The Danish Model
New Horizons in the Economics of Innovation series
Chapter 2: The Objective: To Stimulate a Knowledge-based Debate about Innovation Policy
2. Innovation Innovation takes place when a firm develops a new production process, a new product or a new service and introduces it in the market or into production. The first firm to come out with new developments is a true innovator, while those who implement new developments later can be called imitators. In the real world, the difference between innovation and imitation is not very clearly defined. It is not always easy to copy what others have developed, and often an adaptation takes place so that the innovation fits into the new context. A great deal of the research and development efforts that take place in firms aim toward absorbing new technology and new knowledge that has been developed by others (Cohen and Levinthal 1990). It is correspondingly difficult to differentiate clearly between innovation and its dissemination. The dissemination of an innovation to a greater number of users is simultaneously a process through which the original innovation is improved, made cheaper and made usable across a broader area. That is why we allow the term ‘innovation’ to stand for a process that involves both the original new development, its introduction to the market and, as well, its further distribution and use. INNOVATION AS PART OF DAILY LIFE IN DANISH FIRMS With this broad definition, innovation is something that forces itself upon every firm that is exposed to competition. In most sectors, it is necessary to develop new products, implement new process techniques and organizational forms and to search out...
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