In a recent post, I’ve presented a top-level perspective on competition in innovation. Cardwell’s Law truly takes a bird’s eye view in stating that No nation has been (technologically) very creative for more than a historically short period. Though there is impressive historic evidence to support this observation, it only addresses the symptoms of competition, but not the underlying reasons why society actually engages in such competition. Time to take second look from a slightly different angle:
Innovation is produced
by economic competition
between politically independent entities.
This statement is known as the Rosenberg-Birdzell-Hypothesis, going back to Nathan Rosenberg and L.E. Birdzell’s 1986 book How the West Grew Rich. It connects politics and economics with innovation, so it’s certainly worth some further consideration.
Let’s see where this will get us. We could take this hypothesis line by line, beginning at the end: what is a “politically independent entity“? I’d suggest that this is a paraphrase for “society“. Its political independence becomes visible in its sovereign right to implement the institutions it considers appropriate to organise its affairs. You might consider organisations as independent entities as well, but organisations are dependent upon the political institutions established by the societies they are embedded in. Therefore, I don’t consider organisations as the kind of entities Rosenberg and Birdzell had in mind.
The second line then tells us that societies compete. And this is in line with my previous considerations on Cardwell’s Law. But here comes the surprise: according to this hypothesis, societies engage in economic competition. That implies that the purpose of competition is economic (usually in the sense of economic growth and prosperity). Innovation itself then is not considered as the intention behind the competition between societies.
The first line confirms that idea: innovation is a product, a result of competition; but it is not considered the driving force behind competition. This puts innovation in the position of a collateral benefit or a useful by-product rather than a sought after primary purpose of competition. Innovation has no value of its own.
I must confess that I like several elements of the Rosenberg-Birdzell-Hypothesis, but I don’t subscribe to it entirely. I certainly support the idea that innovation is not an end in itself; rather, it must create value for society by solving its problems. I also agree with the concept of societies competing in innovation. But I do not share the view that societies’ competition should be limited, or even only focused on, economic competition. And I hesitate to believe the competition in innovation occurs only at the level of societies. Why? Well, I do not subscribe to a worldview in which every human interaction is measured for its economic utility or benefit. Consequently, innovation –to my mind– has non-economic dimensions, which would be excluded by Rosenberg and Birdzell. Secondly, I am convinced that innovation most often occurs at a level below societies, or rather, embedded within societies: that’s the work of organisation and entrepreneurs.
Despite these weaknesses, the Rosenberg-Birdzell-Hypothesis is an interesting concept that sets the scene for a more detailed discussion on how the protagonists interact in the innovation landscape. How do societies, organisations, and entrepreneurs interact to generate the innovation that societies need to solve their problems? Food for further thought …
understanding innovation 
Great post. I agree with your arguments.
My concern is that you are abbreviating Birdzell and Rosenberg to a single bumper-sticker sized hypothesis. I recently finished re-reading “How The West Grew Rich” and I suspect the authors would pretty much agree with your larger framework too.
The central insight is that competition between fairly well integrated states led to an arms race of social problem solving. Those states solving problems faster became more powerful than their neighbors, leading to emulation and more constructive competition. What emerged was more innovation, but it involved constructive competition that was built into the fabric of these successes. Within Britain were decentralized markets of constructive competition, decentralized scientists constructively competing, decentralized inventors, political parties, corporations, even sports teams.
Constructive competition between fragmented yet integrated political entities thus led to constructive competition built into the very fabric of societies.
Thanks for sharing your ideas.
I like your emphasis on decentralisation. Very much in synch with “Why Nations Fail?” by Daron Acemoglu and James Robinson. They advocate “the right balance” between decentralised interests and ideas on one side and a sufficiently centralised political framework, centralised enough to ensure that rules are respected. Under such conditions constructive competition propels society forward without developing destructive centrifugal forces. It’s all about that balance.