Schumpeterian patterns of innovation

Abstract

Using patent data for four countries (Germany, France, United Kingdom and Italy) for the period 1968-1986, the authors find that the patterns of innovative activities differ systematically across technological classes, while remarkable similarities emerge across countries in the patterns of innovative activities for each technological class. This result strongly suggests that 'technological imperatives' and technology specific factors (closely linked to technological regimes) play a major role in determining the patterns of innovative activities across countries. Schumpeter proposed two major patterns of innovative activities. The first one, labelled by Nelson and Winter (1982) and Kamien and Schwartz (1982) as Schumpeter Mark I, is proposed in The Theory of Economic Development (1934). In this work, Schumpeter examined the typical European industrial structure of the late nineteenth century characterised by many small firms. According to this view, the pattern of innovative activity is characterised by technological ease of entry in an industry and by a major role played by new firms in innovative activities. New entrepreneurs come in an industry with new ideas, new products or new processes, launch new enterprises which challenge established firms and thus continuously disrupt the current ways of production, organisation and distribution and wipe out the quasi rents associated with previous innovations. The second one, labelled Schumpeter Mark II, is proposed in Capitalism, Socialism and Democracy (1942). In this work, inspired by the features of the American industry of the first half of the twentieth century, Schumpeter discussed the relevance of the industrial R&D laboratory for technological innovation and the key role of large firms. According to this view, the pattern of innovative activities is characterised by the prevalence of large established firms and by relevant barriers to entry for new innovators. Large firms have institutionalised the innovation process with the creation of R&D laboratories filled with researchers, technicians and engineers. With their accumulated stock of knowledge in specific technological areas, their advanced competence in large scale R&D projects, production and distribution and their relevant financial resources, they create barriers to entry to new entrepreneurs and small firms.