Directed innovation reduces market competition

A starting point for missions is to emphasise the importance of cooperation, both between companies and between the public and private sectors. The state should actively point out “a direction that can foster and catalyze new collaborations across multiple sectors” (Mazzucato, 2021, p. 53).

Innovation is also in many respects the result of collective effort. This is easily recognised from an ecosystem perspective and the ‘collaborative innovation bloc’ (e.g. Elert & Henrekson, 2021), inspired by Schumpeter's view (1989, p. 261)4 that the entrepreneurial function is often performed by interaction and cooperation between many different actors.

There are also many historical examples of how pioneering innovations have been developed in close cooperation between different actors. Take, for example, Ericsson's close collaboration with the Swedish telecommunications monopoly– the government agency Televerket– and the development of electronic exchanges and the first generations of mobile telephony in the 1970s and 1980s.5 However, to assume that innovation is only about cooperation is going too far. The cooperation described above as crucial to the development of new technologies became a threat to free competition in the 1980s. The state monopoly now prevented innovative competitors from entering the market. In such an environment, missions can reduce competition and the innovative activities it is supposed to promote (Eriksson et al., 2019).

If we consider innovation and entrepreneurship in today's developed market economies as both a competitive and a collaborative process, it becomes clear that missions can counteract competition and raise barriers to entry. For example, Yerger (2024a) discusses how cooperation between the public sector and incumbent firms can impede entry of other actors and lead to experts giving inadequate, poor or even erroneous advice (Koppl, 2018).