Innovation Systems and the Sustainable Development Goals: Directionality, State Roles, and Capabilities for Transformative Change

ABSTRACT The adoption of the Sustainable Development Goals (SDGs) has intensified debates on whether innovation system (IS) frameworks remain relevant for governing sustainability transformations. This article argues that IS are essential for understanding how directionality toward sustainability emerges through learning, institutional change, and evolving state roles. The paper distinguishes between reactive approaches grounded in historically accumulated capabilities and proactive strategies aimed at creating new development pathways aligned with societal goals, emphasizing interactions, synergies, and trade‐offs across social, economic, and environmental objectives. Four illustrative cases are examined: China and Denmark demonstrate how IS can gradually reorient capabilities toward multiple SDGs, while Seychelles and Costa Rica show how small and less mature IS pursue focused sustainability priorities through governance and institutional innovation.