Enterprise Knowledge Capital E-Book

Blandine Laperche

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 412

Veröffentlichungsjahr: 2017

Beschreibung

Thoroughly grounded in an extensive body of international research and analysis, this book investigates the concepts surrounding a firm's knowledge capital. These concepts play an integral part in the evolution of economic and managerial thinking, particularly in relation to the themes of firm, knowledge and innovation. The author advocates a greater socialization of the production of knowledge capital that stands in contradiction to the strong appropriation strategies that are predominant today. This book presents a historical analysis of the facts with a strong basis in the recent literature in economics and innovation management as well as in case studies of CAC 40 companies that have been conducted over the course of the past few years.

Leseprobe

Table of Contents

Cover

Dedication

Title

Copyright

Acknowledgements

Foreword

Introduction

1 The Firm, Knowledge and Capital: Toward the Definition of Knowledge Capital

1.1. Innovation: definition, organization and measurement

1.2. Knowledge capital: definition and roles

1.3. The theoretical origins of knowledge capital

2 The Building of the Knowledge Capital

2.1. The first forms of knowledge capital and the formation of national innovation systems

2.2. Multi-partner innovation and formation of knowledge capital

3 The Knowledge Capital in Global Networks

3.1. The constitution of knowledge capital within global networks

3.2. Intellectual property rights (IPR) and knowledge capital

Conclusion

Postface

Bibliography

Index

End User License Agreement

List of Tables

1 The Firm, Knowledge and Capital: Toward the Definition of Knowledge Capital

Table 1.1. The typology of product–service systems (Source: [GEU 10, TUK 04, TUK 06])

Table 1.2. Top 10 patent filer in the world (2003–2012). Source: [WIP 15] (extract from the top 100)

Table 1.3. Definitions, questions and objectives of the firm in the contemporary theories of the firm

2 The Building of the Knowledge Capital

Table 2.1. Internal (in-house) and external means for the formation of a firms’ knowledge capital

Table 2.2. Top 10 largest R&D spenders. Source: 2016 Global Innovation 1000 study, Strategy & PWC

Table 2.3. The open innovation of large companies: partners, forms of collaboration and their objectives

Table 2.4. Selected indicators of the innovativeness of SMEs in selected OECD countries. Source: Data compiled from OECD STI Scoreboard 2013, OECD StatExtrats and Eurostats

Table 2.5. Comparison between Mode 1 and Mode 2 for the production of knowledge. Source: Author, based on Nowotny et al. [NOW 03]

3 The Knowledge Capital in Global Networks

Table 3.1. Role of IPRs in the networked enterprise and in innovation networks. Source: Laperche [LAP 11]

List of Illustrations

1 The Firm, Knowledge and Capital: Toward the Definition of Knowledge Capital

Figure 1.1. Forms of innovation in the silver economy in France (51 respondents).

Figure 1.2. Geront’innovations.

Figure 1.3. The linear model of innovation.

Figure 1.4. The chain-linked innovation model.

Figure 1.5. Scale: technology readiness levels.

Figure 1.6. R&D investment over the period from 1990 to 2014.

Figure 1.7. Patent filings in the top 5 patent offices from 1883 to 2014. For a color version of the figure, see www.iste.co.uk/laperche/knowledgecapital.zip

Figure 1.8. Innovation performance in Europe.

Figure 1.9. The indicators included in the Summary Innovation Index.

Figure 1.10. Knowledge: a Russian doll.

Figure 1.11. Information, input and output of knowledge.

Figure 1.12. Enterprise knowledge capital.

Figure 1.13. The evolution of the firm.

Figure 1.14. Absorptive capacity and Knowledge capital

2 The Building of the Knowledge Capital

Figure 2.1. The national system of innovation.

Figure 2.2. The network firm.

Figure 2.3. The mechanisms at work in open innovation.

Figure 2.4. Open innovation and knowledge capital.

Figure 2.5. Patenting activity of young firms by sector, 2009–2011

Figure 2.6. Forms of partnerships within competitiveness clusters.

Figure 2.7. Models of triple helix organization.

Figure 2.8. The triple helix of communications and network-wide expectations (overlay of communication and expectations at the network level guides the reconstruction of institutional arrangements).

3 The Knowledge Capital in Global Networks

Figure 3.1. The globalization of value chains.

Figure 3.2. Stages in the globalization of business research and development.

Figure 3.3. Business motivations in the case of non-profitable strategies for assigning patents.

Figure 3.4. The three stages for the global harmonization of intellectual property rights.

Figure 3.5. Expanding patentability into new fields.

Guide

Cover

Table of Contents

Begin Reading

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To J.-C. L.

Smart Innovation Set

coordinated byDimitri Uzunidis

Volume 13

Enterprise Knowledge Capital

Blandine Laperche

First published 2017 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc.

Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licenses issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned address:

ISTE Ltd

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www.iste.co.uk

John Wiley & Sons, Inc.

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USA

www.wiley.com

© ISTE Ltd 2017

The rights of Blandine Laperche to be identified as the author of this work have been asserted by her in accordance with the Copyright, Designs and Patents Act 1988.

Library of Congress Control Number: 2017950930

British Library Cataloguing-in-Publication Data

A CIP record for this book is available from the British Library

ISBN 978-1-78630-220-5

Acknowledgements

This book is based on the academic work I have conducted over the course of many years, often accompanied by colleagues who have also been my friends and companions on this journey. They are sources of inspiration and the wonderful co-authors of articles, chapters, books and reports, which have fed my thinking and which can often be found within the text presented here in this book.

I would therefore like to thank them warmly in alphabetical order: Sophie Boutillier, Arnaud Diemer, Delphine Gallaud, Claudine Gay, Alfredo Ilardi, Denis Langlet, Gilliane Lefebvre, Zeting Liu, Fabienne Picard, Dimitri Uzunidis and Nejla Yacoub. I would also like to take this opportunity to thank those with whom I co-edited books on related topics and who have not been cited previously, in particular Djellal Faridah, Faïz Gallouj, Joëlle Forest, James K. Galbraith, Nadine Levratto, Sophie Reboud, Paul Sommers, Corinne Tanguy, Leila Temri and Nick Von Tunzelmann. I would also like to address my thanks to Philippe Chagnon for his essential support with the technical realization of the diagrams and Brent Ryan Barber for his great help with the publication of the english version of this book. Daniele Archibugi has done me the honor of writing the foreword of this book, may he receive a testimony of my gratitude.

Finally, my thanks go naturally and very sincerely to Dimitri Uzunidis, the author of this book’s postface, the person who has guided and accompanied me in my research for many years, for the many exciting discussions that never fail to animate us and the development of ever more absorbing projects with the Research Network on Innovation, which he chairs. I count myself as so lucky to have met and be surrounded by such incredible people, who are continuously expanding the scope of what is possible. I am very grateful.

The publication of this book has received the support of Bpifrance Le Lab. I warmly thank Frédérique Savel and Elise Tissier.

Foreword

In a film that is already 20 years old, New Rose Hotel, Abel Ferrara described a society in which large corporations dominate the world. They have money, power and, above all, competences to do it. The key element for their success is knowledge and they fiercely compete among each other to generate innovation-based new products. New knowledge is still generated by humans rather than by machines, and therefore bright scientists and engineers are the strategic resources for companies’ prosperity. Corporations rightly assume that very creative individuals are likely to generate several good ideas in their life – the very gooses that lay golden eggs. The film describes the attempt of one corporation to “steal” the most creative scientist, the genius of the time, for the competing company. The scientist is already very well paid, and is unlikely to be attracted by a greater salary. Here starts the thrill: will the gangsters hired by the company manage to persuade a spectacularly successful scientist to abandon his corporation and to join the competitor? Will they manage to get his brain by conquering his heart?

The film addresses several issues that are essential in the knowledge economy. First, is it true that top scientists and engineers are the core strategic asset of modern corporations? So far, this is far from being the case. Those who work in the R&D departments are unlikely to be the better-paid employees of a company. Most of the chief executive officers of large corporations originated from the financial sector or marketing, under the assumption that being good at managing money and selling products is more important than generating exciting new products and processes. But in the future this is less likely to occur and the progress of the knowledge economy will give more weight to those who are scientifically and technically competent rather than to those who command the tricks of the stock markets or of advertising.

Second, are some individuals so creative that they generate several fundamental discoveries and inventions in their working lifespan? This is already the case and we know that a few creative people are able to generate a wealth of great ideas. Bach, Mozart and Beethoven have composed dozens of masterpieces and this is not an exception. The statistics on the authorship of scientific articles and patents do show that a very few scientists and engineers are responsible for delivering the large majority of high-impact results. It is therefore understandable that corporations try to secure the best minds and head-hunting is already a common practice of oligopolistic competition. It is very likely that we see head-hunters more often around the areas where creativity is a must such as R&D, software development and design. It might appear that the film underestimates the importance of teams and gives too much credit to individual geniuses, but a surprise hidden in the finale shows that networks of good inventors can be economically more important than a single top scientist.

Third, the film challenges the traditional view that the most important incentive to stimulate very creative people is financial. Of course, we know that incentives are crucial to secure the talent of the most gifted. In football, the transfer of top players from one team to another is dominated by the salaries paid, but perhaps those who have their talent in their heads, rather than in their feet, are likely to be more sophisticated and to praise other aspects of life as well as money. Not only scientists working in universities and public research centers, but also their colleagues employed in the business sector give high importance to the intellectual environment in which they operate, the freedom they enjoy in pursuing their agendas, the possibility to discuss ideas with colleagues as well as real or potential competitors.

Twenty years ago, a few spectators were persuaded that knowledge would become the crucial competitive asset for companies. Today, only a few will dispute it. But for those who still have some doubts, this book, elegantly written by Blandine Laperche, will provide definitively convincing arguments. This book clearly explains how the knowledge capital of companies is constructed and how it provides benefits to companies as well as to society at large. Three issues are crucial to Blandine Laperche’s enquiry.

The first is the definition of innovation. For several decades, the Schumpeterian tradition has argued that innovating firms bring dynamism to the economy and are able to generate profits, efficiency and employment through the introduction of new products and processes. Innovating firms have unanimously been considered the frontrunners of progress and prosperity. But the specific understanding of innovation has too often been too narrow. Implicitly more than explicitly, we have assumed that innovation should be understood as something “technological” that is introduced in the “manufacturing” industries. True, for many decades the manufacturing industry provided a wealth of new products and processes that were used and diffused in agriculture as well as in the services. Still, it is too limited to presume that the production of innovation is confined to manufacturing and that the other industries are just users. In a world where the largest share of employment and value added comes from services, this traditional approach needs to be radically revised. We need to understand that innovation occurs in a much broader context; otherwise, we will not be able to understand why some that do not belong to the manufacturing industry are among the more prolific generators of fresh ideas and patents. Take the case of IBM, a company with more than a century on its shoulders, or the much younger Google: both are world leading innovators outside the realm of the manufacturing industry. Are we ready to take the challenge on board and to revise our toolkit? This book faithfully reports the state of the art: we can be happy for the progress achieved in the last decades producing broader and more comprehensive concepts and measures of innovation, but it clearly emerges that much still needs to be done to have instruments able to guide public policies and business strategies.

The second issue is the strong belief that the successful creation of knowledge capital by firms is rooted in a much wider economic and social space. Blandine Laperche builds upon the literature on national innovation systems to give a proper role to the relations between public and business players in augmenting the stock of knowledge. She shows that knowledge-based corporations do not work in a vacuum but rather in a heavily populated space where they interact with governments, universities, research centers, users and competitors. Her insights derive from an older and glorious academic tradition, the French historical École des Annales, which long before the economics of innovation became a popular subject, already understood the crucial role played by complex interactions between social institutions and techniques. In describing the boundaries of the firm, Blandine also takes into account how they have been transformed by the Internet revolution. The open innovation model, one of the most popular developments in the field, has penetrated large and small firms differently and this has relevant consequences for business strategies. The implication is that all companies could potentially take advantage of the existing opportunities, but if they fail to do it, it is likely that they will be marginalized.

The third issue is the way in which corporations are opening to the global society. The knowledge capital developed by companies is not sufficient by itself to sustain economic performance. It should also be properly protected against real and potential competitors in internal and, above all, global markets. But the boundaries of intellectual property right are highly uncertain: as with any property rights, intellectual property is guaranteed, protected and enforced by national governments. In spite of the harmonization that has taken place over the years and, most notably, since the foundation of the World Trade Organization in 1995, each nation still has its own rules and practices. Companies’ strategies are therefore forced to operate in uncharted waters and the attempt made in this book to map them is precious. The potential of companies to defend their own knowledge in isolation is more and more blurred. Blandine suggests that a really successful innovative company should not be obsessed with the protection of its knowledge, but rather it should be willing to share it because they know that this is the best way to move up in the learning curve. To put its own knowledge into a common pool is often the best way for a corporation to provide the standard to everybody. This is a lesson that perhaps several governments, obsessed with the protection of the intellectual property belonging to their own nations, have not yet properly assimilated.

The main lesson to be drawn from this dense, well-written and well-informed volume is that knowledge-based firms are not just profit-maximizing machines but rather institutions embedded into a much wider social fabric. In spite of the several attempts made to create fences around its fruits, knowledge will continue to provide benefits to a larger community of users. Marc Bloch already taught this in the 1930s with his seminal investigation of the Medieval watermills and Bertrand Gille in the 1970s with his comprehensive Histoire des techniques. We should be grateful to Blandine Laperche and her colleagues at the Research Network on Innovation for developing these ancient insights to better understand the knowledge-based company of the 21st Century.

Daniele ARCHIBUGIProfessor of Economics

Introduction

“Every civilization” writes Braudel “imports and exports aspects of its culture. These may include the lost-wax process for casting, the compass, gunpowder, the technique for tempering steel, a complete or fragmentary philosophical system, a cult, a religion or the song about Marlborough that went the rounds of Europe in the eighteenth century: Goethe heard it in the streets of Verona in 1786…” (p. 14). He continues on to say that “civilizations continually borrow from their neighbors, even if they ‘reinterpret’ and assimilate what they have adopted. At first sight, indeed, every civilization looks rather like a railway goods yard, constantly receiving and dispatching miscellaneous deliveries” (p. 29) (Braudel [BRA 93]).

Innovation today is at the heart of business strategy: it is associated with adaptation, change, rebirth, recovery, competitiveness and growth. It is embellished with qualifying adjectives intended to make it even more original: innovation today is disruptive (Christensen [CHR 97]), open (Chesbrough [CHE 03]), frugal (Radjou et al. [RAD 12]), reversed (Govindarajan and Trimble [GOV 12]), fractal (Midler et al. [MID 17]), etc. Technological, organizational and commercial innovation is thus an inevitable trajectory, which can even be considered, for both small and large companies alike, as an injunction carrying with it the penalty of going under in the face of the continuous and globalized tide of competition. But how does a company innovate? What activities become intertwined once the black box of innovation has been opened? How does a company decide what the necessary collaboration with other actors should be in order to succeed in its innovation process and, equally fundamental, what protection it needs to implement in order to secure these achievements and cement their dominant position within their networks?

The purpose of this book is to study the strategies and processes of innovation through the prism of knowledge capital. Here, we define knowledge capital as the set of scientific and technical information and knowledge produced, acquired, combined and systematized by one or more companies within a particular productive objective, and more broadly, within a process of value creation. Knowledge capital therefore refers to the knowledge accumulated by a company, which often maintains collaborations with other companies or institutions for this purpose. It is integrated into the individuals, machines, technologies and routines of a company. It is constantly enriched by the flow of information. It is used to create or improve upon existing products and services, but it can also become an intangible product to be transferred to other economic actors. Knowledge capital is therefore a dynamic concept, a process that describes accumulated knowledge, its enrichment, its combinations and the various forms of its use. This associated objective of value creation is the main condition for transforming knowledge into capital.

Understanding the meaning of knowledge capital requires a return to the key terms and central concepts that structure it. Therefore, Chapter 1 shall revisit the definition of innovation, its evolution over time, but also the processes, that is the organization of activities, that give rise to it. It will also recall the difficulties in assessing innovation. We shall set out to dissect the words knowledge and information, showing how they differ and how they complement each other in order to organize our approach to knowledge capital. We shall also detail its roles, both productive and organizational, within the broader process of value creation. Our definition of knowledge capital is based on the theoretical developments of three key concepts: firm, knowledge and capital. A brief review of contemporary theories of the firm allows us to grasp the advancements being made in the analysis of knowledge production activities within organizations. However, the re-reading of a few founding authors is also essential for a better understanding of the dynamics for the production, use and appropriation of knowledge capital.

Chapter 2 positions knowledge capital in terms of its historical context: industrial capitalism. The rapprochement between science and technology, which is essential to the formation of knowledge capital, is an old one, but has been advanced largely through the impulse of industrial needs, all the way from the manufacturer to the large-scale industry (Gille [GIL 78]). Teams or worker collectives are formed, combine skills and facilitate their appropriation in order to accelerate value production (Marx [MAR 67]). We trace this history and expound upon the reasons and forms of this rapprochement that culminated at the end of the 19th Century in the systematic relationship between science and technology (Habermas [HAB 68]), orchestrated by the States and the gradual creation of national innovation systems (Freeman [FRE 87]), (Lundvall [LUN 92]). This chapter presents the organizational changes in large enterprises in the 20th Century and the emergence of the various forms of organizational networks. The modern network firm model allows for multiple collaborations that are implemented (through open innovation) in order to collectively build knowledge capital (Laperche and Uzunidis [LAP 18]). In this chapter, we study the ways in which large companies create their knowledge capital by drawing on internal resources (accumulated skills, research and development expenditures) and external resources developed together with other companies, both large and small, as competitors or as partners, with institutions of academic research but also directly with consumers. The case of small companies is also analyzed, emphasizing their greatest difficulties, particularly in France, to independently capitalize on their knowledge capital, that is to say without integrating into existing networks formed and dominated by larger firms. This chapter therefore points to the increasing socialization of knowledge capital, which means that an increasing number of all kinds of companies and institutions contribute to the enrichment of the knowledge capital of each firm. At the forefront of these institutions are universities and public research centers. The third mission, which has been assigned to these institutions since the end of the 20th Century, that of the commercialization of research, is part of this desire/need to support the enrichment of the knowledge capital of firms.

Furthermore, this enrichment of knowledge capital is also reflected in the constant expansion of scientific and technical networks at the global scale (Archibugi and Filippetti [ARC 15]). This topic is the subject of Chapter 3. The multinational corporations of yesteryear have since become global and today weave their webs at the scale of the whole planet. Certainly, as Fernand Braudel emphasized in the words quoted above, cultural, scientific and technical goods have always had the peculiarity of being mobile. Yet, up until the end of the 20th Century, business research and development (R&D) activities were most often locked safely within the borders of the multinational companies’ home country. However, R&D has gradually become more internationalized as value chains have become more globalized. R&D laboratories were first established in other Triad countries and today are also based in the ultra-sophisticated clusters of emerging countries. Strategic alliances connect the scientific and technological centers of the planet (Narula, Martinez-Noya [NAR 15]). Reasons for this phenomenon of R&D globalization are to be found in the liberalization of markets (goods and services, labor, financial), which makes this globalization of R&D not only possible but flexible. The reasons are also related to the climate of trust that ensues from the globalization of intellectual property rights (IPRs), which ideally ensures the protection of the scientific and technological resources being propagated worldwide. Above all, the globalization of R&D is mainly driven by the profitability imperative that induces enterprises to reduce production costs, and absorb any new creative source or any new commercial opportunity, wherever it emerges in the world. This need for profitability stems from the weighting of finance in the strategy of companies, with shareholders demanding substantial returns on their investment (shareholder value). Financial globalization, an advanced feature of commercial and productive globalization, plays a key role in business strategies and the structuring of our knowledge-based societies (Chesnais [CHE 96], Laperche and Uzunidis [LAP 08]). It also plays a role in the strategies for the appropriation of knowledge capital, which are becoming increasingly aggressive the more that knowledge capital becomes socialized.

Indeed, this chapter also devotes focus to the important strategic developments of the appropriation of knowledge capital as it is deployed by companies. IPRs are controversial, as they are coupled with traditional roles of protection and incentives to innovate, as well as with barriers to entry (Boldrin and Levine [BOL 08]). We look at these contradictory roles from two angles, that of the multi-partner relationship and that of the extension of IPRs at the international scale, and into new fields. In the context of multi-partner innovation strategies, IPRs acquire a central coordination role, helping to legitimize their existence and even their profusion within knowledge markets. Nevertheless, opportunistic strategies are present at all stages of cooperation, thereby highlighting the role of IPRs in the creation and structuring of networks. They make it possible to draw a hierarchy between, on the one hand, those who appropriate rents in order to strengthen their dominant position and, on the other hand, other actors, resource suppliers, or prospective participants, who are blocked or in a situation of dependency. Geographical expansion through the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS, 1994) has the concurrent aim of accelerating the transfer of technology to countries with less scientific and technological resources with the view to stimulating their ability to innovate. Similarly, expansion into new areas (ICT, living organisms, etc.) aims to stimulate innovation in auspicious sectors. Again there are many contradictions. These are revealed, for example, in the costs associated with newly protected technologies, which slow down their dissemination in emerging countries, and the multiple patent wars that, in the field of ICTs in particular, fill the pages of our newspapers. More generally, these contradictions reveal the poor knowledge on the mechanisms by which innovation emerges and spreads.

This book therefore deals with a series of themes, themselves the subject of very detailed, but also relatively fragmented study, within the fields of economics and the management of innovation. Some authors devote their entire careers to the analysis of, for example, open innovation strategies, research commercialization policies, international strategic alliances and/or the use of IPRs. Their work is fundamental because such expertise makes it possible to identify new strategic enhancements, such as how to exploit a particular tool, etc. Nevertheless, it should be noted that there are inherent risks to a fragmented analysis, in the event that it overlooks any links with other similar phenomena, or in terms of their scopes or implications at a broader level. Adopting a systemic approach, and following the thought of Blaise Pascal, who affirmed that “I hold that it is impossible to know the parts without knowing the whole as it is to know the whole without detailed knowledge of the parts”, our goal was to assemble the pieces of the puzzle to reveal a general framework for analysis. It seems to us that this is essential to reach a deeper understanding of the role and meaning for each piece of the puzzle. It reveals two strong and contradictory tendencies: on the one hand, a growing socialization in terms of the production of knowledge capital, and on the other hand, the offensive strategies of appropriation of the value it produces. The understanding of these two parallel and contradictory phenomena is, to our view, really useful in any reflection on innovation. What is the ultimate goal of innovation? Is it contributing more and more to the profit creation of a few dominant companies, or is it responding to the major challenges facing our societies? We believe that these two objectives rarely intersect.

To conclude, this book naturally has its limits. The literature on these themes is so abundant that other developments certainly could have been included. That being said, it should be noted that rather than seeking to provide definitive answers to the questions posed above, this work is part of a desire to stimulate reflection and debate, while at the same time providing key understandings of the issues surrounding the topic that is innovation.

1The Firm, Knowledge and Capital: Toward the Definition of Knowledge Capital

In this chapter, we investigate the meaning of words. The term innovation is plural and its sense has evolved over time. Here, we examine the current typologies, the modalities of organization of activities that intertwine to give rise to innovation and the indicators used for its measurement (section 1.1). In order to grasp the knowledge capital of an enterprise, it is also useful to review the relationship between information and knowledge. The productive use of a set of information and knowledge produced, acquired and mobilized by a company makes it possible to understand the transformation of knowledge into capital and thus the formation of knowledge capital (section 1.2). The analysis of knowledge capital is based upon the contemporary theoretical developments of the firm and knowledge, which are associated with the contributions of some pioneer authors. We refer to them in section 1.3 of this chapter.

1.1. Innovation: definition, organization and measurement

1.1.1. “From vice to virtue”: the evolution of the definition for innovation

While the concept of innovation is everywhere today, and symbolizes the very latest in modernity, it is nonetheless very old and has not always been associated with progress and growth. According to Godin [GOD 14], the concept of innovation goes back to antiquity and was then used by Greek philosophers in their political theories. This political sense would remain dominant until the 19th Century, up until when innovation meant a “change in the established order” with regard to politics and religion. Innovation was thus banned (e.g. by Edward VI of England in 1548) and religious or political innovators (such as the French revolutionaries of the 18th Century and the reformers of the 19th Century) were indicted, imprisoned, or even worse.

It is only in the 20th Century that the meaning of innovation began to transform and came to be associated with positive notions of progress, creativity and economic growth. From this century onwards, “there is no longer any doubt that the vice that was once characterized innovation, has become a virtue” (Godin [GOD 14, p. 33, our translation]). As such, innovation quickly became associated with technology.

Schumpeter (1883–1950) is often considered as the first economist to use and construct an economic theory based on innovation. However, before him, classical economists were largely preoccupied by the changes brought about through “technical progress”, or “mechanization”, key terms found in the writings of Adam Smith, David Ricardo, Jean-Baptiste Say and Karl Marx to name only a few. In addition, as noted by Godin [GOD 14], the sociologist Gabriel Tarde (1843–1904) is often mentioned as the first person to have devoted theoretical writings to innovation, toward the end of the 19th Century. According to Djellal and Gallouj [DJE 17], although the latter never cited him, he would have been an important inspiration for Schumpeter, at least in his work devoted to the theory of innovation. Despite this, Schumpeter is still widely considered as the father of modern innovation theories.

In Schumpeter’s Theory of Economic Development [SCH 11], he considers that “To produce means to combine materials and forces within our reach (…). To produce other things, or the same things by a different method, means to combine these materials and forces differently” [SCH 05, p. 65]. Evolution results from the execution of “new combinations amongst the means of production”, which include the following cases (Box 1.1).

Box 1.1.Forms of new combinations, according to Schumpeter [SCH 05, p. 66]

1) The introduction of a new good – that is, one with which consumers are not yet familiar – or of a new quality of a good.

2) The introduction of a new method of production, that is, one not yet tested by experience in the branch of manufacture concerned, which need by no means to be founded on a new scientific discovery, and which can also exist in a new way of handling a commodity commercially.

3) The opening of a new market, that is, a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before.

4) The conquest of a new source of raw materials or half-manufactured goods; again, irrespective of whether this source already exists or whether it has to be created first.

5) The realisation of a new organization of any industry, such as the creation of a monopoly position (for example through trustification) or the breaking up of a monopoly position.

The importance of this definition and Schumpeterian analysis in the theory of innovation in general can be explained via several arguments, which are presented below.

In the first place, this definition is important inasmuch as for the first time it distinguishes the various forms that innovation can take, without reducing it to technology. These various forms of innovation are central to the contemporary definition proposed by the OECD, and which we will discuss in greater depth later. Meanwhile, in the analysis of long waves by Kondratieff, technology occupies a central position. In Business Cycles [SCH 39], Schumpeter links the three Kondratieff movements, from the period 1750 to 1940, to the three waves of fundamental innovations, which mainly concern technology, namely the textile, steel and steam industries of the late 18th Century; the railroad empires of the middle 19th Century; and the electricity, automotive, chemistry-based industries at the turn of the 20th Century. “Consequently, the role of innovation… is essential to the explanation of economic cycles” (Uzunidis [UZU 96, p. 122, our translation]). These innovations lead to an increase in supply-side capacities (increased demand for production goods, lower production costs and an increase in the quantities of new products on offer) that is accompanied by an increase in demand (new consumption needs and recourse to credit). We also find this primacy of technology in the analysis of the technoeconomic paradigm proposed by Freeman and Perez [FRE 88, FRE 08, PER 10]. It is defined as the set of the most successful, cost-effective practices in terms of input choices, methods and technologies, as well as in terms of organizational structures, economic models and strategies. The paradigm forms a kind of common sense that facilitates the diffusion of technologies that shape a technological revolution, defined as a constellation of technical systems with a common dynamic that can integrate a set of generic technologies, which can be widely applied (Boutillier and Laperche [BOU 16]).

In Schumpeter’s analysis, innovation is therefore associated with evolution and change. This is the second essential point. “Capitalism, then, is by nature a form or method of economic change and it not only never is, but never can be stationary” [SCH 75, p. 82]; in fact, “The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization, all the elements created by the capitalist initiative” [SCH 75, p. 83]. These new combinations cause the hurricane of Creative Destruction, continuously destroying older elements and continuously creating new ones. Thus, changes induced by innovation also have negative consequences. If we return to the analysis of long waves, excess investment in the growth phase is in fact penalized by losses, redundancies and bankruptcies that will carry out a “vacuum clean-up” at the same time creating anew the spirit of enterprise.

This central role of technology and as such the potential for change, as made possible through technology, is still a subject of debate today. For Gordon [GOR 16], for example, information and communication technologies (ICT) affect a smaller number of activities as compared with the key technologies of the second industrial revolution (electricity and aviation), which is hampering the resumption of activity. On the contrary, other authors (Achibugi [ARC 16], Archibugi et al. [ARC 17]) consider that current technologies offer many opportunities, in terms of job creation and new growth. However, they believe that the economic and social system do not sufficiently promote their exploitation or dissemination. According to these authors, massive public investment into not only science and technology but also infrastructure should be made to help companies develop marketable products and services. The current high financialization of the economy, which makes equity investments more profitable and productive investments more risky, also plays a key role in the absence of a long-awaited recovery and the emergence of a new period of growth (Uzunidis [UZU 03]). Another connected argument is for the focus of science and technical progress to be toward short-term profitability targets, which do not sufficiently take into account large-scale challenges (e.g. climate change, aging populations), which could offer many new business opportunities.

Of course, and this is the third argument justifying the importance of Schumpeter’s analysis, not all innovations have the same effects on the economic structure. New combinations can result from continuous, small-scale transformations – now called minor or incremental innovation – and their effect on the economic structure will therefore be limited. “Insofar as the ‘new combination’ may in time grow out of the old by continuous adjustment in small steps, there is certainly change, possibly growth, but neither a new phenomenon that would be out of the bounds of an equilibrium interpretation nor development in our sense” [SCH 05, pp. 65–66]. On the other hand, Schumpeter goes on to refer to what is today called radical or major innovation: “Insofar as this is not the case, and the new combinations appear discontinuously, then the phenomenon characterizing development emerges. For reasons of expository convenience, henceforth we shall only mean the latter case when we speak of new combinations of productive means” [SCH 05, p. 66].

A radical innovation can be defined as an innovation with a significant impact on the market and on the economic activity of firms. This impact may include changing the market structure, creating new markets or making existing products obsolete. In fact, in the analysis of cycles the new combinations appear in clusters, thereby combining both major and minor innovations. Radical innovations launched by entrepreneurs trigger the beginning of the cycle. The creation of profit opportunities attracts imitating entrepreneurs who offer incremental innovations and thus prolong the growth trend at a slower pace until the eventual turning point of that cycle. Researchers in economics and management now refer to a third category of innovation with respect to these effects: breakthrough, or disruptive innovation (Christensen [CHR 97, CHR 03]). Its trait is to introduce new performance criteria by targeting different users. It opposes continuous innovation and favors new entrants, who adopt a different business model. Consequently, the notions of disruptive innovation and radical innovation are close; however, radical innovation is more closely associated with new technologies that originate from advancements made in science and technology, whereas disruptive innovation can be ascribed to non-technological changes. Products can simply be more basic and not necessarily rely on technological change, or they should introduce new features and functions aimed at appealing to new consumers.

The fourth argument that illustrates Schumpeter’s contribution to the theory of innovation is that innovation is embodied by individuals, or more precisely within “economic functions” as carried out by specific individuals. In this sense, an entrepreneur according to Schumpeter is an individual whose function is to carry out new combinations [SCH 05, p. 74]. By doing so, Schumpeter prolonged the analysis of the French economist J.-B. Say (1767–1832), who considered the entrepreneur as a producer, alongside the scientist and the worker (Boutillier and Tiran [BOU 16]). The entrepreneur’s primary competence lies in the “art of application”, which rests not only on science and knowledge but also on their application in terms of the needs of people (Tiran [TIR 17]). The entrepreneur implements new combinations. By highlighting this function of “placing on the market” or “introducing into production”, Schumpeter highlights the essential difference between novelty or invention (in the technical sense) and innovation. If the invention is defined as a technical solution to a technical problem, innovation consists of its productive and commercial exploitation with the objective of making a profit. The characteristic that distinguishes a novelty from an innovation is that the latter involves “implementation”, whether that is in the form of a market launch of a product or service or a productive use for innovation in commercial or organization processes. The aims of innovation are always linked to economic objectives: increasing the company’s turnover, opening up new markets, reducing production costs, internalizing organizational costs, internalizing and externalizing transaction costs, increasing labor productivity.

However, the creative power of the entrepreneurial spirit and the advent of entrepreneurs as a “group” at the heart of this analysis on the theory of economic development depersonalizes itself in the course of its work, showing an awareness by Schumpeter as to the nature and scope of the transformations which had taken place in the structure of capitalism since the beginning of the 20th Century. The discovery of the existence of what he calls “trustified capitalism” in Business Cycles, will be the object of increasing attention, to the point of becoming the essential cause behind the historically determined character of “capitalism” as it features in Capitalism, Socialism and Democracy. The planning of technological progress by large companies, the development of private research laboratories whose aim is to reinforce the innovation potential of the company are the signs of the “bureaucratization” of technical progress: “Technological progress”, writes Schumpeter, “is increasingly becoming the business of teams of trained specialists who turn out what is required and make it work in predictable ways. The romance of earlier commercial adventure is rapidly wearing away, because so many more things can be strictly calculated that had of old to be visualized in a flash of genius” [SCH 75, p. 132]. This bureaucratization, necessary in the face of competition, is a sign of the strengthening of monopolistic structures. Economists, especially neo-Schumpeterians, raise this evolution by referring to Schumpeter Mark I for small companies that innovate, and to Schumpeter Mark II for the larger corporations that take on this role (Nelson and Winter [NEL 82], Malerba and Orsenigo [MAL 95]). This distinction, as Munier [MUN 13] explains, should be nuanced, since the decisive role of the entrepreneur – and the small business – is a constant theme in all of Schumpeter’s work; it is indeed the disappearance of the entrepreneur that will sound the death knell of capitalism.

The Schumpeterian legacy is thus omnipresent in the themes that animate researchers who specialize in the subject of innovation. Indeed, the contemporary definition of innovation is part of this legacy.

1.1.2. Typology of innovation: the contemporary definition

The contemporary definition of innovation is that as outlined in the third edition of the Oslo manual, published by the OECD in 2005. It is part of a series of OECD-edited textbooks on measuring and interpreting data as it pertains to science, technology and innovation. For example, it complements the Frascati Manual from 2015 [OEC 15a], which focuses on R&D, and the Canberra report from 1995 [OEC 95], which deals with the measurement of human resources that are devoted to science and technology.

The definition of innovation incorporates for the first time forms of technological and non-technological innovation. Indeed, previous versions of the Oslo manual restricted innovation to its technological form (products and processes). Innovation is defined as “the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations” [OEC 05, p. 46].

1.1.2.1. The four categories of the Oslo manual

Four categories of innovation are thus distinguished: product, process, marketing and organizational innovations.

Product innovations relate to “the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses. This includes significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other functional characteristics” [OEC 05, p. 48]. New products can be based on original knowledge and technologies (such as the first microprocessors or digital cameras) or a combination of existing technologies (e.g. the first portable MP3 players). They may also relate to a new type of use, for example an existing chemical composition that is used to produce a new type of detergent when its previous use was quite different. Significantly improved products relate to changes in materials, components or other characteristics that make these products more efficient. Examples not only include “stop and go” systems that cut car engines at traffic lights, GPS navigation systems or automatic parking, but also the increase in the computing or storage power of our electronic devices. The term product innovations also apply to services, whether they are completely new (e.g. a new apartment rental service) or simply improved (e.g. Internet banking).

Process innovations are defined as “the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software” [OEC 05, p. 49]. The introduction of collaborative robots in industry (cobots) is an example of a new production method. New distribution methods, for example, barcode tracking systems or active radio frequency identification goods-tracking systems. Process innovations also apply to services, for example, a new online product reservation system in the case of local food systems (for example La Ruche qui dit Oui!: a Website where consumers can select artisanal products online, whereupon once a critical mass is reached, a pick-up location and time is issued), or the geolocation of available urban rental bikes (or parking spaces).

Marketing innovations concern “the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing” [OEC 05, p. 49]. Changes in product design refer to changes in its shape and appearance, without altering the functional characteristics of the product. Marketing innovation constitutes a change in the wrapping or packaging of foods, beverages, or moisturizers, which does not change the composition of the product itself. Marketing methods for product placement refer to new distribution systems (such as the introduction of a franchising network) or new ways of displaying products, such as furniture, for example, giving the customer the impression of visiting their future home. In the domain of the promotion and pricing of products and services, these new marketing methods denote branding or the first use of a method to adjust the price according to demand.

Organizational innovations