Governance for the sustainable economy: Institutional innovation from the bottom up?

To achieve sustainable development, it is evident that new approaches to governance are required to govern the transformation of the economy and enable the replacement of unsustainable technologies and practices. Very much like new technologies and social innovation, institutional innovation emerges from the bottom up by non-state actors aiming to facilitate the governance of transformation. What is the potential of such institutional innovation?

A sustainable economy fulfills societal needs in a fundamentally different way to the current economic system. Improvements to the efficiency of existing technologies or practices appear insufficient for achieving sustainable development within the planetary boundaries. Disruptive, systemic and transformational changes appear necessary in order to replace existing technologies and practices to establish a sustainable economy. Such innovations often start out in niches; however, the scaling up and the ultimate replacement of current socio-technical systems requires governance to allow for the coordination of actors, the reorganization of socio-technical systems and the mobilization and allocation of resources. As governmental institutions are part of the current (non-sustainable) systems and thereby fail to provide coherent, integrated and transformative governance, we explore whether institutional innovation from non-state actors can step in to provide governance of transformation processes. Based on explorative qualitative case studies of networks in the food sector, city planning and reporting tools, we analyze the potential of bottom-up institutional innovations to coordinate actors in transformation processes.