Introduction

This chapter focuses on the interactive nature of the process of innovation. The analysis takes as its points of departure two important characteristics of an industrial economy: the highly developed vertical division of labour and the ubiquitous and all-pervasive character of innovative activities. It analyses the implications from the fact that a substantial part of innovative activities takes place in units separated from the potential users of the innovations.

Here we shall argue that the separation of users from producers in the process of innovation, being ‘a stylized fact’ of a modern industrial society (capitalist or socialist), has important implications for economic theory. When we focus on innovation as an interactive process, the theoretical and practical problems tend to present themselves differently than in mainstream economic theory.

The interactive aspects of the process of innovation can be studied at different levels of aggregation. First, we discuss the ‘microeconomics of interaction’. Second, we present some preliminary ideas on how the understanding of a national system of innovation can be developed.

The Micro-Foundation: Interaction between Users and Producers

In standard microeconomics the agents – firms and consumers – are assumed to behave as maximizers of profits and utility. Perfect competition with numerous buyers and sellers, and the flow of information connecting them encompassing nothing but price signals, is the normative and analytical point of reference of the theory. Monopolistic structures and complex client relationships are regarded as deviations from this normal and ideal state.

The kind of ‘microeconomics’ to be presented here is quite different. While traditional microeconomics tends to focus on decisions made on the basis of a given amount of information, we shall focus on a process of learning, permanently changing the amount and kind of information at the disposal of the actors. While standard economics tends to regard optimality in the allocation of a given set of use values as the economic problem, par preference, we shall focus on the capability of an economy to produce and diffuse use values with new characteristics. Moreover, while standard economics takes an atomistic view of the economy, we shall focus on the systemic interdependence between formally independent economic subjects.