Summary

This chapter delves into the analysis of innovation, focusing on its sources, processes, and microeconomic implications. It begins by defining technology as problem-solving knowledge, encompassing procedures, recipes, routines, and resulting artifacts. The chapter then explores the structure and evolution of this knowledge, including technological paradigms and their influence on the paths of technological change.

Technological paradigms share common characteristics, but they also differ in terms of their potential for innovation, the sources of their knowledge, the tacit nature of their underlying knowledge bases, the cumulative nature of their innovative processes, and the ability to appropriate economic benefits from innovations. These paradigms correspond to distinct patterns of innovation and dynamics within specific sectors, leading to insightful taxonomies.

The economic impact of innovations relies on their diffusion, making it crucial to understand the factors influencing diffusion rates and patterns.

Evolutionary vs Revolutionary innovation

Analysis:

How is new technical knowledge generated and how does it impact the economy:

• Can we identify some relatively invariant patterns in the processes of innovation?
• How are innovations selected?
• What are the relationships between technologies and forms of corporate organisation? And between technical change and forms of competition?
• How can one characterise the ways through which relatively orderly processes of industrial change emerge out of underlying ‘disequilibrium’ behaviours?
• What is the relative role of ‘chance’ and ‘necessity’ in evolutionary processes, and relatedly, to what extent is techno-economic evolution path-dependently shaped by events occurring along its historical unfolding?
• In which ways do institutions and policies embed the processes of technological and economic change?

Technology:

In the most general terms, a technology can be seen as a human-designed means of achieving a particular end. These means most often entail particular pieces of knowledge, procedures, and artefacts. These different aspects offer different but complementary ways of describing technologies.

What are the characteristics of technological knowledge and information?

1. Non-Rivalrous: Technological knowledge, like information, can be used by one entity without diminishing its availability for others. It doesn't get depleted with use.
2. Indivisibility: There's an inherent quality of being indivisible in the use of knowledge. In other words, a partial or incomplete piece of knowledge often has little or no value.
3. Up-Front Generation Cost: Both technological knowledge and information require substantial initial investments in their creation or discovery. However, their utilization, once established, is more cost-effective.