Intermediaries and Mutual Trust: The Role of Social Capital in Facilitating Innovation and Creativity

What are the key factors that facilitate innovation and creativity? This chapter begins by challenging the traditional emphasis on IP rights as an incentive to creators to innovate. While it is true, that IP rights provide for a much-needed tool to protect creative ideas, we argue that a much more important policy objective is to facilitate the dissemination of ideas in the society. Moreover, we submit that in the age of networked societies, dissemination of ideas could be facilitated by creating a trust-based ecosystem with different incentives for various kinds of intermediaries to emerge and compete with each other and making sure that users are actually able to choose through which intermediary information should be accessed or disseminated. We begin this chapter by offering a brief exposition of the notions of social capital and mutual trust. Mutual trust is a complex phenomenon involving multiple stages of cognitive decisions between a trustor and a trustee. The degree of trust evolves over time and is based on the experience between the communicating parties. Accumulation of trust between members of a society (a kind of social capital) significantly contributes to sharing of ideas and enhances cooperation. In more complex societies, trusting one’s neighbor (intermediary) is one of the major factors that minimizes risk and facilitates communication through neighbors (intermediaries). In designing a trust-based innovation ecosystem, it is first of all important to identify the relevant stakeholders and their main interests. Such stakeholders and their interests may vary depending on their geographical location or the market in which they are operating. We argue that innovation thrives in more flexible regulatory environments, which pose less restrictions and are able to swiftly adjust to the changing needs of technological evolution. Moreover, we suggest that regulators should aim to create ecosystems where more intermediaries could emerge and compete with each other. Having multiple intermediaries enables users to choose whom they believe to be able to provide higher quality products and services. Higher level of trust between various stakeholders of ecosystem contributes to sharing, collaboration, dissemination of information and innovation.