Crafting Innovations The evolving institutional regimes of handicraft exporters in emerging economies

This section positively but critically explores three perspectives that may explain incremental innovation of craft exporters in emerging economies. The first perspective is that of innovation systems. Ever since 1987, studies on innovation systems have greatly contributed to our understanding of innovation. Scholars on innovation systems in emerging economies have added the notion that innovation of firms in emerging economies differs from that in developed economies, since they are more likely to absorb knowledge from global value chains, local innovation systems and other sources. The second perspective is that of business systems, which claims that national institutional differences explain differences in innovation outcomes between countries. The perspective highlights the coherence of institutions, actors and networks within a country, but it tends to ignore differences within countries and between international contexts. The chapter subsequently explores an evolutionary perspective in order to appreciate if, why and how innovation within a territory is predictable over time. It especially considers institutional path dependence. The chapter concludes that each of the three perspectives has merit, but is underdetermined and descriptive, and therefore combines the three perspectives into one. This combined perspective is worked out in an exploratory framework, which is multilevel and multi-spatial. Within the proposed framework, territories have distinct institutional regimes which affect innovation. The regimes comprise business systems, innovation systems and firms. They evolve in processes unique to the territory and sector. Generally speaking, the evolutionary processes are stable and predictable, but these periods of relative stability are likely to be intertwined with outbursts of path creation, renewal and/or