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 8: Divergence Among Mature and Rich Industrial Economies – The Case of Sweden Entering a New and Immediate Economy

Gunnar Eliasson

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


Gunnar Eliasson INTRODUCING THE PROBLEMS OF ENTERING A NEW ECONOMY The industrial world is in the midst of a five-dimensional transition: (1) New technology is being rapidly introduced and changing the existing production organization. The competitive situation between incumbent firms and potential new entrants is being redefined. We may talk about an emerging New Economy. (2) The new technology is simultaneously supporting a rapid globalization of production, redefining the geographical distribution of production among industrial economies and creating new regional allocations of industrial excellence, often transcending national borders and undermining the economic base of national economies as autonomous (policy) decision makers (Eliasson, 2003a). This (3) geographical reallocation of resources gained momentum in the beginning of the sudden, unevenly distributed and disrupting industrial recession of 2001/2003. Furthermore, (4) distorted asset prices coupled with financial investor incompetence created a situation where industrial players became overly cautious and myopic and raised the incidence of long-term investment mistakes (Eliasson, 2002b). Finally, (5) several large companies in mature markets, making up the backbone of Swedish industrial wealth, have been simultaneously in trouble or have been acquired and reorganized by foreign companies, releasing (‘spilling’) sophisticated technology and competent labor in the market. We observe, however, that this does not necessarily constitute a problem. The recession helped free resources when the cycle changed for the better in 2004. The basic presumption of our analysis, and of what we will later call the Experimentally Organized Economy (EOE, Eliasson, 1987a, 1996a), is that there always exist many...

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