Academic journal article IBAR

Innovation-The Case for Multi-Level Research

Academic journal article IBAR

Innovation-The Case for Multi-Level Research

Article excerpt

It is now generally recognised that we are in the midst of major economic upheaval, with the kind of ramifications not seen since the industrial revolution of the early nineteenth century. Products of the human mind, such as software, pharmaceuticals and microprocessors, are replacing those of the earth and the blast furnace as our primary measure of economic power, and information technology is set to become the world's biggest industry within the next decade, displacing the automobile as the primary barometer of economic activity (Mandel 1997). As a recent editorial in Forbes has pointed out, in an international economy built on new technologies that are free from many physical restraints change "goes into overdrive" (Forbes 1997, p. 130).

It is no surprise, then, that innovation is fast becoming the central preoccupation in management and related studies. "Innovate or fall behind: the competitive imperative for virtually all businesses today is that simple", is how Leonard and Straus (1997, p. 111) see it, and their view is widely shared (Peters 1990, Beck 1992). Yet, in spite of this increasing attention, we still have much to learn about the process of innovation in organisational and institutional settings. Questions such as why some firms are more innovative than others in the same industry, why some regions or countries are more innovative in certain industry sectors than others, and why innovation of the more radical kind most often tends to come from outside of existing industries are still being pursued with little resolution in sight.

To date, most studies of innovation and its link with competitiveness have tended to focus on a single level of analysis. Industrial economists, evolutionary economists and institutional theorists have all tended to focus on the nature of innovation at sectoral, regional/national or even global levels (Nelson 1992, Jacobson 1994, Niosi and Bellon 1996), while management theorists have tended to focus on factors governing innovation at the level of the firm (Quinn 1985, Sinetar 1985, Drucker 1986, Kanter 1988, Cohen and Levinthal 1990, Leavy 1997). This paper argues that the time is now ripe for a move towards more multi-level, interdisciplinary research. The early part of the paper reviews the literature on innovation and finds thematic and conceptual convergence across levels and disciplines around the relationship between innovative activity and institutional context and the nature of the innovation process itself. This convergence, the paper concludes, indicates the opportunity for multi-level, interdisciplinary research and points the way towards the kind of framework based on systems thinking, learning theory and dynamic analysis, through which such research might be pursued.

The institutional context for innovation

Among the most prominent themes linking the literature on innovation across levels and disciplines is the growing interest in the relationship between institutional context and innovative activity.

There is a strong tradition associating innovation primarily with rare entrepreneurial or inventive talent. This tradition has its roots in the early literature on economic development, particularly with the Schumpeterian (1912) characterisation of the process as one of 'creative destruction'. As Baumol (1958, p. 64) pointed out nearly forty years ago, the entrepreneur is "at the same time one of the most intriguing and one of the most elusive characters in the cast that constitutes economic analysis". Attempts over the years since to pin down the definitive attributes of this elusive character have continued to meet with little success (see Burch 1986 for a typical example).

There is no doubt that rare talent plays its part in innovation activity, often in the most dramatic ways. History continues to demonstrate the impact that scientific and commercial genius can have on the growth of firms and the transformation of industries. …

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