SPRU - Science Policy Research Unit

History of Economics of Innovation at SPRU

Since its foundation, the study of the Economics of Innovation has been a central pillar of SPRU’s diverse research portfolio. When Chris Freeman established SPRU in 1966, he developed a research agenda for the unit that addressed the economic and social impact of technological progress, as well as the role of innovation in achieving socio-economic goals such as increasing employment, reducing inequality, and achieving sustainable growth. He was decades ahead of the terms ‘smart, inclusive, sustainable’ growth being used by the Lisbon Agenda and EC 2020.

In the 1960s Chris Freeman started collaborating with Keith Pavitt, who also became a crucial figure in the development of the study of Economics of Innovation, most significantly with his taxonomy of innovating firms. With Keith Pavitt joining the unit in 1971, together they made SPRU a centre of international excellence, and a central node in the field of innovation studies.

Indeed, a few years later, in 1974, Chris Freeman wrote “The Economics of Industrial Innovation” the very first and highly influential contribution to the Economics of Innovation research field. Chris Freeman’s most significant work falls into three categories; the sources and effects of innovation seen as an evolutionary process, building on the Schumpeterian framework; long-run capitalistic development; and the role of the state, all of which has helped to frame the field of Economics of Innovation. 

Most notably, Freeman together with Richard Nelson and Sidney Winter (Yale) argued that innovation is an evolutionary process and thereby the use of standard models would have a very restricted interpretative power when applied to the study of technology and innovation. This has led subsequent empirical studies to develop alternative frameworks of inquiry and carefully assess the fundamental properties of technological knowledge and their economic implications – called the Stanford-Yale-Sussex synthesis.

During the 1980s, the Stanford-Yale-Sussex synthesis[1] matured in a broader attempt to develop a radically alternative approach to the study of economic change, commonly termed as evolutionary economics.

[1] The label comes from the three universities where the leading contributors to this research area were affiliated at the time: Stanford (Arrow, Rosenberg, Paul David), Yale (Nelson, Winter), Sussex-SPRU (Freeman, Pavitt, Dosi).