Minerva
Ulrich Witt
Professor of Economics
Past Director of the Evolutionary Economics Group,
Max Planck Institute of Economics, Jena
Ulrich Witt
Recent work

What Kind of Innovations Do We Need to Secure Our Future?

Innovations sometimes turn out to cause severe negative externalities after they have successfully passed the market test. In such cases, the social costs that are revealed only later may result in substantial welfare losses. Obviously, innovations of this kind are the opposite of what we need to secure our future. In this article I discuss the question of whether knowledge flows related to innovation processes be strategically arranged in such a way that these externality risks are minimized.

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The question of what kind of innovations can secure our future is in this paper put in perspective with the unknown risks which innovations may imply. Can the knowledge flows related to innovation processes be strategically arranged in such a way that these externality risks are minimized? The options I review relate to the debate on open vs. closed innovation processes in management science. I briefly discuss several aspects of this debate and introduce a model of self-organizing belief formation. The model reflects the attitudes of a team involved in R&D activities towards the benefits and costs (including the risk assessment) of an emerging innovation. On this basis I show that open innovation processes tend to stop innovations with strong negative externalities earlier than closed processes do. However, open innovation processes at the same time reduce the incentives to innovate and hence curb innovativeness. Society’s strategy of raising innovativeness to secure our future faces a dilemma.

The full text of the article published in the Journal of Open Innovation Vol. 2, 2016 can be downloaded for free under open access here:  DOI 10.1186/s40852-016-0043-y

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