ABSTRACT
Introduction Following early contributions by Schumpeter (1943), it is now accepted as a fact that innovation has a positive effect on economic progress, which relies on the continuous production, use and diffusion of new ideas. The main question that concerns us in this chapter is to find out what drives innovation itself and how the latter can be successfully used to achieve progress. In studying the process of generating innovation, some have emphasized the importance of financing requirements and the return to financiers and entrepreneurs on their risky investments, while others give more weight to the role of incentives to potential inventors and thus call for a more effective system of intellectual property rights. Others, however, object to private intellectual property rights, arguing that they limit the spread of ideas and stifle innovation by encouraging monopolistic behaviour (see Polanvyi, 1944; Baker, 2005; Nicholas, 2011). But beyond the pecuniary rewards to those involved in innovation, there is a more fundamental question: from where do these innovators get their new ideas? Or, how does innovation come about?
