Innovation, R&D, and Technological Change PDF

1. Conceptual framework: Innovation, R&D and technological change Innovation as the key driver of business competitiveness, productivity, economic growth and sustainable development 1  Definition An i...

1. Conceptual framework: Innovation, R&D and technological change Innovation as the key driver of business competitiveness, productivity, economic growth and sustainable development 1  Definition An innovation is a new or improved product or process (or combination thereof) that differs significantly from the unit’s previous products or processes and that has been made available to potential users (product) or brought into use by the unit (process). Source: Oslo Manual (2018, p. 20)  Related concepts Invention ≠ Innovation – Innovation is invention (a new way of doing something) plus diffusion through commercialisation or public provision. Technology as the subset of scientific knowledge that has practical applications – Technology is developed through innovation Research and development (R&D) as creative work undertaken on a systematic basis in order to increase the stock of knowledge and the use of this knowledge to derive new applications (OECD’s Frascati Manual) – Easier to measure than innovation  R&D activities Basic Research has as its objective to develop new scientific knowledge, without specific applications in mind (“curiosity driven” research). Usually conducted in large firm labs and universities. Outputs result in scientific papers & some findings to inspire applied research. Applied Research Involves use of existing scientific knowledge for solution of a particular problem. Can lead to new technologies and patents. Experimental Development focuses on solving technical problems regarding a new product or production process or to improve performance. Can result in a prototype that can be tested and, if successful, leads to innovation. 5 Innovation as new combinations  Innovation implications Essential for business competitiveness and corporate growth (including new start-ups) Generic technologies can create and destroy whole industries (e.g. steam power, electricity, IT) Important role in economic growth at national level through its effect on productivity Innovation as the route to economic diversification and structural change Innovation for sustainable development  Joseph Schumpeter (1883-1950) “The fundamental impulse that tests and keeps the capitalists' engine in motion comes from the new consumers' good, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates”. (Schumpeter, 1934. The theory of economic development. Harvard University Press). Creative Destruction: New technologies and the accompanying organizational changes challenge the economic structure. New firms challenge existing firms and organizations have to adjust or will disappear. This process renews society’s dynamics and leads ultimately society to higher levels of economic development and welfare 9  Types of innovation Product - services Process - organizational Incremental vs. radical innovation Social innovation, inclusive innovation, frugal innovation, green innovation (eco-innovation) September 24  Process innovation Changes in the way the product is made, without changing the product itself Process innovations are often oriented toward improving the effectiveness or efficiency of production by, for example, reducing defect rates or increasing the quantity that may be produced at any given time. Automated production process line Product innovation and technological trajectories Product life cycles shortening, important to replace products frequently with better versions or new varieties  Relationship between Product and Process Product and Process innovation are coupled: New processes facilitate the development and production of new products (engineering and cars, bicycles) New products allow for the development of new processes A product innovation in one firm can account for a process innovation in another (new software). “Softer” forms of innovation are becoming more important 16  Radical vs. incremental innovation Radical: “do something different” – Product: new to world software (voice recognition), hybrid car engines – Process: online share-trading Incremental: “do what we do better” – Product: Windows Vista replacing XP, Teams replacing Skype – Process: improved fixed line phone services  Innovation and sustainable development Green / eco-innovation: to protect the environment and address climate change Inclusive innovation: to create opportunities that enhance social and economic wellbeing of poor and marginalized members of society Grass-root innovation: developed by lower income groups themselves Frugal innovation: lower-cost, less use of resources Pro-poor innovation & innovation for the bottom of the pyramid  Innovation for sustainable development Signed in September 2015 by 194 countries A road map till 2030 - also called the Agenda 2030 Voluntary national reviews Source: World Bank Institute, 2012 Pocketsize ultrasound scan developed by General Electric in China with rural doctors in mind, later marketed globally Innovation for a green transition 26 Geo-engineering (e.g. Storm producers) Carbon dioxide scrubbers 29 30 31 32