Economics of Innovation: Detailed Reading List (2019) (opens in new tab)

There is one very important book missing from this list: Diffusion of Innovation by Everett Rogers (1). Most of the innovation teaching in business schools today, is directly inspired from this book, first published in 1962. You’d be surprised that the fundamentals of Rogers’ diffusion of innovations theory have not changed that much over the years but are still extremely useful today; only the communication channels have changed. The human psychology (early adopters/laggards) or the sociology remain the same. Most people adopt innovations only after they’ve seen the benefits in action in their close friends or relative circles. Hence the importance of social networks for the diffusion of innovations, not to be restricted to early 21st century Facebook style digital social networks.

This theory also explains why innovators should target niche markets, and then expand to larger markets, and not the other way around. It is much easier to overcome the inevitable resistance to change on a specialized niche market, and then the social network effect will help with adoption on larger and larger circles.

(1) https://en.wikipedia.org/wiki/Everett_Rogers

This is most excellent - lots of stuff I’ve not heard about nor read. Looking forward to checking these out this year.

My personal recommendations are to read “The Innovator’s Dilemma” by the late Clayton Christensen and “Ecclesiastes” (ESV for Native English speakers) by Koholet.

“The Innovator’s Dilemma” has had a major impact on me. Keep moving the ball forward and keep finding the biggest market despite what your current market thinks.

“Ecclesiastes” is a great reminder that we will all die and it is good to be apart in the present. To innovate. To make things better regardless if we will live to see the positive impact or not.

Both are honestly great books about life in general too.

Interesting list, and some familiar names (W. Brian Arthur in particular is strongly recommended), along with some notable omissions (Schumpeter's already been mentioned).

I'd suggest a few additions:

- John H. Holland has outlined, though I'm not sure he's actually written a book on, the process of innovation and novel creation, which he describes generally as a mostly recombinative process. New inventions are almost always produced as an edit of one or more earlier ones. Sometimes via deletion, often through combination, sometimes through duplication. This applies to both human invention and genetic processes. (Holland is best known as the father of genetic algorithms.) I'm aware of his work through the Santa Fe Institute, where his ideas have been carried on by others (Arthur is another SFI affiliate).

- Kevin Kelley, What Technology Wants. I'm not a fan, but it's an influential book. Steven Johnson has a number of similarly-pitched titles, Where Good Ideas Come From: The Natural History of Information and How We Got to Now especially.

- Joseph Tainter, The Collapse of Complex Societies puts innovation and complexity in their larger societal context and cycle.

- Histories of industrial R&D labs are insightful. Two of which I'm aware, David A. Hounshell, Corporate Strategy: Du Pont R&D, 1902--1980, and Jon Gertner, The Idea Factory: Bell Labs and the Great Age of American Innovation.

I wish there was something mentioning the tightness of the labor market. If workers are plentiful, is there as much incentive to automate?

Innovation is outcome of culture of the institution (company, society, country, civilisations, .. ) and inclusivity in people.

slightly related...there was a write up on DARPA on HN couple months ago that I thought was fantastic. essentially a guide on how DARPA works and how one might be able to improve/replicate it on the civilian side. i read somewhere that DARPA provided Moderna with funding to research mRNA in 2005, so pretty impressive.

Which of the book elaborates on the funding of innovation by the pentagon due to purchase contracts.

I like your list. As I was thinking of teaching a similar course in the summer of 2022, I may borrow some of your readings with thanks.

Here are some suggested additions:

Allen, Paul (2011) Idea Man.

Altshuller, Genrich (1999). The Innovation Algorithm: TRIZ, systematic innovation, and technical creativity. Worcester, MA: Technical Innovation Center. ISBN 978-0-9640740-4-0.

Schumpeter, Joseph A. (2009) [1948], "There is still time to stop inflation", in Clemence, Richard V. (ed.), Essays: on entrepreneurs, innovations, business cycles, and the evolution of capitalism, Nation's business, 1, New Brunswick, New Jersey: Transaction Books, pp. 241–52 ISBN 9781412822749 Originally printed as: Schumpeter, Joseph A. (June 1948). "There is still time to stop inflation". The Nation's Business. United States Chamber of Commerce. 6: 33–35, 88–91. Archived from the original on November 29, 2014.

Schumpeter, Joseph A. (1949), "Economic theory and entrepreneurial history", in Wohl, R. R. (ed.), Change and the entrepreneur: postulates and the patterns for entrepreneurial history, Research Center in Entrepreneurial History, Cambridge, Massachusetts: Harvard University Press.

Somewhat surprised there's nothing from Schumpeter. Many more popular thinkers drew inspiration from these two classics:

1. Capitalism, Socialism and Democracy

2. Theory of Economic Development