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Absorptive capacity in a two-sector neo-Schumpeterian model: a new role for innovation policy

Author

Listed:
  • Isabel Almudi
  • Francisco Fatas-Villafranca
  • Carlos M Fernández-Márquez
  • Jason Potts
  • Francisco J Vazquez

Abstract

We propose a new co-evolutionary computational two-sector approach to the design of national innovation policy that recognizes the importance of intersectoral absorptive capacity constraints in innovation linkages between sectors in an economy. We show how the innovative capacity of an upstream producer sector can be constrained by the absorptive capacity of the downstream-user sector. This suggests that the low productivity performance of modern innovation policy might in part be understood as a consequence of sectorally unbalanced knowledge evolution, where the problem lies in underinvestment in innovative capabilities in the downstream sector. Our computational two-sector model suggests an important role for innovation policy to create a balanced, sectorally targeted approach.

Suggested Citation

  • Isabel Almudi & Francisco Fatas-Villafranca & Carlos M Fernández-Márquez & Jason Potts & Francisco J Vazquez, 2020. "Absorptive capacity in a two-sector neo-Schumpeterian model: a new role for innovation policy," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 29(2), pages 507-531.
    • Handle: RePEc:oup:indcch:v:29:y:2020:i:2:p:507-531.
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    File URL: http://hdl.handle.net/10.1093/icc/dtz052
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    Citations

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    Cited by:

    1. Agnieszka Lipieta & Elżbieta Pliś, 2022. "Diversity and mechanisms of economic evolution," Journal of Evolutionary Economics, Springer, vol. 32(4), pages 1265-1286, September.
    2. Algarni, Mohammad A. & Ali, Murad & Leal-Rodríguez, Antonio L. & Albort-Morant, Gema, 2023. "The differential effects of potential and realized absorptive capacity on imitation and innovation strategies, and its impact on sustained competitive advantage," Journal of Business Research, Elsevier, vol. 158(C).
    3. Brendan Markey-Towler, 2021. "Psychology of evolutionary economic behaviour," Evolutionary and Institutional Economics Review, Springer, vol. 18(2), pages 361-383, September.
    4. Shi, Xianwei & Liang, Xingkun & Luo, Yining, 2023. "Unpacking the intellectual structure of ecosystem research in innovation studies," Research Policy, Elsevier, vol. 52(6).
    5. Ietto-Gillies, Grazia & Trentini, Claudia, 2023. "Sectoral structure and the digital era. Conceptual and empirical analysis," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 13-24.

    More about this item

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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