Environmental Innovation and Societal Transitions xxx (xxxx) xxx–xxx

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Environmental Innovation and Societal Transitions

journal homepage: www.elsevier.com/locate/eist

Original Research Paper

An intermediary approach to technological innovation systems

(TIS)—The case of the cleantech sector in Finland
⁎
Jani Lukkarinena, , Annukka Bergb, Marja Saloa, Pasi Tainioa, Katriina Alholaa,
Riina Antikainena
a
Finnish Environment Institute, Mechelininkatu 34a, 00251 Helsinki, Finland
b
Prime Minister’s Office Finland, Finland

AR TI CLE I NF O AB S T R A CT

Keywords: The Technological Innovation System (TIS) framework has become a popular tool for the analysis
Technological innovation system (TIS) of innovation dynamics, particularly on a national scale. There have been calls to utilise the
Intermediation framework at sub-national levels too, and to pay attention to location-specific features and
Finnish carbon-Neutral municipalities (HINKU) interactions. This article contributes to the discussion by studying how the sub-national
Market creation
intermediary network of the Finnish Carbon-Neutral Municipalities (HINKU) complements and
Experimentation
challenges the national cleantech innovation system in Finland. To achieve this, we propose an
analytical framework that combines the TIS framework with intermediary functions. Our study
shows that the TIS framework is a practical tool for analysing potential discontinuities and policy
development possibilities regarding innovation systems across spatial scales. Empirically, the
study reveals the ways in which certain technological innovation system functions, such as
market formation and experimentation, are particularly important for local-scale cleantech
deployment and should be analysed further.

1. Introduction

The deployment of cleaner solutions is widely seen as a necessary step in overcoming multiple challenges, including climate
change, a deficiency of renewable and non-renewable resources and the persistent economic downturn (OECD, 2011; EEA, 2015).
Cleantech refers to products, processes and solutions that harness renewable energy and material sources and lead to a significantly
reduced environmental impact during their lifecycle, compared to their conventional counterparts (Stack et al., 2007; Makower,
2001). Significant cleantech innovations can lead to societal and economic transitions (Rennings, 2000). However, commercialisation
is a crucial step in the actual deployment of innovations (Jalkala et al., 2014).
The relationship between policies and their role in the development of cleaner technologies, markets and economic growth has
attracted continuous attention (Alkemade et al., 2011; Panapanaan et al., 2014; Boon and Bakker, 2016; Reichardt and Rogge, 2016).
The Technological Innovation System (TIS) framework has become a popular tool for analysing innovation systems and policy
development potential, particularly on a national scale. Innovation system refers to the flows of technology and information between
people, enterprises and institutions, which is seen as the key to improving technology performance and the innovation process
(OECD, 1997). The innovation system deploys a number of dynamic key processes, or functions, which directly influence the
development, diffusion and use of new technology and, thus, the performance of the innovation system (Hekkert et al., 2007; Bergek

⁎
Corresponding author.
E-mail addresses: jani.lukkarinen@ymparisto.fi (J. Lukkarinen), annukka.berg@vnk.fi (A. Berg), marja.salo@ymparisto.fi (M. Salo),
pasi.tainio@ymparisto.fi (P. Tainio), katriina.alhola@ymparisto.fi (K. Alhola), riina.antikainen@ymparisto.fi (R. Antikainen).

http://dx.doi.org/10.1016/j.eist.2017.04.003
Received 27 June 2016; Received in revised form 20 April 2017; Accepted 20 April 2017
2210-4224/ © 2017 Published by Elsevier B.V.

Please cite this article as: Lukkarinen, J., Environmental Innovation and Societal Transitions (2017),
http://dx.doi.org/10.1016/j.eist.2017.04.003
J. Lukkarinen et al. Environmental Innovation and Societal Transitions xxx (xxxx) xxx–xxx

et al., 2008; Kivimaa and Virkamäki, 2014). TIS is a fruitful approach for studying innovation networks and their dynamics because it
is rooted in sustainability transitions literature and complements the previous system approaches to innovation policy with a process
focus. Furthermore, the TIS matrix offers a well-developed categorisation of processes that are relevant to the development of an
innovation system and related to factors that public policies can potentially address (Kivimaa and Virkamäki, 2014). The TIS
approach has also been specifically developed to inform policy development (Markard et al., 2015) and it has the ability to highlight
pitfalls in the current policy framework.
In addition to national-level analyses, there have been calls to utilise the TIS framework to study sub-national innovation systems,
and to develop the framework to be more open towards particular local contexts (Coenen et al., 2012; Raven et al., 2012; Hansen and
Coenen, 2015; see also Markard et al., 2015). This article answers the call by applying the TIS approach to analyse the cleantech
innovation system beyond just the national scale in Finland. To analyse place-specific dynamics, we turn to the intermediary niche
functions identified in the literature (Kivimaa, 2014). First, we identify the strengths and weaknesses of Finland’s national cleantech
innovation system. Then we focus on the TIS functions performed by the sub-national intermediary network of Carbon Neutral
Municipalities (HINKU), consisting of frontrunner municipalities in low-carbon solution deployment and social innovations. Finally
we extend the framework to local level by studying intermediary functions in the case of a successful member of the network − the
municipality of Ii.
We are interested in the dynamic relationship between national and sub-national systems. To carry out this task, we develop a
framework that combines the TIS approach with intermediary functions. Our research questions are:

• What are the strengths and weaknesses of the national cleantech TIS in Finland?
• How does the sub-national intermediary network HINKU complement and challenge national cleantech innovation system and
affect local cleantech development and deployment?
• How can we combine the popular TIS and intermediary frameworks to analyse policy development possibilities across spatial
scales?

The rest of the article is structured in three sections. We begin by providing an overview of the TIS framework and proposing a
way of combining it with intermediary functions. Second, we introduce the materials and methods of the study. Third, we analyse
Finland’s national innovation system, the role of the intermediary HINKU network in complementing and challenging the national
TIS and a local case study of the municipality of Ii. We close the article with a discussion and relevant policy recommendations.

2. Material and methods

2.1. TIS framework and the roles of systemic intermediaries

Conceptually, a TIS is composed of the actors, networks and institutions contributing to the overall function of developing, diffusing
and utilising new products and processes. Therefore, a TIS contains multiple components that influence the innovation process for
technology – and not only those exclusively dedicated to the technology in question (Bergek et al., 2008). The TIS approach has been
developed to analyse system performance and the factors affecting that performance (Hekkert et al., 2007).
Carlsson et al. (2002) recognise policy bodies and other public organisations as part of a well-functioning system. In particular in
the field of sustainability transitions, policies occupy a central position in socio-technical transitions. As highlighted by Jacobsson and
Bergek (2011), innovation system analysis is a tool to identify potential means of intervention at a systemic level. In the analysis of
cleantech policies, the TIS approach has been applied to study policy mixes covering several sectors of policy making related to low-
carbon passenger transport in Finland (Kivimaa and Virkamäki, 2014) and low-energy policies in Finland and the UK (Kivimaa and
Kern, 2016), for example. We depart from using TIS to looking at the development of a system around a singular technology, and
broaden it out to cleantech deployment affecting technological innovation systems of multiple technologies (cf. Kivimaa and
Virkamäki, 2014).
In sustainability transition studies, the national scale with established actors and existing regulations is often seen as a ‘natural’
system boundary. However, there has been a call for more location- and space-sensitive approaches in sustainability and socio-
technical transition studies (e.g. Coenen et al., 2012). Recent contributions applying TIS approach on different geographical scales
include the case of photovoltaic (PV) adoption in Germany from the perspectives of regional differences (Dewald and Truffer, 2012)
and at the geographical scale as the PV system matures (Dewald and Fromhold-Eisebith, 2015). There is also an emerging literature
on the role of regional innovation systems in sustainability transitions (Mattes et al., 2015), but this has not been connected to the TIS
framework. Another relevant example is provided by Späth and Rohracher (2012), who studied a regional energy initiative in Austria
and the local–national interactions in energy transitions.
The role of intermediaries working between actors – policy-makers, entrepreneurs, funders, producers, users – in sustainability
transitions is another line of inquiry that has gained momentum in recent years (Kivimaa 2014). The role of strategically located
systemic intermediaries that have the capacity to align actors and communicate specified demands to effect systemic change is
especially interesting (van Lente et al., 2003; Klerkx and Leeuwis, 2009). Furthermore, the work of intermediaries and specific
intermediary functions in energy transitions have been conceptualised in relation to a strategic niche management (SNM) framework
(Seyfang et al., 2014; Kivimaa, 2014). However, to our knowledge, combining an intermediary approach with a TIS framework has
not previously been attempted.
The above mentioned studies serve as a starting point for our venture to analyse the differences and similarities between national

2
J. Lukkarinen et al. Environmental Innovation and Societal Transitions xxx (xxxx) xxx–xxx

Table 1
TIS framework adapted to analyse systems of cleantech deployment and development.

System function Description (based on Hekkert et al., Policies and network activities Intermediary functions (based on Kivimaa,
2007 and Bergek et al., 2008) (influenced by Kivimaa and 2014)
Virkamäki, 2014)

Knowledge development
and diffusion
Influence on the direction
of the search
Entrepreneurial
experimentation
Market formation
Legitimation
Resource mobilisation
Development of positive
externalities
How knowledge (e.g. scientific,
technological, production, market) is
developed, combined, exchanged and
diffused in the system.
Selection of a direction to allocate
resources to; incentives to develop/
adopt certain technologies or practices;
visions of the future.
Testing of new technologies,
applications and markets;
opportunities for learning and reduced
uncertainty.
Influencing demand; market creation
for novel solutions throughout
development stages and establishment
of innovation.
Counteracting resistance to change;
social acceptance and compliance with
institutions.
Financial and human resources; other
complementary assets (networks and
infrastructure).
Entry of new actors into the TIS;
benefits to other actors or sectors.
R & D activities and funding;
knowledge exchange facilitation;
informational instruments.
Targets; roadmaps; regulations;
financial instruments.
Policies to stimulate
entrepreneurship; resources and
platforms for experimentation;
practices for risk allocation.
Financial and regulatory instruments;
public procurement policies.
Framing of problem and justification
of policies; research based evidence;
knowledge of successful examples.
R & D resources; dedicated human
resources.
Complementary environmental and/
or financial benefits and knowledge.
Knowledge gathering, processing, generation
and combination; communication and
dissemination of knowledge; education and
training; provision of advice and training.
Articulation of needs, expectations and
requirements; strategy development;
advancement of sustainability aims; policy
implementation.
Creating conditions for learning by doing and
using.
Acceleration of the application and
commercialisation of new technologies;
prototyping and piloting; investment in new
businesses.
Gatekeeping and brokering; configuring and
aligning interests; technology assessment and
evaluation; arbitration based on neutrality and
trust; accreditation and standard setting.
Creation and facilitation of new networks;
managing financial resources; identification
and management of human resource needs
(skills); project design, management and
evaluation.
Creating new jobs.

cleantech TIS and a local cleantech frontrunner municipality, as well as the role of a sub-national intermediary network that interacts
with, complements and challenges both top-down and bottom-up initiatives. The TIS literature typically identifies seven system
functions (e.g. Bergek et al., 2008). However, definitions of the functions and the aspects of the system that are emphasised vary
depending on the application of the framework. We use the framework as an inspiration to analyse the political strengths and
weaknesses of a cleantech innovations system on a national scale. Then we use the framework to analyse the role of a sub-national
network focusing on cleantech deployment. Finally, we utilise 22 intermediary functions identified in the literature (Kivimaa, 2014)
to analyse the implementation of cleantech TIS on a local scale. To operationalise the approach, we have classified the intermediary
functions under TIS categories. Our interpretation of the TIS framework and intermediary functions is summarised in Table 1.

2.2. Finland, the HINKU network, and the municipality of Ii

Finland represents an interesting area of study in terms of cleantech innovation systems: the country has a high standard of living
and it uses a remarkably high quantity of natural resources. The national carbon footprint has remained high despite efforts to move
towards energy and resource efficiency (Putkuri et al., 2013). Policy-level support for cleantech innovations is clear (Prime Minister’s
Office, 2015), and the country has been ranked moderately high in many international green economy rankings, such as the Global
Green Economy Index (Tamanini et al., 2014). According to the World Economic Forum (2014), business environment of Finland is
among the most innovative in the world.
However, typical features of the Finnish cleantech sector include the domination of manufacturing-driven businesses and the poor
economic performance of many small and medium-sized companies (Kotiranta et al., 2015). Additionally, commercialising
innovations and attracting new investments have been identified as challenges for the country. For example, in the Renewable
Energy Country Attractiveness Index (Ernst and Young, 2016), which measures the attractiveness of countries from an investment
perspective, Finland lags behind. Furthermore, even though the current Government actively highlights efficient research utilisation
and bringing innovations to the market faster (Prime Minister’s Office, 2015), there has been a declining trend in research,
development and innovation financing since 2011 (Statistics Finland, 2016). Concerns have also been raised regarding the country’s
success in the global cleantech market in the long run. The analysis illustrates relevant aspects when studying multiple levels of
national and sub-national TIS, and serves as an example for similar studies in other countries.
The analysis of the Finnish TIS (Table 2) builds on earlier literature on the Finnish innovation system and cleantech ecosystems
(Antikainen et al., 2013; Kangas et al., 2015; Kotiranta et al., 2015; Jalkala et al., 2014) and previous TIS applications in certain

4
Tentative results of the project CLEANBIO – Bioeconomy and clean solutions as a basis for sustainable growth, cf. www.syke.fi/hankkeet./cleanbio.

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J. Lukkarinen et al. Environmental Innovation and Societal Transitions xxx (xxxx) xxx–xxx
Table 2
TIS analysis of the Finnish innovation system and the HINKU network, particularly from the perspective of cleantech development and deployment.3
System function Finnish innovation system
Knowledge development and (+/?) Development of the knowledge base for innovations is
diffusion considered to be strong in Finland, and Finland ranks third in
Bloomberg’s innovation ranking (2015). Finland also scores
well in human capital and the production of innovations in
terms of the cleantech industry (Kangas et al., 2015). When
the size of the economy has been taken into account, the
country has the largest public cleantech R & D budget in the
world (Parad et al., 2014). However, the government has
announced cuts in public R & D spending and R & D financing
structures have been overhauled.
Influence on the direction of (-/+) Political support for cleantech is considered somewhat
the search insufficient in Finland (Kangas et al., 2015). The country
scores poorly in the Climate Change Performance Index
(Burch et al., 2016), which measures the ambitiousness of
climate policies. However, the Government’s 10-year
objective is to promote Finland as a pioneer in the fields of
bioeconomy, circular economy and cleantech (Prime
Minister’s Office, 2015, 2016). The Finnish Government has
set an objective whereby 5% of all public spending should be
targeted towards innovative procurement, with special
attention paid to the cleantech sector (Finnish Government,
2013, 2015).
Entrepreneurial (−/?) The culture of experimentation has been considered
experimentation weak in Finland (Berg, 2013; Poskela et al., 2015) and is also
underdeveloped in the field of cleantech. Many cleantech
sector SMEs struggle to find financing for their initial
demonstration projects (Jalkala et al., 2014). However, the
cluster development – which should improve the operating
possibilities available to SMEs – has been considered
successful (Parad et al., 2014). Moreover, the government has
taken up the task of promoting a culture of experimentation
(Prime Minister’s Office, 2015), as the promotion of
demonstration environments is one of the strategic cleantech
targets (TEM, 2014).
Market formation (−/?) In international rankings, Finland is considered one of
the less successful countries in terms of commercialising
cleantech innovations (Parad et al., 2014 align=" < span
class="). The demand-side management efforts, such as
mapping and understanding the needs of customers, co-
operating in stakeholder networks and ensuring long-term
financing, have been insufficiently developed (Jalkala et al.,
2014; Kangas et al., 2015; Nygrén et al., 2015
align=" < span class="). Despite the strategic goal of
doubling domestic cleantech markets to 20 billion euros
(TEM 2014), path dependencies may endanger the renewal of
market structures (Upham et al., 2013 align=" < span
class=").
align=" < span class="
Legitimation (+) The government has sought to create legitimacy for
cleantech promotion by highlighting the bioeconomy and
circular economy, for example, in its strategic programme
(Prime Minister’s Office 2015). The Ministry of Economic
Affairs and Employment, a powerful player in the
government, has also prepared bioeconomy and cleantech
strategies. The preparation and implementation has been
carried out in close collaboration with all other ministries,
which increases legitimacy over sector boundaries.
Resource mobilisation (−) In the cleantech sector, Finland has one of the largest
relative R & D budgets in the world (Parad et al., 2014).
However, the country performs poorly in attracting
investments (cf. Renewable Energy Country Attractiveness
Index, Ernst and Young, 2016). Moreover, the sector has been
affected by recent cuts as resources are being directed to
support existing activities rather than renewing the system on
a larger scale.4
4
The HINKU network
(+) In the HINKU network, expert support provided by the
Finnish Environment Institute includes coordination, GHG
accounting, energy audits, project proposals and procurement
processes (Heiskanen et al., 2015). In addition to this, HINKU
provides forums that contribute to knowledge sharing among
municipalities, as well as with business partners and
researchers (Heiskanen et al., 2015). Furthermore, there have
been initiatives to engage citizens in HINKU activities, which
include concepts like open homes and co-procurement of
energy systems (Saikku et al., 2015). In sum, the HINKU
network enhances knowledge diffusion and produces locally
tailored information.
(+) The HINKU municipalities have committed to an 80%
GHG emission reduction target by 2030 compared to 2007
levels. Thus, HINKU members have adopted more ambitious
goals than those of the national climate policy. Furthermore,
the linkage between climate and economic benefits has been
made due to structural change pressures and expectations
regarding development of local businesses. So far, the
emission reductions realised vary between member
municipalities.
(+/?) Experimentation is an elementary part of the HINKU
activities. Deployment of clean – if not the most cutting edge
(Heiskanen et al., 2015) – solutions stimulates entrepreneurial
experimentation to some extent. In practice, entrepreneurial
experimentation is promoted in (research) projects, e.g. co-
purchase initiatives (Saikku et al., 2015) and cleantech-
related public procurement. The network has stimulated
cleantech experimentation on a nationally notable scale, by,
for example, increasing the number of on-grid solar power
installations. A critical issue is the role of support: how can
cleantech experimentation be ensured in municipalities
without relying on the coordinator?
(+) HINKU municipalities and activities have demonstrated
an ability to support market formation for cleantech solutions.
For example, increased demand for heat pumps has
contributed to in installation activity locally and the co-
purchase initiatives have boosted demand for solar solutions
on a national scale.
The HINKU network has been a channel for various, mainly
Finnish, cleantech companies/SMEs to gain market access and
references. It fills an important gap in the national TIS, which
has failed to form home markets, particularly for cleantech
SMEs (Kotiranta et al., 2015).
(+) There is a clear attempt to create legitimacy for cleantech
deployment with local actions. The decision by the board of
the municipality to join the network and participation by local
residents and companies (Heiskanen et al., 2015) legitimise
low-carbon actions.
GHG accounting provides external validation and a
benchmark for the development of GHG emissions.
Furthermore, communication about successful projects
through local and national media strengthens the trust of
larger audiences.
(+/−) HINKU municipalities assign local coordinators, who
have a key role in initiating and implementing activities, as
well as providing expert support and communications
assistance for local actors. Whilst the network does not
provide funding for investments, it does provide support in
identification of funding opportunities. The lack of direct
funding has been seen as a drawback of the network.
Furthermore, resources remain stagnant at network level
(continued on next page)
J. Lukkarinen et al. Environmental Innovation and Societal Transitions xxx (xxxx) xxx–xxx

Table 2 (continued)

System function Finnish innovation system The HINKU network

despite the regular addition of new municipalities. As a result

Development of positive
externalities
(+/?) Finnish cleantech companies employ approximately
83,000 people (Kotiranta et al., 2015), but many cleantech
SMEs struggle with profitability. However, the sector has
higher hopes for the future than many other sectors
(Kotiranta et al., 2015). The Government Strategy to Promote
Cleantech Business in Finland (TEM, 2014) aims to increase
export and create at least 40,000 jobs, thus providing
economic and social benefits too.
of a diminishing share of support, some less active
municipalities drop all HINKU actions.
(+) Positive externalities such as revitalising the local
economy and fostering a favourable image (Heiskanen et al.,
2015) are motivating factors for municipalities to join and
stay in the HINKU network. The resulting economic benefits
include energy savings and the use of local energy sources.
Employment benefits include permanent jobs created by wind
power installations and bioenergy logistics. For example, the
municipality of Uusikaupunki calculated that HINKU has
created about 200 new jobs (Heiskanen et al., 2015).

Finnish cleantech sectors (Kivimaa and Virkamäki, 2014; Kivimaa and Kern, 2016). The analysis based on the literature review is
further enriched by analyses incorporated into relevant international rankings, particularly the Global Cleantech Innovation Index
(Parad et al., 2014) and the Bloomberg Innovation Index (Bloomberg, 2015).
Besides the national cleantech innovation system, Finland features an interesting example of a sub-national network aiming to
decrease GHG emissions through social innovations and cleantech deployment, the Carbon Neutral Municipalities (HINKU) network. The
network was originally initiated as a two-year project in 2008 to promote a transition towards a low-carbon society. The aim was to
engage small municipalities outside the metropolitan area as ‘change laboratories’ to investigate new solutions to climate change. The
network was launched by a business leaders’ social responsibility initiative with coordination support from the Finnish Environment
Institute. The HINKU network can be framed as a strategic intermediary that works deliberately to achieve goals such as reduced GHG
emissions and faster commercialisation of clean technologies, with simultaneous aims of creating more business and jobs (Medd and
Marvin 2008).
Initiated as a two year project in 2007 with five municipalities, the HINKU is nowadays a network of 34 small and medium-sized
municipalities from all over Finland, with a total population of nearly 650,000 (HINKU Forum, 2017). Municipalities can join free of
charge, but adherence to an energy efficiency agreement is a precondition. The network members are committed to reducing
greenhouse gas (GHG) emissions by 80% by 2030, compared to 2007 levels. The average GHG reductions of the HINKU members
were 22% between 2007 and 2014, although some members have taken a steeper GHG emissions reduction path.1 The steep cuts
attained by some member municipalities have been achieved by deploying conventional, yet eco-efficient, solutions.
Motivations for joining the HINKU are related to the network’s position in facilitating transition dynamics. First, structural change
pressures have amplified communities’ needs to redefine their profiles and improve their images. The HINKU network has proven to
be efficient in bringing media attention to cleantech investments on local scale. For example, in the municipality of Mynämäki
roughly 70% of randomly interviewed people could name a cleantech investment or other HINKU action (Heiskanen et al., 2015).
Second, increasing the proportion of energy produced locally and facilitating energy efficiency are common motivations among
participants. The network offers coordination for local projects that fall within the scope of the national and EU funding agencies.
HINKU thus covers multiple general intermediary functions, especially demand articulation and network formation (Klerkx and
Leeuwis, 2009).
When analysing the HINKU network, the authors have built on their previous practical and scientific experience2 of working with
the network and member municipalities. Furthermore, we have utilised previous research and publications on the topic. Published
sources include:

• Five peer reviewed research articles. Two of the papers focus on HINKU as an example of low-carbon labs focused on local climate
activities (Heiskanen et al., 2013; Heiskanen et al., 2015). The third paper (Pitkänen et al., 2016) includes HINKU as one of 10
examples of green economy. Furthermore, the fourth paper (Saikku et al., 2015) focuses on joint procurement initiatives for solar
energy systems in Finland – one of the ten cases was coordinated by the HINKU network. The fifth paper (Heiskanen et al., 2011)
deals with alternative energy systems, and one of the cases comes from a HINKU municipality.
• Research reports that use HINKU as a case example (Antikainen et al., 2013; Berg, 2013; Kangas et al., 2015).
• Relevant documents, including the webpages of the network used for reporting the completed cleantech activities and knowledge-
sharing (e.g. HINKU Forum, 2017).

3
In the table, the+and−symbols indicate whether certain systemic functions support (+) or hinder (−) innovation and in particular cleantech development and
deployment. In addition to this, (+/−) indicates that while the current situation is supportive, future prospects seem less promising. The question mark (?) indicates
that the situation or the direction of development is uncertain.
1
For example, the GHG emissions of Ii were reduced by 67% between 2007 and 2013.
2
All the authors have previously carried out academic and/or practical work in HINKU communities in different parts of Finland. One of the authors (Pasi Tainio)
has been working exclusively with HINKU for the past seven years and is currently the HINKU team leader at the Finnish Environment Institute. His experience
includes tens of thousands of emails sent and received since 2009, of which hundreds were correspondence with staff from Ii since 2012.

5
J. Lukkarinen et al. Environmental Innovation and Societal Transitions xxx (xxxx) xxx–xxx

To evaluate intermediary functions in the local context, we conducted a case study (Flyvbjerg 2001; Yin 2003) in the municipality
of Ii, which has been able to achieve ambitious cuts to GHG emissions. Ii is located on the western coast of Finland, 600 km north of
the capital city Helsinki and 35 km north of the regional centre Oulu. It has approximately 9600 residents and the population is
growing. However, the unemployment rate in Ii is high at 19.9%, compared to the national average of 13.9% (Kunnat.net, 2014).
Renewable energy has become an important sector for the local economy, complementing various other industries (e.g. the rubber,
plastics and packaging, construction, fine mechanics and metal industries).
To study the case of Ii, nine experts and stakeholders from the public and private sectors were interviewed in March 2015 (see
Appendix A). In the interviews, questions were asked regarding drivers, barriers and particular practices in the deployment and
development of cleantech solutions. The interviews were coded to identify statements regarding intermediary functions (Table 1)
performed by the HINKU network. In addition to this, we mapped the practical cleantech initiatives and analysed the data on
emission reductions and cleantech deployment activities that have taken place since the municipality joined the HINKU network.

3. Results

3.1. TIS analyses of Finland and the HINKU network

The functions of the Finnish innovation system and the HINKU network were analysed with the TIS framework (Table 2).
In summary, the Finnish cleantech TIS has strong drivers, especially in terms of knowledge development and diffusion. The system
also carries wide, top-level legitimation, which signals capacity to achieve successful reforms. At the same time, entrepreneurial
experimentation, market creation and resource mobilisation have remained weak points for a long time, especially because of path
dependencies in more traditional sectors of industry, and bioeconomy, while influencing the direction of the search, should also be
strengthened. Signals for the future pathway are a little mixed: the recent cuts in innovation funding have pushed many SMEs into a
state of uncertainty, but on the other hand the current government has mobilised resources to strengthen the strategic role of the
cleantech sector, as well as a culture of experimentation more generally.
The HINKU network performs several intermediary functions that both complement the national TIS and challenge it. Firstly, the
HINKU network has gained national relevance in complementing aspects that are weak in the national innovation: it drives
experimentation, mobilises human resources locally and creates markets and references for cleantech companies. For example, the HINKU
network has successfully re-framed procurement practices in order to lessen resistance and criticism towards new technology. In
addition, the HINKU network has also shown potential to challenge the national system. The HINKU municipalities that have met or are
on their way to meeting steep GHG reduction targets act as a ‘proof of principle’ (Heiskanen et al., 2015), showing that ambitious
climate policy is possible and feasible. They can, therefore, also influence the direction of the search on a national level. However, the
realisation of transition potential has remained partial due to insufficient financial resources and uneven participation amongst
member municipalities.
Low electricity prices have been identified a strong hindering factor in the diffusion of cleantech innovations. A whole range of
feasible investments in many parts of Europe are unfeasible in Finland because of cheap electricity imports from Norway, Sweden and
Russia. This issue has been resolved in the case of wind power on a national scale by applying feed-in tariffs. However, for more
dispersed solutions, the joint procurement schemes advocated by HINKU municipalities could have major role – this is most visible in
the case of solar PV investments (Saikku et al., 2016).

3.2. Cleantech deployment in the local case of Ii

The municipality of Ii joined the HINKU network in 2012. Since then, territorial GHG emissions have fallen steeply and the largest
contributions to this have come from the wind power capacity installed. Energy efficiency and renewable energy projects in public
buildings include ground source and wood-based heating installations and real-time energy monitoring systems. Despite the northern
climate conditions, the municipality has introduced solar electricity systems, electric cars (EVs) and charging stations. The
municipality has also experimented with LED lighting in public buildings and areas. Overall, 14 renewable energy, 18 energy
efficiency and 2 mobility projects, along with 8 other activities, were completed between 2013 and 2016. The municipality’s climate
commitments were recognised by its nomination for the Nordic Council’s Environment Prize in 2014 (Norden, 2014).
Our next area of focus is HINKU’s intermediary role in local cleantech development and deployment. Based on the analysis above,
we narrow our focus to system functions that have the potential to complement (entrepreneurial experimentation, market formation
and resource mobilisation) or challenge (influence on the direction of the search) the system (Table 3).
The HINKU network has encouraged municipalities to act as pathfinders in entrepreneurial experimentation by creating conditions
for learning by doing and using. The municipality of Ii has completed 21 energy efficiency and renewable energy projects in public
buildings in the last four years. The civil servants emphasise the role of local entrepreneurs in the execution of cleantech projects
focused on improving skills and capacities, although most of the technology has to be acquired from somewhere else. Furthermore,
both company representatives and civil servants have highlighted that production companies now have a stronger driver for
cleantech product development.
Public procurement has been the HINKU network’s key device for supporting market formation both nationally and locally. This is
especially visible in the case of solar power plants, where co-procurement schemes have played a key role in creating commercial
markets. However, procurement does not come without constraints. A municipal energy engineer noted that the procurement
practices are particularly ill-suited to the technologies in the prototyping and piloting phase, as they put companies in a vulnerable

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J. Lukkarinen et al. Environmental Innovation and Societal Transitions xxx (xxxx) xxx–xxx

Table 3
Complementing and challenging intermediary functions of the HINKU network in the municipality of Ii.5

Intermediary function Manifestation Examples and quotes

Entrepreneurial experimentation (complementing the system)

Creating conditions for learning by doing (+) Experimentation with energy technologies has An Ii-based plastic pipe production company has expanded
and using created interest in and specialisation amongst local its operations to produce components for heat pump
actors. systems.

Market formation (complementing the system)

Acceleration of the application and
commercialisation of new
technologies
Prototyping and piloting
Investment in new businesses
(+) The public example has driven cleantech
investments and application of energy efficient
technologies in the municipality.
(?) Introducing and testing technologies that are not
commercially available is currently problematic.
(−) There is no direct business investment scheme
included beyond the public procurement projects.
The HINKU co-procurement scheme in 2016 led to
purchases of 11 solar power plants in Ii, a 10-fold increase
in solar electricity production and an annual carbon
emission reduction of 30 t.
“I know of cases where companies don’t participate in
procurement, because they want to protect their business
ideas. The procedure should be revised.” (interview with a
municipal energy engineer)
not applicable

Resource mobilisation (complementing the system)

Creation and facilitation of new networks (+/?) HINKU facilitates trans-sectoral and trans-
local network building.
Managing financial resources – finding (+) The municipal energy agreements promoted by
potential funding and funding HINKU are a prerequisite for, but not a guarantee of
activities national energy investment funding.
Identification and management of human (+/?) The network has been successful in acquiring
resource needs (skills) technical knowledge, but lacks the capacity to cope
with governance problems.
Project design, management and (+/?) The HINKU network encourages and
evaluation coordinates project design, but the practical work is
up to member municipalities.
An Ii-based construction company frames HINKU as an
opportunity to raise awareness on awareness of the
potential offered by wooden multi-story apartment
buildings.
“Many municipalities are at square one. I first ask them if
they have an energy efficiency agreement. An agreement
is a must before you can apply for funding and launch
energy projects.” (interview with a municipal energy
engineer)
Knowledge sharing about procurement practices is framed
as an area of need and a way of reducing the
administrative burden of experimentation.
Ii has been successful in designing projects, utilising
national networks and acquiring funding.

Influence on the direction of the search (challenging the system)

Articulation of needs, expectations and (++) Membership of the HINKU network
requirements legitimises the 80% emission reduction target for
2030.
Strategy development (+)Membership requires ratification of a municipal
energy strategy that maps key carbon reduction
actions and cleantech investments.
Advancement of sustainability aims (+) The HINKU municipalities have already
achieved notable emission reductions.
Policy implementation (?) The focus of HINKU activities is on voluntary
measures, experimentation and setting examples for
policy design.
Ii has made HINKU membership and emission reduction
targets a solid part of its municipal communication
strategies by targeting an 80% reduction by the earlier
date of 2020.
“Municipalities are already doing many things. The main
driver for joining HINKU was that the network tries to do
things systematically.” (interview with the manager of the
municipal development company)
The carbon emission reduction recorded in Ii was 41%
between 2007 and 2014.
not applicable

position, where they may have to reveal technical details that they consider confidential. This is especially problematic for cleantech
companies, because they need demonstrations and references to gain wider market access.
HINKU membership has been an important factor in resource mobilisation in the municipality of Ii. The local energy group and
energy efficiency strategy have been focal points in strengthening cleantech awareness among the political elite and identifying
funding activities. In particular, participation in a municipal energy programme coordinated by the national energy agency Motiva
has opened up funding options that were previously closed. This also allows for collaboration and bundling of intermediaries to
provide resources for active municipalities.
Some of the companies view the HINKU network as a potential channel that can be utilised to achieve national visibility, new
contacts and business opportunities, but this is not an indisputable view. The message is also a little mixed regarding the network’s
success in identifying human resource needs and providing project management. The network’s specialisation in technical aspects
was seen as a positive element:

“We need objective data and the big picture from the research institute. We take care of the day-to-day activities locally […] For
example, the emission calculations are really important for us. From this [local] perspective it is objective. If we produce the data
ourselves, someone may start to question its integrity.” (Interview with the manager of a municipal development company)
However, a stronger role was expected in stabilising and distributing lessons regarding public procurement practices that differ

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J. Lukkarinen et al. Environmental Innovation and Societal Transitions xxx (xxxx) xxx–xxx

between municipalities. As a practical solution, a shared databank for procurement documents was suggested to encourage trans-
local knowledge-sharing. Regarding project management, the HINKU network actively updates a list of potential funding sources and
encourages member municipalities to participate in applying external funding for cleantech activities. However, this function is
unsystematic and relies on activities and resources on a local scale to exploit the possibilities and practically execute the projects.
HINKU’s role is probably strongest when it comes to political ambition and influencing the direction of the search. The message of an
80% emission reduction target is very compact and it has been adopted in Ii’s communication strategies, including on the homepage
of the municipality’s website. The monitoring of emission reductions also shows promising development. The local energy efficiency
strategy in particular was seen as key in achieving emission reductions and cleantech deployment, because it provides a systematic
approach to emission reduction activities. Moreover, the role of communication is stressed so that the projects have an effect beyond
public actions:

“If you complete an energy project, it is best to have this mentioned in the local newspaper… even in a bigger newspaper. It leads
to contacts. For example, someone calls from a village association and asks me to come and tell them more about our project.
That’s the way projects link together. Good messages should be spread more, because negative messages spread anyway […] we
should develop our media skills even though we’re in a technical sector.” (Interview with a municipal energy engineer)
Overall, the HINKU network is seen as an important protagonist for Ii’s cleantech actions. However, a stronger role is desired in
communicating progress, replicating successful experiments and creating chances for face-to-face encounters among participants. The
network has managed to create protected spaces for cleantech experimentation and thus complement the national TIS in several
facets, but the wider relevance is tied to the application of solutions beyond experimental installations in member municipalities.

4. Discussion and conclusions

To summarise the results gained from analysing the Finnish cleantech TIS, substantive efforts are being directed into knowledge
development and diffusion, and the legitimacy of the cleantech sector is high. Additionally, experimentation is being promoted across
a range of sectors at the moment; government strategies (Prime Minister’s Office, 2015; 2016; TEM, 2014) have positively influenced
the direction of the search. At the same time, there are other societal and political concerns, such as immigration and economic
stagnation, which are high on the political agenda. Yet efforts invested in market formation, resource mobilisation and the creation of
(and communication about) positive externalities is insufficient. The recent cuts in R & D financing and structures have generated
concerns about future knowledge development and diffusion. More emphasis on cleantech deployment by removing administrative
barriers would be a major step in patching the holes identified in the national TIS. Our findings point to a need for a more systematic
recognition of the role and lessons of intermediaries in these processes. The target of our analysis, the Finnish Carbon-Neutral
Municipalities project (HINKU) is an example of an intermediary that complements and also to some extent challenges the national
TIS, even though it lacks the resources to scale up its operations.
The coverage of social factors and local-level interactions seems to be a somewhat weak link in the TIS framework (cf. Dewald and
Truffer, 2012). Using TIS functions to analyse the Finnish cleantech system and the HINKU intermediary network has provided
structure and versatility for the analysis. It allows us to ‘zoom in’ on the parts of the TIS facing greatest challenges and ‘zoom out’ to
see how a sub-national intermediary network can both locally and nationally complement and challenge the whole. The approach
provides an applicable way to study cleantech systems and their interaction across spatial scales.
As regards the analysis of the HINKU network, it has gained national relevance in complementing aspects that are weak in the
national innovation system (Kotiranta et al., 2015; Kangas et al., 2015): it drives experimentation, mobilises human resources locally
and creates markets and references for cleantech companies. While the HINKU municipalities are adept at deploying cleantech
solutions, they have not contributed to the development of new technological innovations on a large scale. Instead, the potential for
creating positive externalities (e.g. jobs), the resources provided by the HINKU network (e.g. tailoring and validating information)
and trust among key stakeholders have been important drivers in the uptake of cleantech projects.
HINKU’s project-based structure complies with the notion that transition intermediation is often a temporal venture (Kivimaa,
2014; p. 1379). As many of the HINKU municipalities are small and situated outside the affluent capital region, they act as special
‘proofs of principle’ (Heiskanen et al., 2015); by demonstrating that ambitious climate policy and cleantech deployment is possible,
they challenge other localities of different sizes and with various economic constraints to do the same. Our findings resonate with
those of Späth and Rohracher (2012) on regions as showcases for demonstrating the socio-economic feasibility of energy transitions.
Considering the current government’s objective of supporting experimentation and revising procurement legislation, the message
may already have been heard.
Successful intermediary functions in the local case study are tied to more general dynamics that enable mutual reinforcement of
local experimentation and network support. The role of trust has been recognised as a necessary precondition for managing
transitions, for example in the energy sector (e.g. Rayner and Bellaby, 2010; Walker et al., 2010). In the case of Ii, the first installation
projects have been important in increasing knowledge about and trust in the solutions (cf. Raven et al., 2008; Coenen et al., 2010).
Successful demonstrations have improved local technological capacities, verified economical savings and transformed governance
practices that together have extended the HINKU network’s authority. The committed local decision makers and policy networks (cf.

5
In the table, the+and−symbols signify the strength of intermediary functions, whilst? indicates an indecisive and+/? a contradictory function.

8
J. Lukkarinen et al. Environmental Innovation and Societal Transitions xxx (xxxx) xxx–xxx

Seyfang et al., 2014; Feola and Nunes, 2013) in particular have been crucial in enabling and replicating cleantech projects.
Furthermore, the strong public signal has encouraged local entrepreneurs and residents to invest, experiment and specialise in the
cleantech sector. Additionally, the successful member municipalities have, to a certain extent, validated the national relevance of the
network and encouraged new members to join.
However, the case also reveals barriers to cleantech intermediation. The strong example of Ii has not resonated in the actions of
the neighbouring municipalities so far, underlining the steepness of administrative boundaries and the importance of local resources.
Furthermore, the HINKU network’s intermediary capacity is, in practice, tied to the commitment of member municipalities,
suggesting geographically uneven dynamics. If the ‘proofs of principle’ are taken seriously the development should soon move beyond
the ‘islands of cleantech experimentation’ and materialise in regime-level change.
Some policy-relevant proposals can be drawn on the basis of the study. First, the steep GHG emission reductions achieved locally
by the HINKU network’s actions verify the presence of unharnessed cleantech deployment potential. More focus could be directed to
market creation on a national scale, too. Second, the focus on sub-national intermediation opens up trajectories for resource
mobilisation that should be taken more seriously as an extension of the national TIS and in development of intermediaries. The local
contexts are currently detached from the national innovation system, but these could be re-connected by paying systematic attention
to intermediation. Third, the findings from our analysis of the local forerunner emphasise the importance of a long-term perspective
in building networks and nurturing trust, but also the critical role of budgeting practices that currently create concrete barriers to
cleantech deployment. Political and social innovations − such as the development of new public procurement practices advocated by
the local champion − would be central to overcoming these monetary barriers. Finally, the Finnish study highlights the effect of a
sub-national intermediary network in facilitating cleantech development on weak areas of the national innovation system. This
concept could also be applied to the evaluation of innovation systems.

Acknowledgements

This work was funded by the Finnish Funding Agency for Innovation (Tekes) project Start-up and co-creation communities as
ecosystems for eco-innovations (SCINNO) and research project Intermediaries in the energy transition: The invisible work of creating markets
for sustainable energy solutions (TRIPOD, 288402). The authors are thankful for the substantive comments received from Professor Eva
Heiskanen and the constructive feedback from the anonymous reviewers.

Appendix A

Stakeholder interviews in the municipality of Ii

Type of organisation Title(s) Role of the representative and/or organisation on local Date
ecosystem of eco-innovations

Municipal Manager The company is profiled as having expertise in green 12.3.2015

development and energy and environment.
marketing Two project officers Project officers have hands-on expertise on delivering 12.3.2015
company projects related to renewable energy and business
development.
Municipal real estate Energy engineer Energy engineer is responsible for technical and energy 12.3.2015
company efficiency management of properties owned by the
municipality.
International Two representatives with Factory operates in facilities owned by the Site visit 12.3.2015;
industrial production and municipality. Drivers and approaches on eco- interview by phone
manufacturing managerial positions innovations of the production process were also 18.3.2015
company discussed.
Construction and Two representatives with Managers of building firm and building element Construction site
modular units managerial positions manufacturer with expertise on (multi-story) wooden visit and interview
production buildings. 12.3.2015
company
Local piping Mechanic Experience on energy systems installations and related 12.3.2015
installation local markets including public tenders and private
company customers.

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