Dynamism

The Values That Drive Innovation, Job Satisfaction, and Economic Growth

Edmund Phelps, Raicho Bojilov, Hian Teck Hoon, Gylfi Zoega, Edmund S. Phelps

• Publisher: Harvard University Press
• Year: 2020
• Print ISBN: 9780674244696
• eBook ISBN: 9780674246669
• Topic: Business
• Subtopic: Law Biographies
• Index: Business

Nobel Laureate Edmund Phelps and an international group of economists argue that economic health depends on the widespread presence of certain values, in particular individualism and self-expression.

Nobel Laureate Edmund Phelps has long argued that the high level of innovation in the lead nations of the West was never a result of scientific discoveries plus entrepreneurship, as Schumpeter thought. Rather, modern values—particularly the individualism, vitalism, and self-expression prevailing among the people—fueled the dynamism needed for widespread, indigenous innovation. Yet finding links between nations' values and their dynamism was a daunting task. Now, in Dynamism, Phelps and a trio of coauthors take it on.

Phelps, Raicho Bojilov, Hian Teck Hoon, and Gylfi Zoega find evidence that differences in nations' values matter—and quite a lot. It is no accident that the most innovative countries in the West were rich in values fueling dynamism. Nor is it an accident that economic dynamism in the United States, Britain, and France has suffered as state-centered and communitarian values have moved to the fore.

The authors lay out their argument in three parts. In the first two, they extract from productivity data time series on indigenous innovation, then test the thesis on the link between values and innovation to find which values are positively and which are negatively linked. In the third part, they consider the effects of robots on innovation and wages, arguing that, even though many workers may be replaced rather than helped by robots, the long-term effects may be better than we have feared. Itself a significant display of creativity and innovation, Dynamism will stand as a key statement of the cultural preconditions for a healthy society and rewarding work.

II

THE ROOTS AND BENEFITS OF INNOVATION

4

A Case Study of Iceland’s Successful Innovators

Gylfi Zoega

ABSTRACT In this chapter we establish a common set of values and resulting attitudes that characterize the founders of four successful, innovating companies. Each company is founded on the basis of an indigenous innovation, not merely the application of new technology. Some of the values detected and determined will then be used in subsequent studies on the relationship between values and innovation at the national level.

Introduction

In previous chapters, it was found that indigenous innovation in the 1990s was higher in the US, the UK, and Scandinavia than in the continental European economies and Japan after 1990 and picked up from its pace in the 1970s and the 1980s while it slowed down further on the continent and in Japan. The objectives of the four chapters in this part of the book are, first, to establish a set of values and beliefs that can explain this pattern and, second, to study the consequences for labor force participation and job satisfaction when such values are lacking.

The objective of this chapter is to determine a common set of values and resulting attitudes that characterize innovators by interviewing the founders of four companies. The results of these interviews will then be used to guide the empirical work conducted in the subsequent chapters using aggregate data on values and beliefs. The companies include two software companies, Solfar Studios¹ and Plain Vanilla;² one producer of prosthetic limbs, Össur;³ and one company that developed software to maximize airlines’ seat utilization rates, Calidris, now a part of Sabre Airline Solutions.⁴ Of the four, Solfar and Össur are still independent companies, Calidris became part of Sabre Airline Solutions, and Plain Vanilla folded its operations and fired its staff in 2016.

1. Interviews

The interviews took place in September and October 2015 at the University of Iceland and Plain Vanilla’s headquarters. Each innovator was invited for an interview, and minutes were taken. The purpose of the interviews was to understand the founding ideas behind each company and, most importantly, to identify a common set of values and resulting attitudes among the founders.

1.1. Solfar Studios

We interviewed Thor Gunnarsson, founder of Solfar Studios. He has a long history and experience in the software business dating back to the early 1990s.

1.1.1. History. Most software companies existing in Iceland today trace their origins to a company called OZ, founded in the 1990s.⁵ The formation of that company was the beginning of innovation in the software sector. When OZ was dissolved at the end of the decade, the main players went on to create other companies. One of these companies was CCP Games, which creates computer games that allow people all over the world to play together.⁶ A third-generation company, Solfar, was founded in 2014 by three senior executives of CCP Games and OZ. These individuals, who can be characterized as “serial entrepreneurs,” had previously worked in the UK and the US. Our interviewee, Gunnarsson, was one of these three people. He said that when Solfar was founded, they had the notion that they could set up a creative studio in the entertainment software sector in Reykjavík, given the experienced talent base that had accumulated there over the previous 20 years.

The individuals who came from OZ had an interest in computer graphics; at OZ they combined real-time graphics wit...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Contents
• Preface
• Introduction: A Theory of Innovation, Flourishing, and Growth
• Overview of the Chapters
• I. Estimating Innovation—Across Time and Across Nations
• II. The Roots and Benefits of Innovation
• III. Two Applications of Robots
• Epilogue
• Notes
• Acknowledgments
• Index