Businesses told to turn to ‘old knowledge’ for innovation

As the credit crisis continues to lower public and private investment in R&D, experts argue that innovation can also be sparked by novel combinations of ‘old’ knowledge in non-technology intensive companies or sectors that do not undertake much R&D.  

“Innovation stems from all kinds of existing knowledge,” said the director of the Finnish Ministry of Employment and Economy, Petri Peltonen. He was speaking at a 28 October conference organised by BusinessEurope, the European employers’ association. 

The focus should thus not only be on strong scientific orientation and technology intensity, but the definition of ‘innovation’ should be extended to include “novel combinations of existing knowledge,” argued Peltonen. This would be particularly suitable for SMEs, he added, which are “good at combining knowledge to create” new products and services.

For example, novel combinations of exisiting knowledge could lead to innovation in organisational change, he said.

This observation is backed by the OECD’s 2008 Outlook, which reviews trends and developments in science, technology and innovation. The report, published on 27 October, states that while most policies remain focused on science and technological innovation, “innovation in firms goes considerably beyond technological innovation and also includes process, organisational and marketing innovation”. 

Therefore, policies to foster innovation need to be broadened to cover the full range of innovation activities, including sectors that do not undertake much R&D, states OECD. 

As for the current credit crisis, the OECD Outlook notes that future global investments in R&D and innovation “will depend in part on the longer-term impacts of financial market instability on business spending, which accounts for most R&D investment by OECD countries”. 

Peltonen also acknowledged that research and development are an area in which cost savings are easy to make. However, “you need to be aware that the overall competitiveness of a company is at risk and undermined” if such cuts are made, he warned. He believes it is up to governments to create incentives that meet the immediate demands of companies in such difficult times.

He was optimistic that companies would overcome the crisis if it was short term. However, he noted that if the current credit crisis dragged on much longer, then “things wouldn’t necessarily look that good”.

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