Milestone Review: Broad Research Context

This is a section out of a milestone review paper I am piecing together. Any questions or feedback are both welcomed and appreciated. 

The broad context of this work is innovation economics, with influences stemming from institutional, evolutionary and complexity economics. These compatible and emerging fields are explored in the modern context of Australian innovation policy; creating a refreshing perspective in a highly controversial arena. The outcomes of the work have significant implications for the Australian Innovation System, and the perspective through which we view innovation policy generally.

The three most influential scholars are J. Schumpeter, E. Ostrom, and F. Hayek. Schumpeter (1942) placed innovation and entrepreneurial activities into the centre of determinants of economic change. Most important was his incorporation of an evolutionary focus, through the now famous ‘gale of creative destruction’. Schumpeter’s legacy is continued throughout this dissertation, with innovation as a continual process of trial-and-error that drives economic change.

In The Use of Knowledge in Society, Hayek (1945) stressed the importance of local knowledge when making economic decisions – re-framing the economic problem as one of knowledge coordination, while simultaneously generating concern over central planning interventions. While Hayek marvelled at the efficiency of the institution of the market in coordinating local knowledge, we switch focus to commons institutions. Innovation is a problem in coordination of innovation resources (including knowledge), facing similar institutional planning challenges.

Ostrom (1990), through study of natural resource governance, demonstrated how the commons did not always result in tragedy, if a complex, bottom-up institutional setting for collective action evolves. This revealed how the commons could be, and are being, utilised as a voluntary, self-organising institution for governance of social dilemmas.

We hypothesise that innovation commons are emerging through a complex collection of rules and governance by citizens – to avoid the social dilemmas inherent in innovation. That is, innovation is occurring through an evolutionary process (Schumpeterian), that can be analysed through institutions where the governance rules for collective action are developed from the bottom-up (Ostrom), because these institutions appear to be very efficient at coordinating and mixing knowledge in the commons (Hayek).

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