Page 44 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.73, # 2, 2016, pp. 42-61

focus on the three players of Finnish technology transfer system – universities,
public research centers and private companies. Recommendations are included in the
conclusion.

2. Literature Review
Over the past decade, both academic scholars and policy makers have focused on
the role that technological innovation plays in economic growth. OECD defines
innovation as the implementation of a new or a significantly improved product (good or
service) or process, a new marketing method, or a new organizational method in
business practices, workplace organization or external relations of a company. The
major features are that innovation: 1) is associated with uncertainty over the outcome of
innovation activities; 2) involves investment; 3) is subject to spill-over; 4) involves the
utilization of new knowledge, or a new combination of existing knowledge; 5) aims at
improving the firm‟s performance by gaining a competitive advantage by shifting the
demand curve for the firm‟s products (United Nations Economic Commission for
Europe, 2012).
The process of innovation consists of a number of stages starting from the
inventions resulting from labaratories and ending with the new products and
processes appearing on the market. This process involves several organizations,
which enable the commercialization of innovation to occur. The major stages and
actors involved in the innovation process are presented schematically in graph 1 and
graph 2. While graph 1 illustrates a traditional ("linear") model of innovation and
commercialization, graph 2 highlights an interactive approach to the process of
innovation and commercialization. As it can be seen, from graph 1, research
institutions and companies are involved in the innovation process. Main activities
involved in this process are conducting basic and applied research, testing the results
of inventions (development testing) and investing needed capital to take the results
of inventions to the market. This entire process results in new products or processes,
and called innovation. Basic research conducted at universities and research
institutions result in discoveries and new knowledge.
Applied research which is based on the results of basic research ends with
inventions. Inventions of research institutions are often developed into prototypes by
companies. Companies invest funds on development testing, creating prototypes and
on working capital into order to take the innovation to the market. It must be noted
that the first two activities (basic and applied research), which are referred to as
“research and development stage” are performed by universities, research
institutions as well research and development departments of companies. The third
and fourth activities (development testing and investing), which is referred to as
“commercialization stage” are performed by companies.

44