R&D intensities in several sub-sectors, while ICT sector size and composition are quite similar. On the other hand, company data suggest that the gap is instead structural: the sector size and composition of sub-sectors differ greatly, while R&D intensities are similar. One major explanatory factor lies in international flows of R&D and value added. Companies tend to allocate a larger share of their value added and a smaller share of R&D outside their home markets. In the sub-sectors which include much larger and more numerous US companies, these flows are unbalanced, and (BERD) R&D intensities are thus higher in the US than in Europe, everything else being equal.

PurposeTo analyse the evolution of the Swedish telecommunications sector (1970‐2003), with a focus on barriers and drivers of innovative activity.Design/methodology/approachDeveloping a functional approach to innovation systems analysis, where six basic interdependent functions need to be served for a new technology to be developed and diffused and for a supporting industry to evolve. The sector is divided into four major sub‐sectors: traditional fixed telecom; mobile telephony; fixed data communications (including internet); and mobile data communications (including mobile internet).FindingsRelate to two questions: first, how did it happen that Sweden developed a leading innovation system for mobile telephony but not for data communication; and second, what are the strengths and weaknesses of the innovation system for mobile data communications? Findings include that early developments mattered, innovative search direction is crucial as are the provision of incentives for innovative activity.Research limitations/implicationsFunctional analysis of innovation systems useful for guiding policy actions, which should have the purpose of strengthening weak functions, removing bottlenecks and stimulating inducement mechanisms, in particular if used to stimulate the transition from one phase to another. It needs further development, in particular with respect to the understanding of diffusion processes.Practical implicationsThe stimulation of innovation in, and diffusion of, mobile and broadband data services is crucial to development of the innovation system, globally, in Europe and in Sweden. An innovation system which allows for entrepreneurial experimentation should be fostered. Early stage financing and diffusion of services are major system weaknesses. Regulatory authorities should consider addressing innovation explicitly.Originality/valueNew (adapted) approach for guiding policy action. Better understanding of dynamics in the telecom sector, and the comparative success and failure of Swedish industry in sub‐sectors.