This paper analyses how and why different types of innovation systems interact through analysing seven Australian sectors. We find that there are sets of mechanisms or systems that ‘articulate’; i.e. structure and shape the interaction among sectoral innovation systems and other types of innovation systems. Drawing on the Schumpeterian and evolutionary legacy, we contribute a theoretical explanation of how interaction among innovation systems influences innovation. First, this interaction enables and enhances variety creation by expanding the new combinations of knowledge and resources a firm can achieve. Second, it allows for more efficient and effective scaling up of useful knowledge recombination to achieve increasing returns. Empirically, this is supported in that the more successful sectors have active articulation systems with alignment with other systems, while weaker sectors have unplanned and patchy linkages. No simple model seems to explain successful articulation. However, important factors are active receptor firms with the motivation and capabilities to absorb and use resources from external systems, high quality and responsive education systems, and international linkages. Public research, labour markets, and intermediaries varied in importance. © 2012 Copyright Taylor and Francis Group, LLC.