In this chapter it is shown that, in spite of the fundamental importance for economic growth of product innovation, standard economic theory – neo-classical as well as transaction cost approaches to industrial organization – tends to neglect it. It is also shown that moving the focus to product innovation leads to very different conclusions on how alternative institutional set-ups affect economic performance. Institutional set ups assumed to optimise allocation and minimise transaction costs do not support innovation and growth. That is why producer goods where innovation is a regular phenomenon are transacted neither in pure markets nor in hierarchies. The omnipresence of “organized markets” reflects the need for users as well as producers to engage in on-going information exchange and interactive learning in connection with product innovation.
Lundvall, B. and Lund Vinding, A. (2004), "PRODUCT INNOVATION AND ECONOMIC THEORY – USER-PRODUCER INTERACTION IN THE LEARNING ECONOMY", Christensen, J. and Lundvall, B. (Ed.) Product Inovation, Interactive Learning and Economic Performance (Research on Technological Innovation, Management and Policy, Vol. 8), Emerald Group Publishing Limited, Bingley, pp. 101-128. https://doi.org/10.1016/S0737-1071(04)08005-9Download as .RIS
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