Innovation & Innovative Capacity
Innovation—in the form of new products, processes, and ways of managing— is essential to economic growth. The innovative capacity of a nation or region is heavily rooted in its microeconomic environment, in areas such as the intensity of scientists and engineers in the workforce, the degree of protection of intellectual property, and the depth of clusters.
Innovation also holds the key to solving many of the world’s most pressing social challenges such as health care and improving the quality of the physical environment. The institute works with U.S. and international leaders to assess innovative capacity and develop strategies for advancing economic competitiveness and technological innovation.
Publications & Resources
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- Summer 2001
- MIT Sloan Management Review Vol. 42, No. 4
Innovation: Location Matters
by Michael E. Porter & Scott Stern
The authors describe how managers can understand the role of location in innovation and evaluate the innovative capacity of both countries and regions. Using data from the Organization for Economic Cooperation and Development and emerging nations over the past quarter century, their findings show the striking degree to which location matters for successful innovation at the global technology frontier. Their analysis sheds light on why individual nations have registered sharp differences in innovative performance.
The strong effect of location on innovation holds important implications for companies and creates a new broader agenda for innovation management. Choosing R&D location and managing relationships with outside organizations should not be driven by input costs, taxes, subsidies or even the wage rates for scientists and engineers, as they often are. Instead, R&D investments should flow preferentially to the locations with the greatest innovative capacity. Taking active steps to harness and extend locational advantages takes on equal weight with R&D process management. Locational advantages - rooted in proprietary information flows, special relationships with local companies, and preferential access to local institutions - are competitive advantages that are difficult for outsiders to overcome. They can help explain an apparent paradox of globalization: Ideas and technologies that can be accessed at a distance cannot serve as a foundation for competitive advantage. Effective management of locational advantages may ultimately prove more sustainable than simply implementing corporate best practices.
- Order article from MIT Sloan Management Review
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- 2002
- Research Policy 31 899–933
The Determinants of National Innovative Capacity
by Jeffrey L. Furman, Michael E. Porter, & Scott Stern
Motivated by differences in innovation intensity across advanced economies, this paper presents an empirical examination of the determinants of country-level production of international patents. We introduce a novel framework based on the concept of national innovative capacity. National innovative capacity is the ability of a country to produce and commercialize a flow of innovative technology over the long term.