It is now generally recognised that we are in the midst of major economic upheaval, with the kind of ramifications not seen since the industrial revolution of the early nineteenth century. Products of the human mind, such as software, pharmaceuticals and microprocessors, are replacing those of the earth and the blast furnace as our primary measure of economic power, and information technology is set to become the world's biggest industry within the next decade, displacing the automobile as the primary barometer of economic activity (Mandel 1997). As a recent editorial in Forbes has pointed out, in an international economy built on new technologies that are free from many physical restraints change "goes into overdrive" (Forbes 1997, p.130). It is no surprise, then, that innovation is fast becoming the central preoccupation in management and related studies. "Innovate or fall behind: the competitive imperative for virtually all businesses today is that simple", is how Leonard and Straus (1997, p.111) see it, and their view is widely shared (Peters 1990, Beck 1992). Yet, in spite of this increasing attention, we still have much to learn about the process of innovation in organisational and institutional settings. Questions such as why some firms are more innovative than others in the same industry, why some regions or countries are more innovative in certain industry sectors than others, and why innovation of the more radical kind most often tends to come from outside of existing industries are still being pursued with little resolution in sight. To date, most studies of innovation and its link with competitiveness have tended to focus on a single level of analysis. Industrial economists, evolutionary economists and institutional theorists have all tended to focus on the nature of innovation at sectoral, regional/national or even global levels (Nelson 1992, Jacobson 1994, Niosi and Bellon 1996), while management theorists have tended to...
