Review of Industrial Organization 18: 137–139, 2001.
The Theory of Innovation, Jon Sundbo. Cheltenham: Edward Elgar, 1999, 220
This book does not, as one might imagine from the title, attempt to develop a theory
of innovation. Rather it traces the emergence and historical development of three
theories of innovation, attempts to place them within the context of long waves of
economic development, and argues that the three theories are competing for dom-
inance as we move into the 21st century. The analysis is often methodological and
epistemological, and while sociology and economics are the principal disciplines,
the former heavily predominates.
In essence, Sundbo’s thesis can be reduced to three assertions. First, since the
nineteenth century there have been three main theories of innovation: the entre-
preneur, the technology-economic, and ﬁnally the strategic. Secondly, each of these
can be linked to a respective stage in the third, fourth and (current) ﬁfth Kondratiev
wave, and paradigm shifts occur at key stages in these waves. Finally, the strategy
theory of innovation is now competing with the other two for dominance, and may
become the new paradigm of innovation. Innovation is deﬁned relatively conven-
tionally as the ﬁrst business use of something new which results in commercial
gain, and includes product, process and organizational innovation as well as “a new
type of marketing or overall behaviour on the market, including a different relation-
ship with the state and other ofﬁcial regulation systems, societal organizations or
speciﬁc consumers” (p. 21).
The starting point for the book is not, however, innovation itself, but the concept
of long waves of economic development, or Kondratiev waves. Sundbo argues
that there is now convincing evidence for the existence of such waves, and that
innovation is important to these waves because extensive innovation activity occurs
in the recovery phase, helping to propel the economy into the period of prosperity.
In many ways this is the weakest part of the analysis, and the emphasis on long
waves so early in the book rather serves to dilute the message. Kondratiev waves
have what can be generously described as a mixed press among economists, and
making the thesis of the book dependent on their existence and importance is risky.
Sundbo uses this element to sustain the argument that economic activity is linked
to paradigm shifts in innovation (i.e., changes in the accepted, shared view of how