Free user innovation: an important complement to the Schumpeterian innovation paradigm

Eric von Hippel

Chapter 1 in Handbook on Post-Schumpeterian Innovations, 2025, pp 2-16 from Edward Elgar Publishing

Abstract: Free user innovation refers to functionally novel products, services, or processes developed by consumers at their own expense and during their unpaid discretionary time. These innovations are not protected by their developers and are freely accessible to anyone. This phenomenon occurs within the household sector, which consists of all resident households producing goods and services for their own consumption using their own capital and unpaid labor. Free user innovation is distinct from the producer innovation paradigm, which focuses on profit-driven development for both consumer and industrial markets. Nationally representative surveys have shown that many consumers innovate, revealing a fundamental challenge to the Schumpeterian innovation paradigm, which traditionally assumes consumers merely consume rather than innovate. Joseph Schumpeter's theory emphasized that economic change is driven by producers, who educate consumers and distribute development costs across many purchasers. This producer-centric view has been widely accepted and echoed by economists and policymakers. However, the widespread occurrence of free user innovation suggests the need for a new paradigm that recognizes and complements the traditional Schumpeterian model. This chapter explores the free user innovation paradigm, highlighting its differences and complementarity with the producer-driven approach.

Keywords: Free User Innovation; Household Sector; Consumer Innovation; Schumpeterian Paradigm (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035322503
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