Innovation & Knowledge Based Economy
Adam Smith’s Definition of Economics
Adam Smith, considered to be the founding father of modern Economics, defined Economics as the study of the nature and causes of nations’ wealth or simply as the study of wealth.
Definition of Economy
According to A.J. Brown, “An economy is a system by which people get living” or it is a framework where all economic activities are carried out.
It is a way through country’s resources are owned and the way that country takes decisions as to what to produce, how much to produce and how to distribute what has been produced determine the type of economic system that particular country practices.
Definition: Knowledge -Based Economy
“The knowledge-based economy is an expression coined to describe trends in advanced economies towards greater dependence on knowledge, information and high skill levels, and the ready access to all of these by the business and public sectors.” (Oslo Manual, 2005)
KNOWLEDGE ECONOMY FEATURES VERSUS TRADITIONAL ECONOMY
If the economy means traditionally the science of rarity; resources rarity versus multiple and unlimited needs, the knowledge economy in light of digital technology is an economy of abundance. This is attributed to the fact that knowledge cannot be consumed or exhausted. However, it is self-breed consumption, through the transfer to other knowledge.
Economics of Innovation
Research on innovation spans a number of disciplines; economic approach is one of them. While Innovation is the use of new knowledge to offer a new product or service that customer want. It is invention + commercialization (Freeman, 1982).
Joseph Schumpeter (1934) proposed a list of five types of innovations:
Schumpeter (1934) argued that “economic development is driven by innovation through dynamic process in which new technologies replace the old, a process he labelled “creative destruction”. Technological innovations leads to economic development, through the new product and processes that are introduced by the entrepreneurs (Schumpeter’s theory)
Innovation & Knowledge Based Economy
Adam Smith, considered to be the founding father of modern Economics, defined Economics as the study of the nature and causes of nations’ wealth or simply as the study of wealth.
Definition of Economy
It is a way through country’s resources are owned and the way that country takes decisions as to what to produce, how much to produce and how to distribute what has been produced determine the type of economic system that particular country practices.
Definition: Knowledge -Based Economy
“The knowledge-based economy is an expression coined to describe trends in advanced economies towards greater dependence on knowledge, information and high skill levels, and the ready access to all of these by the business and public sectors.” (Oslo Manual, 2005)
If the economy means traditionally the science of rarity; resources rarity versus multiple and unlimited needs, the knowledge economy in light of digital technology is an economy of abundance. This is attributed to the fact that knowledge cannot be consumed or exhausted. However, it is self-breed consumption, through the transfer to other knowledge.
Economics of Innovation
Research on innovation spans a number of disciplines; economic approach is one of them. While Innovation is the use of new knowledge to offer a new product or service that customer want. It is invention + commercialization (Freeman, 1982).
Joseph Schumpeter (1934) proposed a list of five types of innovations:
Schumpeter (1934) argued that “economic development is driven by innovation through dynamic process in which new technologies replace the old, a process he labelled “creative destruction”. Technological innovations leads to economic development, through the new product and processes that are introduced by the entrepreneurs (Schumpeter’s theory)
Triple Helix Model
Recent decades have seen a shift from an earlier focus on innovation sources confined to a single institutional sphere, whether product development in industry, policy-making in government or the creation and dissemination of knowledge in academia, to the interaction among these three spheres as the source of new innovative organizational designs and social interactions. This shift entails not only various mechanisms of institutional restructuring of the sources and development path of innovation, but also a rethinking of our main models for conceptualizing innovation, including innovation systems (national, regional, sectoral, technological, etc.) and the Triple Helix.
The Triple Helix of university-industry-government relations is an internationally recognized model for understanding entrepreneurship, the changing dynamics of universities, innovation and socio-economic development. Triple Helix is a model of managing interactions among universities, business and government on common projects.
The concept of the Triple Helix of University-Industry-Government relationships developed in the 1990s by Etzkowitz and Leydesdorff, encompassing elements of precursor works by Lowe in 1982 and Sábato and Mackenzi in 1982, interprets the shift from a dominating industry-government dyad in the Industrial Society to a growing triadic relationship between university-industry-government in the Knowledge Society. Through subsequent development (e.g. Etzkowitz and Leydesdorff, 1998, 2000; Leydesdorff, 2006) the concept has grown into a conceptual framework for exploring the complex dynamics of the Knowledge Society and for informing policy-makers at national, regional and international level in the design of new innovation and development strategies.
Radical vs Incremental Innovation
“Radical” innovations create major disruptive changes, whereas “incremental” innovations continuously advance the process of change (Schumpeter, 1934).
Why Firms Innovate?
Interaction of Science and Technology System
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