This report provides insights into the definition of innovation and specifically how policies affect knowledge creation and innovation in agro-food supply chains (D9.1a, objective 1), considering innovation as a key determinant for competitiveness. The innovation system – rather than the linear model of innovation – will be central to our discussion. The first part of the report focuses on innovation systems. It discusses basic definitions of innovation, the relationship between innovation and competitiveness and the measurement of innovation. These three topics are discussed both in general terms and with specific reference to the agr0-food sector. Next, the report provides a conceptual framework based on the National Innovation Systems approach with reference to the agro-food sector. The second part of the report focuses on the role of policies and provides insights into the main policies set at the European level that affect research and innovation in the agro-food domain