economics of innovation literature review

What drives firm innovation? A review of the economics literature

66 Pages Posted: 2 Nov 2021

Elizabeth Webster

Swinburne University of Technology; University of Melbourne - Melbourne Institute: Applied Economic & Social Research

Alfons Palangkaraya

Centre for Transformative Innovation, Faculty of Business and Law, Swinburne University of Technology; Swinburne University of Technology - Centre for Transformative Innovation

Tom Spurling

Swinburne University of Technology

What Drives Firm Innovation? A Review of the Economics Literature

Date Written: October 29, 2021

This paper aims to give the reader a sense of the stylised facts about what makes some firms attempt more changes compared with others. The report begins with a review of definitions of innovation; and why we care about innovation and its differential treatment in the economic and management literatures. It is relevant to mention, however, at this juncture that the definition of innovation used in this study embraces all attempts by the firm to change and improve its production and operation processes and menu of products – whether successful or not. We then proceed to draw out the main conclusions from the applied economics literature, first by looking at studies of new-to-the-world innovation and next considering new-to-the-firm innovation studies.

Keywords: Innovation; firm performance

JEL Classification: O30; O33

Suggested Citation: Suggested Citation

Elizabeth M. Webster (Contact Author)

Swinburne university of technology ( email ).

Cnr Wakefield and William Streets, Hawthorn Victor 3122 Victoria, Victoria 3122 Australia

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

Level 5, FBE Building, 111 Barry Street Parkville, Victoria 3010 Australia

Centre for Transformative Innovation, Faculty of Business and Law, Swinburne University of Technology ( email )

AGSE Building Room 117 Hawthorne, Victoria 3121 Australia +61392145826 (Phone)

Swinburne University of Technology - Centre for Transformative Innovation ( email )

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Systems of innovation and innovation ecosystems: a literature review in search of complementarities

• Regular Article
• Published: 12 December 2018
• Volume 28 , pages 1053–1080, ( 2018 )

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• Nihad Faissal Bassis   ORCID: orcid.org/0000-0001-9011-9256 1 &
• Fabiano Armellini 1  

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This paper aims to clarify to what extent the emerging theory of innovation ecosystems (IE) and the theory of systems of innovation (SI) are complementary and then identify how its communities could benefit from cross-fertilization. We performed a critical literature review of both topics using meta-synthesis as method to identify, analyze and compare the two theories. Using a framework, this paper explores the elements belonging to each theory’s domain, in order to identify the key factors necessary to compare the two theories. The results of this analysis show that both theories involve the assessment of three key aspects: the understanding of innovation activities, the role of the agents involved, and the interaction and resulting networks among them. A similarity was found showing that these two different theories are applications of System Thinking approach. Another finding, which has not been mentioned in previous research on the topic, is that the construction of the initial concepts of the IE theory was originally rooted in several SI elements. Finally, we found key factors that may be the cross-fertilization link between the two communities that represent each theory.

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Faissal Bassis, N., Armellini, F. Systems of innovation and innovation ecosystems: a literature review in search of complementarities. J Evol Econ 28 , 1053–1080 (2018). https://doi.org/10.1007/s00191-018-0600-6

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Published : 12 December 2018

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DOI : https://doi.org/10.1007/s00191-018-0600-6

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