What drives innovation? Evidence from economic history

Abstract

An unresolved issue in innovation studies is to what extent and how innovation is affected by changes in the economic environment of firms. This study elaborates on a theoretical framework that unites theories of innovation as creative response and the economics of complexity. In the empirical section, results from a new micro-based database on Swedish product innovations, 1970–2007, are introduced. Applying the theoretical framework, both quantitative evidence and collected innovation biographies inform of the historical impulses that have shaped innovation activity in the Swedish economy in two broad surges during the 1970s and 1990s. The study shows that, rather than being the result of continuous efforts, most innovations were developed as a response to discrete events, history-specific problems and new technological opportunities. It is also suggested that patterns of creative response are industry-specific and associated with the radicalness and complexity of innovation processes.