Mr. Keynes and the neo-Schumpeterians: Contributions to the analysis of the determinants of innovation from a post-Keynesian perspective

Abstract

Abstract The purpose of this paper is to discuss the importance of knowledge, both tacit and codified, in the formation of the state of long-term expectations that drive firms’ decisions to search for innovation and to investment in R&D. The paper takes the post-Keynesian theory as reference, associating it with the neo-Schumpeterian analysis of innovation dynamics. First, it is argued that knowledge plays a crucial role in building agents’ confidence, emphasizing that radical innovations are more dependent on the accumulation of codified knowledge, given the higher degree of uncertainty associated with this type of innovation, while incremental innovations are more dependent on tacit knowledge about the current market conditions and technological trajectory. Second, it is argued that the accumulation of knowledge and the constant introduction of innovations foster the creation of a convention to innovate, which facilitates the decision to pursue innovations by influencing long-term expectations.