Modelling the Dynamic Emergence of AI-Enabled Biomedical Innovation Systems

How do regulatory policies, funding structures, and cross-sector coordination shape knowledge flows and institutional transformation? Focusing on the smart medical device sector in Taiwan, this study explores how governance dynamics accelerate system transformation and foster demand for adaptive and integrative innovation systems. Building on the National Biotechnology Innovation System framework and qualitative system dynamics modeling, the study analyzes institutional interactions through 28 semi-structured interviews and 18 policy documents. Findings identify systemic bottlenecks, including translational gaps, coordination challenges, and barriers for traditional manufacturers. These gaps have enabled tech firms to emerge as system leaders by bridging these institutional gaps. This study extends innovation systems theory by conceptualizing an emergent governance function that addresses institutional gaps. At the policy level, the study highlights the importance of enabling institutional change in governance to address structural fragmentation and support system-wide transformation.