Economists typically model innovation as shifting the technological possibility frontier in order to produce more with the same amount of inputs. Or in other words, to improve the usage of capital and labor in the production process seems to be an important objective of innovation. This type of innovation is often referred to as technological innovation or process innovation, as it implies more efficient ways of producing output.
These innovations in firms, however, often led to labor force lay-offs due to more efficient technology-intensive production techniques and to shifts in the skill structure of employees within innovative firms.
The traditional concept of product and process innovation needs to be complemented by non-technological innovation that is recognized as an essential element of innovation success in general. There is ample evidence that the implementation of technological innovation critically depends on service innovation (e.g. introducing new business models, new marketing approaches and delivery channels). Yet, non-technological innovation plays a particularly important role in service firms where interaction with customers and end users provides vital incentives for the design of new services. Moreover, some services facilitate and accelerate the implementation of technological innovation (e.g. technical services, intellectual property management, etc)
Just like product, process, organizational and marketing innovation is often associated with better economic performance; also social innovation can be an important driver of economic performance. Economic performance is, however, usually narrowly defined in terms of productivity and gains in value added that firms produce, ignoring the social implications.
- job creation and job destruction
- the shift in demand for skills
- the evolution of polarization of the labor market.
Second, we want to define and document the importance of social capital and social innovation, as a complement to the traditional (economic) concepts of innovation. Social innovation can be defined by analogy with the more traditional concepts of product and process innovation. Social innovation consists in changes in patterns and regularities in relations among individuals that affect their abilities to attain individual or collective goals, or in other words that help improve social capital (trust). We want to analyze the relationship and complementarities between social innovation and technological innovation. In particular, we want to find out whether social innovation results in more technological innovation and vice versa? And third, we aim to improve the understanding how innovation in services impacts not only employment and inequality, but also how innovation spillovers affect innovations and performance in the manufacturing sector.
Research conducted in this working package will thus enable to examine the feasibility of including social dimensions of innovation and service innovations into macro models used for ex-ante impact assessment of RTD policies. Micro studies and case studies will serve to give a more accurate information on how social impact of innovation can be effectively included into macro models.