The influence of market demand upon innovation: a critical review of some recent empirical studies

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Citation: David Mowery, Nathan Rosenberg (1979) The influence of market demand upon innovation: a critical review of some recent empirical studies. Research Policy (RSS)
DOI (original publisher): 10.1016/0048-7333(79)90019-2
Semantic Scholar (metadata): 10.1016/0048-7333(79)90019-2
Sci-Hub (fulltext): 10.1016/0048-7333(79)90019-2
Internet Archive Scholar (fulltext): The influence of market demand upon innovation: a critical review of some recent empirical studies
Tagged: Business (RSS) Economics (RSS), Review (RSS), Innovation (RSS)

Summary (Abstract)

Mowery and Rosenberg -- collaborators on a number of key words in the literature on innovation and both significant figure in their own right -- collaborated on an extensive literature view on an argument about whether innovation is demand driven or supply driven. In the former framing, market demand "calls forth" innovations. This literature had, at the time that the article was written, apparently gained some prominence through a series of highly profile academic articles. A supply-driven explanations would argue that innovations would follow from technological breakthrough and inventions. The argument has very important policy implications in that it a demand-driven theory would argue against funding basic science and R&D while a supply-driven argument would not. Mowery and Rosenberg's article offers a blistering critique of the demand-driven theory and the empirical work supporting it.

The authors offer a series of critiques of research supporting the demand-driven hypothesis including selection on dependent variables, operationalization of demand that are overly broad, the systematic omission of basic research from consideration, misinterpretation of results, or results that do not support the authors conclusions, a focus on diffusions instead of on invention itself.

In the discussion of SAPPHO of particular or as can be seen in reviews like Roberts (1988), much innovation research is focused on the commercialization of invention. Indeed, it makes more sense that market demand would be associated with commercialization success, but that need not necessary also be connected with invention.

The authors conclude that, "the uncritical appeal to market demand as the governing influence in the innovation process simply does not yield useful insights into the complexities of that process." They argue that demand is clearly necessary, but that it is not sufficient, and that focusing too heavily on market demand has caused both policy makers and innovation researchers to loose track. In closing, the author discuss the policy implications of a market-demand based theory which they argue would unfairly de-fund basic research and R&D more generally.

Theoretical and Practical Relevance

Mowery and Rosenberg's article has been cited more than 600 times since was published more than 30 years ago. In some ways though, their article is less famous because it argues against a simplistic argument that they were successful in doing away. In a number of way, the authors other work (and Rosenberg's in particular) has argued so heavily in favor of supply side forces (e.g., Rosenberg's (1990) article on Why do firms do basic research (with their own money)?. Similarly, von Hippel's books on The sources of innovation and Democratizing innovation have each shown the supply side of innovation as distinct from (although not irrelevant to) market forces.