Innovation as Creative Destruction

[caption id="attachment_49729" align="alignright" width="300" caption="Ilustrasi-admin (shutterstock)"][/caption] In previous articles focusing on the values and logics of technology and economics (Nalar Eknomi dan Nalar Teknologi, http://www.kompasiana.com/kusmayantokadiman) innovation is seen being the key-word and the common factor of economics and technology. A closer view into the relation between technology and economic development is offered by the so-called Schumpeterian Perspective. From this perspective, innovation is conceived as a creative destruction process. Competition among agents generates variety through innovation, but also reduces this variety through selection mechanisms, which depend on market institutions. Thus, innovation is the result of a process of creative destruction which transforms the routines of individuals, firms and institutions through formal and informal learning, and integration of tacit and codified knowledge. The creative destruction process determines, among other things, the level of development of an economy. While the selection mechanisms tend to diminish the micro-diversity, the creative component of creative destruction process helps to increase it. In this sense, they are opposing forces and so interdependent that they can have an impact both on competition and development. The initial differences in the skills of actors and selection mechanisms are key factors in the process of creative destruction. The creative destruction synthesizes the two pillars of economic growth:

1. The corporation that generates the innovation process which is therefore responsible for the "creative" component of creative destruction process, and
2. The market which leads the selection mechanism and thus explains component destruction.