Demand, Users and Innovation
Edited by Rod Coombs, Ken Green, Albert Richards and Vivien Walsh
Rod Coombs, Ken Green, Albert Richards and Vivien Walsh The branch of economics that is variously known as standard, conventional or neoclassical, places great importance on ‘markets’ and ‘market signals’ in explaining the allocation of resources and the making of decisions about technological change. This emphasis is reﬂected in politics and macro-level economics, especially in the Anglo-Saxon world but increasingly elsewhere, in an assumption that markets are the best or even the only possible way of efﬁciently governing an economic system. At the micro level, the ﬁrm in neoclassical theory is an actor which acts in order to maximize proﬁts given the prices of inputs and outputs. In contrast, evolutionary or neo-Schumpeterian economics emphasizes supply-side factors such as entrepreneurship and ﬁrm capabilities, and stresses the role of the ﬁrm as an actor which operates in conditions of uncertainty, which does not know the outcome of decisions which it might take, which must generate knowledge (at a cost), which takes risks, which goes through a learning process, and which develops strategies under the inﬂuence of its own culture, ethos and guiding philosophy and not only based on ‘objective’ knowledge. However, evolutionary economists have somewhat neglected the demand side, possibly because it has been so strongly emphasized in neoclassical economics. Evolutionary economic theory has, on the demand side, developed the concept of the ‘selection environment’ in which products succeed or fail (Nelson and Winter, 1982), but it has been rather less well studied than supply-side factors within this...