Invention, inventive learning, and innovative capacity

Abstract

The contrasting performances of individual and corporate invention are analyzed from a long-term perspective, by exploring, first, the process of resource allocation to invention. Experimential learning, experimentation, and uncertainty are assumed to be important micro-level characteristics of inventive processes, and are incorporated in a basic learning model of resource allocation and performance. Decision-making behavior in adaptive systems, derived from the work of Simon (1955, 1962), provides a link between the scientific system's microlevel perspective and its macro effects on long-term socieconomic patterns of change and stability. The process of invention is then related to the macrosocietal innovative capacity, by analyzing inventive performance over a 106-year period (1880–1986) with U.S. invention patent data. Fluctuations in the age distribution of patents, or age cycles, provide insights on the temporal structure of the societal innovative capacity, and help predict its fluctuations. The relationships between innovative capacity, individual and corporate invention, and long-term socio-economic trends are then explored statistically. The societal innovative capacity and, more significantly, corporate invention, explain a substantial proportion of long-term changes in net national income. Despite the importance of corporate inventive performance, the relationship between corporate invention and national income carries greater potential risk, however. National income trends are found to be important statistical predictors of new annual corporate inventive output, exposing the latter's potential vulnerability to major economic crises.