Innovation and Firm Consumption. A New Perspective?

There continues to be an overwhelming supply-side focus in the study of innovation and the firm. There have been a number of exceptions, notably around the work of von Hippel and others, which emerged in the mid 1970s in relation to the role of the user on new product development and the innovation process (von Hippel, 1976, 1978, 1988; Parkinson, 1982; Foxall, 1987). However, even here the focus on use and its relationship with innovation was on the supplier rather than that on the consumer. The role of demand and consumption in the innovation process still remains largely neglected in the literature. This chapter seeks to redress some of this imbalance by exploring the role that consumption plays in the innovation process. More particularly, it seeks to explore the firm as a consumer and how this may shape the innovation process. Consumption and the way firms consume intermediate goods and services forms an important, but neglected, part of a firm’s capability set. The focus of the chapter is, therefore, primarily on the consumption of intermediate goods and services by firms, rather than on the role of final consumption by individuals and households.