Abstract
There has been quite a bit of controversy surrounding the notion of state as entrepreneur and particularly the role of the state as a driver of technological innovation. Mariana Mazzucato and her camp have long argued that the state, as a Weberian ideal type, possesses a unique capacity for long-term planning and a greater tolerance for risk than the private sector. This, Mazzucato argues, positions the state more effectively than the often short-sighted and risk-averse private sector to spearhead efforts addressing humanity’s grand challenges. She points out, for instance, that the emergence of the renewable energy industry owes much to decades of sustained state support and direct entrepreneurial initiative – a development she sees as far from coincidental (Collington and Mazzucato, 2024; Mazzucato, 2013, 2021).
Critics of the entrepreneurial state argue that such interventions distort free markets and crowd out true innovations. They advocate for a limited state role confined to correcting market failures and cite instances of failed state-led projects to bolster their case. These critics call for outsourcing ever more state functions to the private sector, which they deem more efficient, arguing that this would better serve economic progress (Wennberg and Sandström, 2022).
In their recent work, Kettel, Drechsler and Karo introduce a new dimension to this debate. They point out that one simply cannot outsource the functions of the state, hollow out state competencies and then fault the state for underperforming. Instead, they propose, one should enhance state competencies by designing better state bureaucracies. In other words, for these authors, the question of the effectiveness of the entrepreneurial state is fundamentally a question of organisational design – in the form of bureaucracy.
There are probably few words in the English language that arouse more boredom, aversion or outright hostility than the word bureaucracy. The word carries a persistent stigma, conjuring notions of red tape, overregulation, inefficiency, and, above all, organizational stagnation (Lopdrup-Hjorth & Roelsgaard Obling, 2019; Monteiro and Adler, 2022). For critics of the entrepreneurial state, this negative perception of bureaucracy provides yet another weapon in their arsenal against state involvement. Indeed, attacks on bureaucracy seem to have found new vigour in the era of Donald Trump and Elon Musk.
Kettel, Drechsler and Karo confront these stereotypes in a compelling fashion, making the case that technological innovation cannot even fully materialise in a free market economy without a well-designed state bureaucracy. In other words, they reframe state bureaucracy from a relic of inefficiency to an essential operational enabler of innovation at the level of the aggregate. For the authors, however, this is not merely a matter of innovation policy but rather about the art of putting that policy into action: what they call innovation bureaucracy. It’s about ‘how governments actually organise their efforts in relation to innovation’, bridging the gap between grand policy ambitions and their real-world impacts. This is where bureaucracy reigns supreme – with a remarkably far-reaching potential.
In the opening chapter of the book, the authors assert that an effective innovation bureaucracy must possess a peculiar quality: It must anchor itself in stability while remaining flexible enough to foster agility. This notion of ‘agile stability’, an apparent contradiction in terms, is the core theme running throughout the whole book.
In the second and third chapters, the authors lay out a theoretical foundation for their argument, identifying two contrasting models in the history of public sector innovation bureaucracies. The first one, which they term ‘Weber I’ model, represents long-term stability. Weber I bureaucracies are characterised by professional expertise, hierarchical structures and meritocratic recruitment. These can be observed in most ministries, for instance, or in regulatory bodies and funding agencies (e.g. Japan’s MITI, Germany’s industrial policy agencies, etc.). Weber I bureaucracies have been particularly prominent in East Asian developmentalist states.
The second model, which they term ‘Weber II’, represents agility. Weber II bureaucracies emerge as charismatic and dynamic networks focused primarily on innovation. They are characterised by rapid experimentation and greater entrepreneurial risk-taking. By design, they are smaller and often operate on the periphery of government bureaucracy. Examples include DARPA (Defence Advanced Research Projects Agency) in the U.S. and some innovation agencies in Finland (SITRA), Sweden (VINNOVA), Israel (Office of the Chief Scientist), Singapore (A*STAR), etc.
One of the most interesting insights from chapters two and three is that while Weber II networks emerge to solve new problems, they can eventually mature and consolidate into Weber I bureaucracies. Agile networks, in other words, can gradually become stable bureaucracies, or give rise to stable bureaucracies, hence losing their initial agility. This is in-line with the original Weberian theory of charismatic authority transitioning into rational-bureaucratic structures. The authors argue, however, that the best performing innovation bureaucracies balance Weber I and Weber II models in a sustained fashion. Agile stability, as such, provides continuity and institutional memory, ensuring that innovation does not collapse under uncertainty – while at the same time continuously experimenting with novel ideas and scaling innovations. A state capable of holding this balance is, according to the authors, a ‘Neo-Weberian’ state.
The authors introduce a further typology in chapter three. They identify five ideal type actors often involved in innovation bureaucracies: ‘Funders’ and ‘rulers’ create financial and regulatory stability (Weber I) while ‘doers’ and ‘creators’ push boundaries (Weber II). ‘Intermediaries’, then, bridge the two models, facilitating knowledge exchange. Some of these roles sometimes oscillate between public and private sectors – depending on the nature of the interaction between the two.
After this theoretical groundwork, the book moves on to actual history. Chapters four, five and six offer a birds-eye view of the history of innovation in developed economies. They show, for instance, that after WWII, innovation bureaucracies prioritised stability and long-term strategic direction, which gave rise, at the same time, to corresponding agile agencies such as the NSF (National Science Foundation) and DARPA in the U.S. and their European equivalents. These were designed, partly, to harness wartime technological advances for civilian use (GPS, the internet, touchscreens, voice recognition, microwave ovens, mRNA technology, drones, virtual reality and countless other consumer technologies have come out of DARPA, that is, military-sponsored R&D). This iteration of agile stability relied on top-down mission-driven agencies and it generated major technological breakthroughs with significant commercial ramifications.
By the 1970s–1980s, hybrid models emerged, blending state leadership with market mechanisms. Japan’s VLSI Project and U.S. SEMATECH reflected this shift – wherein governments assumed the role of funders and intermediaries rather than sole creators or doers. This transition fuelled neoliberal reforms, bringing about the New Public Management paradigm, weakening public sector autonomy by privileging short-term efficiency over long-term innovation capacities. Agile stability, as such, lost some of its stability. From the late 2000s onwards, however, societal challenges like climate change and digital transformation revived interest in long-term mission-oriented innovation.
The book concludes by highlighting, once again, the significance of the balancing act that a Neo-Weberian state bureaucracy can orchestrate. Neo-Weberian bureaucracies are well positioned to tackle grand societal challenges precisely because they can integrate long-term strategic foresight backed by political support with the dynamic agility required for experimentation. Future innovation bureaucracies, the authors propose, must embrace this agile stability in order to remain effective. This is how to make an entrepreneurial state.
Given the compelling Weberian analysis at the heart of this book, I find it relevant not only to organisation studies and public administration literature but also to sociology proper. Moreover, I appreciate the intellectual resolve required for rehabilitating a topic as widely disparaged as bureaucracy. Prior to engaging with this text, I myself saw little merit, if any, in the study of bureaucracy. This changed promptly after reading the account that the authors have provided of Max Weber’s masterful intellectual incursions: Partly through examining the Chinese tradition of Confucian bureaucracy and the Mandate of Heaven, Weber made an astounding prediction, quite early in the 20th century: that, while capitalism could not have originated in China, upon its eventual arrival, it would flourish to an extraordinary degree. A prophecy ‘that has been rather impressively fulfilled’ (61), it reveals the rare and profound insights one can glean from the systematic study of bureaucracy.
Kilker (1984) has observed that widespread aversion to bureaucracy arises in part from an underlying apprehension regarding socialism, given the latter’s heavy reliance on an extensively enlarged public sector bureaucracy that enables the government to steer the entire economy. Kettel, Drechsler and Karo address this apprehension by demonstrating that government bureaucracy is in fact necessary for the proper functioning of capitalism itself. Not only can the entrepreneurial state, rooted in agile stability, enhance wealth creation in the private sector – it is also uniquely equipped to tackle grand societal challenges through direct and indirect involvement in technological innovation.
