Institutions for Economic Development
Chapter 4: Building Blocks of Innovation
4. Building blocks of innovation All systems are composed of elements and relationships between these elements. Innovation systems are made of economic agents (different types of organizations with their routines) and links between them. This chapter looks at seven crucial building blocks of systems of innovation – human capital, academic institutions, government laboratories, horizontal policy, vertical policy, government investment, and absorptive capacity. As I did above, I distinguish here four types of institutions: independent organizations, practices of organizations (e.g., R&D, production, and marketing routines), institutions that represent the environment of organizational routines and shape the relationships between organizations, such as laws, public policies, and regulations, and other institutions. The four-class typology presents an advantage, because public policies usually are independent variables that determine organizational routines. For instance, tax credits or direct subsidies for R&D may trigger new R&D or innovation or innovation practices in private firms. It is convenient to distinguish between these kinds of institutions when our goal is to understand the development of innovation systems. The chapter also develops the concept of ‘absorptive capacity of nations’ – a notion that derives from Cohen and Levinthal (1990), Zahra and George (2002), and other scholars: institutions that support R&D increase a nation’s capacity to use existing technical knowledge. 4.1 HUMAN CAPITAL The relationship between human capital and economic development has generated an extensive and convincing literature. However, problems of definition and measurement have precluded precise estimation of the impact of human capital on economic development (Griliches, 1997; van...
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.