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The Handbook of Technology and Innovation Management by Scott Shane

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Chapter 16. The Contribution of Public Entities to Innovation and Technological Change

Maryann P. Feldman and Dieter F. Kogler

The authors would like to thank Barry Bozeman, Elizabeth Graddy, Chandler Stolp, and David Wolfe for comments and suggestions on this chapter. We have benefited from discussion with Wendy Dobson, Al Link, Maryellen Kelley, and Don Siegel.

Innovation – the realization of economic value from new ideas – is recognized to be an activity best accomplished by the private sector. Motivated by profits, market share, and growth potential, companies develop new products, processes, and organizational forms. The market adjudicates their success, rewarding those companies that produce goods and services valued by consumers. Indeed, the idea of the invisible hand of the market driving the winds of creative destruction, which then result in innovation, technological change, and economic growth, is a most romantic and intoxicating image.

Yet, in many ways, the efforts of the private sector are only the visible tip of the iceberg that defines innovation and technological change in the economy. Under the surface, typically unobserved and underappreciated are public entities – governments, universities, nonprofit foundations, voluntary membership organizations, and other institutions that are instrumental in providing resources, offering incentives, and defining opportunities for the private sector. It has not been popular to talk about the role of government, or to acknowledge ...

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