Research Policy 29 Ž2000.

1033–1046
www.elsevier.nlrlocatereconbase

Innovation regimes, R & D and radical innovations in

telecommunications
Helge Godoe )
Norwegian Institute for Studies in Research and Higher Education, HegdehaugsÕeien 31, N-0352 Oslo, Norway
Received 8 April 1998; received in revised form 27 May 1998; accepted 30 July 1999

Abstract

By introducing the concept of innoÕation regimes, the aim of this article is to show how the rapid pace of technological
development in the telecom sector may be explained by the close links between the sector’s own R & D and the creation of
numerous innovations, many of which are radical. In contemporary innovation theory, a theoretical antinomy exists:
Whereas, the creation of incremental innovations is variously explained in terms of «rational» responses to markets,
dynamics of technological regimes, dominant design, etc., radical innovations, in contrast, are explained in terms of
serendipity, chance or haphazard scientific discoveries. Evidence from analysis of innovations in the telecom sector suggests
that innovation regimes have provided a capability of coordination, direction and leadership in the creation of many of the
radical technological innovations that have emerged in the sector. Thus, one may claim that the strong innovation regimes
and high R & D intensity of the telecom sector, at least until recently, have provided a capability of creating innovations on
purpose — for a purpose. The policy implications of this contradict some of the assumptions on which the prevailing
market-oriented R & D governance models and policies are based — and which are supported by contemporary innovation
theories. q 2000 Elsevier Science B.V. All rights reserved.

Keywords: Innovation theory; Innovation regimes; Radical innovations; R & D policy; Telecommunications

1. Introduction: explaining rapid technological
development in telecommunications
The rapid pace of technological development in
telecommunications is based on a stream of innova-
tions, many of which are radical. However, explain-
ing this in terms of current innovation theory is
difficult. In current innovation theories, radical inno-
)
Tel.: q47-22-59-51-72; fax: q47-22-59-51-01;
E-mail address: helge.godo@nifu.no
vations are variously attributed to haphazard scien-
tific breakthroughs, chance, serendipity, etc. Con-
trary to this, empirical evidence in telecommunica-
tions suggests a systemic relationship between sci-
ence and technology-based R & D and the emergence
of radical innovations, mediated by what may be
termed innoÕation regimes. Thus, one may claim
that radical innovations may be created on purpose
— for a purpose. If this is accepted as valid, it will
require adjustments of how innovation theory ex-
plains the creation of innovations, in particular, radi-
cal innovations. However, in terms of policy implica-
tions, this provides support to the rationale of long-

0048-7333r00r$ - see front matter q 2000 Elsevier Science B.V. All rights reserved.
PII: S 0 0 4 8 - 7 3 3 3 Ž 9 9 . 0 0 0 5 1 - 7
1034 H. Godoer Research Policy 29 (2000) 1033–1046
term, basic and strategic R & D, organized in innova-
tion regimes.
The rapid technological development and innova-
tion diffusion processes in telecommunications ap-
parently contradict numerous conventional assump-
tions in explaining technological development. Ac-
cording to the logic of installed base ŽFarrell and
Saloner, 1986., this predicts technological conser-
vatism Ž «lock-in». as a network expands. However,
in witnessing the rapid diffusion and development in
telecommunications, this does not seem to occur,
which makes understanding this and the dynamics of
network externalities more complex and challenging.
Until recently Ž1998., the telecom sector in most
OECD countries has been heavily regulated, usually
by means of national, state-owned PTT monopolies
in telecom service provision and operations. Accord-
ing to conventional wisdom and market liberalistic
ideologies, monopolies are antithetical to rapid tech-
nological development and general progress because,
lacking competition in markets, these generally fos-
ter bureaucratic, inefficient and omnipotent status
quo. Proponents of market liberalism claim Žcounter-
factually. that the development of the telecommuni-
cations sector would have been even more dynamic
in the absence of monopolies, because these are
insensitive and unresponsive to its customers and
their demands. Although status quo and inefficiency
are salient characteristics of some types of
monopolies, this does not explain the variety in
quality, degree of innovation and technology diffu-
sion and dynamism one may observe when compar-
ing the various national telecom sectors. As evident
in OECD statistics ŽOECD, 1999., 1 one may ob-
serve nations with a high degree of regulation Žuntil
recently., such as in the Nordic countries, having a
high rate of telecom penetration at lower costs than
countries with more liberalized markets, such as the
UK and USA, which liberalized their telecom sectors
for more than a decade ago. Although it is difficult,
if not impossible, to find satisfactory quantitative
measurements of the rate of change and progress in
1
Cf. OECD’s Communications Outlook 1999, Figs. 7.4 and 7.5
Žp. 165. on ‘‘tariff baskets’’ and Table 4.2 Žp. 74., which gives
scores on ‘‘Telecommunication access paths per 100 inhabitants’’.
telecommunications which may be compared to other
sectors, the evolution of telecommunications has been
rapid and dynamic, in spite of the heavy regulations
that dominate many parts of the sector and in spite of
the installed base logic. In comparison, other sectors
of industry where technological development is
mainly incremental seem to lack or have only weak
equivalents of the innovation regimes found in
telecommunications. Thus, for innovation theory and
analysis, which is the main focus of this article, the
telecommunications sector offers a focal point for
further refinement of explanations, in particular of
how and why radical innovations may be created,
and how these contribute to rapid technological de-
velopment.
Following Krasner Ž1985, p. 2., an innovation
regime may be defined as principles, norms and
ideology, rules and decision-making procedures
forming actors’ expectations and actions in terms of
the future development of a technology, in this case,
technology relevant for the future development of
telecommunications. As will be explained further
below ŽSection 3., the innovation regimes of
telecommunications were constituted in various in-
ternational cooperative organizations, mainly in stan-
dards setting, i.e., technology oriented social net-
works with a substantial participation of researchers
and management from the R & D institutes in the
industry. A radical innovation, in contrast to an
incremental innovation, may be defined as a novel
category, species or class of technological deviceŽs.,
system or processrsolution, which represents a dis-
continuity compared to predecessors Žif such exists.,
such as what is seen in comparing Samuel Morse’s
telegraphic device from 1835 with the communica-
tion computers used for today’s e-mail. The term
«radical innovations» will be discussed further be-
low. However, the conceptual framework of innova-
tion regimes allows the explanation of the creation of
radical innovations as a rational outcome of strategy
goals — at least this may be seen in the telecom
sector. Understanding this may be important for
R & D policy in general: By fostering a radical R & D
strategy and sustained R & D effort, it is possible
Ži.e., realistic. for a firm, or a sector or nation to
have radical innovations as a policy goal. In the
Zeitgeist of the 1980s and 1990s, what may be
termed as a market-oriented R & D goÕernance mod-
 H. Godoer Research Policy 29 (2000) 1033–1046
els have gained a dominant position in R & D policy
— and this is supported by current innovation theo-
ries, as evident by the paradigmatic status of the
‘‘chain-linked’’ innovation model Žcf. Kline and
Rosenberg, 1986.. However, markets are inherently
conservative and reactive as sources of innovations
because these usually do not have a rhetoric that is
capable of articulating demand for non-existent, radi-
cal innovations. Even if efficient and creative in
matching supply and demand, markets are usually
incapable of organizing the risky, long-term and
complex R & D processes needed for creating radical
innovations Žcf. Chesbrough and Teece, 1996, p. 73.,
as evident in the notion of market failures ŽMartin et
al., 1996.. An implication of explaining radical inno-
vations as an outcome of serendipity or chance, or as
a process that is so complex that it is difficult to
understand ŽRycroft and Kash, 1994., may be that a
policy or strategy aimed at creating radical innova-
tions is a contradiction in terms, i.e., a fallacy or an
impossibility. However, the structural changes in
most industries Žglobalization, international competi-
tion, deregulation, liberalization, etc.. are putting
high demands on increased capabilities for firms and
nations to innovate. Combined with serious social
and environmental issues that also require a broad
range of radical solutions or innovations, an inade-
quate theoretical understanding of how radical, R &
D-based innovations may be created is becoming
serious.
2. The problem of explaining radical innovations
Numerous radical technological innovations intro-
duced during the past decade have created new
telecommunications systems, services andror radi-
cally modernized old ones, such as the telephone
network. Following current technological innovation
theories, radical innovations may inaugurate the
emergence of new technological paradigms, initiat-
ing developmental patterns variously termed as
‘‘technological trajectories’’ ŽDosi, 1988., ‘‘techno-
logical guideposts and avenues’’ ŽSahal, 1985. or
‘‘technological regime’’ ŽNelson and Winter, 1982.,
or ‘‘basic design’’ ŽRosenberg, 1982., ‘‘pattern of
evolution’’ ŽHughes, 1987.. The developmental pat-
1035
tern of a technological trajectory is well understood
and comparatively easy to observe. However, ex-
plaining how and why new technological paradigms
based on radical innovations emerge is not so clear
in innovation theory. This is not only an unresolved
theoretical problem; it also involves conceptual con-
siderations related to the definition of radical innova-
tions. Both aspects will be discussed below.
Dosi Ž1988, p. 1136. attributes new technological
paradigms to science, claiming a direct dependence
and link between major technological paradigms and
scientific breakthroughs. Sahal Ž1985. is more ex-
plicit: The emergence of what he calls systems inno-
Õations Ži.e., radical innovations. is attributed to
chance, as opposed to necessity. The latter explains
the logic of a particular developmental pattern, fol-
lowing his notion of a technological guidepost.
However, chance, as the term implies, is different,
equating the emergence of radical innovation to a
stochastic process, analogous to mutation within
bio-evolutionary theory. An elaboration of the latter
is provided by Mokyr, who employs the term
serendipity, claiming that: ‘‘Some cultural, scien-
tific, or technological ideas catch on because in some
way they suit the needs of society, in much the same
way as some mutations are retained by natural selec-
tion for perpetuation’’ ŽMokyr, 1991, p. 276.. Be-
cause of the high R & D intensity of the sector,
Rosenberg ŽRosenberg, 1994, pp. 216–217., in his
analysis of telecommunications, claims that in spite
of strong path-dependencies and ‘‘systemness’’, the
future course of technological development is unpre-
dictable. Thus, Rosenberg’s explanation contains an
element similar to Dosi’s.
In a broader perspective, one may claim that an
antinomy occupies explanations of technological in-
novations in innovation theory; two different and
inherently contradictory ‘‘laws’’ are utilized for ex-
plaining innovations: Radical innovations, which are
explained as a result of chance, serendipity, genius,
science, etc, making the future unpredictable, partic-
ularly in sectors which have a high R & D-intensity.
Opposing this, incremental innovations are explained
in terms of necessity, making it possible for an
analyst such as Dosi to claim that within a techno-
logical trajectory, innovations are ‘‘ . . . strongly se-
lectiÕe, finalized in quite precise directions, cumula-
tiÕe in the acquisition of problem-solving capabili-
1036 H. Godoer Research Policy 29 (2000) 1033–1046
ties’’ ŽDosi, 1988, p. 1128 — emphasis by Dosi..
Furthermore, Dosi claims that developments within a
trajectory have elements of predictability as evident
in technological forecasting. Following this, a radical
innovation which is created without serendipity is a
contradiction in terms, because an innovation which
is planned or anticipated, i.e., not created by
serendipity, is not radical. In this, «radical» is equated
with surprise and spontaneousness. However, this
logic is flawed, because it equates how an innova-
tion is created Žserendipity. with what is created,
i.e., the content or substance, which in a radical
innovation represents a discontinuity compared to
predecessors, if such exist. As evident in the litera-
ture Žcf. Merton, 1968, pp. 157–162; Roberts, 1989;
Andel, 1994; Campanario, 1996., serendipity is pri-
marily a type of process for creating new knowledge,
thus having status similar to inductive or deductive
methods. This explains why serendipity may be ob-
served in a broad range of discoveries and innova-
tions — in incremental technological innovations as
in many other types of discoveries and innovations.
In terms of the content of an innovation, serendipity
is an epiphenomenon, regardless of the profoundness
or triviality of the discovery or innovation created.
Still, the discussion of serendipity as a pre-
requisite of radical innovations is fertile because
attention is also given to the definition of radical
innovation. Earlier, a radical innovation was defined
as a novel category, specie or class of technological
deviceŽs., system or processrsolution which repre-
sents a discontinuity compared to predecessors, if
such exist. The critical problem is, of course, to
determine what constitutes a discontinuity, i.e., crite-
ria in analysis — and who undertakes this analysis
or classification. The abundance of definitions found
in contemporary innovation literature reflects the
somewhat vague, qualitative aspects involved in the
theoretical understanding of what constitutes a radi-
cal innovation. Furthermore, although definitions
may be analytically distinct Že.g.,: the dichotomy of
«radical» vs. «incremental»., forcing the complexi-
ties of the real world into these categories and
definitions may pose difficulties. Thus, one analyst
ŽDurand, 1992. resolves this problem by introducing
a continuum for categorizing innovations, with the
value «radical» in one extreme and «incremental» at
the other, with an intermediary category termed «mi-
cro radical». This gives the analyst a more tuned
analytical apparatus for categorizing various innova-
tions. However, in telecommunications, it is obvious
that introduction of digital switching technology and
packet switching, digital mobile radio communica-
tion, satellite communication, optical fiber networks,
etc. qualify as radical technological innovations. Prior
to their development and diffusion in the 1970s and
1980s, these technologies were non-existent, as
equipment and systems. In addition to this, their
introduction required massive reeducation of operat-
ing personnel Žpast skills and knowledge became
irrelevant., new modes of organization, new skills
and perceptions, etc. These new technologies also
enabled the development and introduction of a broad
range of new services and applications — and com-
plementary innovations. Thus, in terms of technol-
ogy and internal organization as criteria, one may
classify these innovations as radical, as done in this
article. However, for the general public outside the
«black box» of telecommunication technology, this
may not be obvious. In their perception, telephony
has been stable for more than a century; «digital» is
something mystical or trivial inside the black box.
For them, telefax or Internet may represent some-
thing radical because these services represent novel-
ties Ž «new to the world». and discontinuities com-
pared to previous media for communication of text
and information. Thus, who undertakes an analysis,
whether the analyst is inside or outside the black
box, is also a factor in the classification of an
innovation. In an analysis of technological innova-
tion, being inside the black box provides an essential
perspective.
As will be evident, the analysis of radical innova-
tions in the telecom sector will show that these to a
large extent may be explained in terms of an interac-
tion between R & D and the innovation regimes of
the sector, the latter providing planning, will and
leadership to the creation of innovations, some of
which became radical. Thus, the antinomy based on
a distinction between radical and incremental innova-
tions becomes unsatisfactory. The essential theoreti-
cal problem is how to explain the emergence of
radical innovations and the simultaneous introduc-
tion of a new technological paradigm. In discussing
this as a weakness of the Nelson–Winter–Dosi-
model, van den Belt and Rip Žvan den Belt and Rip,
 H. Godoer Research Policy 29 (2000) 1033–1046
1987. suggest that the problem may be resolved by a
further extension of Thomas S. Kuhn’s concepts of
an exemplar Ži.e., radical innovation. in combination
with a cultural matrix: This creates a new technolog-
ical paradigm and subsequent dynamics of a devel-
opmental trajectory. Van den Belt and Rip’s point is
that this ‘‘conceptual reformulation’’ allows the in-
troduction of intentionality and expectation Žhuman
will. in explaining the creation of a new technologi-
cal paradigm. As an explanatory strategy, it has the
advantage of explaining technological development
as distinct from bio-evolutionary development. How-
ever, even though the notion of an ‘‘exemplar’’ may
be clear, ‘‘cultural matrix’’ needs to be specified,
because it retains some of the vagueness in Dosi’s
attribution of novel technological paradigms to ‘‘sci-
ence’’. A lead to this is provided by Chesbrough and
Teece when they observe that: «Because so many
important innovations are systemic, decentralization
wi.e., marketsx without strategic leverage or coordina-
tion is exactly the wrong organizational strategy. In
most cases, only a large company will have the scale
and scope to coordinate complementary innovations»
ŽChesbrough and Teece, 1996, p. 73.. Basing this
claim on the analysis of innovations in the computer
industry — which has increasing similarity and inte-
gration with the telecom industry — this points to
organizational and strategic factors, in particular
leadership, direction and coordination of complexity
as salient features in creation of large, radical inno-
vations. Somewhat similar, Rycroft and Kash Ž1994,
p. 623. advocate the need for a conceptual frame-
work for explaining how complex technologies are
developed as an interaction between Ža. technology,
Žb. the sociotechnical system and networks that de-
velop technologies Že.g., R & D., and Žc. metaphori-
cal «holding companies» Že.g., the «military-in-
dustry complex». for major areas of technology and
related policy. Even though Rosenberg Ž1994, p.
205. claims that the future of telecommunications is
unpredictable because of the sector’s high R & D
intensity, he points in the same direction by advocat-
ing that one should appreciate the role of govern-
ment policy and systemness in telecommunications,
i.e., the organizational factors. Thus, organizational
and leadershiprdirection factors in addition to a
strong technological impetus have been given recog-
nition by some innovation analysts as being a critical
1037
component in what others prefer to call «cultural
matrix». The conceptual framework of innovation
regimes will attempt to make these factors more
specific.
3. The innovation regimes in telecommunications
The concept of innoÕation regime was developed
in a study ŽGodoe, 1995. in order to explain the
innovations found in analyzing the R & D-based in-
novations in telecommunications. Based on an ex-
post R & D portfolio analysis of a Norwegian tele-
com R & D organization during a 10-year period
Ž1980–1990., the study identified R & D results which
subsequently contributed to the creation of innova-
tions in terms of telecom systems, services andror
components, equipment and techniques. All these
innovations were created as results of an intimate
and prolonged interaction with the international net-
works and organizations in the telecommunications
sector. The conceptual framework of innovation
regimes was developed in order to explain this. In
mapping how the innovations evolved, a salient fea-
ture was how the R & D-activities were undertaken as
an extensive cooperation, especially within the
framework of international standardization bodies,
but also with the telecommunication equipment in-
dustry, universities, consultancies, other research in-
stitutes, etc. However, participation in the activities
of some of the international standardization bodies
was significant for numerous reasons. The study
confirmed what numerous analysts have observed: In
the development of telecommunications, technical
standardization has a fundamental, strategic role Žcf.
Mansell, 1990, 1993; Rosenberg, 1994; Hawkins,
1996.. Of the standardization bodies, the most im-
portant were the following.
Ø NORDTEL, a formalized institution for coop-
eration among the Nordic telecommunication net-
work operators. The successful cellular mobile com-
munication system NMT, which was inaugurated in
1981, was a direct result of the work initiated by
NORDTEL. The subsequent development of the
GSM mobile communication system was also sup-
ported by NORDTEL.
1038 H. Godoer Research Policy 29 (2000) 1033–1046
Ø CEPT, 2 together with EBU 3 and ESA 4 each
had a complex system of technology committees and
working groups aimed at technological standards
setting and development of pan-European telecom-
munication systems and services.
Ø ITU, 5 in particular groups working in ITU’s
sub-organizations CCITT 6 and CCIR 7 were impor-
tant in the creation of many new communication
systems and related standards. Similar to CEPT and
NORDTEL, these organizations provided mecha-
nisms and a framework for R & D collaboration. In
addition to ITU, researchers participated in the activ-
ities of COST and ISO.
In these bodies, telecommunication researchers
established contacts with colleagues from sister orga-
nizations, which provided a formal framework for
extensive interaction among people dedicated to a
common cause: creation of novel technological solu-
tions and networks. As meetings in these bodies
often were held on rotation basis among the partici-
pants, researchers had ample opportunities to become
well informed of the R & D activities undertaken in
laboratories at sister organizations within their spe-
cial field of research. Thus, these networks also
constituted strong professional networks with a global
extension Žcf. Hawkins, 1996, p. 182; MacLean,
1999..
However, the most important aspect of this was
their focus of work: Standardization and harmoniza-
tion of future technological solutions, i.e., solutions
that initially did not yet exist, but were or became
‘anticipated’. This may be illustrated: The work on
the concept which later became ISDN, began within
2
CEPT sCommite´ Europeene des Postes et Telecommunica-
tiones. CEPT’s work with telecommunication standardization was
closed down in 1989, substituted by ETSI ŽEuropean Telecommu-
nication Standardization Institute., with HQ in Cannes, France.
3
EBUs European Broadcasting Union.
4
ESA s European Space Agency.
5
ITUs International Telecommunications Union is an UN or-
ganization based in Geneva. During the 1990s, ITU has been
reorganized and its sub-organizations CCITT and CCIR Žcf. next
notes. do not exist any longer. MacLean Ž1999. gives an account
of the present, reorganized ITU; Hawkins Ž1996, p. 179. explains
how this development evolved.
6
CCITT s International Consultative Committee on Telephony
and Telegraphy.
7
CCIR s International Radio Consultative Committee.
CCITT in the latter part of the 1960s. In 1980, the
basic, general standard for ISDN was sanctioned,
initiating work on more detailed technical levels.
ISDN has just recently been introduced as a service.
Similarly with GSM: The concept emerged gradually
from 1979r1980, as a scenario of the ‘‘next genera-
tion’’ of a public, land mobile communication sys-
tem. Formally, work with GSM 8 in CEPT began in
1982–1983, and the memorandum of understanding,
in which most European network operators agreed to
construct this system, was signed in 1986. After this,
the detailed engineering and specification of the
system and related equipment began, based on the
general system architecture created earlier.
Thus, the basic Žstylized and simplified. princi-
ples consist of the following elements: First, a sce-
nario or vision based on a technological opportunity
or potential is put forward, most probably informally
through the existing channels in the network. Then
various elements of this scenario are explored in
R & D projects, in order to establish the realism
andror requirements for further development of the
concept. Then, perhaps in parallel, various drafts of a
formal system concept are presented and negotiated
in one of the bodies named above, in order to initiate
a standardization process. If an agreement on this is
made, further work is carried out, in order to create
technical specifications of the standard. Following
this, the required technological components, software
and equipment are created or searched for, tested,
field trails are held, etc. Finally, and gradually, the
new service and networks or equipment Žmanufac-
tured by the industry according to specifications. are
launched on the markets. If successful, it becomes an
innovation as it initiates a rapid diffusion and expan-
sion process.
The concept of a regime, as defined by Krasner
Ž1985., was initially developed to characterize and
explain salient features and dynamics of international
alliances, such as formalized in NATO, OPEC, etc.
8
«GSM» as an acronym is now euphemistically explained to
mean «Global System for Mobile communication». Originally,
this acronym was an abbreviation of the French name «Groupe
Special de Mobilite»´ — a working group established in CEPT for
this specific task.
 H. Godoer Research Policy 29 (2000) 1033–1046
Adopting the concept of regimes for explaining how
innovations in telecommunications are created may
be fertile because the international cooperative bod-
ies, such as CEPT and ITU, provided a mechanism
for making decisions on existing and future Žoften
non-existent. telecommunication systems and tech-
nological solutions. The individual actors in this,
although representing national telecom operators,
were homogenous in terms of a number of critical
factors that normally facilitate decision-making and
consensus creation, typical of close-knit peer groups
Žcf. Mansell, 1990, p. 504; MacLean, 1999, p. 151..
The homogeneity could be observed in factors such
as educational background and professional experi-
ence Žengineering, R & D in telecom high tech devel-
opment, etc.., high status and influential positions in
their organizations, R & D interests, social values,
norms and ideals regarding the benefit of technologi-
cal development, and, not the least, even age and
gender Žall male.. In a broad sense, no «language
barriers» existed among the individual actors, i.e., a
high degree of intersubjectivity in technological val-
ues and related ideology Žcf. Hawkins, 1996, p. 182..
As illustrated in the GSM-case earlier, CEPT pro-
vided the institutional structure and decision making
mechanism, making it possible for the actors through
negotiation to reach agreement on creating the GSM
system. The formal commitment for constructing the
GSM system was made in a MoU signed by the
telecom operating companies in 1986, however,
reaching this stage and — more significant — ful-
filling the future obligations of the MoU would not
have been possible without credibility and trust from
all the parties. The «glue» in this was created through
the interaction and decisions made within the GSM
working group in CEPT, and after the MoU was
signed in 1986 — in the GSM consortium which
was established in Paris with the object of making
detailed design of the GSM. This work was under-
taken by R & D personnel and engineers form the
R & D organizations of the signatories of the MoU.
Thus, a broad consensus on an agenda combined
with parallel R & D agendas and institutional struc-
ture and decision making mechanisms constitute a
regime, which becomes an innovation regime be-
cause of its intention of creating a future mobile
telecommunication system ŽGSM. based on as yet
non-existent technological system and solutions —
1039
and subsequent execution and implementation of
these agreements.
Even if minuscule, by participating in these sys-
tems, small R & D organizations such as the Norwe-
gian could be a full-fledged member of systems that
were creating innovations as described above. At the
same time, its own R & D agenda was shaped by the
activities in these bodies, making it possible to con-
tribute to the process. Needless to say, participation
in these activities required political skills, making the
term technological diplomacy Žcf. Hawkins, 1996, p.
168. apt, because in the creation Žshaping. of stan-
dards for future systems such as GSM, based on
non-existent technologies, creating and designing so-
lutions involved negotiations. However, participation
gave the researchers access to the latest works in
their sister institutes and organizations and their part-
ners in the telecom manufacturing industry. This
kind of reciprocal process was seen in the GSM
mobile communication system development: In this,
the Norwegian R & D organization’s contribution was
solution to the digital radio communication part of
the system architecture, based on R & D undertaken
in collaboration with another Norwegian R & D insti-
tute. By this, the researchers were able to ‘‘shape’’
GSM in a direction believed advantageous to its
owner, the Norwegian telecommunications operating
company Žlarge investments were saved by this solu-
tion compared to competing, rival solutions.. 9
4. Innovation regimes as a concept
The initial reason for constructing the term «in-
novation regimes» as a conceptual framework was in
order to improve explanation of how innovations in
telecom are created, particularly explanation of its
radical innovations. An alternative explanatory ap-
proach could be to employ the concepts and explana-
tions provided by the notion of «national systems of
innovation» ŽNSI.. The organizational and institu-
9
The story of GSM became complex because the EC Commis-
sion ‘‘discovered’’ that GSM could serve as a leveraged liberal-
ization of the telecommunications monopolies of Europe. This
aspect and its impacts on the GSM development after 1987 will
not be analyzed in this article. However, Hawkins Ž1996, p. 176.
provides an explanation of this.
1040 H. Godoer Research Policy 29 (2000) 1033–1046
tional mechanisms involved in technology standards
setting and R & D cooperation in the telecom sector
have elements or aspects which are isomorphic to
that of a ‘‘national innovation systems’’ Žcf. Lund-
vall, 1988, 1993; Nelson and Rosenberg, 1993; Niosi
et al., 1993.. In Petrella Ž1992., this possibility of a
similarity is explored as the idea of «globalization of
technobergs», as an emerging trend that will change
NSI. However, as evident in the analysis of McK-
elvey Ž1991. analysis, there are no uniform defini-
tions of the concept of NSI; the range of interpreta-
tions of what constitutes a NSI is broad. Even if
most of the proponents of NSI recognize the in-
creased importance of internationalization and glob-
alization as a factor influencing NSI, the main em-
phasis and focus of analysis is on the nation and
individual national characteristics Žcf. McKelvey,
1991, pp. 118–120; Nelson, 1993, pp. 17–18.. Thus,
Niosi et al. Ž1993, p. 212. define NSI as « . . . a
system of interacting private and public firms, w . . . x
universities, and government agencies aiming at the
production of science and technology within national
borders». They justify this position by stating that
« . . . it may be worth remembering that most R & D
efforts of any industrial country takes place within
its national borders, and that multinational corpora-
tions only make a small share of their R & D activi-
ties» Žp. 222.. Following a NSI perspective with a
focus on the nation, the strategic role and influence
of international cooperation, which was important in
the telecom sector, could be overlooked or underesti-
mated. In spite of some structural similarities, an
innovation regime is something more and different
from NSI: It is a mechanism which decides what
kind of communication systems and technology to
develop and create, in adÕance of its existence,
based on scenarios of the future. Thus, it may create
new technological paradigms through a development
process. A possible analogue to this for the automo-
bile industry would be if they, within an international
cooperative mechanism, made an agreement on cre-
ating a radically new transportation system, based on
novel and still non-existent technological solutions
which they agreed to create in the future. Thus, Niosi
et al.’s assumption that because innovative activities
are undertaken within national boundaries, creation
of innovations may be adequately explained in terms
of systemic elements within the nation, is not satis-
factory for innovations in telecommunications, i.e.,
in so far as our earth is divided into nations which
have systems that undertake the actual work in creat-
ing innovations Že.g., R & D., this is only a neces-
sary, not a sufficient element for explaining innova-
tions in telecommunications.
Whereas a focus on the nation and its system
level may be inadequate for the analysis of innova-
tions in telecommunications, the approaches offered
by actor network theory Žcf. Latour, 1987. with its
particularistic focus may provide interesting insights
on how an innovation emerges, through its emphasis
of the details of each stage in a developmental
process. However, in this focus on the individual
actors Žboth human and non-humans., the institu-
tional «glue» characteristic of an regime may be
difficult to observe and explain. Thus, following the
methodology of actor network theory could render
interesting accounts of how an innovation evolved,
which in sum may provide a foundation for explana-
tions, possibly giving support to the concept of
innovation regimes.
The global innovation system which constitute the
innovation regimes in telecom may be of a type that
van den Belt and Rip Žvan den Belt and Rip, 1987.
term a ‘‘cultural matrix’’ which creates an ‘‘exem-
plar’’, i.e., new technological paradigms. However,
its formalized institutional characteristics makes the
term ‘‘innovation regime’’ more apt and precise,
because the sector, due to its innovation regimes,
was Žuntil recently. capable of continuously creating
a broad range of innovations, many of these radical
innovations. Furthermore, these innovations were
outcomes of intentions: These were made on pur-
pose — for a purpose, and not as results of serendip-
ity. Thus, their degree of success, their ability to
qualify as innovations, is also a measurement of the
rationality of the innovation regime. In contrast, the
idea of radical innovations being created by a ran-
dom mutation-like process implied in the analogy to
bio-evolutionary theory is not satisfactory for
telecommunications. Instead, it is the interactions
between the R & D communities of the sector and the
global or regional innovation regimes described
above, which explains how the innovation regimes
are constituted. In addition, the recognition of strong
network externalities which may be obtained by
making future systems and services compatible
 H. Godoer Research Policy 29 (2000) 1033–1046 1041

Fig. 1. Outline of innovation regimes in telecommunications.

1042 H. Godoer Research Policy 29 (2000) 1033–1046
Ž‘‘open’’ and ‘‘universal’’. also motivates these
regimes, i.e., the actors are generally interested in
finding these kind of solutions. In telecommunica-
tions, which is fundamentally a technical extension
of social and cultural interactions and networks, the
creation of compatibility has been perceived as
mandatory: The more nodes a network or system
may access, the more valuable each single node will
become. However, this factor favours technological
stability. Thus, the challenge of telecom’s innovation
regimes has been to create new technologies which
are symbiotic or complementary to the old ones,
which in turn explains why the innovations often
appear as innocuous and smooth, incremental transi-
tions from the old, as illustrated by the introduction
of digital technology in existing telephone networks.
This point will be explored further below, in the
discussion of innovations in large technological sys-
tems.
According to Sahal Ž1985., the different rate and
degree of innovations observed in various sectors
may be explained in terms of its topology of innoÕa-
tion, 10 more so than any demand-pullrtechnology-
push dichotomy. Extending this to telecommunica-
tions, one could claim that the sector had a topology
of innovation which was favourable to innovations,
with its unique innovation regimes providing a dy-
namic. However, by employing the conceptual
framework of innovation regimes, a plausible expla-
nation may be given as to why some sectors have a
particular topography.
Generically, telecommunications is a large tech-
nological system Ž‘‘the world’s largest machine’’.,
with the inherent characteristics described by Hughes
Ž1987.. Hughes developed his explanations based on
an empirical material from the early stage of electri-
fication. According to Hughes, radical innovations in
large technological systems are antithetical, violating
the conservatism inherent in these as they grow and
10
In Sahal’s explanation, some sectors or industries, for various
reasons, are more dynamic than others in terms of technological
progress. Thus, if depicted as a ball rolling down a sloping
landscape, the pace and direction of technological progress will
depend on the pattern on the ground, thus the term «topology of
innovation». According to Sahal, some industries Žlandscapes,
topologies. may be characterized as having steep valleys, in which
the ball Žtechnological progress. rolls fast, etc.
gain momentum. Consequently, the innovations and
rapid technological development in the telecom sec-
tor should not occur. Joerges Ž1988. has resolved this
problem by making a distinction between large tech-
nological networks ŽLTN. and large technological
programs ŽLTP., the latter defined as ‘‘ . . . prein-
frastructural systems oriented towards some quasi-
experimental set of technical, economic or political
goals’’ ŽJoerges, 1988, p. 28.. LTP was coined to
distinguish the uniqueness of large scale efforts such
as the Aswan dam, the Chunnel and EU’s RACE-
program in telecommunications R & D. The fertility
of the concept of LTP is that it is possible to
elaborate the innovation regimes of telecommunica-
tions as extending over both LTP and LTN of
telecommunications: Whereas the LTN is properly
explained in terms of diffusion related innovation
dynamics Ži.e., predominantly incremental innova-
tions typical of large technological systems., the
dynamics of LTP are dominated by R & D and tech-
nology drive. If successful, a LTP will gradually
evolve into a LTN. The uniqueness of the telecom-
munication sector apparently is its ability to initiate
and create new LTPs and develop these into LTNs,
which in turn explains why the technological devel-
opment in the sector is rapid, in spite of being the
world’s ‘‘largest machine’’. This is conceptually il-
lustrated below, in Fig. 1.
5. Present day (late 1990s) innovation regimes
Due to liberalization and deregulation, many of
the cooperative mechanisms that were active in the
1970s and 1980s have either been restructured, as
with ITU and CEPT, or deteriorated. The latter is
evident in the Nordic countries, where the PTT-
owned telecom operators until early 1990s cooper-
ated extensively in the development of mobile com-
munications, cf. the development of NMT and GSM.
Since then, the cooperation has been abandoned, due
to the introduction of competition and fear of anti-
trust legislation, which would now classify this kind
of cooperation as collusion. Because of the general
importance of compatibility in communications, the
role and status of standard-setting bodies remains
important. However, now these interests are main-
tained largely by governmental regulatory bodies
 H. Godoer Research Policy 29 (2000) 1033–1046
outside the operational and R & D environment of the
telecom companies. Thus, the direct coupling which
linked the innovation regimes to the actors of the
sector which was salient in the past has become
weaker. Still, one may observe processes and net-
works, often organized as international, industrial
consortia Žcf. Hawkins, 1999., which may qualify as
innovation regimes in the «classic» sense, as evident
in the activities of the Internet Society 11 or the
TINA-C ŽTelecommunications Information Network-
ing Architecture Consortium., both having extensive
international participation, however, with loci in
USA. The perspectives of these activities are ori-
ented to the future creation of novel communication
systems, such as the future Internet II. Typically, as
the origin of Internet itself, this as an innovation
regime has a foundation outside the mainstream
telecommunications operators environment with close
ties to computer science at universities, which may
explain why it still exists. In TINA-C, many of the
participants are computer equipment and system
manufacturers, in addition to representatives from
R & D communities of telecom operating companies,
under the leadership of Belcore, one of the largest
R & D organizations in the world, with close ties to
the US Bell system. Still, the loci of innovation
regimes have shifted as the classic ones have become
diluted or deteriorated, due to structural changes and
changes in the regulatory environment in the sector
as a whole.
This process is reinforced by internal structural
changes in the R & D communities that formerly
were active in the innovation regimes: As market-
oriented R & D governance models are introduced,
11
In the development of the Internet, the system of «RFC»
Žrequest for comments. became institutionalized as the procedure
by which all the participants working with developing the Internet
were able to agree upon various technical aspects of the standards
and solutions, as these evolved. According to Hafner and Lyon
Ž1996, p. 145., the RFC no. 1 was sent out to the participants in
April 1969. By April 1999, RFC no. 2583 had been submitted.
Publication of a RFC usually marks the conclusion of a task or
project undertaken in a technical committee within the Internet
system. Thus, a RFC in terms of work represents the tip of an
iceberg. A RFC has status similar to ITUs «recommendations»,
i.e., a semi-legal technical code. Cf. http:rrwww.cis.ohio-
state.edurhtbinrrfcrINDEX for a list of all the RFCs related to
Internet.
1043
clients in business units in telecom operating compa-
nies hesitate to give priority and support to activities
involving cooperation in international organizations
and networks. As this may imply close ties with
competing operators, clients express doubts if this is
a viable strategy for securing future, proprietary
advantage, which is the main reason why they want
to pay for R & D. Thus, one may predict that in the
future, the impetus for innovation will originate less
often in the sector itself than in the past, creating —
almost by default — what may seem as a «lock-in»,
which is typical of technological evolution in most
industries.
6. Implications for innovation theory
The theoretical antinomy in contemporary innova-
tion theory, in which radical innovations and the
introduction of novel technological paradigms are
explained by various forms of serendipity and chance,
may be an important reason why current innovation
models only have restricted validity in explaining
innovations in the telecommunications sector. As
seen, many of these were radical innovations that
emerged from the unique innovation regimes which
governed technological development in telecommu-
nications.
Furthermore, instead of serendipity, the telecom-
munications sector’s innovation regimes create radi-
cal innovations and associated novel technological
paradigms as the result of intention: Radical innova-
tions were created on purpose — for a purpose.
Thus, radical innovations are rational outcomes of
the innovation regime. However, this does not ex-
clude risks and uncertainties, as evident by failures
in telecommunications, such as teletex and videotex
Žoutside France.. Nor does it exclude inertia or the
power of ‘‘old’’ technological paradigms in the cre-
ation of new, as evident in the dominant position of
circuit switching technology, in spite of new, more
efficient technologies emerging. Within and between
innovation regimes, there may also be considerable
rivalry and competition between various technologi-
cal solutions. This was seen during the 1980s, as
microwave radio link technology tried to ‘‘beat’’ the
influx of optical fibers, or the initial resistance and
scepticism of many telecom operating companies to
the Internet — and more generally to packet switch-
1044 H. Godoer Research Policy 29 (2000) 1033–1046
ing. Finally, appreciation should be made of the
extreme size, complexity and political–economic in-
terests involved in the telecommunication sector.
Thus, the conceptual framework of an innovation
regime would need more research in order to estab-
lish the validity of the claim that it is possible to
create radical innovations on purpose — for a pur-
pose. As such, it may be considered an ad hoc
explanation having validity for explaining innova-
tions in telecommunications during a short period of
time, as this is observed through the peephole pre-
sented in this article. The magnitude of making this
claim generally valid is clearly beyond the scope of
this article, however, some points in this direction
could be made.
Following the claims of this article, one logical
hypothesis would be that in the absence of innova-
tion regimes, one may predict a low rate of innova-
tion. As a research project, work with this could be
simplified by analysis of a few sectors that —
similar to telecommunications — have a high R & D
intensity, such as in pharmaceutical and biotechno-
logical industries. By tracing the sources of innova-
tions in these sectors — and the relationship be-
tween these and the R & D efforts undertaken by the
industries, a strong correlation and interdependence
would undoubtedly emerge, as evident in many stud-
ies ŽSwann, 1988; Taggart, 1993; Bierly and
Chakrabarti, 1996.. However, due to structural fac-
tors such as high level of market competition and
inherent characteristics of the innovations them-
selves, the type of cooperation, organization and
leadership found in the innovation regimes of the
telecommunications sector would probably be weak
or absent in these sectors. Still, one would have to
analyze the significance of large scale cooperative
efforts such as the Human Genome project, the « war
against AIDS», etc., or the large, global scientific
communities and networks active in these industries
in terms of being de facto innovation regimes. Based
on studies of the computer industry, Chesbrough and
Teece Ž1996. have pointed to mechanisms which are
important for creating what they term systemic inno-
vations. Hawkins Ž1999. has made similar observa-
tions with regard to the role of international ICT
R & D consortia. Thus, an analysis of these could
render insights that support the conceptual frame-
work of innovation regimes.
7. Policy implications
As shown by Mansfield Ž1991. and Pavitt Ž1991.,
the complexity and temporal dimension makes the
relationship between fundamental research and inno-
vations difficult to understand, possibly contributing
to misconceptions and stereotypical ideas of the
‘‘ivory tower’’ of R & D. Thus, the lack of theoreti-
cal understanding reflected in current innovation the-
ories that attribute radical innovations to various
form of serendipity aggravates the information prob-
lem which confronts policy-making: If radical inno-
vations are outcomes of unpredictable ‘‘mutations’’,
it is difficult to justify allocations to these purposes.
However, by understanding the role of a strong
innovation regime, this may possibly serve as a
model for making R & D and technology policy more
rational and meaningful.
In telecommunications, as in many other sectors
dependent on technology, R & D policy is increas-
ingly being directed at short-term objectives, to-
wards incremental improvements and the adjustment
of existing services and products. Liberalization of
the telecom markets and regulations favouring in-
creased competition explains this. Simultaneously,
what may be termed a market-oriented R & D gover-
nance model has been introduced for many reasons:
To make R & D more relevant, efficient and sensitive
to the needs of users and markets Žcf. Fransman,
1992.. Furthermore, some believe that difficult man-
agerial information problems are reduced, if one may
assume that recipients, who also pay for the R & D,
will be the most qualified to judge how much and
what kind of R & D is needed. In advocating the
market-oriented R & D governance model, many de-
cision-takers and policy-makers express opinions that
the ‘‘old style’’ way of financing and managing
R & D favoured inefficiency and irrelevance, in the
guise of ‘‘long-term’’ research. Noll Ž1991., al-
though sympathetic to R & D, is typical of this atti-
tude when he claims that AT & T, through its Bell
Labs, is using too much money on R & D, making
this a highly risky allocation of corporate resources.
However, he gives credit to Bell Labs’ past creativity
and innovativeness, advocating the introduction of a
national ‘‘telecommunications R & D tax’’ to keep up
the kind of work Bell Labs traditionally has under-
taken, as a national, public good.
 H. Godoer Research Policy 29 (2000) 1033–1046
Thus, imperatives of the markets are called upon
to redirect the R & D of telecom. An extreme case of
this is seen in British Telecom ŽBT. Žcf. Fransman,
1992., which now to a great extent relies on buying
its R & D on the market, on a ‘‘when-needed’’ basis.
BT claims this will help the company to become a
large, global network operator, because its focus is
more oriented to market needs. Other large network
operators, such as NTT in Japan and AT & T in USA,
are also adjusting their R & D policies in order to
become more competitive, but they are apparently
increasing their in-house R & D. In spite of this
observed pluralism of R & D strategies, which is
essentially the classic «make or buy» dilemma in
organizing industrial R & D ŽTeece, 1988., the domi-
nant trend is a belief that market-oriented R & D
governance models are preferable. The pervasiveness
of this may also be observed in public R & D, both in
national and international arenas, the latter evident in
the EU’s R & D policy, e.g., in the 4th Framework
Programme that ambitiously proclaims that the R & D
results will come to the markets in a few years.
Whether the attitudes expressed in these policy shifts
are earnestly intended or not, the market-oriented
R & D governance model may to a large extent rest
on assumptions that are empirically and theoretically
unjustified in the real world of innovations, thus
ultimately creating policies and strategies that are
contradictory to their intended benefits. This may
explain why recent innovation policy and strategy
research has attempted to counterbalance the inher-
ent biases and unintended consequences inevitable in
a market-oriented R & D governance model: On a
conceptual level, Chesbrough and Teece Ž1996. show
how distinguishing autonomous innovations from
systemic Ži.e., radical. innovations is critical for the
success of organizing innovation processes. Whereas
creating autonomous innovations may benefit from
« virtual» Žmarket. types of R & D organizations, sys-
temic innovations require a type of coordination,
scale and obligation which is beyond the capabilities
of the former, because of market failures and other
factors. Simultaneously, what is termed the «third
generation R & D» strategy ŽRoussel et al., 1991. has
gained followers, because this provides firms under-
taking R & D with a more comprehensive approach
to making priorities for R & D. Hopefully, as innova-
tion research makes progress, new insights will pro-
1045
vide R & D strategists and policy-makers with new
models for understanding the role of knowledge Žcf.
Arora and Gambardella, 1994. and the importance of
innovation regimes. The conceptual framework of
innovation regimes may serve as a model for R & D
policy and strategy — and simultaneously demon-
strate that the creation of radical innovations may be
a rational process, not a mystery of chance and
serendipity.
Acknowledgements
The author would like to thank Egil Kallerud,
Keith Smith, Johan Hauknes, Karl-Erik Brofoss and
the anonymous referees for providing helpful com-
ments to various drafts of this article.
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