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Endogenous Innovation

The Economics of an Emergent System Property

Cristiano Antonelli

This ground-breaking new book builds upon the Schumpeterian creative response. The author shows that firms, in out-of-equilibrium conditions, try and react by means of introducing innovations. The success of their reaction is contingent upon their access conditions to knowledge, which are shaped by the system in which they operate. The emergence of new innovations can, in turn, knock firms further out-of-equilibrium and cause changes in the system properties that govern their access to external knowledge. This path dependent loop of interactions between the system properties and the individual actions of firms, accounts for endogenous innovation and the dynamics of the system.
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Index

The Economics of an Emergent System Property

Cristiano Antonelli

Abernathy, W.J. 68
Abramovitz, M. 89, 130, 135, 167, 168, 169, 183
Abramovsky, L. 114
Acemoglu, D.K. 154, 167, 189
Adams, J.D. 84, 93, 104, 129
Aghion, P. 16, 41, 45, 49, 83, 98, 99, 189
Agrawal, A. 115
Akcigit, U. 97
Albin, P.S. 48
Alchian, A. 6, 48
Andersen, E. 22
Anderson, P. 47
Anderson, P.W. 21, 35, 37, 67
Antonelli, C. 6, 13, 26, 28, 35, 36, 37, 38, 40, 41, 42, 44, 45, 46, 48, 49, 50, 52, 63, 64, 65, 66, 69, 71, 74, 77, 82, 83, 84, 86, 87, 89, 92, 99, 111, 112, 116, 118, 119, 123, 126, 128, 131, 132, 133, 134, 141, 143, 145, 149, 150, 153, 160, 161, 163, 165, 166, 167, 170, 171, 172, 181, 182, 183, 184, 188, 189
Arocena, R. 145
Arora, A. 86, 89, 150
Arrovian
analysis 5, 96
analysis of knowledge 125
approach 142
framework 956, 121, 124, 125, 141
and extreme Arrovian conditions 96
good 103
good in equilibrium 102
hypotheses 1223
hypothesis of ‘failure of the market’ 96
market failure 96, 110, 120, 147
methodology 90
postulate 812, 1078
properties 105
properties of knowledge 81, 83, 101, 102, 121, 122, 198
remedy 106
see also derived demand for knowledge
Arrow, K.J. 15, 81, 87, 88, 90, 95, 96, 98, 129, 144, 189, 200
Arthur, B. 21, 43, 116
Arthur, W.B. 35, 37, 51, 52, 67, 128, 189
Audretsch, D.B. 40, 41, 65, 113
Bailey, A. 160
Bandura, A. 40
Barbiellini Amidei, F. 133
Battisti, G. 169
Bauer, J.M. 110, 148
Bayma, T. 115
Birchenhall, C. 12
Bitnet, adoption of 115
Bloom, N. 16, 82, 83
Blume, L.E. 62
Bockerman, P. 179
Boden, M. 47
Bohlin, E. 149
Bonifati, G. 51
Boppart, T. 115
Borowiecki, K.J. 113
Boschma, R. 46, 113
Branstetter, L. 181
Breschi, S. 181
Bresnahan, T.J. 110
Briglauer, W. 149
Brynjolfsson, E. 110
Business Cycles19, 30, 32, 33, 67; see also Schumpeter, J.
Caldari, K. 35
Capitalism, Socialism and Democracy3, 20, 33, 67; see also Schumpeter, J.
Caselli, F.154
Cassata, F. 19
Cassiman, B. 86, 131
Cerchione, R. 112
Cervone, D. 40
Chesbrough, H. 89, 116, 149
Cimoli, M. 168
Clemence, R.V. 22
Clemmons, R.J. 84
Cobb–Douglas production function 135, 136, 174, 176
Cobo, C. 115
Cohen, W.M. 83, 94, 98, 105, 130
Coleman II, W.J. 154
Colombelli, A. 49, 50, 86, 87, 99, 116, 119, 183
Comin, D. 168
Consoli, D. 118
constructionist design methodology (CDM) 878, 99, 125
approach 93
framework 87, 89
system of equations 106
see also models
Cowan, R. 117
Craft, N. 4, 37, 61
creative response 367, 68, 72; see also Schumpeter, J.
‘The creative response in economic history’ (Schumpeter, 1947) 3, 20
Crépon, B. 87, 99
Crespi, F. 170
Crowston, K. 114
D’Adderio, L. 112
Darwin, C. 8
Darwinian/Darwinistic
analogy 13
approach 9
ascent, theorizing of 39
hypothesis 8
selection 37
Dasgupta, P. 41, 90
Davenport, T.H. 111
David, P.A. 6, 13, 29, 44, 46, 62, 63, 66, 82, 89, 90, 92, 110, 117, 130, 141, 144, 165, 167, 168, 169, 183
Debackere, K. 112
definition(s) of
feedback 51
knowledge portals (KPs) 114
knowledge spillover 97
demand pull approach 423, 49, 68, 145, 1656
derived demand for knowledge 8994
Arrovian methodology 90
Arrovian properties of knowledge 89, 9092
chapter note 94
factors affecting 934
market failure 92
see also Arrovian
digital knowledge generation and the appropriability trade-off 11026
chapter note 126
ICT and digital generation of knowledge 11019
ICT-based innovations and applications 11317
knowledge interactions 117
knowledge portals (KPs) 114
see also definition(s)
implications 1245
knowledge interactions 1234
knowledge spillovers as compensation for market failure? 11924
Dodgson, M. 111, 116
Doloreux, D. 89, 116, 149
Dosi, G. 12
Durlauf, S.N. 62
economics of knowledge 818
the ‘Arrovian postulate’ 812
constructionist design methodology (CDM) approach/framework 878
externalities: imitation, knowledge, pure (technical) and pecuniary 834
literature on 812
see also Nelson, R.
Edgeworth box of Z countries 1778
Edquist, C. 141, 146
Eliasson, G. 146
endogenous innovation as creative response, see an evolutionary complexity of endogenous innovation; innovation as a creative response; innovation as emergent system property; Schumpeterian legacy, reappraisal of; ‘standing on the shoulders of giants’
Enkel, E. 116
entrepreneurship 14, 15, 21, 312, 41
equilibrium 1617
Esposito, E. 111
Evangelista, R. 184
evolutionary complexity of endogenous innovation 5165
chapter notes 645
feedback 512
emergence 525
endogenous variety 61
organized complexity and knowledge connectivity 5561
and candelight metaphor (Jefferson) 567
path dependence 614
Multiple Probability Transition Matrices (MPTMs) 63
standard Markov chains 63
An Evolutionary Theory of Economic Change7, 8
Fassio, C. 183, 184
Feder, C. 161
Feldman, M.A. 169
Feldman, M.P. 113
Ferraris, G. 64, 131
Feyer, J. 154
Fisher, F.M. 41
Fleming, L. 189
Fontana, M. 67
Foster, J. 47, 67
Fransman, M. 37, 48, 148
Free/Libre and Open Source Software (FLOSS) 143
Freeman, C. 29
Friedman, M. 40
Galasso, A. 149
Gambardella, A. 86
Geels, F.W. 12
Gehringer, A. 49, 116, 145, 170
Geroski, P. 188
Goldfarb, A. 115, 124
Greenstein, S. 148
Griffith, R. 114
Griliches, Z. 15, 18, 45, 73, 82, 83, 84, 90, 94, 97, 98, 99, 105, 129, 135, 181, 189, 190, 195, 199
Growiec, J. 154
Guerrieri, P. 184
Guerzoni, M. 146
Gururajan, R. 113
Habakkuk, H.J. 168
Hafeez-Baig, A. 113
Hall, B.H. 82, 83, 141, 144
Hall, R.E. 154
Hamermesh, D.S. 115
Harada, T. 116
Harper, D.A. 53
Hausmann, R. 50
Heimeriks, G. 115
Hempell, T. 111
Hendriks, P.H.J. 111
Hicks, J. 42, 167
Hidalgo, C.A. 50
Higon, D.A. 112
Hobijn, B. 168
Howitt, P. 99
ICT (information and communication technology), see digital knowledge generation and the appropriability trade-off
Ientile, D. 144
innovation 324, 8991, 93, 97, 98, 99, 100, 1089, 125, 1278
counts 823
economics of 11011
indicators 82
ICT-based 11214, 117, 12021
open 116
search for endogenous causation of 378
technological 133, 13740
innovation as a creative response 2550
adaptive vs creative responses 256
causes of mismatches: key role of system characteristics 278
chapter notes 4850
the great synthesis 2938see also Marshall, A.; Walras, L.
historic and complex character of
economic processes: history
matters 289
the Schumpeterian platform 3848
inclusion of the classical legacies 413
market rivalry in the neo-Schumpeterian approach 41
new economics of knowledge 437
reactive decision-making 3941
selective diffusion of innovations 478
system as source of externalities: causes of mismatches 267
see also Schumpeter, J.
innovation as emergent system property 6672
critical assumptions 667
evolutionary approaches 678
five new radical elements 7071
Schumpeterian notion of innovation 7072
see also Schumpeter, J.
innovation and knowledge policy, new framework of 14150
analysis of public procurement 146
direct/indirect public interventions 1457
enhancement of knowledge
interactions 14950
knowledge spillovers and reduction
of knowledge costs 147
public policies 1445
results of analysis carried out 1434
selective undersupply vs generic
undersupply 144
shift in demand curve 145
telecommunications 1489
Iwai, K. 1112
Jaffe, A. 82, 86
Jaravel, S. 98
Jaravel, X. 45
Jefferson, T. 56
candelight metaphor 567
Johansson, B. 86
Jones, C.I. 154
Kahneman, D. 39
Kalder, N. 42
Kamien, M. 49
Karabarbounis, L. 180
Kataishi, R. 141, 181
Kim, E.H. 115
knowledge appropriability trade-off 95109
knowledge appropriability as a problem 957
and as an opportunity 978
the trade-off 98109
knowledge governance, pecuniary knowledge externalities, total factor productivity growth 12740
chapter notes 140
effects of pecuniary knowledge externalities on total factor productivity 12933
implications 13840
integration of Schumpeterian and Marshallian legacies 1278
model 1338
see also innovation
knowledge market failure 96, 1023, 106, 107, 142
Arrovian analysis of 125
hypothesis 123
knowledge spillover 6, 15, 18, 19, 70, 73, 83, 87, 978, 105, 110, 11925, 130, 147, 149, 181
knowledge-abundant countries 1834, 186
knowledge-intensive business services (KIBS) 89
Koellinger, P. 112
Kongaut, C. 149
Krueger, A. 154
Krugman, P. 48
Lamarck, J.-B. 8
Lamarckian hypothesis and metaphor 8
Lane, D.A. 21, 35, 37, 50, 51, 67, 128
Langlois, R.N. 30
Larson, R.R. 115
Latzer, M. 110
Laursen, K. 179
Lehnert, D. 12
Leontief paradox 184; see also S–H–O framework
Levinthal, D.A. 64, 83, 94, 98, 105, 130
Lewis, P. 53
Lind, R.C. 144
Link, A. 44, 82, 86, 129, 132, 181
Link, A.N. 150
Lissoni, F. 181
Loebbecke, C. 114
Lööf, H. 86
Loomes, G. 39
Louçã, F. 67
Lucas, R.E. 129
Mairesse, J. 141, 144
Malerba, F. 11, 30, 46, 168
Maliranta, M. 179
Mansfield, E. 84, 130
Marchionatti, R. 19
Marshall, A. 12, 1421, 22, 23, 334, 128; see also Marshallian
Marshallian
analysis of competition process 18
analysis and theory of economic development 15
attractor 35
contributions 3031
dynamics 22
of imitation 17
endogenous externalities 19
equilibrium 35, 36, 46, 47, 136
frame, Schumpeterian grafts onto 20
framework 14, 33, 356
imitation externalities 16
legacy 3
microeconomic foundations 14
model 14
of competition 16
roots 13
search for equilibrium 1617
selection of variety 67
Martin, R. 34, 46, 64
Marx, K. 42
Maskus, K.E. 183
and Maskus–Nishioka approach 183
Mastroianni, M. 111
the Matthew effect, power law of 115
Maxfield, R. 50
Maxfield, R.R. 51, 67
Meliciani, V. 172, 184
Metcalfe, J.S. 22, 47, 67, 128, 130, 131, 132
Mill, J. 24
Miller, J.H. 48, 51
model(s)
ABS 64
constructionist design methodology (CDM) 119
dynamics of creative response 1928
of endogenous growth 129, 166, 188, 192, 199
growth 129, 133, 140
see also Romer, P.M.
Heckscher–Ohlin (H–O) 172, 173, 175
history-friendly 11
see also Malerba, F.
of industrial dynamics 12
Marshallian 1416
NK 54, 64
open innovation business 116
quality ladder framework (Schumpeter) 99
of Schumpeterian growth 187, 198, 200
Schumpeterian version of H–O model 184
S–H–O 17686
Moen, J. 149
Mohnen, P. 170
Mokyr, J. 61, 130
Montobbio, F. 143, 178, 181
Morikawa, M. 111
Mowery, D.C. 146
Naval, C. 115
Navarrete, T. 113
Neiman, B. 180
Nelson, D. 87
Nelson, R. 81; see also ‘The simple economics of basic scientific research’
Nelson, R.R. 67, 811, 12, 22, 46, 47, 48, 67, 90, 95, 98, 129, 134
Nerkar, A. 114
Nesta, L. 44
new growth theory 34, 43, 129
Nishioka, S. 183
and Maskus–Nishioka approach 183
North, D.C. 52
Organisation for Economic Co-operation and Development (OECD) 173
Orsenigo, L. 30
Oster, S.M. 115
Ostrom, E. 131
out-of-equilibrium conditions 14, 18, 20, 21, 23, 28, 37, 38, 49, 54, 67, 712, 124, 1278, 1369, 172, 1768, 180, 1813, 1845, 198
Page, S.E. 48, 51
Pakes, A. 82, 94, 99
Patrucco, P.P. 118
Penrose, E. 7, 22
Perez, C. 180
Picketty, T. 165
Pittaway, L. 112
Poisson, S.D. 12
Porcile, G. 168
Porter, M.E. 133
Prusak, L. 111
Pyka, A. 43
Quatraro, F. 49, 160
Raiteri, E. 146
Rampa, F. 178
Rasel, F. 114
Ravix, J.-L. 23
Ricardo, D. 24
and Ricardian specialization of Portugal in wine, England in cotton 168
Rizzello, S. 40
Röller, L. 170
Romer, P.M. 4, 68, 734, 84, 129, 140, 181, 199, 200
and postulate of positive-sum game 5
Rosenberg, N. 90
Rosenkopf, L. 114
Rullani, F. 117
Ruttan, V.W. 42, 167, 189
Rybczynski, T.M. 164, 186
Safarzyńska, K. 12
Samuelson, P.A. 185
Saunders, A. 110
Saviotti, P. 43, 44, 130
Scellato, G. 38, 40, 48, 49
Schankerman, M. 149
Scherer, F.M. 3, 11, 41, 188
Schmookler, J. 43, 49, 50, 82, 90, 165
Schumpeter, J. 3, 10, 13, 14, 15, 16, 17, 1820, 22, 23, 24, 25, 268, 3041, 48, 67, 6970, 127, 137, 172, 188, 199, 200
analysis of limits of perfect competition 81
creative response 367
essay (1947) 38, 66
essay on five radical new elements 7071
innovation as a creative response, see innovation as a creative response
Mark One and Mark Two 2930
Marshallian dynamics 21
notion of innovation 3, 2930, 39, 523, 68, 7072, 184
reaction and Marshallian externalities 128
see also ‘The creative response in economic history’
Schumpeterian
creative reaction/response 367, 68, 72, 178
dynamics 13, 14, 16, 18, 22, 345, 46, 57
endogenous innovation 61
of self-reinforcing mechanisms 35
focus on response 39
framework 356
framework of creative response 1878, 198
hypotheses 1011, 41
hypothesis of endogenous and directed technological change 1756
legacy 11, 15, 16, 43, 49, 51, 61, 678
literature 1011
and Marshallian legacies 127
notion of innovation as result of creative reaction 52, 7072, 184
path-dependent dynamics of self-reinforcing mechanisms 21
platform 3848, 712
reactions and Marshallian externalities 128
synthesis 43
tradition 18, 137
see also models
Schumpeterian approach to endogenous specialization in international trade 17286
chapter notes 186
grafting Schumpeterian creative response on H–O 1726
implications 1846
the S–H–O model with knowledge as an input 18084
the S–H–O model with two inputs 17680
Schumpeterian growth: the creative response to knowledge exhaustibility 187201
chapter notes for 200201
conclusions 198200
convergent advances in economics of 18892
innovation 1889
knowledge 18992
technological change 189
the model 1928
Schumpeterian legacy, reappraisal of, see evolutionary complexity of endogenous innovation; innovation as a creative response; innovation as emergent system property; ‘standing on the shoulders of giants’
Schwartz, N. 49
Scitovsky, T. 132
Shearmur, R. 89, 116, 149
S–H–O framework 1834
Siegel, D. 82, 129
Silverberg, G. 12
Simon, H.A. 39, 40
‘The simple economics of basic scientific research’ (Nelson, 1959) 81
Smith, A. 24, 42
Social Science Indicator 3
Solow, R.M. 36, 160, 1612, 186
Song, J. 149
Sorenson, O. 64, 189
Soto-Acosta, P.A. 113
‘standing on the shoulders of giants’ 324
biological evolutionary approaches, limits of 613
innovation as random event 810
innovation when performance level fails 1013
chapter notes 224
the Marshallian foundations 1321
exogenous innovations 1415
imitation externalities 1521
no appropriability 15
new growth theory, limits of 46
Staub, K.E. 115
Stiglitz, J. 41
Stoneman, P. 169
Sturgill, B. 154
Subashini, R. 113
Sugden, S. 39
Sunley, P. 34, 64
Sutz, J. 145
Tambe, P. 119
Tassey, G. 89
technological congruence 42, 15371, 178
chapter notes for 171
evolutionary complexity of 1636
possible outcomes 1646
implications of 16671
advance 1667
diffusion of innovations 169
direction of technological change 167
firms’ strategies and emergence of innovation systems 168
industrial policies 16970
innovation policy 17071
international division of labour 1678
location 169
its existence, and standard Cobb–Douglas production function 15560
and total factor productivity growth 16063
technological congruence and economic complexity of technological change, see technological congruence
Temin, P. 41
The Theory of Economic Development3, 20, 33
Trajtenberg, M. 110
Turvani, M. 40
Tushman, M. 47
Tversky, A. 39
Urraca-Ruiz, A. 172
Utterback, J.M. 47, 68
van den Bergh, J.C.J.M. 12
Van Looy, B. 112
Van Reenen, J. 141, 144
Van Schewick, B. 115
Vasileiadou, E. 115
Veblen, T. 6
Verspagen, B. 12
Veugelers, R. 86, 131
von Hippel, E. 115
Walras, L. 14, 33
general equilibrium approach 33
Walrasian approach 3031
Walrasian framework 33
Walrasian world 34
Walsh, J. 115
Weitzman, M.L. 85, 94, 105, 116, 130, 134, 189, 195
Whelan, E. 113
Windrum, P. 12
Winter, S. 67, 811, 12, 22
Winter, S.G. 47, 48, 67
Wolff, E. 82
Wright, G. 110
Young, A. 42
Z countries/economies 174, 17683, 186
Zeira, J. 180
Zuboff, S. 111
Zuleta, H. 154, 160
Zwick, T. 111