Table of Contents

Handbook of Research on Innovation and Entrepreneurship

Handbook of Research on Innovation and Entrepreneurship

Elgar original reference

Edited by David B. Audretsch, Oliver Falck, Stephan Heblich and Adam Lederer

Leading researchers use their outstanding expertise to investigate various aspects in the context of innovation and entrepreneurship such as growth, knowledge production and spillovers, technology transfer, the organization of the firm, industrial policy, financing, small firms and start-ups, and entrepreneurship education as well as the characteristics of the entrepreneur.

Chapter 24: Innovation and the Evolution of Industries: A Tale of Incentives, Knowledge and Needs

Uwe Cantner and Marco Guerzoni

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


Uwe Cantner and Marco Guerzoni INTRODUCTION This chapter is about the co-evolution of technology and markets. Since our goal is to understand the way these forces impact the advancement of industry, these cannot effectively be independently analyzed. Classical economists recognized that the link between technological evolution and market forces is the trigger of industrial revolution, as well as the consequential tumultuous process of economic growth: ‘In turning from the smaller instruments in frequent use to the larger and more important machines, the economy arising from the increase of velocity becomes more striking’ (Babbage, 1832, pp. 4–36). However, Adam Smith noted that the use of ‘more important machines’ is limited by the extent of the market. He described the combined effect of innovation, which creates new markets, and of new markets, which creates incentives for innovation. Karl Marx highlighted the role of machines as the main source of productivity increases as well. Marx also recognized that low wages lead to demand shortages. Despite the awareness of the classical economists, the analysis of the co-evolution of technology and markets as the principal determinants of industrial dynamics is abandoned in traditional neoclassical theory. A certain extension of this approach is found only in the search for incentives responsible for the direction and nature of technological progress. The so-called demand-pull approach looks at the demand side of the economy, considering product innovations as initiated by demand. On the other hand, changes in relative prices are considered responsible for certain factor-saving directions taken by...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information