Constituents of innovation systems
1. Schumpeter I & II
• Theory of heroic entrepreneurship and creative destruction as the engines behind business cycles:
Entrepreneurs are destabilizing agents because they change the existing relations and techniques
of production. They lead the economy toward a better use of capital and knowledge, which is vital
for macroeconomic growth and rising productivity
• Act of inventing versus act of innovating or risk bearing:
It is no part of his function to find or create new possibilities. They are always present, abundantly
accumulated by all sorts of people
• Schumpeter recognized that in large firms innovation became bureaucratized and that organized
and specialized R&D departments played an increasingly important role in the innovation process.
• Development engineer in the R&D department of a large electrical firm could be an entrepreneur
in his sense of the word
1
,2. Abernathy & Utterback’s model
Baumol’s vision: Schumpeter was wrong in terms of replacement: both type of actors remain present
albeit focusing on different contributions.
• Small, entrepreneurial firms seem to be in an advantageous position when it comes down to
creating breakthroughs
• Large, routinized firms on the other hand are more effective in terms of creating aggregated
incremental improvements (can also have revolutionary consequences)
Fluid Specific
Competitive emphasis on Functional Product Cost Reduction (Price)
Performance
Predominant type of Frequent major changes in Incremental for product and
innovation products process with cumulative
improvements (<> trivial) in
productivity and quality
Product Line Diverse, often including Mostly undifferentiated
custom designs standard products
Production processes Flexible and inefficient Efficient, capital-intensive
and rigid.
Equipment General-purpose, requiring Special-purpose/committed,
highly skilled labor automated
Organizational form Informal and Emphasis on structure, goals
Entrepreneurial and procedures
…
A productive unit’s capacity for and methods of innovation depend critically on its stage of evolution
The idea of evolution results in a central role of the ‘product life cycle’ concept (connected also to
industry life cycles
2
, 3. Social Construction of Technology (SCOT) perspectives on innovation dynamics
Interpretative Each technological artifact has different meanings and interpretations for
flexibility various groups → generate different problems to be solved
Relevant social • The most basic relevant groups are the users and the producers of the
groups technological artifact, but most often many subgroups can be delineated
(users with different socioeconomic status, competing producers…)
• Sometimes there are relevant groups who are neither users, nor producers
(journalists, politicians, civil groups) → they can be distinguished based on
their shared or diverging interpretations of the technology in question
Design flexibility There are always multiple ways of constructing technologies: a design is only a
single point in the large field of technical possibilities, reflecting the
interpretations of certain relevant groups (see Fluid stage)
Problems and Different groups in different societies construct different problems, leading to
conflicts different designs
Closure Over time, as technologies are developed, the interpretative and design
flexibility disappears through closure mechanisms
Rhetorical When social groups see the problem as being solved, the need for alternative
closure designs diminishes → often the result of communication efforts
Redefinition of A design standing in the focus of conflicts can be stabilized by inventing a new
the problem by design which transcends the current problem
inventive activity
Closure is not New social groups may form and reintroduce interpretative flexibility, causing
permanent a new round of debate or conflict about a technology
4. Technology push vs market pull
Schumpeter: technology push
Minor innovations: market pull
5. Market failures in innovation
Innovation implies uncertainty: technical and commercial
• Innovation might imply long time frames introducing appropriation concerns
• The presence of uncertainty and the outcome of inventive activity (information) seems to require
activities designed to reduce or mitigate its consequences
The market, as a coordination device to allocate resources, results in a sub-optimal situation
• The rational choice with respect to this type of activities: do not invest → if all market actors arrive
at the same conclusion, investment levels will be low/moderate (equaling voluntarism/
sponsorship driven by idealism)
• Society as a whole might be better off if we would allocate more resources, leading to investing
taxpayer’s money (as well as the creation of IP arrangements…)
3
1. Schumpeter I & II
• Theory of heroic entrepreneurship and creative destruction as the engines behind business cycles:
Entrepreneurs are destabilizing agents because they change the existing relations and techniques
of production. They lead the economy toward a better use of capital and knowledge, which is vital
for macroeconomic growth and rising productivity
• Act of inventing versus act of innovating or risk bearing:
It is no part of his function to find or create new possibilities. They are always present, abundantly
accumulated by all sorts of people
• Schumpeter recognized that in large firms innovation became bureaucratized and that organized
and specialized R&D departments played an increasingly important role in the innovation process.
• Development engineer in the R&D department of a large electrical firm could be an entrepreneur
in his sense of the word
1
,2. Abernathy & Utterback’s model
Baumol’s vision: Schumpeter was wrong in terms of replacement: both type of actors remain present
albeit focusing on different contributions.
• Small, entrepreneurial firms seem to be in an advantageous position when it comes down to
creating breakthroughs
• Large, routinized firms on the other hand are more effective in terms of creating aggregated
incremental improvements (can also have revolutionary consequences)
Fluid Specific
Competitive emphasis on Functional Product Cost Reduction (Price)
Performance
Predominant type of Frequent major changes in Incremental for product and
innovation products process with cumulative
improvements (<> trivial) in
productivity and quality
Product Line Diverse, often including Mostly undifferentiated
custom designs standard products
Production processes Flexible and inefficient Efficient, capital-intensive
and rigid.
Equipment General-purpose, requiring Special-purpose/committed,
highly skilled labor automated
Organizational form Informal and Emphasis on structure, goals
Entrepreneurial and procedures
…
A productive unit’s capacity for and methods of innovation depend critically on its stage of evolution
The idea of evolution results in a central role of the ‘product life cycle’ concept (connected also to
industry life cycles
2
, 3. Social Construction of Technology (SCOT) perspectives on innovation dynamics
Interpretative Each technological artifact has different meanings and interpretations for
flexibility various groups → generate different problems to be solved
Relevant social • The most basic relevant groups are the users and the producers of the
groups technological artifact, but most often many subgroups can be delineated
(users with different socioeconomic status, competing producers…)
• Sometimes there are relevant groups who are neither users, nor producers
(journalists, politicians, civil groups) → they can be distinguished based on
their shared or diverging interpretations of the technology in question
Design flexibility There are always multiple ways of constructing technologies: a design is only a
single point in the large field of technical possibilities, reflecting the
interpretations of certain relevant groups (see Fluid stage)
Problems and Different groups in different societies construct different problems, leading to
conflicts different designs
Closure Over time, as technologies are developed, the interpretative and design
flexibility disappears through closure mechanisms
Rhetorical When social groups see the problem as being solved, the need for alternative
closure designs diminishes → often the result of communication efforts
Redefinition of A design standing in the focus of conflicts can be stabilized by inventing a new
the problem by design which transcends the current problem
inventive activity
Closure is not New social groups may form and reintroduce interpretative flexibility, causing
permanent a new round of debate or conflict about a technology
4. Technology push vs market pull
Schumpeter: technology push
Minor innovations: market pull
5. Market failures in innovation
Innovation implies uncertainty: technical and commercial
• Innovation might imply long time frames introducing appropriation concerns
• The presence of uncertainty and the outcome of inventive activity (information) seems to require
activities designed to reduce or mitigate its consequences
The market, as a coordination device to allocate resources, results in a sub-optimal situation
• The rational choice with respect to this type of activities: do not invest → if all market actors arrive
at the same conclusion, investment levels will be low/moderate (equaling voluntarism/
sponsorship driven by idealism)
• Society as a whole might be better off if we would allocate more resources, leading to investing
taxpayer’s money (as well as the creation of IP arrangements…)
3
