The foundations of innovation in modern societies: the displacement of concepts and knowledgeability

Neither knowledge societies nor knowledge-based economies are necessarily historically new phenomena. There have been knowledge societies in the past (see Stehr 1994: 5–32), similarly, economies have been knowledge-intensive in the past (cf. Antonelli et al. 2006: 211). However, the general significance of knowledge in contemporary societies has risen considerably. In the economy, knowledge now rivals more conventional factors of production such as property and labor.

These observations do not preclude, however, that the supposedly typical rational attitude toward economic conduct found in liberal-capitalist economies may not change and develop. It is possible that we are witnessing, at the present time, an increasing “moralization of the market.” Economic processes and products are more and more judged based not merely on purely rational premises but with reference to ethical convictions. Such a moralization of the market with respect to the products of biotechnology, for example, would represent such a transformation in the attitudes typical of the capitalist “spirit” (cf. Stehr 2000, 2008; Stehr and Adolf 2010).

As John (1998: 205) shows, in a study of the evolution of American communications, “the most fundamental technical breakthroughs—electric signaling in the 1840s, voice transmission in the 1870s—emerged in highly unusual contexts that provide few obvious lessons for students of innovation today (emphasis added).”

For as Durkheim ([1912] 1965: 479) perceptively observed: “Life cannot wait” (cf. also Gehlen [1950] 1988: 296–297). In their discussion of expertise and how expertise may be justified, Collins and Evans (2002: 241) advance similar observations about the essential difficulties encountered in the public domain if one would have to wait for expert advice: “Decisions of public concern have to be made according to a timetable established within the political sphere, not the scientific or technical sphere; the decisions have to be made before the scientific dust has settled, because the pace of politics is faster than the pace of scientific consensus formation.”

As Godin (2008: 23–4)—in a history of the concept of innovation—points out: ‘Novation’ is a term that first appeared in law in the thirteenth century. It meant renewing an obligation by changing a contract for a new debtor. The term was rarely used in the various arts before the twentieth century… In fact, as with imitation and invention, innovation was pejorative for a while. Until the eighteenth century, a ‘novator’ was still a suspicious person, one to be mistrusted.”

For Joseph Schumpeter innovations become a central, if not the main component, of the dynamics of economic action. For example, innovations are seen to be more important than is price competition among firms. According to Schumpeter ([1942] 1962: 132), pioneering entrepreneurs who “reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry,” are at the center of the dynamics of the capitalist system. In Schumpeter's usage, innovations refer to the initial introduction of a new product (thus, product innovation) or system and process (hence, process innovation) into the economy. Although Schumpeter's terminology extends to organizational and managerial innovations, most of the subsequent analyses carried out in economics that pertain to innovations have concentrated on technical innovations or innovations that relate to artifacts. Since Schumpeter makes a sharp distinction between invention and innovation, it becomes evident that his notion of innovation refers not merely to the fabrication of additional knowledge but to incremental knowledge that has been translated into practice (hence practical knowledge) and results in a new product or process. An invention as additional knowledge (or conceptual invention) is knowledge as defined here, namely, a capacity for action.

For an overview of the results of innovation studies cp. Faulkner 1994: 434–442.

One of the first empirical studies of the interdependence of technical innovation and organizational processes and development is Burns and Stalker’s The Management of Innovation (1961). For a recent discussion of the territorially embedded approach to innovation drawing on studies from the fields of economic geography including the “cluster” literature (cf. Asheim et al. 2006) and regional studies, see for example James et al. 2012.

A comparative anthropological analysis of knowledge systems that does not proceed from the assumption of an essentialist hierarchy of knowledge systems with scientific knowledge invariably at the apex of such a stratified figuration, but rather aims to explore both continuities and differences among forms of knowledge, can be found in Watson-Verran and Turnbull (1995).

Consistent with Schumpeter’s core insights, Drucker (1993: 184) observes that initial economic advantages gained by the application of (new) knowledge become permanent and irreversible. What this implies, according to Drucker, is that imperfect competition becomes a constitutive element of the economy. It is the case, of course, that the wide dissemination and application of knowledge beyond the boundaries of the organization that initially gained an edge (as the result of being ahead of its competitors) does not literally lose the now more widely “shared” knowledge since this is one of knowledge’s more peculiar properties. Knowledge can be disseminated or sold without leaving the context from which is disseminated or sold. The edge that remains is perhaps best described as an advantage that could be minor but may also be quite significant, based on cumulative learning or the fact that one is able to benefit from the “first-mover-advantage.” All of this does not preclude a strategy among firms that attempts to share the benefits from incremental knowledge and innovations in an attempt to reduce the economic risk of investing into the fabrication of knowledge and in an effort to increase the payoff from innovative products and services. Among other reasons, the difficulties that may be associated with efforts to appropriate benefits from research efforts in private firms is often employed as a standard justification for the public support of science (see Nelson 1959; Rosenberg 1990; Pavitt 1991: 111); or it is argued that the societal returns from basic research efforts are significant and higher than the private returns, justifying public support for such research (Rosenberg 1990: 165).

Nonetheless, a few discussions that make reference to knowledgeability may be found in the social science literature. These usages differ from our conception. For example, Giddens (1984: 21–22) refers to the notion of knowledgeability in the context of his structuration theory. Giddens’ term knowledgeability refers to practical knowledge (practical consciousness), and thus knowledge as a “normal” or everyday point of reference of social action, shared by many although in a tacit sense, or not immediately apparent or accessible (Giddens 1984: xxiii; see also Berger and Luckmann 1966). Knowledge, so defined, is a condition for social action. Using Pierre Bourdieu’s terminology, common sense or practical knowledge corresponds almost always to the non-reflexive sens pratique. Practical knowledge refers to an immediate competence in making sense of the world. However, it is a competence that is, as it were, oblivious to itself (Bourdieu [1980] 1990:19). It does not contain the knowledge of the practices it generates. The practical mode of relating to the social world is as Bourdieu ([1980] 1990:19) also describes it, a relation of “learned ignorance” (docta ignorantia). Dewey ([1916] 2005) offers a similar perspective on common sense knowledge. Giddens usage of the term knowledgeability appeals principally to these universalistic, a-historical attributes of practical knowledge found in all societies at all times, and not to the questions taken up in this paper: what is the role and importance of knowledgeability as a core attribute for the possibility of innovation.

Our definition of knowledgeability refers neither to what is called common sense, non-reflexive or ordinary knowledge and nor do we refer to specialized scientific-technical knowledge. Also, knowledgeability should not be conflated with knowledge, especially not with its frequent proxy in empirical studies, namely years of schooling. Knowledgeability is closer to what is at times defined as reflexive or theoretical knowledge. It is the combination of ability and temperament that enables one to pursue interests and get things done. For example, knowledgeability should be seen as the ability of actors and groups of actors, actors with little formal institutional power, to move items of concern onto a particular agenda, such as bottom-up innovation for example.

Sprague and Rudd (1988) have examined the nature and the extent of organizational dissent in high-technology industry.

Hayek (1945: 519) classic formulation of dispersed knowledge refers to the discrete knowledge distributed among economic actors in the marketplace only: “The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge, which all the separate individuals possess.”

The ability to tolerate conflicting points of view has considerable affinity to Rawls’ (1997: 766) notion of public reason: In a democratic society, “citizens realize that they cannot reach agreement or even approach mutual understanding on the basis of their irreconcilable comprehensive doctrines. In view of this, they need to consider what kinds of reasons they may reasonably give to one another when fundamental political questions are at stake.”

The ability to generate new and persuasive ideas as one of the competences that make for knowledgeability has a “soft” affinity to cognitive characteristics of the economic function of the “creative class” as described by Florida in The Rise of the Creative Class (2002). Aside from the “super-creative core” of the creative class made up of occupations such as scientists, university professors, poets and architects, there is a diverse group of professionals who “engage in creative problem-solving, drawing on complex bodies of knowledge to solve specific problems”; what the group of professionals “are required to do regularly is think on their own” (Florida 2002: 69).

In the context of discussing ways of measuring the quality of life that transcends the conventional economic indicator of the GNP, Hirschman (1989) asks whether “having an opinion” is a good that should be incorporated into a measure of the quality of life of a country. Hirschman (1989: 77) offers the following assessment employing the language of economics: “the forming and acquiring of opinions yields considerable utility to the individual. At the same time, if carried beyond some point, the process has dangerous side effects—it is hazardous for the functioning and stability of the democratic order. Under present cultural values these side effects do not enter the individual calculus—they are like external diseconomies.”

In the United States, the social location of many of these activities can be found in what Drucker (1989: 187) calls the “third” sector of non-profit, non-governmental, “human change” institutions [or, the “civil society sector” as Salamon and Anheier (1997) have called it]. The third sector is actually the “country’s largest employer, though neither its workforce nor the output it produces show up in the statistics. One out of every two adult Americans—a total of 90 million people—are estimated to work as volunteers in the third sector” (Drucker 1989: 197).