◄Previous: Learning outcomes

# 1 The significance of technological innovation

We live in a world where the history of technological change and innovation has been nothing short of remarkable, affecting our lives, the effectiveness of organisations, the profitability of industries, the well-being of societies, the sustainability of the environment and the prosperity of nations. Indeed, it has long been recognised that technological innovation is an essential driver of economic growth. This can be explained by the relationship between innovation and higher or better productivity, generated as a result of product innovation (goods and services), process, and system innovations. A consequence of higher or better productivity is economic growth.

Technological innovation sits at the core of capitalist economies and has been considered a major reason for the economic ‘success’ of capitalist societies compared with other forms of economic and social relations (Harvey, 2010). One of the most influential political economists in the mid twentieth century, Joseph Schumpeter, recognised innovation as a fundamental feature of the ‘creative-destructive’ tendencies of capitalism.

Approaching this issue from a different ideological perspective in the 19th century, Karl Marx also recognised the importance of science, technology and industry, although his focus was primarily on social progress. Taken together, these ideas have promoted scholarship on the relationship between science, technology, innovation and industry and the consequences of the interplay between these factors for different political economies and societies.

While many would accept that technological innovation is an essential driver for economic growth, the extent to which the negative aspects of this phenomenon are considered acceptable is a subject that can divide opinion.

- Can you think of some negative aspects of technological innovation in broad terms?

- Innovations that fail to deliver on the claimed benefits or, even worse, those that have harmful effects on customers, clients and citizens.

There are potential negative aspects specific to individual technological innovations. As technological innovations are widely adopted and used, they can destabilise existing technological and organisational arrangements and sometimes industrial, social and economic relations more broadly, often for better and sometimes for worse. One common result, for example – and one with which many of us are familiar – is what often seem to be continuous cycles of organisational change and a regular pursuit of technological ‘fixes’ that claim to result in better goods and services and systems, and more economical, more efficient and productive industrial processes.

While we can point to some negative consequences of technological innovation, the question of the value of innovation is being currently extended beyond a narrow focus on economic growth, as measured by Gross National Product (GDP) at a national level, to consider other benefits, such as indicators of ‘economic well-being’ and ‘green growth’ (OECD, 2017).

Clearly many technological innovations have a significant role in generating economic wealth and other benefits for society and the economy. It is consequently a challenge for us to find the best ways to innovate in terms of developing and capturing the value of technological innovation.

We have now used the word ‘innovation’ a few times. Before progressing further, this is an appropriate point at which to ‘unpack’ what we understand about innovation.

◄Contents►Next: 2 What is innovation?

OpenLearn - Introducing technology and innovation management
Except for third party materials and otherwise, this content is made available under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 Licence, full copyright detail can be found in the acknowledgements section. Please see full copyright statement for details.