Journal of Evolutionary Economics

, Volume 28, Issue 5, pp 1151–1174 | Cite as

Entrepreneurial cyclical dynamics of open innovation

  • JinHyo Joseph YunEmail author
  • DongKyu Won
  • KyungBae ParkEmail author
Regular Article


This study addresses the following matters: What is the structure and mechanism of modern capital economic dynamics that motivates the growth limits of capitalism? The modern economy can be modeled as Entrepreneurial Cyclical Dynamics of Open Innovation with three sub-economies such as market open innovation by SMEs and start-ups, closed open innovation by big business, and social open innovation. When there is low balance among the three sub-economies, which is to say, if any of the sub-economies is too big, or too small, the economy dynamics decreases, and the economic growth rate slows down to nearly zero or even negative according to the model simulation. South Korea, with a low internal reserve policy, is in this situation. When there is medium balance among three sub-economies, which is to say, any of the sub-economies is big enough to lead the total economy but is not sufficiently big to control totally the other two economies, the economy dynamics increases and the economic growth rate will be maintained at a high level according to the model simulation. India, with its grassroots innovation festival, demonstrates this situation. When there is a high balance among the three sub-economies, which is to say, the three sub-economies are well balanced and there is no change in the economic system, the economy dynamics become too low and the economic growth rate stays at a low level according to the model simulation. Japan’s Hitachi is moving from this situation to a medium balance.


Entrepreneurial cyclical dynamics Market open innovation Closed open innovation Social open innovation New combination 

JEL Classification




This work was supported by the DGIST R&D Program of the Ministry of Science, ICT and Future Planning (16, and 17). This paper was first presented at ISS 2016, and SOItmC, and was fully updated based on several anonymous reviewers’ comments. JinHyo Joseph Yun has created original ideas and provided basic concepts, wrote the all the drafts, and has taken the role of first and corresponding author. KyungBae Park made the entrepreneurial cyclical dynamics causal model and mathematical model. DongKyu Won performed system dynamics simulations of total and individual cases. So, JinHyo Joseph Yun as corresponding author wants to point out KyungBae Park, and DongKyu Won as co-corresponding author together with the agreement of all authors.

Compliance with ethical standards

Conflict of interests

None of the authors have any conflict of interest.


  1. Abramovitz M (1986) Catching up, forging ahead, and falling behind. J Econ Hist 46(2):385–406CrossRefGoogle Scholar
  2. Abramovitz M (1995) The elements of social capability. In: Koo BH, Perkins DH (eds) Social capability and long-term economic growth. Palgrave Macmillan, LondonGoogle Scholar
  3. Abramovitz M, David PA (1996) Convergence and deferred catch-up: productivity leadership and the waning of American exceptionalism. In: Landau R, Taylor T, Wright G (eds) The mosaic of economic growth. Stanford University Press, StanfordGoogle Scholar
  4. Barlas Y (1994) Model validation in system dynamics. In: Monaghan C, Wolstenholme E (eds) System dynamics: methodological and technical issues, conference proceedings of the 12th International System Dynamics Conference, University of Stirling, Scotland. UK. System Dynamics Society, New York, pp 1–10Google Scholar
  5. Breschi S, Malerba F, Orsenigo L (2000) Technological regimes and Schumpeterian patterns of innovation. Econ J 110:388–410CrossRefGoogle Scholar
  6. Bruun C (2003) The economy as an agent-based whole—simulating Schumpeterian dynamics. Ind Innov 10:475–491CrossRefGoogle Scholar
  7. Chauvet E, Paullet JE, Previte JP, Walls Z (2002) A Lotka-Volterra three-species food chain. Math Mag 75(4):243–255Google Scholar
  8. Chesbrough HW (2006) Open innovation: the new imperative for creating and profiting from technology. Harvard Business School Press, BostonGoogle Scholar
  9. Chesbrough HW (2013) Open business models: how to thrive in the new innovation landscape. Harvard Business School Press, BostonGoogle Scholar
  10. Dahlman CJ, Nelson R (1995) Social absorption capability, National Innovation Systems and economic development. In: Koo BH, Perkins DH (eds) Social capability and long-term economic growth. Palgrave Macmillan, LondonGoogle Scholar
  11. Day RH (1984) Disequilibrium economic dynamics: a post-Schumpeterian contribution. J Econ Behav Organ 5:57–76CrossRefGoogle Scholar
  12. de Felice A (2014) Measuring the social capabilities and the implication on innovation: evidence from a special industrial cluster. J Econ Stud 41(6):907–928CrossRefGoogle Scholar
  13. Gupta AK (2013) Tapping the entrepreneurial potential of grassroots innovation. Stanf Soc Innov Rev 11:18–20Google Scholar
  14. Hanusch H, Pyka A (2006) Principles of neo-Schumpeterian economics. Camb J Econ 31(2):275–289CrossRefGoogle Scholar
  15. Henkin GM, Polterovich VM (1991) Schumpeterian dynamics as a non-linear wave theory. J Math Econ 20:551–590CrossRefGoogle Scholar
  16. Hitachi Home Page,
  17. Iwai K (2000) A contribution to the evolutionary theory of innovation, imitation and growth. J Econ Behav Organ 43:167–198CrossRefGoogle Scholar
  18. Jang HS (2014) Capitalism in Korea (Korean). Heybooks, SeoulGoogle Scholar
  19. Jang HS (2015) Why should we be angry?; capitalism in Korea 2nd inequality of Korean which was made by the failure of distribution(Korean). Heybooks, SeoulGoogle Scholar
  20. Jeon JH, Kim SK, Koh JH (2015) Historical review on the patterns of open innovation at the national level: the case of the Roman period. J Open Innov Technol Mark Complex 1:1–17CrossRefGoogle Scholar
  21. Keynes JM (1937) The general theory of employment. Q J Econ 51:209–223CrossRefGoogle Scholar
  22. Kodama F, Shibata T (2015) Demand articulation in the open-innovation paradigm. J Open Innov Technol Mark Complex 1:1–21CrossRefGoogle Scholar
  23. Kofoid C (1925) Elements of physical biology. American Public Health AssociationGoogle Scholar
  24. Kondratieff ND (1979) The long waves in economic life. Rev (Fernand Braudel Center):519–562Google Scholar
  25. Koo BH, Perkins DH (1995) Social capability and long-term economic growth. Palgrave Macmillan, LondonCrossRefGoogle Scholar
  26. Lee K (2013) Schumpeterian analysis of economic catch-up: knowledge, path-creation, and the middle-income trap. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  27. Lee K, Lim C (2001) Technological regimes, catching-up and leapfrogging: findings from the Korean industries. Res Policy 30(3):459–483CrossRefGoogle Scholar
  28. Lotka AJ (1920) Analytical note on certain rhythmic relations in organic systems. Proc Natl Acad Sci U S A 6:410–415CrossRefGoogle Scholar
  29. Luna-Reyes LF, Andersen DL (2003) Collecting and analyzing qualitative data for system dynamics: methods and models. Syst Dyn Rev 19:271–296CrossRefGoogle Scholar
  30. Lundvall B-Å (2013) Innovation studies: a personal interpretation of the state of the art. In: Innovation studies: evolution and future challenges, pp 21–70Google Scholar
  31. Malerba F, Orsenigo L (1996) The dynamics and evolution of industries. Ind Corp Chang 5:51–87CrossRefGoogle Scholar
  32. Maltus TR (2006) An essay on the principle of population, vol 1. Cosimo, Inc., New YorkGoogle Scholar
  33. Mathews J (2002) A resource-based view of Schumpeterian economic dynamics. J Evol Econ 12:29–54CrossRefGoogle Scholar
  34. Mazzucato M (2011) The entrepreneurial state. Soundings 49(49):131–142Google Scholar
  35. Moore JF (1993) Predators and prey: a new ecology of competition. Harv Bus Rev 71(3):75–86Google Scholar
  36. Morioka M, Kuramochi K, Mishina Y, Akiyama T, Taniguchi N (2015) City management platform using big data from people and traffic flows. Hitachi Rev 64:52–57Google Scholar
  37. Nelson RRWSG (1982) An evolutionary theory of economic change. Harvard University Press, CambridgeGoogle Scholar
  38. Nelson, R. R., Dosi, G., Helfat, C. E., Pyka, A., Saviotti, P. P., Lee, K., . . . Malerba, F. (2018). Modern evolutionary economics: an overview. Cambridge University Press, CambridgeGoogle Scholar
  39. Patra SK, Krishna VV (2015) Globalization of R&D and open innovation: linkages of foreign R&D centers in India. J Open Innov Technol Mark Complex 1:1–24CrossRefGoogle Scholar
  40. Piketty T (1995) Social mobility and redistributive politics. Q J Econ 110(3):551–584CrossRefGoogle Scholar
  41. Piketty T (2015) About capital in the twenty-first century. Am Econ Rev 105(5):48–53CrossRefGoogle Scholar
  42. Pyka A (2017) Transformation of economic systems: the bio-economy case. In: Knowledge-driven developments in the bioeconomy. Springer, Berlin, pp 3–16CrossRefGoogle Scholar
  43. Saviotti PP, Pyka A (2004) Economic development by the creation of new sectors. J Evol Econ 14(1):1–35CrossRefGoogle Scholar
  44. Saviotti PP, Pyka A (2008) Micro and macro dynamics: industry life cycles, inter-sector coordination and aggregate growth. J Evol Econ 18(2):167–182CrossRefGoogle Scholar
  45. Schumpeter JA (1934) The theory of economic development: an inquiry into profits, capital, credit, interest, and the business cycle, vol 55. Transaction Publishers, PiscatawayGoogle Scholar
  46. Schumpeter JA (1939) Business cycles: a theoretical, historical, and statistical analysis of the capitalist process, vol 1. McGraw-Hill, New YorkGoogle Scholar
  47. Schumpeter JA (1942) Capitalism, socialism and democracy. Routledge, LondonGoogle Scholar
  48. Schumpeter JA (1954) History of economic analysis. Oxford University Press, New YorkGoogle Scholar
  49. Simon HA (1972) Theories of bounded rationality. In: McGuire CB, Radner R (eds) Decision and organization. North-Holland Pub. Co., Amsterdam, pp 161–176Google Scholar
  50. Smith A, Fressoli M, Thomas H (2014) Grassroots innovation movements: challenges and contributions. J Clean Prod 63:114–124CrossRefGoogle Scholar
  51. Sterman JD (2001) System dynamics modeling: tools for learning in a complex world. Calif Manag Rev 43:8–25CrossRefGoogle Scholar
  52. Stiglitz JE (2012) The price of inequality: how today's divided society endangers our future. WW Norton & Company, New York CityGoogle Scholar
  53. Teece DJ (2007) Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance. Strateg Manag J 28:1319–1350CrossRefGoogle Scholar
  54. Teece DJ, Pisano G, Shuen A (1997) Dynamic capabilities and strategic management. Strateg Manag J 18:509–533CrossRefGoogle Scholar
  55. Temple J, Johnson PA (1998) Social capability and economic growth. Q J Econ 113(3):965–990CrossRefGoogle Scholar
  56. Van den Bergh JC (2004) Evolutionary analysis of the relationship between economic growth, environmental quality and resource scarcity, Tinbergen Institute Discussion Paper, No. 04-048/3Google Scholar
  57. Verhulst P-F (2009) Notice sur la loi que la population poursuit dans son accroissement. Correspondance Mathématique et Physique 10:113–121Google Scholar
  58. Volterra V (1926) Fluctuations in the abundance of a species considered mathematically. Nature Publishing Group, LondonCrossRefGoogle Scholar
  59. Winter SG (1984) Schumpeterian competition in alternative technological regimes. J Econ Behav Organ 5:287–320CrossRefGoogle Scholar
  60. Witt U (2002) How evolutionary is Schumpeter’s theory of economic development? Ind Innov 9:7–22CrossRefGoogle Scholar
  61. Witt U (2009) Novelty and the bounds of unknowledge in economics. J Econ Methodol 16(4):361–375CrossRefGoogle Scholar
  62. Witt U, Brenner T (2008) Output dynamics, flow equilibria and structural change—a prolegomenon to evolutionary macroeconomics. J Evol Econ 18(2):249–260CrossRefGoogle Scholar
  63. Woolcock M (2001) The place of social capital in understanding social and economic outcomes. Can J Pol Res 2(1):11–17Google Scholar
  64. Yoshikawa Y, Sato A, Hirasawa S, Takahashi M, Yamamoto M (2012) Hitachi’s vision of the smart city. Hitachi Rev 61:111Google Scholar
  65. Yun JJ (2015) How do we conquer the growth limits of capitalism? Schumpeterian dynamics of open innovation. J Open Innov Technol Mark Complex 1:17CrossRefGoogle Scholar
  66. Yun JJ, Won D, Hwang B, Kang J, Kim D (2015) Analysing and simulating the effects of open innovation policies: application of the results to Cambodia. Sci Public Policy 42:743–760Google Scholar
  67. Yun JJ, Won D, Jeong E, Park K, Yang J, Park J (2016a) The relationship between technology, business model, and market in autonomous car and intelligent robot industries. Technol Forecast Soc 103:142–155CrossRefGoogle Scholar
  68. Yun JJ, Won D, Park K (2016b) Dynamics from open innovation to evolutionary change. J Open Innov Technol Mark Complex 2:7CrossRefGoogle Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Daegu Gyeongbuk Institute of Science and Technology (DGIST)DaeguRepublic of Korea
  2. 2.Korea Institute of Science and Technology Information (KISTI)SeoulRepublic of Korea
  3. 3.Department of Business AdministrationSangji UniversityWonjuRepublic of Korea

Personalised recommendations