The purpose of the study was to develop an explanatory model of institutional design effective regional innovation system. For identification of actors, mechanisms, factors, processes and results of innovation and institutions of innovative regional space, the authors have developed a comprehensive methodology that combines economic, mathematical and sociological (interview, expert methods and case studies) methods. The object of the empirical study was Krasnodar Krai. As a result, the authors propose an institutional model of regional innovation system, which is a combination of different organizational structures, each of which has certain resources and perform specific functions. It is shown that the internal architecture of the model can generate positive effects such as innovative products and services, developed innovative competence, etc. However, if there are barriers in the institutional structure, negative effects are created. The incentives and barriers of innovations in the regional economic space were identified and characterized. It was proved that an effective strategy for the formation and development of a regional innovation system based on internal sources of development, implies a sustainable system of spatial-network interactions of all participants in this process that go beyond the boundaries of the economy or the type of the involving organizations. One of the results of the empirical study is to identify "green" (environmental) innovation as important drivers of innovative process of modern regional socio-economic systems, the impact of which is associated with their ability to create incentives for innovative processes (technological , product, service, organizational, marketing, institutional and social) in other sectors and the system as a whole