Social Innovations, Institutional Change and Economic Performance

Social Innovations, Institutional Change and Economic Performance

Making Sense of Structural Adjustment Processes in Industrial Sectors, Regions and Societies

Edited by Timo J. Hämäläinen and Risto Heiskala

This book examines the nature of social innovation processes which determine the economic and social performance of nations, regions, industrial sectors and organizations.

Chapter 1: Introduction: Historical Transformation Challenges Established Structures

Risto Heiskala and Timo J. Hämäläinen

Subjects: business and management, organisational innovation, economics and finance, economics of innovation, institutional economics, innovation and technology, economics of innovation, organisational innovation


Risto Heiskala and Timo J. Hämäläinen The world economy is going through a historical transformation (Freeman and Perez, 1988; Freeman and Louca, 2001; Perez, 2002). This transformation has been labeled in various ways such as the ‘rise of information society’, ‘globalization’, the ‘end of organized capitalism’ and the ‘rise of network society’ (Bell, 1980; Lash and Urry, 1987; Held et al., 1999; Castells, 2000). However, even such broad definitions tend to describe only one dimension of the current systemic transformation which involves inter alia: (1) the rapid development and diffusion of information and communications technologies, (2) the globalization of economic activities through international trade, foreign direct investments and cross-border alliances, (3) the increasing specialization, complexity and knowledge-intensity of production processes, (4) the growing differentiation of demand patterns in consumer and producer markets, and (5) the spread of cooperative network arrangements in economic organization (Hämäläinen, 2003; Hämäläinen and Heiskala, 2004). The historical paradigm shift has created a major structural adjustment challenge for the industrialized societies. The old socio-economic structures inherited from the postwar decades do not anymore perform very well in the radically changed technological and economic environment. Structural unemployment remains high in many industrialized countries, income and regional differences are rising and economic growth is slowed down by rigid economic and social institutions. Many countries have responded to the paradigm shift in the world economy by increasing their investments in research and development, education and new infrastructures....