It is not just an entrepreneur’s pure knowledge that leads to innovation and growth but, rather, the combination of that knowledge with creativity. Although knowledge in general leads to technologically advanced production, a special type of knowledge is necessary to the sort of successful R&D that will result in ground-breaking inventions and future rents, namely, creativity. For example, if Thomas Edison had confined himself to simply making a more efficient candle, he would never have discovered the electric light bulb.
There is no question that the Schumpeterian entrepreneur drives economic growth and it would seem that the entrepreneurial spirit would be highly desirable and sought after. However, there might be good reasons not to innovate, not to be creative. Sticking to routines can be indicative of a firm’s risk aversion. To stay competitive, a company needs to successfully and regularly introduce innovations. If it does not, it will lose ground to its competitors and eventually drop out of the market. Thus, risk-adverse firms might rationally prefer to rely on proven procedures, resulting only in routinized innovations, than take the risk involved in the invention of new products or processes.
Thereby, being part of a (regional) network may have several benefits. One of the most obvious benefits is the augmented knowledge production because of unhindered knowledge flows. Being part of a network further has an insurance function that reduces uncertainty associated with innovation. One of the best examples is the famous Silicon Valley in California.
The goal of the project is an accurate depiction of the “innovative firm”—that is, discovering the role of networks, human capital, and competencies of the employees that lead to the greatest success in terms of firm growth and stability. Thereby, the Ifo Innovation Survey, which has been conducted annually since 1979, will make it possible to determine the industry- and product-specific innovation activities of a sample of more than 1,000 German firms. The last panel wave has added a new complex of questions on the competencies of innovators, e.g., special skills, creativity, team spirit, honesty, cooperativeness, and organizational compliance. The next panel wave will add a new complex of questions on cooperation in (regional) networks.
Panal data analysis
Ifo Innovation Survey
Falck, Oliver and Stefan Kipar, "Die High-Tech-Offensive im Freistaat Bayern", ifo Schnelldienst 63 (03), 2010, 21-26 ( Abstract ).
Falck, Oliver, Stefan Kipar (with Paul Pascal), "Unternehmenskooperationen im Innovationsprozess: Erste deskriptive Befunde neuer Fragen im ifo Innovationstest", ifo Schnelldienst 63 (01), 2010, 23-27 ( Abstract ).
Falck, Oliver, Stefan Kipar and Ludger Woessmann, "Human capital and enterprise innovation activity: Findings from new questions in the Ifo Innovation Survey", ifo Schnelldienst 61 (7), 2008, 10-16 ( Abstract / Download ).
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