Innovation and Employment

Innovation and Employment

Process versus Product Innovation

Charles Edquist, Leif Hommen and Maureen McKelvey

Which kinds of growth lead to increased employment and which do not? This is one of the questions that this important volume attempts to answer. The book explores the complex relationships between innovation, growth and employment that are vital for both research into, and policy for, the creation of jobs.

Appendix C: Taxonomies of innovation

Charles Edquist, Leif Hommen and Maureen McKelvey

Subjects: economics and finance, economics of innovation, industrial economics, innovation and technology, economics of innovation


The following discussion provides a brief overview of the main arguments and concepts used in developing taxonomies of various kinds of innovations. Our primary purpose in this discussion will be to explain the significance (and possible limitations) of the definitions of ‘significant’ and ‘incremental’ innovation that have been used in data collection instruments for much of the empirical research to which this report refers (European Commission, 1993; OECD, 1996c). One basis for categorizing product innovations has been the distinction drawn by some theorists between ‘generic’ and ‘non-generic’ innovations (Freeman, 1974; Nelson and Winter, 1977, 1982). Generic innovations refer broadly to new ‘systems’ or classes of technology that have wide diffusion and economic consequences of major importance. Non-generic innovations refer to technological alternatives within these systems that are potentially substitutable for one another, and hence optional. Related to the dichotomy between ‘generic’ and ‘non-generic’ innovations is a distinction between ‘radical’ and ‘incremental’ innovations - that is, between those involving basic changes in design and those involving only minor modifications. It has been argued, though, that ‘Radical innovations are difficult to disentangle from generic innovations and it is therefore best to use radical and incremental as relative terms whose interpretation is anchored in agreed benchmarks of empirical examples’ (Clarke, 1987: 35). The difficulty alluded to here arises because the term ‘generic’ has to do with the degree of impact in other sectors, while the term ‘radical’ refers to the degree of change in artefacts. Specifying what is meant by a distinction between...

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