INNOVATION SYSTEMS IN THE TERMS OF SCHUMPETERIAN CREA-TIVE DESTRUCTION

Robert Ciborowski

doi:10.21303/2504-5571.2016.00114

Abstract

‘Creative destruction’ is one of the most important analytical tools, taking into consideration both the economic and sociological characteristics of capitalist society. According to Schumpeter, in the long term, evolution gives rise to economic develo-pment resulting from batches of innovative solutions, leading to improvements in the standard of living. The innovation activity of firms is based on supply-side factors, hence it is large en-terprises that excel in innovation since they strive to achieve a monopoly market posi-tion and above-average profits. Schumpeter attempts to combine two elements: the spread of monopolies and the con-tinuation of economic development, both occurring through innovation, which is far more important than price competition. The Schumpeterian ‘creative destruction’ permeates the main aspects of macroeconomic activity, not only in the long term, but also in the area of economic fluctuations, structural changes, or the functioning of markets. As a result, it becomes a factor determining changes in the economic order.

Highlights

The recent growing interest in the role of innovation in economic development has prompted many theoreticians to return to the work of Joseph Schumpeter
The Schumpeterian ‘creative destruction’ process demonstrates that innovative advantage is the main source of economic growth and development
The ability to achieve this kind of advantage is possible thanks to the stepping up of innovation activities by gaining a monopolist position

Summary

INNOVATION SYSTEMS IN THE TERMS OF SCHUMPETERIAN CREATIVE DESTRUCTION

Robert Ciborowski University of Bialystok Economics and Management Faculty 63 Warszawska str., Bialystok, Poland 15067. According to Schumpeter, in the long term, evolution gives rise to economic development resulting from batches of innovative solutions, leading to improvements in the standard of living. Schumpeter attempts to combine two elements: the spread of monopolies and the continuation of economic development, both occurring through innovation, which is far more important than price competition. The Schumpeterian ‘creative destruction’ permeates the main aspects of macroeconomic activity, in the long term, and in the area of economic fluctuations, structural changes, or the functioning of markets. As a result, it becomes a factor determining changes in the economic order.

Introduction

Conclusions