Who Innovates? The Regional Economic Impact of Private Corporate Innovation Investments

Abstract

Our interest in writing this article is to create a bridge between the scholarly and academic research on technological innovation and a private sector, for-profit business model that implements the ideas on innovation and entrepreneurship, primarily in metro regional economies.

Existing companies that already have cash flow from operations have a different set of innovation investment issues to solve than start-up ventures. Aravind Chandrasekaran, Kevin Linder and Roger Schroeder describe that in existing companies with existing products being sold in markets to existing customers, there are "dual demands of innovation and improvement. Organizations can over emphasize improvement over innovation or visa-versa leading to several forms of traps."

Regional innovation policy for existing firms should focus on resources that reduce private sector investment risk.New firms, producing radical new products, need a different type of innovation infrastructure than existing firms.

But, both new and existing small manufacturing firms need one essential ingredient in common in order to innovate. They need new product ideas.

The companies who innovate are existing companies and entrepreneurs with new ideas, and new product innovation creates the greatest economic impact.

Keywords: innovation economics, private capital markets, productivity, neoclassical economics, Robert Solow, Wassily Leontief

JEL Classification: L16, M13, O16, O31, O32, O33, O34, O38, R58