Invention and innovation

Invention and innovation are the terms used very commonly along various domains of science and can be defined differently, depending on the field in which they are applied. In economy, the paradigm exists that only a useful idea is creative. Therefore, in case of economy, invention and innovation are the creative forces driving development of market. Invention relates to creation of the new, while innovation is focused around making it more useful.

Invention

Invention could be described as “any thought, behavior, or thing that is new because it is qualitatively different from existing forms”. Commonly accepted approach is of neo-classical economic theory. It proclaims that technical invention appears as the result of creative problem solving. Regardless, an inventive thought is often hard to convert to any tangible or practical result, neither is the invention possible to predict. Therefore, economic theories are not interested in the psychological process of invention.

Different theories stress one or more of these factors that influence invention:

• individual qualities
• social environment
• problem-solving
• resource-access

In simplified means, invention consists of three areas:

• scientific-technological
• sociopolitical
• cultural

Invention is often impractical at the beginning. Enterprise tries to adapt inventions and when it successfully does so, the results can become a source of very lucrative business. The way to adapt invention is by innovation and marketing.

The most significant problems around invention in economy are as follows:

• it is immensely difficult to properly protect rights around invention: patents, copyright or authorship laws
• very useful inventions shift the market completely – companies and huge concerns sometimes do not allow them to be integrated into the market
• most inventions are not useful at first; they need to become a subject of innovation or to be recalled at another place or time; this process enlarges the problem of authorship and is connected to low profitability of invention
• the demand for invention is almost nonexistent due to no free possibility of practicality testing
• it is not profitable to be an innovator; when the price of information that cannot be easily validated exceeds zero, the demand is nonexistent

Business fields in which inventions are most significant consist of:

• technology, e.g. digital or biotechnology
• medicine and pharmacy
• culture related

Innovation

In Cambridge Dictionary innovation is referred to as “a new idea or method, or the use of new ideas and methods”. The definition represents the relationship between invention and innovation: while invention is about an emergence of a completely new idea itself, innovation is a way of adjusting the idea to the reality or, as it happens in economy, to a certain market.

While invention is the matter of supply side, innovation depends on changes derived from demand side. It consists of process and product innovation, both of which are focused upon optimizing value of output with regards to input. In comparison with invention, the way how and when the innovation occurs matters and is described by innovation process.

External factors regarding invention and innovation

Innovation, as it occurs, needs the right circumstances. One of the concepts concluding this topic is the concept of Innovation Ecosystem. It is based on the fact, that innovation is one of the ways of getting more output from inputs. Because it is one of the main aims of economy, a proper ecosystem for innovation is crucial to be implemented in any market.

The characteristics of innovation ecosystem are:

• innovation ecosystem models economic dynamics of complex relationships between actors and entities, whose functional goal is to enable technology development and innovation
• actors include material resources and human capital of entities within the ecosystem
• entities are the institutions, organizations etc. of actors within the ecosystem
• an ecosystem includes two distinct economies: research economy, driven by fundamental research, and commercial economy, driven by marketplace
• research economy resources have to be derived from commercial economy finances
• the ecosystem does not easily regulate itself in this regard and so the definition includes a proper taxation of the marketplace

Context of invention and innovation

When innovation occurs, it is always a part of a three-step process.

• invention
• innovation
• diffusion

The above process was called by Schumpeter “creative destruction” and is now very commonly used in scientific literature. The object of creation is destructive, because every new, which appears to the customer as better, displace the old. As a consequence, new, innovative and profit-maximizing entrepreneurs are always fighting with each other and by the same coin, with the already existing market.

Inventor and innovator

Inventor is a person, often a scientist or an artist, who has a completely new idea. The idea is often impractical or yet not useful. To patent an invention is crucial for an inventor - it allows him to safely monetize an invention that could otherwise be easily stolen.

An innovator is a person or a legal person who implements an invention to create a useful product or to improve an already existing one. Legal protection is also important for an innovator, but the necessity of it varies among industries.

Relationships between inventor and innovator are often complicated in terms of the economy and legal protection. One of the concepts regarding economy is Innovation Ecosystem, and a helpful legal solution is Patent Pending.

References

• Arrow K.J. (1962). Economic Welfare and the Allocation of Resources for Invention, The Rate and Direction of Inventive Activity: Economic and Social Factors. Universities-National Bureau Committee for Economic Research, Committee on Economic Growth of the Social Science Research Council, Princeton University Press,(p. 609 - 626).
• Hung S-C. (2004). Explaining the process of innovation: The dynamic reconciliation of action and structure. Human Relations 2004; Volume 57(11): 1479–1497.
• Jackson D.J. (2015). What is an Innovative Ecosystem?. National Science Foundation.
• Kaiserfeld T. (2005). A Review of Theories of Invention and Innovation. Paper No. 47, Electronic Working Paper Series
• Zucker L.G., Darby M.R. (1996). Star scientists and institutional transformation: Patterns of invention and innovation in the formation of the biotechnology industry. Proc. Natl. Acad. Sci. USA Vol. 93, pp. 12709–12716.

Author: Maksymilian Podgórski