Aug 25, 2012

"Creative Destruction" vs "Creative Accumulation"

Schumpeter Mark I industries are characterized by turbulent environments with relatively low entry barriers where innovations are (mostly) generated and developed by new “entrepreneurial” firms. Accordingly, technological competition among firms in Schumpeter Mark I industries assumes the form of “creative destruction” with successful innovating entrants replacing the incumbents. Vice versa, Schumpeter Mark II industries are characterized by stable environments with relatively high entry barriers in which innovations are generated and developed by large established firms. In Schumpeter Mark II industries technological competition assumes the form of “creative accumulation” with incumbent firms introducing innovations by means of a process of progressive consolidation of their technological capabilities along well established technological trajectories (Malerba, 2005, p. 382).
The authors conclude:
Our results indicate that, in general, a Schumpeter Mark I pattern is significantly related with a higher probability of inducing breakthrough inventions. As already mentioned, this result merits particular attention because the source we use to measure breakthrough invention (the “R&D 100” competition) is likely to be biased in favour of breakthrough inventions stemming from the R&D intensive segments of the economy. This finding may perhaps be interpreted as a vindication of the thesis of Jewkes, Sawers and Stillerman (1958) who, long ago, argued that inventive activities undertaken outside the walls of the research and development facilities of large corporation were continuing to play a fundamental role for the generation of breakthrough inventions.
An interesting graph from the paper:
HT: Laura Stefanescu.

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