Rethinking the Market-Technology Relationship for Innovation

Abstract

This paper revisits the "what causes innovation - market pull or technology push?" debate to argue that the conceptualisation is flawed and that the firm is the only "agent" capable of innovative action. The paper differentiates between "use", "need" and "intended use" to obtain greater precision with respect to the technology-market matching process that is fundamental to innovation. The validity of the approach is demonstrated through empirical examples. These examples also show the value of distinguishing between two types of market concept used by the innovating firm. These are the "reference market" which is a traded product that is a principal source of "use" ideas for the mental construction of the "innovation market" concept. It is the latter that can be thought to guide the construction of innovative production technology.

Keywords: market pull, technology push, reference market, innovation market, needs, intended use, use-value.

JEL Classification: O31,O32,O33