Study of innovation initiated by Schumpeter

Today, everyone knows that technological progress and innovation are important for economic growth.

However, technological progress is sometimes ridiculed as “manna fallen from heaven” because it is treated as an exogenous factor in the Solow model, which is a traditional theory of economic growth.

According to this theory, technological progress that is important for economic growth appears like a sudden gift.

On the other hand, an American economist Paul Romer advocated the endogenous economic growth theory in 1986. It defines that technological progress is determined in a model, and those who achieved technological progress can grow economically.

For this theory, he won the Nobel Prize in Economics in 2018. Since the birth of the endogenous growth theory, R&D (research and development) investment has been considered as an important factor in economic growth.

However, even the endogenous growth theory has not clarified the process and factors of how technological progress or innovation is created.

It is not easy to describe the process of creation of technological progress and innovation by using mathematical models.

As a result, no matter how much we invest in R&D recognizing the importance of creating technological progress and innovation, it can end up as blind investment.

Meanwhile, there was an economist who studied the process of technological progress and innovation against the above-mentioned traditional orthodox economic growth theories. That was Joseph Alois Schumpeter (1883-1950) from Austria.

He stressed that technological progress plays an important role in economic growth in the long run.

Then, an idea was generated that economic growth was not achieved merely from the field of technology, but on the background of the co-evolution of science and technology. Based on this idea, development was made by researchers called neo-Schumpeterians, who were viewed as heretical in economics.

One of such researchers, the Italian economist Giovanni Dosi, suggested a concept called the “technological paradigm” in 1982. It refers to a pattern of problem solving based on specific scientific principles.

For example, when a viral disease spreads, people are prepared for it by receiving a vaccine. This is a pattern of solving the problem of viral disease by receiving a vaccine as the basis of antibodies, based on the scientific recognition that diseases can be prevented by producing antibodies against the virus inside the body.

In this case, the vaccine is a technological paradigm.

However, the novel coronavirus is causing a pandemic now. Conventional inactivated vaccines are also effective against this virus, but in developed countries such as the U.S. and the U.K., a completely new type of mRNA vaccine has been developed based on the knowledge of genetic recombination. When this becomes a new problem-solving pattern, it will become a new technological paradigm.

That is to say, it is an innovation that changes the traditional paradigm.

Technological paradigm created by co-evolution of science and technology

Analyzing the history of mankind’s creation of new technological paradigms, or innovation in other words, we can see that there has been co-evolution of science and technology.

It includes the vaccine discovered by Pasteur (1880), the serum by Behring and Shibasaburo Kitasato (1890), Salvarsan as a treatment for syphilis by Ehrlich and Sahachiro Hata (1910), and penicillin by Fleming (1928).

These technological paradigms in the pharmaceutical field have been created one after another based on the establishment of new scientific knowledge called the Chemical Revolution (1783), which was credited to Lavoisier (1743-1794), a French-born chemist.

However, relationships between science and technology are not uniform. Sometimes there is a long-time lag between the birth of new scientific knowledge and of a new technological paradigm, and sometimes new technology may be created first and then it generates new scientific knowledge. Also, technological progress can occur in combination with scientific discovery.

For example, the new scientific knowledge of the chemical revolution led to the technological paradigm of vaccines, which stimulated the advance of scientific knowledge to produce serums. It further triggered new scientific knowledge leading to salvarsan and penicillin.

Furthermore, even before the Pasteur vaccine, there was a legendary folk remedy that allegedly protected people from smallpox by placing in their nostrils a scab taken from a person infected by smallpox.

Actually, it was a method to produce antibody by using a scab from a patient. Of course, it was not based on scientific knowledge.

Yet, human beings have been creating paradigms through the accumulation of experiences. These experiences are established as technological paradigms, when understood scientifically.

The importance of the field of resonance with diversity

I have described the progress of technological paradigms referring to the history of the pharmaceutical field. This model can be applied to the histories of developments in various industrial fields.

For example, scientific elucidation of atmospheric pressure has given rise to the technological paradigm of steam engines. Similarly, scientific knowledge of elements has created the technological paradigm for steelmaking.

Since 2.6 million years ago when mankind began to use tools, co-evolution of science and technology has created technological paradigms in all fields, which brought about innovation to create new paradigms. And today, such innovations lead to economic growth.

Here, it should be noted that these innovations can be classified into two types: 1) emergence of a new technological paradigm based on a new scientific principle (“paradigm-disruptive innovation”), and 2) progress of technology within an existing paradigm (“paradigm-sustaining innovation”) (Classification by Professor Eiichi Yamaguchi of Kyoto University).

For example, looking at the foregoing innovations in the pharmaceutical field, Lavoisier’s chemical revolution was exactly the elucidation of a new scientific principle. Based on that, vaccines were created as a paradigm-disruptive innovation, which surpassed the traditional paradigm of folk medicine.

On the other hand, the development of Neo-Salvarsan, an improved version of salvarsan, could be said to be a paradigm-sustaining innovation, in which existing technology was gradually advanced based on scientific knowledge.

From the perspective of economic growth, there is no doubt that paradigm-sustaining innovation also contributes in the short and medium term. But in the long run, history has proved that economic growth from such innovation would diminish, and then approach its limit.

It is paradigm-disruptive innovation that breaks through this situation. However, it is very difficult to obtain innovative scientific knowledge necessary for this purpose.

For example, Denis Papin (1647-1712), a physicist from France who applied scientific knowledge of steam pressure to industrial technology, which later became the basis for the practical application of steam engines, made achievements by studying in collaboration with various scientists and engineers. Professor Yamaguchi, mentioned earlier, calls such a network of knowledge specialization a “resonant field.”

In order to create new scientific knowledge and a technological paradigm that leads to paradigm-disruptive innovation, I think it is essential to have a resonant field, where various scientists and engineers cooperate, rather than relying on a single genius, for example.

For this resonant field, it is important to have diversity, that is to say, the gathering of people with different opinions, different ways of thinking, and different fields of expertise.

In Japan, which is often referred to as a village society or a vertically divided culture, people of the same kind often gather and work together toward a single goal. As a result, paradigm-sustaining innovation can be achieved, but paradigm-disruptive innovation has been difficult to achieve.

In this way, however, growth would slow down and reach a limit, as we may have realized already.

If you think you can make a breakthrough one day only by continuing R&D investments, which is just like waiting for manna to fall from heaven.

I believe that the field of resonance with the diversity of various scientists and engineers are the essence of open innovation, and that is where the manna of paradigm-disruptive innovation comes from.

* The information contained herein is current as of February 2021.
* The contents of articles on are based on the personal ideas and opinions of the author and do not indicate the official opinion of Meiji University.
* I work to achieve SDGs related to the educational and research themes that I am currently engaged in.

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