From Breakthrough to Incremental Innovation Leadership: Lessons from Germany

Abstract

The relationship between breakthrough and incremental innovation remains one of the more important issues in innovation theory and in national innovation policy. Using a comparative historical approach, in this paper, we analyze the rise and fall of Germany as a science and innovation leader of the early part of the twentieth century and its transformation from a breakthrough to an incremental innovator after 1945. We find that Germany was an important early precursor and successful practitioner of such contemporary concepts as national innovation systems, the triple (quadruple) helix, and university–business collaboration well before they became regarded as best practice only after 1980. We then pose the question of why modern Germany, in spite of its economic success, was not able to restore its preeminence in science and breakthrough innovations limiting its performance to incremental innovation in selected traditional industries. In our conclusions, we propose to draw important lessons from the successes and failures of Germany for countries that aspire to innovation leadership today. We argue that although many conditions have changed, key rules of maintaining breakthrough innovation leadership remain valid.