This article deals with system innovation in Freeman and Perez’s innovation typology (incremental, radical, system, techno-economic paradigm). This article conceptualises these changes as transitions from one socio-technical system to another. These transitions are co-evolution processes that are not only about technological discontinuities, but also about markets, user practices, regulation, culture, infrastructure and science. In a critical discussion of co-evolution literatures, the article distinguishes three levels of co-evolutionary processes. To understand transitions, these insights are combined in a multi-level perspective, consisting of niche, regime and landscape levels. Transitions come about when co-evolutionary dynamics at these three levels link up and reinforce each other. The perspective is illustrated with a historical case study: the transition from aviation systems based on propeller-aircraft to aviation systems based on turbojet aircraft (1930–1970). The case study provides not just an evolutionary economic analysis of technological change, but also deals with the long-run evolution of technology and the socio-economic system.

In recent years numerous articles have been published which advocate a multi-level perspective (MLP) for the analysis of long-term technological transitions. This paper reviews current transitions research and considers the limitations of the MLP which need to be addressed to enhance understanding of processes of innovation affecting the transformation of technology and society. The paper suggests ways in which the MLP may be effectively rethought, based on more thoroughgoing application of a co-evolutionary concept of technological transitions.