ABSTRACT

This section aims to identify the extent to which the organizational setting influences the process of innovation.

The question of how the organizational setting relates to the ability and propensity to innovate has been widely examined by a large body of empirical literature20 inspired by two contrasting statements of Schumpeter (1934, 1942). The first one states that entrepreneurship is a mechanism to create changes in the system through innovation and that entrepreneurs are the agents of creative destruction (Schumpeter, 1934). The second one states that large firms will be (more than) proportionately more innovative than small firms (Schumpeter, 1942). The existence of such a large literature does not seem to guarantee a clear interpretation of the findings due to the difficulties of measuring innovative activity (Cohen, 1995).