Innovation Patterns: Upgrading Sectoral Classification for the Fourth Industrial Revolution
25 Pages Posted: 7 Mar 2017 Last revised: 11 May 2018
Date Written: March 6, 2017
At the dawn of the Fourth Industrial Revolution, we notice that conventional methods for classifying companies into economic sectors are increasingly unfit-for-purpose, because they fail to accommodate the key ways in which innovations are transforming existing industries, and even spawning altogether new ones. We introduce a new framework for the comparative study of Industrial Revolutions that also provides the foundation for an adaptive and comprehensive classification scheme. We show how the same five Axes of Innovation commonly characterize the first three Revolutions in modern history, and how these Axes are also capturing the key features of the Fourth Industrial Revolution that is presently underway. We demonstrate that, in any Industrial Revolution, each Axis of Innovation manifests as a unique Innovation Pattern that remains durable throughout that Revolution. Innovation Patterns are the fundamental driving forces behind Revolutions, and the interactions between them strongly shape how new technologies evolve during the Revolution in which they appear. One significant practical application of our framework is as the basis of a novel system for classifying companies into economic sectors. We discuss how this approach to classification is preferable to conventional techniques, detail how it can be used to derive a system of new-economy sectors, and provide several worked examples.
Keywords: Classification Systems, Economic Sectors, Industrial Revolutions, Innovation Dynamics
JEL Classification: G3, G23, L00, N1, O3
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