The distinction between “innovation” and ‘invention” made is of key importance since it uncovers the economic significance of innovation. Not every invention becomes economically valuable. In fact, very few inventions have caused evolutionary improvements in the commercial sector. It is innovation that accelerates change and thus produces long term economic growth since it targets existing market needs, which have not been already met.

As a consequence, the main incentive for businesses to innovate and disclose new technologies is the motivation for profit (through commercial sales or patent licensing). Zahra and Covin (1994)[1] suggest that “[i]nnovation is widely considered as the life blood of corporate survival and growth”.

With the rising globalization of the market and the free flow of data, innovation capacity (patents, licenses, participation in R&D efforts, knowledge and ideas) becomes an increasingly important asset, ensuring stable economic growth, rise in per capita income and a competitive advantage. This peculiarity of today’s knowledge-based economy has been first brought up by Joseph Schumpeter way back in 1942[2] and has been already proven by several global examples like the rise of German biotech firms[3] and the steady GDP growth in China and India between 1981 and 2004[4].

[1] Zahra S. A., Covin J. G., The financial implications of fit between competitive strategy and innovation types and sources (1994), Journal of High Technology Management Research, 5(2), p. 183-211

[2] Schumpeter J., Capitalism, Socialism and Democracy (1942), Harper & Brothers, ISBN 0061330086