What do we know about innovation by Jan

What do we know about innovation? by Jan Fagerberg, Centre for Technology, Innovation and Culture, University of Oslo

One picture tells more …

Innovation studies – an emerging field • Fuzzy concepts • Many different perspectives • … and tribes (that do not speak the same languages) • A holistic understanding needs to be ”constructed” • TEARI/Handbook of Innovation (OUP) project, an attempt to do this; historians, economists, geographers, sociologists.

Fuzzy concept: Innovation • Definitions, classification or theory? • Definition no 1: The introduction of novelty into the economic (and social? ) sphere; - What? Invention and innovation, - Which context? Global or local? - Who? Innovators and imitators • Definition no 2: ”New combinations” of ideas, resources and capabilities

The ”combinatory” dynamics of innovation and diffusion • Innovation and knowledge: Not the same but related • The need for complementarity between different factors • The cumulative nature of innovation; the interaction between innovation and diffusion

Kline and Rosenberg (1986) “it is a serious mistake to treat an innovation as if it were a well-defined, homogenous thing that could be identified as entering the economy at a precise date – or becoming available at a precise point in time. (…) The fact is that most important innovations go through drastic changes in their lifetimes – changes that may, and often do, totally transform their economic significance. The subsequent improvements in an invention after its first introduction may be vastly more important, economically, than the initial availability of the invention in its original form” (Kline and Rosenberg 1986, p. 283)

Classifications of innovation Type; Impact; • • • revolutionary (GPT), • radical, • marginal/incremental (”reinvention”) product, process, supply, market, Organization Level; • architectural • modular (Henderson and Clark 1990)

Innovation at the firm level • The rules of the game; uncertainty and information over-flow; the role of strategy • Firm-level knowledge (”organizational memory”, Nelson and Winter 1982) as organizationally embedded and cumulative; facilitates certain paths (innovations) and constrains others; inertia • The need to balance ”exploitation and exploration”; organizing for innovation • The importance of open-ness and ”absorptive capacity” (Cohen and Levinthal 1990)

The systemic character of innovation • Firms do not innovate in isolation; “the innovation journey is a collective achievement that requires numerous entrepreneurs in both the public and private sectors” (Van de Ven et al. 1999, p. 149, “social systems of innovation”). • Spatial systems: National (Lundvall, Nelson) or regional (Cooke 1998) • ”Technological systems”(Hughes, Carlsson and Stankiewicz )/ ”triple helix” • Sectoral systems (Malerba et al)

Innovation-systems: Appealing but underdeveloped approach. • Lack of theoretical reflection and interaction between empirical and conceptual work. • What determine the boundaries of systems? • The dynamics is not well specified. What are the main activities, feedback mechanisms etc, and how do these interact? • Need to explore factors leading to path dependent dynamics; as well as the role of open-ness in generating change.

Innovation and performance • Used to be ignored, this changed with ”new growth theory” (Romer 1990) which predicts; the higher R&D, and the larger the country, the higher the rate of growth • Little progress since then. Why? Based on an outdated understanding of innovation? • Macro-theorizing needs to take research on innovation in firms more thoroughly into account.

Innovation and policy • Old view: Innovation is a specialized activity that depends on science; subsidize science and R&D • New view: Innovation is a broad, pervasive phenomenon that goes on everywhere (and interacts with diffusion) • In most cases the critical constraining factor is not science – or R&D – but demand • Consequences for policy?

Conclusions • Need for different tribes to interact more • Researchers focusing on macro and meso should study research on innovation processes in firm, and vice versa. • More work needed on how knowledge and innovation operate at the organizational level, • …on organizational innovation, and • what the real constraints for innovation - and the appropriate policy-responses - are.