Growth of the Firm by Repeated Innovation: towards a New Micro-economics Based on Design Functions

Innovation is at the heart of economic development, but nevertheless raises nsiderable theoretical challenges in the fields of both Economics and Management. In this ticle, we will be examining recent work on innovation in these two disciplines, which leads to introduce a crucial function for innovation that we have called the "design function" herent to firms. This function cannot be formally assimilated with a traditional production nction. It requires specific management methods that determine its "efficiency". Its study lps us relate innovation strategies to firms' core learnings. This change in representation has ree advantages: (i) offering an interpretation of the regimes of growth by repeated novation observed in certain firms; (ii) unifying and simplifying ad hoc micro-economic odels of innovation; (iii) providing a representation of the firm that is better suited to pitalism, particularly when based on competition by innovation.