Baltic Journal of Economic Studies  

35

Vol. 9 No. 1, 2023 

This is an Open Access article, distributed under the terms 
of the Creative Commons Attribution CC BY 4.0

1 Taras Shevchenko National University of Kyiv, Ukraine
E-mail: vergun.va@gmail.com
ORCID: https://orcid.org/0000-0002-9784-5557
2 Taras Shevchenko National University of Kyiv, Ukraine (corresponding author)
E-mail: gdarja03@gmail.com
ORCID: https://orcid.org/0000-0003-4734-4268
3 Taras Shevchenko National University of Kyiv, Ukraine
E-mail: yaroslav.humenyuk@gmail.com
ORCID: https://orcid.org/0000-0003-0091-2758

DOI: https://doi.org/10.30525/2256-0742/2023-9-1-35-45

SOCIAL COMPONENT IN THE MODERN  
NATIONAL INNOVATION SYSTEM

Volodymyr Verhun1, Darya Glukhova2, Yaroslav Humeniuk3

Abstract. With the intensification of globalization processes and the high level of competition in international, 
regional and national markets, innovation has acquired the status of a major advantage for any country and 
has become the basis for ensuring its sustainable economic development. The use of new knowledge and  
technologies provides an opportunity to implement and intensify innovation and, as a result, to build an  
efficient and competitive innovation economy. Based on the above, the question arises of building a  
fundamentally new national innovation system, adapted to the socio-technological challenges, which should 
determine the competitive position of the national economy in the global arena. In this context, social capital,  
as a factor of readiness for technological transformations of the state and strengthening of competitive  
positions in the international markets, forms the basis for the expansion of research and transformation of the 
NIS. The purpose of the article is a theoretical substantiation of objective processes of transformation of NIS, taking  
into account modern trends and identifying the role and place of the social component in it. Given the fact 
that scientific and technological progress is an inevitable process, the relationship between the center and the 
periphery of the global economic system is characterized by unequal scientific and technological exchange, in 
which the peripheral countries are forced to pay intellectual rents contained in imported goods and services,  
as well as to act as a raw material and production appendage of the developed countries. The subject of the article  
is the transformation processes that take place in modern innovation systems under the influence of global 
challenges, as well as the social component, which is undoubtedly the driving force in the modern world for 
the promotion of domestic innovations, the development of high-tech business, and the increase of the level 
of technological readiness of society. The methodological basis of the study is the historical-logical method, the 
system-structural analysis of economic processes and phenomena, and the methods of qualitative comparison.  
Results. Social capital in NIS acts as a kind of litmus test, reflecting its efficiency and competitiveness, since 
the functionality and social role of the innovation system is expressed in providing society with innovations, 
technological goods, products and services that effectively satisfy the entire spectrum of human needs.

Key words: innovation system, social capital, financing, innovative product, technology, globalization, research  
and development (R&D).

JEL Classification: O31, O32, O33, O38, O57

1. Introduction
Modern economic conditions dictate the need 

to solve the problems of activating innovation 
processes in the national economy and ensuring the 
creation of a highly efficient NIS. The main factor 
of the country 's economic growth is the system of  
innovation processes taking place in the country.  
The formation and improvement of innovation  

systems is one of the key issues of economic 
development not only of industrialized countries, 
but also of developing countries, which creates 
an objective need to search for new forms and  
mechanisms of interaction between the state, 
science, business, production and education. In the 
classical structure of the NIS there are three actors: 
the government as a guarantor, which provides 



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and implements mechanisms for regulating the  
innovation processes taking place in the country; 
directly the scientific and technological sector, which 
is a generator of innovative ideas and novelties; 
and business as a system of commercialization and 
transformation of scientific results into finished 
products and goods. Unfortunately, in the theoretical 
base of world research, as well as in practice, there 
is no social component of the NIS, as a system of 
popularization, promotion and consumption of 
domestic R&D. Therefore, the real question is how 
to embed a social element into the modern system of 
innovative values, i.e. society itself, which motivates  
and stimulates the above mentioned actors to 
development. The purpose of the article is a  
theoretical substantiation of the role and place 
of society in modern NIS, which is implemented  
through the main tasks, namely: on the basis of 
a conceptual framework to explore the prerequisites 
for the formation and development of NIS; to analyze 
the most effective national systems in the world; 
to determine the methods and ways of introducing 
the social component in NIS; to highlight the main 
problems of innovative development at the global  
level. The article reveals both the theoretical  
approach to the structure and development of the  
NIS, and determines the relationship with its 
participants, taking into account the social component.

2. Theoretical views on the formation and 
development of the national innovation system

Modern social, economic and political attitudes are 
creating qualitatively new approaches to consumption, 
communication, lifestyle, production, advertising,  
etc., which is due to the intensive development of 
innovative technologies. In this context, the task of 
any progressive government is to introduce these 
technologies into society in order to create a society  
that is responsible and ready for innovative 
transformations. It is expedient to create a National 
Innovation System (NIS), which would rely not only 
on economic, political and legal institutions, but  
also to cover the social side, which acts as a kind  
of basis for the adoption and development of 
new technologies. The purpose of the article is to  
determine the role and place of the social component  
as a new player in the national innovation system  
and the theoretical argumentation of its importance.

At the present stage, the leading countries of the 
world economy have accelerated the pace of socio-
economic development through the use of scientific 
and technological cooperation as part of modern 
globalization processes, which in turn ensure the 
trade and production integrity of the world economy  
through innovation and effective functioning of  
national innovation systems.

Since the beginning of the 1990s, the concept of 
the national innovation system has been in the center 
of attention of scientists dealing with economic, 
technological and innovative development, as well 
as state and international organizations responsible  
for the development of innovation and industrial 
policy. Accordingly, the theoretical justification 
of innovation infrastructure and its elements in  
scientific circles is the "Concept of National  
Innovation Systems" (CNIS), which was proposed 
by a group of scientists as K. Freeman, B. Lundvall  
and R . Nelson. (Freeman, 2011; Lundvall, 1992)

K. Freeman considered NIS as "a system of 
institutions in public and private sectors, the  
activities and interactions of which are aimed at 
initiating, importing, modifying and diffusing new 
technologies". (Freeman, 2011). Based on the 
conclusions of the institutional theories of scientists 
R . Coase and D. North, he continued to study the 
institutional context of innovation, emphasizing  
that NIS is a kind of institutional structures in the  
public and private sectors, whose activities and 
interactions initiate, create, modify and promote  
the diffusion of new technologies.

B. Lundvall, based on the concept of "national 
production systems" of F. List and the work 
of Von Hippel on technological cooperation 
between firms, studied the relationship between 
producers and consumers of new knowledge and 
technologies within a state and compared the priority  
characteristics of innovative innovation. systems  
in the countries of Northern Europe. According 
to the ideas of B. Lundvall, the interaction of firms  
in the process of technological development is 
much more often realized within the country and is  
determined by the peculiarities of its institutional 
structure, to which special attention was paid by the 
economist – scientist D. North. He assumed that 
institutions create a system of incentives (positive and 
negative) that direct people's activities in a certain 
direction. According to him, technology only sets  
the upper limit of achievable economic growth.

In the theory of economic development, the founder 
of the concept of innovation is the Austrian scientist 
J. Schumpeter, who for the first time substantiated 
its economic and business essence. He, in the long 
run, identified the complexity of this phenomenon, 
namely, innovation is: a brand new product; improved 
product; a new way of manufacturing existing  
products; a new way of promoting existing products; 
use of a new raw material. It marked the beginning  
of a new round of economic views and mainstream, 
which led to the formation of a structured system not 
only at the business level, but also at the technological 
level. It can be assumed that this is a kind of synergy  
of natural sciences and humanities, which is present 
today in almost all scientific approaches.



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Since the 1960s, research on innovation has been 

carried out in Germany, in particular by Professor 
G. Mensch. His contribution to the theory of  
innovation was the refinement of its classification 
and the nomination of the "continuity hypothesis".  
It should be noted that he was one of the few 
researchers who were able to identify the first negative 
manifestations of the situation in the 1970s, when 
the signs of a new global stagnation were not yet 
obvious. G. Mensch described the crisis of the 70's 
as a "technological stalemate", i.e., a natural pause in  
the progressive development of the economy.

At the end of the twentieth century, NIS has 
already emerged as a system that requires appropriate  
research methodology and regulatory mechanisms. 
For example, in the work of S. Naubar "Formation  
and development of the concept of national  
innovation systems", the search and formalization  
of the ideological and methodological basis of the 
concept. D. Metcalfe – an English economist from  
the University of Manchester, Director of the Center  
for Innovation and Competition – proposes to  
consider NIS as a set of developed institutions that 
individually and in cooperation contribute to the 
development and transfer of technology, as well as 
provide conditions for public policy influencing 
innovation processes. (Metcalfe, 1993). There are 
also scientists who consider the national innovation  
system from a purely socio-political point of 
view. They do not distinguish its technological  
determinants. Sociologist Reio Miettenen belongs  
to such scientists. He sees and writes about NIS as  
a term and concept used for a limited period of 
time, which is not only characterized by a particular 
technology and political situation, thus giving 
the conceptual meaning to the phenomenon of  
socio-political context. 

The concept of G. Mensh is shared by the American 
economist R . Foster, who, summarizing a large  
amount of factual material and using S-shaped  
logistic curves as the main analytical tool, found  
the existence of technological limits and  
technological gaps and proved the objectivity of  
cyclical development. He noted that innovations 
are subject to a certain logic and predictability, and 
on this basis, it is possible to assess the depth of  
those changes that will occur in the future. In order  
to do this, according to R . Foster, companies must 
carry out a concentrated program of accumulation  
of scientific knowledge through research.

The neoclassical theories of endogenous  
development form the basis for the further  
development of the concept of NIS and its structure 
at the present stage. Among the economists who 
have dealt with this issue, it is worth mentioning:  
R . Solow, P. Romer, K. Erode, R . Lucas, S. Grossman. 
The main idea is the implementation of technological 

changes through research and development in order  
to maximize profits over time. In models of  
endogenous growth, the production function is based 
on three factors of production: labor, physical capital 
and human capital.

That is, it can be assumed that "innovativeness" –  
is a system of factors that affect the parameters 
of a product, but provided that these factors are  
applicable for the first time specifically to it. It is clear 
that the very mode of production or the market may  
not be new, but in relation to a specific product, it  
acts as an "innovation", considered as an object in  
space and time. (Schumpeter, 2008)

It marked the beginning of a new round of  
economic views and mainstream, which led to the 
formation of a structured system not only at the  
business level, but also at the technological level.  
It can be assumed that this is a kind of synergy of  
natural sciences and humanities, which is present 
today in almost all scientific approaches. American 
scientist, economist, publicist, one of the most 
influential management theorists of the twentieth 
century P. Drucker in his works "Innovation and 
Entrepreneurship" (1985) formed a theory of  
innovative economy and entrepreneurial society, 
in which scientist believed that the economy of the  
90s is fundamentally different from the economy of 
the 60s and 70s, which was based on production, 
and as a result entrepreneurs focused on improving  
their production, including large companies 
that dominate the market. Innovative economy  
includes the formation of an effective NIS, taking  
into account balanced mechanisms of regulation  
by the government and cooperation between the 
scientific and business sectors.

Drucker's theory was supported by economists 
K. McConnell and C. Brew, who considered large 
companies as a factor of innovative development 
and argued that new technologies require the use of 
large capital and market, centralized and integrated  
market, rich and reliable sources of raw materials. 
In other words, only large firms can afford a  
technological breakthrough because they have the 
appropriate market power and a sufficient resource 
base, while small firms cannot.

Considering the concept of NIS, it is also worth 
emphasizing some of its negative aspects. Among the 
publications devoted to the study of the development 
and functioning of NIS, there is a large number  
of works devoted to the study of infrastructural 
and institutional problems and shortcomings of 
real innovation systems (B. Carlson, S. Jacobson). 
Noteworthy are the works whose authors try to 
determine the determinants of NIS functions, the 
non-fulfillment of which means the failure of NIS 
(M. Heckerte). However, these functions are often 
rather abstract and indirect. Important work is  



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devoted to the study of the links between R&D 
and technology creation processes at the level of  
individual industries (W. Loy) and countries  
(S. Louis). They are considered through the prism of 
the barriers created by the introduction of the latest 
technologies, which is a rather long and expensive 
process that not every country can afford.

It is worth noting that in the XXI century scientific 
schools are being formed that consider and research 
NIS in the relevant specialties. Such associations 
are formed, for example, on the basis of universities  
where NIS theorists work. An example of such an 
association is the IKED (Innovation Knowledge 
and Economic Development) group. The most 
famous project of this group is GLOBELICS – an  
international network of researchers, practitioners 
and policy makers who share and use the concept 
of innovation systems in their activities. It is an  
international network of scholars who take the  
concepts of "studying, innovating, and building 
innovation systems" (LICS) as a core and use them to 
strengthen LICS in developing countries, economic 
systems, and societies in transition. Researchers 
seek to locate systems with unique features that 
contain common positive developments in order to 
develop tactics for innovation, innovation systems,  
international competitiveness, regional development, 
the labor market and human capital.

Important achievements in the study of innovative 
systems are the works of Ukrainian scientists. For 
example, according to M. Kundryk, K. Friedman's 
definition of NIS is limited only to institutional 
regulation and innovative institutions, while, in his 
opinion, the concept of NIS has expanded from  
a single enterprise to the business environment and, 
finally, beyond purely economic categories, today 
covers the field of politics, management, education  
and science. Mykytyuk Z. defines the national 
innovation system as "a set of interconnected  
institutions designed to create, store and transfer 
knowledge, skills and artifacts that define new 
technologies." M. Sharko considers the national 
innovation system as an economic mechanism based 
on the development and use of new knowledge, 
entrepreneurial approach, integration into foreign 
markets and accelerated development of competiti-
veness of the country and its regions. (Sharko, 2005)

Nowadays the question of innovative orientation 
development arises not only on cooperation between 
scientific sector, state and business, but also on 
integration of a social component into the given 
form of communication. Accordingly, social capital 
becomes a determinant and a new participant in the 
NIS, expanding and transforming it. It can be seen 
in the form of links between market participants,  
human potential, and in the context of innovative 
development, as a society ready for the latest 

transformations. J. Coleman believed that social  
capital is "...the value of aspects of social structure  
to actors as resources they can use to achieve their 
goals...". (Coleman, 1988) Today, this statement 
is expressed in the form of popularization of  
innovation, as well as tightening of ties between  
NIS participants. The scientist P. Bourdieu drew 
attention to the fact that the well-being of an  
individual depends to a greater extent on the  
intensity of his connections with other individuals, 
since useful economic information circulates  
along such chains, so social capital is a useful resource 
that forms the readiness and awareness of society to 
new information and technologies. N. Kondratyev 
considered innovative activity as an interweaving  
of not only material, but also social aspects (elements), 
noting that human potential becomes the basis of 
innovative competitiveness of the country and, 
accordingly, of NIS.

The modern scientific school of international 
business and law (V. Vergun, D. Glukhova,  
Y. Humeniuk, R . Yedeliev) defines NIS as a complex 
of relations between the state, scientific sector 
and business in the context of formation and  
development of the innovation-technological  
nation, ready for new global transformations.

3. The social component as a modern  
element of the national innovation system

Today, innovations have become a larger category 
that form state, national, international and global 
institutions, such as innovation systems and 
infrastructures, and interpret all socio-economic 
and political-legal processes in the form of modern  
concepts and paradigms, among which are:  
inclusive paradigm of the innovative model of 
global economic development and the concept of  
sustainable development.

Modern problems related not only to the  
environment, but also to the asymmetry of economic 
development, information security, militarization, 
terrorism, etc., are somehow correlated with innovative 
development. Therefore, there is an opinion that 
scientific and technological progress has a negative  
effect not only on the environment, but also on all 
humanity as a whole, enslaving it.

But one way or another, innovative technologies  
have become a determinant of international 
competitiveness of any participant in business  
processes at the national and global levels. In this 
context, for each state the question of organizing  
an effective national innovation system, which would  
be focused on country specialization and specification,  
and also satisfy global challenges and requirements.

There are many interpretations of the NIS structure 
as an institutional and infrastructural complex that  



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Vol. 9 No. 1, 2023 
ensures the innovative development of the country. 
(Patel, Pavitt, 1994)

First of all, for a graphic description of the NIS  
it is necessary to identify its main participants,  
namely: the state (guarantor), the scientific sector 
(research institutes, universities, scientific and 
educational institutions) and business. Most  
researchers are limited to this list, but today the  
defining component of this system is society, which 
determines a country 's willingness to adopt and  
develop certain technologies.

The figure shows the components of the national 
innovation system and the relationship between them. 

First of all, it should be noted that the first Chain 
(number 1) is the state – the science sector. The 
government directs and finances science through  
grants, competitions, as well as scholarships and 
subsidies, thereby stimulating the latter to create 
a critical mass of R&D.

Chain 2 shows the "return" of contributions and 
privileges of the state in relation to science. In this  
regard, the majority of scientists see the volume 
of government contracts, the development of the  
military-industrial complex and other public sectors 
at the expense of R&D. (Haagedoorn, 1994)  
However, it should be said that this connection is 
not limited to this. The state should be interested 
in increasing the innovative potential, first of all, to 
increase international competitiveness, create an 
attractive investment climate, develop intellectual 
capital, and expand external relations. (Kolomytseva, 
Pavlovska, 2020) All this, strangely enough, is  
achieved at the expense of the scientific sector. This 
sector should be open and communicate with all 
components of the NIS, such as the state.

The relationship between science and business is 
bilateral, complex and multifaceted. Consequently, 

this link is not effective in all countries. For example, 
in peripheral countries, Chain 3 is rather weak,  
because there is a very low level of confidence in the 
quality of local innovations. Unfortunately, Ukraine 
is one of these countries. Entrepreneurs prefer to 
buy foreign technologies, spending more money  
and reducing the innovative potential of the country.  
In the countries of the center, the opposite is true;  
the level of trust in national developments is so high 
that their quality is beyond doubt. These countries 
include USA, Japan, Belgium, Switzerland, UK,  
China. In each case there is an element of  
specialization, but in the general picture of the  
world these countries are recognized as innovative. 

The high quality of the offered products (in 
this case, R&D) stimulates the demand for them,  
which is represented by Chain 4, the density of  
which reflects the effectiveness of the relationships 
between the components. If technologies meet 
or exceed customer expectations, it is logical that  
the business sector will be interested in their 
development and will invest in them.

As mentioned above, society is a new actor in  
the NIS, as it used to be considered from the point 
of view of R&D commercialization. Society is an  
element that generates demand for certain innovations, 
acts as a determinant of the state's readiness  
to produce technologies and, as a consequence, its 
international competitiveness. As shown in Figure 
1, "society ", in parallel with the state, provides the  
demand for innovative products. Therefore, it is 
important to assess the innovative development of 
society and the extent to which the state provides it  
with access to new technologies.

Today, there are a large number of indicators 
that measure the innovative capacity of society, the  
economy and business. They are diverse and are  

 
Figure1. The structure of relations between NIS participants

Source: compiled by the author



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formed depending on the development of the  
country and the region; they can be generalizing and 
integral. The most popular is the Global Innovation 
Index (WIPO), which accumulates an overall  
measure of the innovation development of  
countries and ranks them accordingly. 

The Digital Economy and Society Index (DESI) 
is a composite index published by the European 
Commission since 2014, measuring the progress 
of EU countries in the digital economy and society.  
It establishes a set of relevant instruments that  
operate in the European digital policy framework.  
There are also national parameters that characterize 
 the degree of society 's readiness for modern 
technologies. As a rule, they are focused on business  
and government. (Müller, Potters, 2019).

In the context of the popularization and diffusion 
of information and communication technologies 
(ICTs), the following parameters are important:  
ICT Development Index, E-Government Develop-
ment Index, Global Networking Index, Inclusive 
Internet Index, Networked Society Readiness Index, 
E-commerce Index, Global Cybersecurity Index, 
European Bank for Reconstruction and Development 
(EBRD) Knowledge Economy Index. Developed 
countries annually assess the effectiveness of measures 
taken to improve NIS and innovation infrastructure. 
These indicators are a kind of tool for determining  
its strengths and weaknesses, as well as priority 
directions of development, taking into account not  
only economic, political, legal and technological 
factors, but also socio-cultural, religious and 
psychological.

Society creates demand for innovative products 
by consuming and using new technologies. The  
5th and 6th Chains clearly show that in the  
conditions of globalization, the state should already  
be prepared for the relevant needs of society and  
ensure their turnover.

Using the example of the leading developed  
countries of the world, it is possible to determine the 
industrial and technological policy of the country. 
Therefore, according to the expert data of the  
Harvard Business Review in 2019–2020, the following 
countries held the leading positions.

The Czech Republic is an industrial country.  
The main industries are fuel and energy, metallurgy, 
engineering, chemical, light and food industries. 
The Czech Republic spends about 500 million euros 
annually on research and development to improve  
these industries.

In recent decades, Sweden has made a breakthrough 
in modern industries – digital technology and 
telecommunications. For ten years, the share of 
information technology in the country 's economy has 
grown to 16%, and 5% of the working-age population  
is already employed in the IT industry.

France is a highly developed country, a nuclear and 
space power. It ranks second in the European Union 
(after Germany) in terms of total economic volume 
and is consistently among the top ten in the world.  
The French government has earmarked 15 billion  
euros for the state program Le Grand Plan 
d'Investissement 2018–2022 ("Great Investment 
Plan 2018–2022", also called "Plan of Investment  
in Professional Development").

The French Tech Horizon 2022 program pays 
special attention to the issue of public support for 
the development of start-ups in the elite category of  
"deep technologies" – high-tech companies with 
a "special profile", which often experience serious 
problems in obtaining external financing due to 
the existence of a significant time gap between the 
development of innovative products or services 
and their subsequent launch on the market. For the  
targeted support of such companies in the French  
Tech Horizon 2022, it was envisaged to allocate 
approximately 70 million euros from the budget 
of the government's industrial investment fund  
(ESPAS, 2019).

In recent years, the Republic of Korea has  
accelerated the development of innovative  
technologies and is now one of the world's top  
consumer electronics manufacturing locations.

The government focuses on the development 
of "green technologies" and spends 2% of GDP  
annually on them, and in 2009 a long-term  
national strategy for "green growth" (2009–2050) was 
adopted, with funding of $320 million.

The People's Republic of China, or the " World 
Factory ", which has the largest gold and foreign  
exchange reserves, is a powerful innovative and 
technological potential in every sense: it increases 
the education of the population, the number and  
quality of highly qualified personnel, and spares  
no financial resources to create a technological base.

Putting science and technology and innovation 
above other tasks and giving specific substantive  
tasks – this message rang out for the first time in 
the history of the formation of five-year plans for 
the country 's socio-economic development (2021–
2025). Over the past 5 years, the indicator of China's  
scientific and technological progress has increased  
from 55.3% to 59.5%, and a number of important  
results have appeared in this direction. In terms of 
innovation capability, the country ranks 14th among 
131 economies in the world. According to the latest 
data, in 2019, China's innovation index was 228.3, an 
increase of 7.8% compared to 2018, while investment 
in technology research and development (R&D) 
amounted to 2.23% of total GDP (Gross Domestic 
Product), exceeding the average EU level in 2018  
(Mark J. Greeven, George S. Yip, Wei Wei, 2019). 
According to Deloitte, the most promising innovative 



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areas of China's economic growth are: fintech, 
artificial intelligence, and new energy sources and 
telecommunication technologies.

The United Kingdom is one of the leading  
countries in the world with innovative industry,  
which is reflected not only in the country 's strategic 
plans, but also in the trends of increasing government 
spending on R&D: in 2014 it amounted to 1.66% of 
GDP, in 2015 – 1.67%, in 2016 – 1.68%, in 2017 –  
1.7%, in 2018 – 1.72% of GDP. In the industrial  
strategy of the UK government was set the goal of 
becoming the most innovative country in the world, 
which provides for further gradual increase of R&D 
spending to 2.4% of GDP by 2027, and in the long 
term – up to 3% of GDP. In relative terms, these  
are not the highest figures, but in absolute terms –  
this amounts to about 10 billion pounds sterling. 

The United States leads the world in terms 
of technology sales, modernization trends, and  
innovative development. The innovation support 
system in the United States is highly diversified and 
decentralized (SGIR , 2020). Its members include 
federal and local government agencies, universities,  
the private sector, nonprofit organizations, and 
intermediary firms. The system combines a large  
amount of R&D (basic research is funded by  
government agencies) with a focus on the practical 
application of developments in the marketplace. The 
federal government supports innovation through 
infrastructure development and targeted programs 
(World Investment Report, 2020).

Local governments usually provide direct support 
to companies related to regional business and  
development of the state economy. According to the 
White House, in fiscal year 2020, total spending on 
innovation and R&D in the United States amounted 
to $523 billion, which is 26% of the funds allocated  
for similar purposes by all states in the world.

Ukraine is also not worth the global innovative 
trends and increasing its potential in this area. This  
can be seen in the following trends.

Thus, according to WIPO in 2020, Ukraine 
ranked 45th out of 131 countries in the rating 

"Global Innovation Index 2020", scoring 37.4 points  
out of 100.

In 2019, 782 enterprises carried out innovation 
activities in the industrial sector. At the same time, 
the share of the number of industrial enterprises 
that implemented innovations (products and/or  
technological processes) in the total number of 
industrial enterprises was 13.8%.

At the same time, the share of expenditures on 
research and development will decrease from 26.3% 
in 2018 to 20.5% in 2019, on the acquisition of  
other external knowledge – from 0.4% to 0.3%.  
In addition, no less important indicator is the share  
of expenditures on scientific and technical work in  
GDP, which in 2020 will be only 0.47%.

As can be seen from Table 2, the studied indicators 
show a correlation between the state's level of  
innovative development through the popularization 
of technology in society, its transformation and 
modernization. 

Returning to Figure 1, Chain 6 shows that every- 
thing is interconnected and it is very difficult to 
determine who dictates the rules in this situation, but 
the government as a guarantor ensures the promise 
not only to popularize technologies, but also to create 
conditions for their comfortable and appropriate use. 
This means that not every innovative technology is 

Table 1
Ukraine's place in the modern  
innovative business system

Indicator Place Dynamics (+/-)
Education 23 +20
R&D 44 +10
Creation of knowledge (patents  
and inventions)

23 -6

Political and operational stability 123 +2
Government's effectiveness 93 +2
The rule of law 109 -2
Regulatory policy 88 +6
Doing business 52 -4
StartupBlink 29 -

Source: compiled by the author

Table 2
Global indicators of innovativeness the world's leading countries

Country
Networked Readiness Index Global Innovation Index Global Competitiveness Index

Place Score Place Score Place Score
The Czech Republic 28 66.33 24 48.3 33 -
Sweden 1 82.75 2 62.5 6 -
France 17 73.18 12 53.7 32 -
The Republic of Korea 14 74.60 10 56.1 23 -
People's Republic of China (Hong Kong) 40 58.44 11 54.2 5 -
United Kingdom 10 76.27 4 59.8 19 -
USA 8 78.91 3 60.6 10 -
Ukraine 64 49.43 45 36.3 55 -

Source: compiled by the author



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obliged to "take root" in this or that society. Based on 
specialization, cultural characteristics, climate, level 
of urbanization, and age qualification, the guarantor 
balances the technological equilibrium in society.

It is impossible not to mention the relationship  
between society and business (Chains 7, 8), which 
determine the commercial core. Starting from the 
fact that the essence of entrepreneurship lies in 
the innovative component, it is they who, through 
advertising, PR , social networks, etc., create in the 
consumer's subconscious the need for a certain 
technology (product). At the same time, the business 
sector must monitor and study the reaction of  
society to what it offers. In this context it is  
important to create one's own niche and think about 
the customer's needs. As practice shows, after a  
certain period of time (less than a year), 90% of 
consumers expect an improved product, not a new  
one, but an improved one or one with additional 
options. Apple can serve as such an example,  
orienting its consumers to a new iPhone every year.

Science and society are most closely related, and  
the main indicator is education. The level of society  
and the characteristics of innovative development 
determine the specifics of education and science in the 
state. The quality of national education is proportional  
to the level of confidence in it. By raising domestic 
standards and bringing them closer to international  
ones, the state maintains and strengthens its intellectual 
potential (Lundvall, 1992). Naturally, it is necessary 
to take into account not only the specialization of 
the national economy, but also the prospects for its 
development, as well as the needs of society, which 
cannot be ignored. The formation of a differentiated 
complex of scientific and educational approach increases 
the international competitiveness of all economic 
entities, meeting the needs of all NIS participants.

An important question is that of the indicators of 
social capital in this field. They are multifaceted and  
have different measures, as well as scientific affiliation, 
namely: the number of innovative products used, the 
number of applicants who enter national universities, 
the number of scientists involved in national  
innovative programs, the number of views and "likes" 
in social networks of national projects, the number of 
applicants who choose natural sciences, the number 
of individuals who finance domestic innovative 
projects, the identification and recognition of  
domestic innovative products, the level of  
popularization of national innovations and techno-
logies in universities, schools, colleges (subjects that  
are considered on a practical case), the way of 
popularization of innovations (through friends, 
relatives, at work, at school, at university, etc.), number 
of social innovation projects, etc. These indicators  
are not included in any index that is considered in  
the study of innovation, because they are polyscientific.

It is advisable to abstract from the "complaints"  
about the imperfect legislative system, insufficient 
funding for R&D, obsolete physical capital and brain 
drain from the country and look at NIS from the 
point of view of social capital. It can be discussed 
not only within a country, but also in the context of  
glocalization, for example, the creation of the EU  
Digital Single Market, the European Innovation 
Platform, the global fintech network, technoparks and 
technopolises. Representative structures create trust  
in the national product and stimulate its consumption.

Chain 9, which determines society 's willingness and 
confidence in national education, is no less important 
and perhaps the most decisive. National achievements 
shape social interest and desire for education. This 
phenomenon can also be called capital substitution 
in the context of human capital formation, which in  
turn can increase the international competitiveness  
of the NIS.

It is seen that the above processes are complex, 
institutional and inseparable, which requires a response 
from all NIS participants, namely: the state (balanced 
and adaptive legislative framework; preferences and 
benefits for small and medium-sized businesses; 
expanding the range of relations with foreign investors; 
simplifying registration innovative companies and 
obtaining permits for activities; creation of project 
databases with open access; formation of state projects 
with the right to invest; convergence of national 
and international standards, etc.); scientific sector 
(attracting foreign specialists and colleagues in joint 
areas of research; collaboration of natural and human  
sciences, as: formation of a services’ range for the 
development, promotion and support of innovative 
projects on the part of marketers and managers; 
motivation for publication activity; openness to 
cooperation with business and public organizations; 
elimination of bureaucratic webbing, etc.); business 
sector (increasing confidence in national innovations, 
expanding access to information, creating a base of 
preferences in R&D; financing scientific developments 
at the local level, creating regional technology 
parks, organizing and participating in scientific and 
educational events, etc.); society (first of all, it must be  
said that society ceases to perceive the educational  
and scientific spheres as a service. Moral norms form  
the basis for the competence and professionalism 
of each individual, and thus for the strength of the 
nation. Avoid blindly applying foreign experience at 
the national level, and even more so, waiting for an 
adequate reaction. If it is copied, abruptly switching 
to Western models, then all efforts will fail. The  
readiness of society as social capital is formed  
gradually, because not everyone in it can perceive 
changes in the same way, or they can be implemented 
in a "distorted" way. This issue is of great and 
comprehensive relevance. So far, it has been perceived 



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Vol. 9 No. 1, 2023 
exclusively in terms of ethical norms, but if to talk  
about the social basis of innovation, it should 
already concern socio-economic, political and legal  
mechanisms for regulating public opinion).

4. Conclusions
There are many definitions of the concept of the 

national innovation system and its management 
interpretations. Each author considers it on the basis 
of his scientific interests. NIS cannot be considered as 
standardized: from the economic, political and legal 
point of view, as it serves as a broader concept than  
the national innovation policy or infrastructure, 
including all areas of social development.

These theories consider NIS as an auxiliary system 
of economic growth, socio-political transformations, 
diffusion and technology transfer. Today, it is  
necessary not only to create a qualitatively new  
structure of relations between participants, but also 
to use the mechanism of eclecticism – to  
comprehensively adapt to the development and  
research of NIS and not to ignore social issues.  
Practice shows that economic indicators are not 
a decisive factor in the competitiveness of the  
company, industry and even the country, because  
the social component forms the demand that will 
determine the proposal in the future. Therefore, the  
task of the new forces is to interest and prepare the 
society for innovative discoveries and to make it  
adhere to them.

The article presents the structure of the NIS,  
clearly tracing the links between its classical actors  
and the social component.

In this context, it is important not only to broaden 
scientific opinion on the role of society in increasing 
the country 's innovative activity, but also to  
consider it as a determinant of progress in all areas. 
Unfortunately, today there are few scientific and 
theoretical works that explicitly define this issue.  
At the same time, the article attempts to provide 
a justification for considering the social component 
as the fourth actor in the NIS, since it can be used to 
popularize national R&D and its implementation  
in business and industry.

Having studied social capital as a determinant of 
the development and transformation of the national 
innovation system, the following conclusions can be 
drawn: NIS implements a social, educational function, 
provides training, provides resources, manages and 

regulates innovation processes, while the social  
function (aimed at improving the quality of life) is 
one of the main determinants in providing society  
with innovations, technological goods, products 
and services that allow more efficiently meet the full  
range of human needs. 

The formation of an effective and competitive NIS 
is a strategic task for all its participants, including  
society. Balanced relationships can minimize the need 
for large amounts of state funding and distribute it 
correctly among all actors to the fullest extent. This 
issue is very relevant and open, especially in the  
context of global transformations and orientation 
towards sustainable development, which should  
reduce not only physical negative impact on the 
environment, but also socio-cultural, increasing the 
level of education, responsibility and readiness of 
society for modern challenges and changes.

Social capital is a critical component of all processes 
that take place at the national and international  
levels, especially in the field of innovation, because 
it reflects the potential of the state and its readiness 
for further innovative development. When designing 
innovation systems and infrastructures, it is  
particularly important to take into account the 
willingness and ability of society to perceive, 
consume and use innovative products and services.  
Unfortunately, in many countries the social factor  
is not used as a determinant in the study system.

Modern trends in economic growth and  
characteristic features of innovative economies, 
determine the basic requirements for the  
development of NIS in independence from the 
national framework. Among them, the basis is that it 
should include: ensure sustainable economic growth 
and competitiveness of the country through the use 
of scientific and technical potential; possess self-
sufficiency (support on own resources of the national 
economy) and resistance to the effects of the external 
environment; implement mechanisms for aligning 
socio-economic development of society; comply with 
world development trends, have the ability to interact 
and integrate into higher level innovative systems; to 
form on the basis of a balanced combination of state, 
commercial, scientific, market and social regulatory 
mechanisms. This can be achieved through well-
coordinated interaction and exchange of capital in 
the economic nature of the NIS, thus ensuring the 
international competitiveness of the state.

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Received on: 5th of February, 2023
Accepted on: 19th of March, 2023

Published on: 31th of March, 2023