It is increasingly evident that complex problems, such as pressing societal challenges (aging population, climate change and other environmental problems, energy issues, etc.) call for a systemic approach to solutions and shift to a combination of multiple types of innovation. The quest is reinforced by the ongoing crisis, severe budget constraints and increasing unemployment that challenge present economic models, threaten citizens’ welfare and increase inequalities in European economies. The comparison of the innovation performance of EU economies indicates that after a period of convergence this process has come to a halt in 2012. Less innovative countries as a group are no longer catching-up with the best innovation performers while the innovation performance of the EU on average still marks growth, albeit weak (IUS, 2013). By observing the indicators of the innovation performance that leads to growth and economic prosperity one does not get any insight into social aspects of these developments. Eurostat Survey on Social inclusion and living conditions reveals that in 2011 approx. 24% of EU27 population (120 million) were at risk of poverty or social exclusion with the trend increasing since 2008 (Eurostat Survey, 2013). The evidence on contrasting trends in economic and social indicators could be substantiated with additional data. It seems however that the data sets mentioned suffice to illustrate the emerging dichotomy in the European economies and to call into question the inclusiveness and sustainability dimension of EU2020 Strategy. In this context the objective of the paper is to point to the gaps in understanding innovation and its implications on social dimensions of economies. Better understanding of innovation that goes beyond R&D and new techology implications is of high relevance for macro-economists when constructing models that forecast the direction and strength of impacts on different variables, as well as for public policy that uses such analyses for designing policies.