Size and sophistication: the two faces of demand.

Innovation is widely acknowledged as one of the main forces driving economic growth. However, despite our significant knowledge of the technological determinants of innovation processes, an adequate understanding of demand side factors is still lacking. This paper aims to survey the literature on the influence of demand upon innovation. Although theories and empirical studies on this issue can be found at various points in economics, management theory, and marketing, in each context, the concept of demand has been understood in different ways and both different methodologies and units of analysis have been employed. This Babel of languages makes it difficult to find a common thread among the different contributions and boosts the perception of a certain disregard of the demand side. This paper reviews the most important literature on the topic with two aims: one is to give an overall picture on how innovation studies have handled the concept of demand; the other is to suggest a framework that includes the main insights from previous contributions. More than an attempt to come out with a general theory on demand, it constitutes a suggestion of a common language.