3 - Innovation theory: firms, regions, and the Japanese state

Summary

Innovation: definition, measures, and theories

Definitions

Innovative activity, sustained over time, is what keeps firms in business and provides resources (tax, employment) for the communities within which they are embedded. Not surprisingly, how innovation is (and should be) fostered within firms, local communities, and nations has been of interest to scholars and policymakers for a long time. For Schumpeter, the innovative impulse, driven by individual inventors and entrepreneurs – including that for new goods, new methods of production, and new markets – sets the capitalist engine in motion (Schumpeter 1934).

The OECD has compiled a comprehensive set of definitions and measures of various kinds of innovations with the goal of facilitating cross-national comparisons of “innovation policy.” This new field is an amalgam of industrial policy and science and technology policy (OECD 1997). In general, innovations:

comprise new products and processes and significant technological changes in products and processes. An innovation has been implemented if it has been introduced on the market (product innovation) or used within a production process (process innovation)

(OECD 1994)

This book is concerned with innovation in high technology manufacturers in particular. As such, it is focused on determining factors supporting (and undermining) technological product innovation at the firm level:

A technological product innovation is the implementation/commercialisation of a product with improved performance characteristics such as to deliver objectively new or improved services to the consumer. A technological process innovation is the implementation/adoption of new or significantly improved production or delivery methods. It may involve changes in equipment, human resources, working methods or a combination of these

(OECD 1997, emphasis added)