Innovation

Neoclassical equilibrium theory took the process of innovation to be an external (exogenous) and random variable in the economic function (like an earthquake or good/bad weather). Joseph Schumpeter argued, on the contrary, that the innovation process is internal (endogenous) in an economy and that it provides energy for productivity and economic growth. Innovation as an evolutionary process is the ‘secret ingredient’ not only of business success, but also of economic growth. This ‘secret sauce’ of success is also an important cornerstone for the dynamism and growth of an economy, as well as the driving force of the world and our lives. Although innovation is an uncertain phenomenon, it also has dynamic and cumulative dimensions. The process of technological change is not only risky and costly, but also highly uncertain and, apparently, never complete in an evolutionary framework. Frequent and usual failures, sometimes very big, are a part of research and development and the innovation process, and so are other uncontrollable factors such as serendipity.