Creative Destruction Research Articles

Law and Religion: Destruction and Reconstruction

Diritto e religione: decostruzione e ricostruzione ABSTRACT. In the 1940s, Austrian economic Joseph Schumpeter coined the concept of “creative destruction” to describe how capitalism evolves through the relentless and continuous dismantling of its old paradigms. Fast forward to the present, British and American scholars Russell Sandberg and Marc O. De Girolami are emerging today as contemporary “creative destroyers” in the field of law and religion. Pointing to the pathologies affecting the intellectual development of the discipline and prescribing possible remedies, this paper introduces and discusses two recent works by the Authors as part of their efforts to critically deconstruct law and religion and project it into the future. SUMMARY: 1. Introduction - 2. Repentance - 3. Reappraisal- 4. Regeneration - 5. Discussion - 6. Death and New Life - 7. Conclusions.

Enhancing Human Knowledge and Capabilities with Artificial Intelligence Tools for Education

This study explores the different ways Artificial Intelligence (AI) tools bolster human knowledge and boost intellectual and creative efforts within the educational sector. It provides a broad examination of AI's potential to enhance educational processes and outcomes while also assessing the ramifications of AI-driven creative destruction on the job market encompassing both job displacement and the emerging scope for new knowledge creation. Purpose. The study aims to explore the different ways in which AI tools enhance human knowledge and capabilities and their role in augmenting human intellectual and creative endeavours in education. By examining how AI can improve educational processes and outcomes, it highlights the potential for significant advancements. Additionally, the study critically examines the implications of AI-driven creative destruction on the job market, focusing on the education sector. This includes understanding both job displacement and the creation of new opportunities that require advanced skills. Methods. This research involves a detailed analysis of various AI applications across the education domain. It employs virtual interviews with students and educators to provide detailed examples of AI's impact and reviews existing literature to contextualise these findings within broader economic implications. By focusing on the education sector, the study provides a comprehensive overview of how AI is being implemented and the outcomes of these implementations. This approach allows for a thorough understanding of both the benefits and challenges connected with AI integration. Results. The study suggests that AI significantly improves data processing capabilities, leading to notable advancements in educational research and personalised learning. These improvements can facilitate decision-making and innovation. However, AI also disrupts traditional employment patterns, displacing routine jobs that are easily automated. Conversely, it creates new roles that demand advanced technical skills and continuous education, highlighting a shift in the job market toward more specialised and high-skill positions. Conclusion. While AI can present substantial benefits in terms of efficiency and innovation, it poses significant challenges in the form of job displacement. To manage these transitions effectively, strategic responses from policymakers and educational institutions are essential. These strategies should aim to ensure equitable access to AI’s benefits and support workforce adaptation. By fostering a balanced integration of technological advancements and human well-being, it is possible to mitigate the negative impacts while maximising the positive outcomes of AI.

Creative Destruction and the Reallocation of Capital in Rural and Urban Areas

Creative Destruction and the Reallocation of Capital in Rural and Urban Areas

A Schumpeterian exploration of Gini and top/bottom income shares

Abstract Data show that an increase in the Gini coefficient is associated with a falling bottom $p_{B}$ % income share and an increasing top $p_{T}$ % income share where, for example $p_{B}$ = 40 and $p_{T}$ = 1. This relationship, which we call the $X$ inequality relationship, is pervasive in the sense that it is observed in many countries, including the US, the UK, France and others. The purpose of this paper is (i) to construct a Schumpeterian growth model to explain the relationship, and (ii) to identify/quantify factors behind it via calibration of the US economy. Our model gives rise to a double-Pareto distribution of income as a result of entrant and incumbent innovations. Its advantage is that it allows us to develop iso-Gini loci and iso-income share schedules in a tractable way. Using a double-Pareto distribution as an approximation of an underlying income distribution, calibration analysis reveals that a declining business dynamism and fiscal policy changes in the past decades played a significant role in generating the $X$ inequality relationship in the US.

Endogenous innovation scale and patent policy in a monetary schumpeterian growth model

Abstract This paper develops a monetary R&D-driven endogenous growth model featuring endogenous innovation scales and the price-marginal cost markup. To endogenize the step size of quality improvement, we propose a tradeoff mechanism between the risk of innovation failure and the benefit of innovation success in R&D firms. Several findings emerge from the analysis. First, a rise in the nominal interest rate decreases economic growth; however, its relationship with social welfare is ambiguous. Second, either strengthening patent protection or raising the professional knowledge of R&D firms leads to an ambiguous effect on economic growth. Third, the Friedman rule of a zero nominal interest rate fails to be optimal in view of the social welfare maximum. Finally, our numerical analysis indicates that the extent of patent protection and the level of an R&D firm’s professional knowledge play a crucial role in determining the optimal interest rate.

IMPACT OF ARTIFICIAL INTELLIGENCE ON FUTURE ENTREPRENEURSHIP: SURVEY RESULTS AND TRENDS ANALYSIS

The article examines the phenomenon of artificial intelligence (AI) and its manifestation as a result of creative destruction in all spheres of activity, including entrepreneurship. The peculiarities of AI research are noted, and the results obtained during the survey are analyzed. The goal of this article is to investigate the impact of artificial intelligence on contemporary entrepreneurship. In particular, it discusses the ways in which artificial intelligence is used in business practices and its role in the process of creative destruction. The survey results, conducted among entrepreneurs, are analyzed to identify key trends and challenges associated with AI implementation. The research methodology includes conducting surveys among the general population and entrepreneurs from various sectors regarding artificial intelligence and its potential use in entrepreneurship, as well as analyzing the responses received from respondents. The results: the survey shows that the majority of entrepreneurs acknowledge the significant impact of artificial intelligence on enhancing business process efficiency, decision-making, and innovative development, and are already integrating it into their operations. The scientific novelty of this article lies in the detailed analysis of the impact of artificial intelligence on entrepreneurship, providing survey results, and drawing conclusions regarding the potential use of this technology in business. The practical significance lies in conducting a qualitative analysis and revealing the role of artificial intelligence in entrepreneurial activity. The article emphasizes the widespread adoption and impact of the technology on modern business, demonstrating its potential for improving efficiency and innovation. The conducted analysis emphasizes the need for further research for a deeper understanding and optimal utilization of AI in entrepreneurship.

From death to birth: Do logistics parks help local renewals in logistics industry?

In the era of E-commerce and globalization, the logistics industry has become a new driving force for local economic development, with government-led logistics parks planned and constructed as a powerful policy instrument. Skeptical about whether logistics parks really take effect as expected, this paper investigates the local process of creative destruction in the logistics industry, focusing on how government-led logistics parks bridge between firm exit and firm entry during industrial renewal. Using firm-level data of third-party logistics firms in China from 2003 to 2021 and adopting system GMM estimator method, we verify that previous exit contributes to future entry but varies by the firm type and the city's importance in the regional transport network. Furthermore, we find two major roles of government-led logistics parks: (1) accelerating this process by providing the platform where various resources can be reused and reorganized into high-quality new logistics firms; and (2) prioritizing the rebirths from local existing firms over arrivals from other cities, though with some level of local protectionism. Government policies and planning decisions should maintain such function without inhibiting regional market integration.

The permanent global crisis of working-class social reproduction: ten propositions

The maintenance and reproduction of the working class remains a necessary condition for the reproduction of capital. But the capitalist may safely leave this to the labourer’s drives for self-preservation and propagation. (Marx [1867] 1976: 718) The capitalist mode of production gives rise to a crisis of working-class social reproduction from the outset, and continually exacerbates that crisis in the course of its development. Far from being in principle a crisis for the capitalist mode of production itself, then, crises of working-class social reproduction are the empirical effects of changes in the capitalist economy, reflecting capitalist power over the fate of the propertyless population. The inherent characteristics of the capitalist mode of production – competition between individual capitals, uninterrupted scientific and technological revolution, an ever-increasing division of labour on local to global scales, the constant process of ‘creative destruction’ as obsolete capitalist enterprises die and new ones are born, the universalisation of commodity production, concomitant to proletarianisation and the creation of a permanent ‘reserve army of labour’, and the tendency for capital to invade and take over any form of production more ‘primitive’ than itself – all continually disrupt areas of social and economic activity within capitalist social formations and those which capitalism has not fully penetrated yet. The effect of state government policies and governance on the part of international organisations is to induce or exploit crises of working-class social reproduction in order to further the hegemony of capital over their own territory and the world market as a whole.

Creative destruction? Exploring the deliberate destruction of possessions by consumers

The purpose of this article is to explore consumption practices that involve the deliberate destruction of meaningful possessions; in particular, what motivates consumers to do so, why they choose it over other divestment options and what value creation do they expect from this. This is a consumer choice acknowledged but lacking in extant research, theoretical or empirical. From the existing literature a qualitative study was developed, consisting of a series of exploratory interviews with consumers who considered that they had engaged in possession destruction. From analysis of the identified themes, we developed a temporal process, where possession destruction creates self-wellbeing for the consumer, through the elimination of negative symbolic value associated with the possession. The existence of ritualistic and taboo behaviour suggests that this type of consumption can also be conceptualised as a social, violent, and sacrificial process.

‘It just seems that they don’t act like men’: The influence of gender role stereotypes on women’s entrepreneurial innovation activities

The purpose of this study is to explore how gender role stereotypes influence women entrepreneurs in their innovation activities. To examine how women perceive and respond to stereotypes that deem them less capable of initiating innovation processes of creative destruction in Schumpeterian terms, I draw on symbolic interactionism. The ethnographic field study I conducted in an entrepreneurial ecosystem reveals that relevant actors and institutions still attribute women as exploring innovation potentials of limited scope, having higher risk awareness, and exploiting identified innovation potentials in niche rather than mainstream markets, while they are more often driven by emotions. To challenge these stereotypes and thrive in exploring and exploiting innovation potential, they need to invest considerable resources in legitimation efforts, building strategic alliances, and managing expectations. These findings contribute to the development of theory on the impact of gender on the performance of innovation activities.

Typewriting Services in Tacloban City amid the Digital Age: A Case Study

Typewriting, once a common service, has largely faded due to the rise of computers and digital technology. However, in Tacloban City, Philippines, one typewriting business has persisted for over 26 years. The study explores the factors behind the continued operation of this lone typist, investigating their motivations, clientele, and adaptation strategies in the digital age. Researchers employed a qualitative case study approach, utilizing purposive sampling to gather data from the sole typewriting service provider. Thematic analysis, following Caulfield's (2019) framework, was used to analyze the data. Findings reveal that the typist's dedication, specialized services, and specific customer base who prefer traditional methods contribute to the business's enduring success despite the widespread availability of digital alternatives. This study offers deeper understanding on the resilience of traditional businesses in a rapidly evolving technological landscape and provides insights into the dynamics of creative destruction and cultural lag within a specific industry.

A probabilistic framework for stranding risk assessment and EPBD IV scenario analysis for the Italian building stock

The building sector is a major contributor to global GHG emissions, constituting an essential player in national and global decarbonization strategies. In this framework, governments have started requiring higher building energy performances to reduce emissions, with the new European Energy Performance of Buildings Directive (EPBD) representing a further step in this direction. Such requirements could be enforced at a large scale with specific penalties for the property owners, such as the stranding of non-compliant assets, making them not rentable or marketable until requirements are met. A few countries have already applied these measures but with a limited extent and effective implications compared to the decarbonization goals. Thus, while the consequent impact is potentially considerable given that a significant share of existing buildings would be stranded, a high uncertainty characterizes its assessment, calling for a probabilistic approach. However, no probabilistic methods have been formulated for stranding risk. This paper critically reviews the state-of-the-art approaches for stranding assessment of buildings. A probabilistic framework based on methodologies derived from natcat risk assessment is also presented. A scenario-based analysis is carried out on the Italian building stock and compared to the impact of natural hazards. Results reveal that stranding risk can be relatively significant in terms of expected monetary losses. The categorization of this risk as sustainability-induced “creative destruction” is also discussed. The findings provide insights into which policies would be required to implement decarbonization pathways for the building stock while underlining how energy retrofit design can adapt to mitigate stranding risk.

Power in Modernity: Agency Relations and the Creative Destruction of the King Two Bodies. Libro de Isaac Ariail Reed

El libro en cuestión está organizado en tres apartados mayores, la primera parte es la exposición teórica, denominado Poder. La segunda es un análisis en extenso de las rebeliones estadounidenses que tuvieron lugar a finales del siglo XXVII hasta la primera mitad del siglo XIX, cuyo nombre es Modernidad. La tercera parte es una discusión intelectual sobre su proyecto teórico en referencia a la crítica a la modernidad que lleva por nombre Power in Modernity. En este libro se nos propone una respuesta a la pregunta latente: ¿Por qué obedecemos los mandatos políticos y sociales?

Inequality, openness, and growth through creative destruction

We examine how inequality and openness interact in shaping the long-run growth prospects of developing countries. To this end, we develop a Schumpeterian growth model with heterogeneous households and non-homothetic preferences for quality. We show that inequality affects growth very differently in an open economy as opposed to a closed economy: If the economy is close to the technological frontier, the positive demand effect of inequality on growth found in closed-economy models may be amplified by international competition. In countries with a larger distance to the technology frontier, however, rich households satisfy their demand for high quality via importing, and the effect of inequality on growth is smaller than in a closed economy and may even be negative. In such case trade gives rise to the endogenous emergence of a ‘dual economy’ where some domestic sectors are highly innovative while others are lagging behind.

Enabling Creative Destruction: A View from the Perspective of Managerial Control

Creative destruction originates in successful development and launch of a radically different product/process/market configuration, or radical innovation, by a company. A radical innovation can materialize in a business firm only if autonomy is extended to organizational personnel, towards experimentation with heterogeneous knowledge from outside the organization. In this article, I inquire into conditions that enable the materialization of radical innovation—an important precursor to creative destruction—while affording top management the wherewithal to stay in control. An extended version of March’s computational model suggests that when a radical innovation project initiates with a low level of collective human capital with respect to the new process–product–market domain being considered and the project personnel are provided a certain extent of autonomy to experiment in the new domain, top management can detect a change to organizational outcomes by changing the rate of exploitation. Thereby top management obtains a feeling of being in control of proceedings. This situation is, therefore, conducive to the materialization of creative destruction. The indirect method of control to nurture radical innovation—demonstrated in this research—constitutes an improvement over the autonomy-averse ‘agency’ and ‘transaction cost economics’ approaches that are sub-optimal in open systems characterizing radical innovation efforts in corporate venturing.

Declining research productivity and income inequality: A centenary perspective

Research productivity has been sharply declining since 1920. This decline has significant implications for inequality. Using an open-economy Schumpeterian growth model, we show that domestic research productivity influences income inequality through two opposing forces: a positive effect from increased asset returns and a negative effect from the erosion of innovation rents through creative destruction. In contrast, foreign research productivity affects inequality solely through the asset returns channel. By constructing a long historical data series for 21 OECD countries, we find that the asset returns channel has been the dominant driver of inequality over the past century. The reduction in both domestic and foreign R&D productivity accounts for 25% to 35% of the observed downward trend in income inequality over this period.

THE MICROECONOMICS OF INNOVATION UNDER UNCERTAINTY AND THE RESOURCE-BASED VIEW OF BUSINESS STRATEGY

We link end-product innovations with those entrepreneurial endeavors aimed at developing firm-specific valuable, rare and unique resources (VRIO) under uncertainty. These resources are responsible for rent and sustainable competitive advantage by the resource-based view (RBV) of business strategy, yet their uncertain cost and productivity are not explicitly operationalised in RBV. We argue that acknowledging resource-uncertainty implies uncertainty in the path-dependent evolution of VRIO resources, which translate to heterogenous end-product attributes that shape the competitive environment. Resource-uncertainty requires management to be active in resource-risk-management, a role that ultimately reduces the uncertainty management observes, compared with the uncertainty that an outsider observes. Our framework highlights complementarities between those entrepreneurs responsible for disruptive innovations, and routinised innovation processes of established firms. Both cope with and manage innovation risk, and both are essential for the creative destruction process.

Inflation and income inequality in an open-economy growth model with liquidity constraints on R&D

This study presents a framework to understand the relationship between inflation and income inequality in an open-economy Schumpeterian growth model with heterogeneous households, firm-level innovation, and cash-in-advance constraints on R&D investment. We show that the global real interest rate channel can play a key role in defining this relationship. In smaller economies that have negligible impacts on the global interest rate, income inequality is likely to exacerbate as inflation rates rise. In contrast, for larger economies that can significantly affect the global interest rate, inflation and income inequality may demonstrate a U-shaped relationship. These theoretical predictions are supported by the quantitative analysis in a model calibrated to the economies of the US and the eurozone, as well as empirical estimates using cross-country data.

A Year Older, A Year Wiser (and Farther from Frontier): Invention Rents and Human Capital Depreciation

Abstract We look at how the arrival of an invention affects wage returns and the probability of moving out of employment for white- and blue-collar co-workers of the inventor. First results suggest that older workers are hurt by the arrival of an invention. This negative effect disappears when we control for education and, in particular, for the time since obtaining the last formal degree, that is, distance to human capital frontier. If anything, this effect is slightly higher for non-STEM than STEM-educated co-workers. This result suggests that retraining programs could be helpful in making the process of creative destruction and economic growth more inclusive.

Can Innovation Stimulate Income Inequality in South Asia?

Income inequality can jeopardize social cohesiveness, stifle economic growth, trigger a recession, and slow the rate of economic development. It may also cause social unrest and dispute, which are the determinants of economic growth. The Schumpeterian growth hypothesis is tested by employing the quantile regression to examine the role of innovation in determining income inequality for the selected South Asian countries. The empirical findings show that innovation, especially the number of patent applications, has a statistically significant and positive association with income inequality in South Asia which increases income inequality. For sustainable economic growth, everyone must be given equal economic opportunities in the economy, and the government must abolish capitalists’ oligopoly on wealth. Similarly, everyone must be given equal opportunities to innovate because innovation encourages not only productivity but also economic growth in the long run.