evolutionary theories initiated by R. Nelson and S. Winter (1982) focus on the genesis of innovation within organizations. They see it as a systemic phenomenon, resulting from the interaction between actors within organizations (giving rise, through learning, to organizational routines, a source of change and inertia), as well as resulting from fruitful interactions between organizations and institutions (analyses in terms of innovation systems at different scales: local, regional, national, sectoral). A country, like a company, is situated, in its development, on a technological trajectory that largely conditions its capacity to assimilate new technologies.
For their part, endogenous growth theories (Romer 1994) study technical progress as the result of private and public investment in the sphere of the economy, particularly in knowledge, infrastructure and human capital. Private investments are made by individuals motivated by profit. Economic growth is then determined by the behavior of economic agents and macroeconomic factors. The field of public policy then becomes paramount, and theoretical work calls for the replacement of big scientific and technical programs that marked the post-war period by more indirect modes of intervention. They are based, on the one hand, on the framework conditions for innovation (by strengthening the components and interactions within innovation systems), and, on the other hand, on incentives to invest and innovate, particularly for firms. This results in positive externalities, which can be seen as the basis for justifying government intervention.
This contribution looks back at some of the evolutions of the major issues of innovation economics. In the first part of the chapter, we attempt to define and develop the meaning of the word innovation, with a particular interest in the work of J.A. Schumpeter. Then, in the second part, we look at the difficult issue of measuring innovation, in particular because of its multifaceted nature. The identification of the key actors of innovation (entrepreneurs, large companies, as well as universities, so-called third places) is the subject of the third part. It reveals their diversity and the need for their interaction to ensure both the production and the diffusion of innovation. The fourth part of this chapter is devoted to the question of these systemic relationships and to the evolution of policies dedicated to strengthening them.
1.2. The definition of innovation and the primacy of J.A. Schumpeter’s work
While the concept of innovation is omnipresent today and symbolizes the latest form of modernity, it is nevertheless very old and has not always been associated with progress and growth. According to B. Godin (2014), this concept dates back to Antiquity and was used by Greek philosophers in their political theories. This political meaning remained dominant until the 19th century. Until then, innovation evoked a “change in the established order” in politics and religion. Innovation was thus subject to prohibitions (e.g. by King Edward VI of England in 1548), and religious or political innovators (such as the French revolutionaries of the 18th century and the reformers of the 19th century) faced charges, imprisonment or worse. It was not until the 20th century that the meaning of the word “innovation” changed and became associated with progress, creativity and economic growth. From that century on, “there is no longer any doubt that innovation has become a virtue, not a vice” (Godin 2014, p. 33). Innovation then clearly became associated with technology.
J. A. Schumpeter is considered the first economist to use and construct an economic theory of innovation. Yet, before him, classical economists were largely interested in the changes brought about by technical progress, a term found in the writings of A. Smith, D. Ricardo, J.B. Say and K. Marx, to name but a few. At the beginning of the 19th century, Saint-Simonism (H. de Saint-Simon, 1760–1825) widely popularized the idea that technical progress (via “industrialism”) was the necessary condition for improving the well-being of humanity. Moreover, as pointed out by B. Godin (2014), the sociologist G. Tarde (1843–1904) is often mentioned as the first to have devoted theoretical writings to innovation at the end of the 19th century. In The Theory of Economic Development (1981), Schumpeter considers that evolution results from the implementation of new combinations of means of production: the manufacture of a new good, the introduction of a new production method, the opening of a new outlet, the conquest of a new source of raw materials or of semi-finished products, the realization of a new organization, such as the creation of a monopoly situation. The importance of this definition and, more generally, of the Schumpeterian analysis of innovation can be explained by several arguments, which we present below:
First of all, this definition is important because, for the first time, it distinguished the various forms that innovation can take, without reducing it to technology. This variety is central to the contemporary definition proposed by the OECD in the Oslo Manual (OECD 2005), which distinguishes the product, process, new business method and new organizational method (OECD 2005). The most recent definition (OECD 2018) focuses on the enterprise and simplifies this definition by distinguishing product and business process innovation (OECD 2019). The notion of “business” processes refers to the traditional functions of the enterprise. It brings together process, and the organizational and marketing innovations defined in previous versions of the manual.
However, in the Schumpeterian analysis of long-term economic cycles (business cycles), the so-called Kondratieff cycles or waves, technology plays a major role. In Business Cycles (1939), Schumpeter in fact links the three Kondratieff movements from 1750 to 1940 and the three waves of fundamental innovations, which essentially concern technology: textiles, iron and steel, steam at the end of the 18th century, railways in the mid-19th century; and electricity, automobiles, chemicals at the beginning of the 20th century. The role of technological innovation was then crucial in explaining economic cycles (Uzunidis 1996). These innovations lead to an increase in supply capacity (increased demand for production goods, lower production costs, increased quantities of new products on offer) and a revival of demand (new consumption needs, credit). We also find this primacy of technology in the analysis in terms of the techno-economic paradigm proposed by C. Freeman and C. Perez (Freeman 2008; Perez 2010). This is defined as the set of most successful or profitable practices, in terms of the choice of inputs, methods and technologies, and organizational structures, business models and strategy. The paradigm forms a kind of common sense that facilitates technology diffusion.
In Schumpeter’s analysis, innovation is therefore associated with evolution and change. This is the second essential point. It is new combinations that cause the hurricane of “creative destruction” (2008), continuously destroying old elements and creating new ones. Thus, the changes brought about by innovation also have negative consequences. Going back to the analysis of long waves, over-investment in the growth phase is punished by losses, layoffs and bankruptcies, creating a “vacuum cleaning” effect that can unleash the entrepreneurial spirit again.
This central role of technology, and therefore the potential for change it offers, is still a subject of debate today. For R. Gordon (2016), for example, information and communication technologies affect a smaller number of activities compared to the key technologies of the second industrial revolution (electricity, automobiles and aviation), which hampers the recovery of activity. Other authors, however, believe that current technologies bring many opportunities, jobs and growth, but that the economic and social system does not sufficiently promote their exploitation and diffusion. According to D. Archibugi (2016), for example, massive public investments, in science and technology, as well as in infrastructure, should be made to help companies develop marketable products and services. The current context of the strong financialization of the economy, which makes stock market investments more remunerative and more risky than productive ones, also plays a key role in the absence of the long-awaited recovery of a new long-term cycle (Uzunidis 2003). The orientation of science and technical progress towards short-term profitability objectives and the insufficient consideration of major challenges (such as climate change, population aging, pandemics) are also obstacles to the emergence of a new cycle.
Admittedly, and this is the third argument justifying the importance of Schumpeter’s contribution, not all innovations have the same effects. New combinations may result from continuous and small-scale transformations – minor or incremental innovations – and their effect on economic structure is therefore limited. New combinations that appear discontinuously are similar to radical innovation. These are innovations that have a significant