Encyclopedia of Technology and Innovation Management

Chapter 15. Innovation Models

Allan N. Afuah^[10] and Kwaku O. Prakah Asante^[11]

The rapid pace of technological innovation, business model innovation, and globalization that firms face raises some interesting questions. Why do some firms innovate more than others? Why are some firms more likely to profit from innovation than others? What is innovation and how does a firm manage the creative process for profitability? Understanding the critical success factors and inhibitors that underpin successful innovation—be it technological or business model—is critical to gaining and sustaining a competitive advantage. This chapter presents a summary of the models and concepts which have been developed to understand innovation phenomena and contribute towards answering these questions.

What are innovation models?

Innovation models evaluated in this entry contribute to the understanding of firms likely to introduce, exploit, and sustain profits from innovation. Static and dynamic models are presented that capture several internal and external factors of the firm-impacting innovation. These factors include the size of the firm, technological and market capabilities, technology imitation, complementary assets, and technology evolution. Static models capture the cross-sectional perspective of a firm's capabilities and knowledge, in addition to the firm's incentive to invest at specific instances in time. The static models do not characterize how innovations evolve over time. Conversely, dynamic models ...