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addition it has become obvious that national and regional institutional coni gurations
mediate innovation processes of industrial sectors. Studies based on VoC tend to neglect
these inl uences and pay little attention to the inl uence of home markets and the quality
of the demand side for the emergence and dif usion of innovation. Focusing on institu-
tional coni gurations at the macro level to explain the behaviour of agents in innovation
processes at the micro level, this strand of literature goes beyond the national system of
innovation approach in two areas: the development of institutional typologies based on a
more systematic and comparative institutional analysis and the consideration of the active
role of agency.
4
Research based on VoC succeeds in specifying institutional coni gurations
and their impacts in terms of the room for strategic choice left to i rms. The complex insti-
tutional coni gurations, their complementarity as well as their interconnectivity provide
comparative institutional advantages for agents. Comparative studies provide empirical
evidence that i rms are able to use strategically named 'comparative institutional advan-
tages' in developing innovation. These selection processes gradually result in specii c
knowledge accumulation and competence building of i rms, indicated by dif erent national
innovation proi les. However, the approach also has some major limitations because the
mainly used institutional typology of coordinated and liberal market economies appears
robust for some countries - particularly for the US and Germany - while for other coun-
tries this appears weaker. Furthermore the co-existence of region-specii c institutional
settings within a wider national institutional setting is not taken into account.
In sum, the analysed approaches complement each other in their focus on institu-
tions and the way these reproduce stable patterns of behaviour. The complex interplay
of dif erent institutional coni gurations that has evolved and the pattern of interaction
between complementary institutions are resulting in a dominant path of national inno-
vation systems in a particular space-time context. Additionally, they share the view of
the relative stability of institutional arrangements at the national level compared to the
institutional variations and change at the sectoral and regional level. In path-dependent
developments, primarily the stabilization and selection function is highlighted by
setting incentives for knowledge accumulation and specii c competence building - the
basis for innovation. There is a lack of discussion in the reviewed strands with regard
to institutional change and institutional dynamics within path-dependent develop-
ments. Additionally, little is said about how institutional dynamics and institutional
change are related to positive and negative lock-in ef ects of path-dependent develop-
ments. Processes of institutional change are mainly seen as either incremental, leading
to continuity of the present technological path, or as abrupt and disruptive, leading to
the breakdown and replacement of institutional settings. Innovation creates the need
to break from the established institutions when new knowledge bases are incompatible
with the dominant institutional coni gurations of a path. This dichotomy underestimates
institutional dynamics and institutional change within path-dependent developments
that can contribute to positive unforeseen feedback or unexpected impacts over time.
The plasticity of institutions and institutional arrangements contributes particularly to
'path plasticity' that will be outlined in the following section.
3. Path plasticity and institutional change
Processes and modes of institutional change within a given path are still insui -
ciently understood. Apparently the institutional dynamics within a well-established
