Research Policy 37 (2008) 430–445 Available online at www.sciencedirect.com The evolving nature of Taiwan’s national innovation system: The case of biotechnology innovation networks Mark Dodgson a,∗ , John Mathews b,1 , Tim Kastelle a,2 , Mei-Chih Hu c,3 a University of Queensland Business School, University of Queensland, Brisbane, QLD 4072 Australia b Macquarie Graduate School of Management, Macquarie University, Sydney, NSW 2109, Australia c Graduate Institute of Management of Technology, Feng Chia University, Taichung, Taiwan Received 20 September 2006; received in revised form 7 October 2007; accepted 20 December 2007 Available online 19 February 2008 Abstract The dynamics of national innovation systems (NISs) are a source of considerable academic and policy interest, especially when to address new competitive challenges they involve changing institutions and relationships within successful systems. This paper examines the case of Taiwan which is embarking on a new phase in its approach to building its national innovative capacity through creating the infrastructure for a biotechnology industry. By examining the process and mechanisms by which new biotechnology innovation networks are being created, and contrasting their development with existing networks, we analyse the dynamics of Taiwan’s NIS. The paper reviews the prospects for this new phase in Taiwan’s transition from ‘imitation’ to ‘innovation’. The paper aims to add to the understanding of how innovation systems evolve. It is concerned with the contributors, processes and challenges of NIS evolution and the form and meaning of its dynamic changes. © 2007 Elsevier B.V. All rights reserved. Keywords: National innovation system dynamics; Innovation networks; Taiwan 1. Introduction Over a decade ago Patel and Pavitt (1994) argued that most national innovation system (NIS) research is static, and much work in the area remains concerned with describing patterns of expenditure, and the creation of new institutions and policies, rather than in-depth anal- ∗ Corresponding author. Tel.: +61 7 3365 1615; fax: +61 7 3365 6988. E-mail addresses: mark.dodgson@uq.edu.au (M. Dodgson), John.Mathews@mq.edu.au (J. Mathews), t.kastelle@business.uq.edu.au (T. Kastelle), mchu@fcu.edu.tw (M.-C. Hu). 1 Tel.: +61 2 9850 6082, fax: +61 2 9850 9942. 2 Tel.: +61 7 3365 6090, fax: +61 7 3365 6988. 3 Tel.: +886 4 24517250x4055. ysis of why and how changes occur. There still remains the need to gain a better understanding of the dynam- ics and evolution of NIS. Taiwan is an interesting case from a policy perspective as it is often portrayed as a leading example of the way governments can influence innovation performance: Taiwan ‘governs the market’ (Wade, 2004). Its interventionist development model in information technology (IT) has been hugely success- ful, built around encouraging technological diffusion through innovation networks assisted by powerful inter- mediary research institutes (Mathews and Cho, 2000). But what happens when this model is applied to a very different technology, with very different requirements for its development? The search for new markets to drive continued economic growth is causing Taiwan’s innova- tion system to evolve. We observe the pattern of changes occurring by examining innovation networks in biotech- 0048-7333/$ – see front matter © 2007 Elsevier B.V. All rights reserved. doi:10.1016/j.respol.2007.12.005