“Innovation is one of the most important economic and business phenomena”
“Twenty different perspectives on the economics of innovation”
Adam Smith thought that “invention and technological change were important factors in creating “the wealth for Nations.” Adam Smith is often regarded as the founding father of economics.
Rae took an opposite view to Adam Smith on the relationship between invention and the division of Labour.
Smith thought that division of Labour is considered the great generator of invention and improvements, it is represented as proceeding from the antecedent progress of innovation. He thought that this gave rise to invention and innovation. However Rae saw invention as the mechanism that lies at the heart of wealth creation. Also John Stuart Mill, the great philosopher and political economist saw the centrality of invention in wealth creation. Adam Smith and john Rae saw innovation as something that lies at the heart of wealth creation.
Henry George considered that innovation would not necessary improve the lot of ordinary person,
Joseph Schumpeter’s idea was that the process of creative destruction is the essential fact about capitalism. He thought that as the innovator creates something, it destroys something else, often the competitive position of a rival firm. He saw innovation as an essential force for wealth creation- though as part of a process of creative destruction and not just creation.
Research and creativity generate inventions. After this stage it moves onto design and development and lastly to innovation. Invention is about the generation of new ideas, where innovation is when the new idea is used in the market. Creativity is the process where the invention is the result.
A pure process innovation simply changes the way in which a product is made, without changing the product itself. A pure product innovation on the other hand creates a new or improved product for sale without any...
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