This article examines the concept of brokerage models of innovation. It discusses the principles of brokerage theories and explains that while traditional models of innovation focus on the generation of novel solutions, brokerage theories focus on how managers recognize and recombine existing resources. Brokerage models of innovation also highlight how organizations are embedded within larger field landscapes and how managerial strategies, structures, and actions aimed at innovation will be enabled or constrained by the institutional dynamics unfolding at these larger levels. This article also highlights the innovation lessons from Thomas Edison, Elmer Sperry, and Design Continuum.
Lorenzo Massa and Christopher L. Tucci
This chapter offers a broad review of the literature at the nexus between Business Models and innovation studies and examines the notion of Business Model Innovation in three different situations: Business Model Design in newly formed organizations, Business Model Reconfiguration in incumbent firms, and Business Model Innovation in the broad context of sustainability. Tools and perspectives to make sense of Business Models and support managers and entrepreneurs in dealing with Business Model Innovation are reviewed and organized around a synthesizing meta-framework. The framework elucidates the nature of the complementarities across various perspectives. Finally, the use of business model-related ideas in practice is discussed, and critical managerial challenges as they relate to Business Model Innovation and managing business models are identified and examined.
This chapter reviews conceptual and empirical arguments for expecting the structure and nature of capital markets to impact on the financing of innovation. Market failure and innovation systems approaches to problems in the financing of innovation are reviewed, including approaches based on the varieties of capitalism, insider and outsider financial systems, and legal rights literatures. The complementarity between financial markets and other markets coordinating the allocation of resources is emphasized so that the impact of financing problems on innovation behaviour cannot readily be separated from wider system effects. The chapter concludes that there are generic issues involved in the financing of innovation related centrally to the long-term and uncertain nature of the pay-offs to innovation investment. The evidence suggests that different financial systems embedded in different financial market and legal structures address different elements of this problem in different ways. Relatively coordinated and bank-financed insider systems appear to offer greater commitments of long-term patient capital alongside investment in firm-specific human capital. There are big pay-offs in these systems in terms of incremental innovation in particular. The death of bank-based coordinated systems has been, as Mark Twain remarked on reading his obituary, greatly exaggerated.
This chapter examines collaboration—the shared commitment of resources to the mutually agreed aims of a number of partners—and innovation management. Very few organizations, if any, can innovate alone, and collaboration with a select number of partners creates the complementarities necessary for innovation, encourages learning, and better equips organizations to deal with uncertainty and complexity. The chapter explores collaborations between firms and between businesses and universities, government policies for collaboration, the role of brokers, and collaboration and technical standards. The management of collaboration has to deal with the instabilities and tensions inherent in this organizational form. Critical tasks include partner selection and structuring and organizing the collaboration. The chapter argues the advantages of managing collaboration as part of the architecture of innovation ecosystems.
Ritsuko Ozaki and Mark Dodgson
This chapter argues it is important for effective innovation management to understand how innovations are consumed. The diffusion of innovation depends on the fit between innovation and consumers’ circumstances and underlying values. Investigation as to how socially contextual and emotional factors, as well as more rational factors such as costs, utility, and technical functionalities, affect innovation adoption decisions is crucial. By using the example of Josiah Wedgwood, the chapter shows how innovation is affected by the broader social and cultural changes that influence patterns of consumption. It uses the examples of hybrid vehicles and green electricity tariffs to reveal the complexities in decisions to consume innovation, understanding of which better informs value propositions from innovation.
Candace Jones, Mark Lorenzen, and Jonathan Sapsed
Creative industries experience a variety of changes, which are driven by differing forces. However this variety may be understood by considering two dimensions: semiotic codes; the signifiers of symbolic value that consumers derive from products, and the material base; the formats, fabrics, and physical human activities underpinning these products. We characterize four types of change, based on high and low change combinations with semiotic codes and the material base: Preserve, Ideate, Transform, and Recreate. This framework is applied to a range of creative industries, from mature sectors like museums, architecture, and fashion, through the many transitions of film production, to contemporary digital advertising and online content creation. We show how each of the change types appear to have different drivers related to public policy, demand, technology, and globalization, offering an alternative classification framework to guide creative industries scholars, practitioners, and policy-makers.
Roberto Verganti and Claudio Dell'Era
Studies of innovation management have often focused their investigations on two domains: technologies and markets. Technological innovation has been capturing most attention, especially as far as radical technological change is concerned. Design has recently gained much attention among practitioners and scholars as a source of innovation. Still, the role of design in innovation and competition remains a rather young (preparadigmatic) area, with blurred boundaries and often unclear or contrasting perspectives. In this chapter we aim to provide a theoretically solid and empirically grounded view on design from a very specific angle: design as a source of innovation. The chapter first defines what innovation driven by design is and how it stands apart from other approaches of innovation. It shows that design is related to the innovation of the meaning of products and services: an innovation that concerns the purpose, the ‘why’ people use things, rather than the functionality and performance of products (i.e. the ‘what’ and ‘how’).
Innovation is an expensive process; significant resources must be expended to initiate, direct, and sustain it. It is a process that takes time which means that the resources that support it must be committed until the process is complete. According to this article, contemporary economists of innovation have largely neglected the relationship between finance and innovation. This article notes that empirical research has not kept pace with theoretical developments and the evidence that does exist, even on basic propositions, is often ambiguous. Furthermore, this article points to serious limitations associated with the dominant analytical approaches employed in micro- and macroeconomic research on finance for analyzing the dynamics of economic change. In closing, it draws attention to some crucial questions that need to be addressed in new research on finance and innovation.
Michael A. Hitt, Susan E. Jackson, Salvador Carmona, Leonard Bierman, Christina E. Shalley, and Douglas Michael Wright
Little systematic research has been done on strategy implementation, yet there is a body of work providing guidance for implementation efforts. The authors examine three basic collections of work on resources and governance, managing human capital, and accounting-based control systems, explaining how these issues have implications for strategy implementation. Although the chapters in this Handbook provide many useful insights concerning issues that must be addressed in order to effectively implement firms’ strategies, there is need for more and systematic work. The purposes of this final chapter are to identify promising future research directions and to serve as a catalyst for the creation of additional collections of work that can enhance our understanding of strategy implementation. The five specific topics for which more work on strategy implementation is needed are innovation and entrepreneurship, marketing strategies and services, managing operations, managing financial assets and human capital, and strategies (international, acquisitions, differentiation).
Bjørn T. Asheim and Meric S. Gertler
The process of knowledge production exhibits a very distinctive geography. This article argues that this geography is fundamental, not incidental, to the innovation process itself: that one simply cannot understand innovation properly if one does not appreciate the central role of spatial proximity and concentration in this process. The goal of this article is to demonstrate why this is true, and to examine how innovation systems at the subnational scale play a key part in producing and reproducing this uneven geography over time. This article addresses four key issues. First, it looks at the reason why location matters when it comes to innovative activity. Second, it turns to examine regional innovation systems, and the role played by them in generating and circulating new knowledge leading to innovation. Third, the article considers the relationship between regional systems of innovation and institutional frameworks at the national level. Finally, the relationship between local and global knowledge flows is examined.
Rajneesh Narula and Antonello Zanfei
Economic globalization implies a growing interdependence of locations and economic units across countries and regions. Technological change and multinational enterprises (MNEs) are among the primary driving forces of this process. This article attempts to evaluate the changing extent and importance of MNEs as conduits for cross-border knowledge flows. MNEs affect the development and diffusion of innovations across national borders through a number of mechanisms, among which FDI (through which MNEs acquire existing assets abroad or set-up new wholly or majority owned activities in foreign markets) is only one. International knowledge flows also move through trade, licensing, cross-patenting activities, and international technological and scientific collaborations. These other modalities involve a wide variety of economic actors, but the MNE occupies a central role among these actors. This article emphasizes the MNE's multifaceted role in the more general process of the globalization of innovation.
Keld Laursen and Nicolai J. Foss
This article surveys, organizes, and critically discusses the literature on the role of human resource practices for explaining innovation outcomes. We specifically put an emphasis on what is often called ‘new’ or ‘modern’ HRM practices—practices that imply high levels of delegation of decisions, extensive lateral and vertical communication channels, and the use of reward systems. We discuss how individual practices influence innovation, and how the clustering of specific practices matters for innovation, while drawing attention to the notion of complementarities between practices. Moreover, we discuss various possible moderators and mediators of the HRM/innovation link, such as the type of knowledge involved (tacit/codified), knowledge sharing, social capital, and network effects. We argue—despite substantial progress made in the pertinent literature—that the precise causal mechanisms underlying the HRM/innovation links remain poorly understood. Against this backdrop we suggest avenues for future research.
Jan Fagerberg and Manuel M. Godinho
“Catch-up” relates to the ability of a single country to narrow the gap in productivity and income vis-à-vis a leader country, while “convergence” refers to a trend towards a reduction of the overall differences in productivity and income in the world as a whole. Successful catch-up has historically been associated not merely with the adoption of existing techniques in established industries, but also with innovation, particularly of the organizational kind, and with inroads into nascent industries. This article discusses some of the perspectives that have emerged in the catching up literature. It extends the perspective to the most recent decades, compares cases of successful catch-up to less successful ones, and considers the lessons that may be drawn. Finally, it raises the question of what present day developing countries can learn, particularly with respect to policy, from the literature on innovation and catching up.
Competitiveness derives from the creation of the locally differentiated capabilities needed to sustain growth in an internationally competitive selection environment. Such capabilities are created through innovation, and because capabilities are varied and differentiated, and since the creative learning processes for generating capabilities are open-ended and generally allow for multiple potential avenues to success, a range of different actors may improve their competitiveness together. According to this article, the efforts to promote competitiveness through innovation can rarely be understood in isolation from what others are achieving at the same time. This applies whether one is speaking of countries, of national groups of firms in an industry, of subnational regions, or of individual companies. Indeed, it is worth emphasizing that the degree of interaction between innovators in search of competitiveness has tended to rise substantially historically, and has attained new heights in recent years.
Bronwyn H. Hall
In the study of innovation, the word diffusion is commonly used to describe the process by which individuals and firms in a society/economy adopt a new technology, or replace an older technology with a newer. But diffusion is not only the means by which innovations become useful by being spread throughout a population, it is also an intrinsic part of the innovation process, as learning, imitation, and feedback effects which arise during the spread of a new technology enhance the original innovation. This article provides an historical and comparative perspective on diffusion that looks at the broad determinants: economic, social, and institutional. The ways in which the different social scientific disciplines think about diffusion is discussed and a framework is presented for studying its determinants. Some of the empirical evidence on these determinants is reviewed, and a range of examples are also given.
Economic history addresses the issue of the way in which the record of economic growth is related to historical developments. This article argues that technological and organizational innovation are responsible for this lengthy period of gradually accelerating growth. Although this argument is appealing, in fact economic theories explaining any such relationship are far from straightforward. Growth theory is a field characterized by spirited scholarly debate. An important current debate is that between the evolutionary approach and the more neoclassically inspired “endogenous growth theory”. This article argues that the gap between these two approaches is rooted in fundamental differences in their basic worldviews. While the neoclassical tradition adheres to a worldview in which cause and effect are clearly separable, and growth is a steady state phenomenon, the evolutionary worldview is one of historical circumstances, complex causal mechanisms, and, turbulent growth patterns that appear to be far from a steady state.
The relationship between innovation and employment is a complex one and has long been a topical issue in economic theory. The literature on innovation and employment has addressed different research questions rooted in several streams of research. This article examines the enormous body of scholarly research on this topic within the advanced economies. First, the various different perspectives, the scope, and types of innovations are considered, identifying the different employment effects they may have. Second, effects on the quantity of employment are reviewed at the firm, industry, and macroeconomic level. Third, changes in the quality of employment are examined, considering the effects on skills and wages, and the impact of organizational innovation, again at different levels of analysis. Finally, this article presents a summary of stylized facts with a discussion of future research issues.
The use of property-like rights to induce innovations of various kinds is perhaps the oldest institutional arrangement that is particular to innovation as a social phenomenon. It is now customary to refer to these rights as intellectual property rights (IPRs), comprising old types of rights such as patents for inventions, trade secrets, copyrights, trademarks, and design rights, together with newer ones such as breeding rights and database rights. The various IPRs usually have long legal and economic histories, often with concomitant controversies. Nonetheless, despite their long history, until recently IPRs did not occupy a central place in debates over economic policy, national competitiveness, or social welfare. In the last quarter of the twentieth century, however, a new era—dubbed the pro-patent or pro-IP era—emerged, first in the US and then globally. These changes provided policy makers in both developed and developing countries with new challenges.
The close bond between the management of projects and innovation was well understood in the 1950s when pioneering organizations created new structures, techniques, and processes to manage complex and highly uncertain research and development projects in technologically advanced weapons and defence-related industries. Over subsequent decades, there have been some points of convergence when researchers investigated the nexus of innovation and project management, such as Japanese product development practices in the 1980s. But in the main, the literatures on project and innovation management followed distinct, largely self-contained trajectories of theoretical, professional, and practical development. In recent years, however, there has been a strong convergence and cross-fertilization of ideas between innovation and project management. A new wave of research is investigating the different ways in which organizations use projects to manage the uncertainties associated with innovation processes and outcomes.
Nick von Tunzelmann and Virginia Acha
This article considers not just traditional “low-tech” industries but also those classified by the Organization for Economic and Co-operation Development (OECD) as “medium-tech.” It combines them hereafter as “low- and medium-tech” (LMT) industries. These are frequently “mature” industries, where technologies and market conditions may change slowly. Furthermore, this article untangles the relationship between the technologies and markets which comprise an “industry”—effectively OECD type classifications are rejected in favor of alternative sectoral taxonomies. This article also elucidates the roles of firm strategies and structures in the LMT industries. The implications of this discussion for the evolution of industry structure, especially entry, are also considered in this text. Finally, this article concludes with a call for revising the academic agenda.