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July 24, 2008
Source of innovation
The Information Technology and Innovation Foundation has published an important new report -- Where Do Innovations Come From? Transformations in the U.S. National Innovation System, 1970-2006, written by Fred Block and Matthew Keller of UCal, Davis. The report describes the shift in technological innovation over the past few decades:
Whereas the lion’s share of the R&D 100 Award-winning U.S. innovations in the 1970s came from corporations acting on their own, most of the R&D 100 Award-winning U.S. innovations in the last two decades have come from partnerships involving business and government, including federal labs and federally funded university research. Indeed, in the 1970s, approximately 80 percent of the award-winning U.S. innovations were from large firms acting on their own. Today, approximately two-thirds of the award-winning U.S. innovations involve some kind of interorganizational collaboration—a situation that reflects the more collaborative nature of the innovation process and the greater role in private sector innovation by government agencies, federal laboratories, and research universities.
The report has a nice overview of both the innovation policy debate (specifically on the role of government) and the shifts in the economy since the 1970's. They describe five:
• mounting competition from foreign firms
• deregulation that lowered barriers to competition for entrenched firms.
• computerization
• shifts away from mass markets to niche markets
• increasing short-term performance orientation of financial markets.
The result was the breakdown of the old large industrial system to a more networked approach.
The data they use is based on R&D Magazine's annual "Best 100 Inventions" awards. The authors readily admit that this is somewhat "gizmo" oriented. But still it is good data source to support the underlying conclusions about the success of technology policy over the past three decades:
The federal government has created a decentralized network of publicly funded laboratories where technologists will have incentives to work with private firms and find ways to turn their discoveries into commercial products.
. . .
Complementing these decentralized efforts are more targeted federal government programs that are designed to accelerate progress across specific technological barriers.
That does not mean that everything is fine. As the authors point out, there are still major problems:
In our view, the system of federal support for innovation has enormous strengths, but it also suffers from three major, interconnected weaknesses. First, the system carries decentralization to an unproductive extreme. Under current arrangements, it is entirely possible that five different government agencies might be supporting 30 different teams of technologists working on an identical problem without a full awareness of the duplication of efforts. This situation is a particular problem if different groups are unable to learn from each other in a timely fashion. Second, because the importance of the federal role in fostering innovation is not widely recognized, federal programs in support of innovation lack the broad public support that would be commensurate with their economic importance. Third, the budgetary support for the current system is inadequate and uncertain. Funding for more collaborative research and commercialization efforts are relatively limited, and total federal levels of R&D spending have been declining in real terms since 2003. These declines put the entire U.S. innovation system at risk.
Those are all good points -- especially the second point of a lack of understanding of the positive role of the government.
I do have one not so minor critique of the report. It has nothing to do with the actual study, but the framework. The authors keep describing this as a study of the "national innovation system." It is not. It is a study of the R&D/technology system. As I have said many times (and it is a wall I will continue to beat my head against, I guess), there is more to innovation than technological innovation. As this report shows, we have a pretty good idea of the role of government policy in technology innovation. We need to do much more to understand the role in innovation in general.
Posted by Ken Jarboe at July 24, 2008 09:35 AM
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