Is Firm Renewal Stimulated by Negative Shocks? The Status of Negative Driving Forces in Schumpeterian and Darwinian Economics
2016 (English)In: Cambridge Journal of Economics, ISSN 0309-166X, E-ISSN 1464-3545, Vol. 40, no 1, 93-121 p.Article in journal (Refereed) Published
The idea that firms are more innovative under difficult external condition has no prominent place in evolutionary economics. The neo-Schumpeterians agree with Schumpeter that innovation is stimulated by positive driving forces and associated with industrial renewal through creative destruction. Also Darwinian economists shed light on opportunity factors (variation) and selection. On the other hand, in neoclassical Schumpeterian models, fierce competition and low product demand may enforce innovation and productivity increases in established firms. An orthodox Schumpeterian tradition even maintains that innovation in depression is the cause of the following recovery. But the orthodox Schumpeterians are as reluctant as the neoclassical Schumpeterians to elaborate the underlying psychological mechanism. In the theory of transformation pressure, firms facing an actual decline in profit are supposed to be more creative and rational, or at least more anxious to follow near-rational heuristic rules, having a positive effect as a possible over-reaction on innovation and productivity growth
Place, publisher, year, edition, pages
2016. Vol. 40, no 1, 93-121 p.
IdentifiersURN: urn:nbn:se:su:diva-111130DOI: 10.1093/cje/beu068ISI: 000368411800005OAI: oai:DiVA.org:su-111130DiVA: diva2:774373