ABSTRACT
In his The Theory o f Economic Development (1934) and Capitalism, Socialism and Democracy (1942), Schumpeter describes two different patterns of industrial innovation. In the former (Schumpeter Mark I), the major source of innovative activity is small firms operating in highly competitive industries, whereas in the latter (Schumpeter Mark II) this role is played by large firms operating in oligopolistic industries. The visionary entrepreneur as the driving force behind innovative activity in the former innovation pattern is replaced by the large R&D laboratories in the latter.
