Sources, Procedures, and Microeconomic Effects on Innovation

Evaluates the processes leading from the initial ideas for technological opportunities to serious innovative attempts, and finally, to changes in the structures and performance of industries. Discussed are: (1) innovation opportunity sources, (2) the markets' role in both resource allocation for opportunity exploration and the rates and directions of technological advances, (3) the characteristics of the processes of innovative search, and (4) details about the incentives that drive private agents to commit themselves to innovation. This interpretation of the innovation process helps to demonstrate why sectors vary in their innovation modes and rates and why firms within each industry differ in their innovation tendency. Also considered is the relationship between innovative activities and the dynamics of industrial structures and performances. (SFL)