Ema Talam, Lecturer, Staffordshire Business School

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Innovation is of great importance for economies, firms, but also us as individuals. In this blog, we are going to briefly discuss how innovation is impacting our everyday life.

Broadly speaking, innovation refers to new or improved products, processes or methods. Innovative products and services have greatly shaped our lives – the way we perform simplest of daily tasks, study, work or spend our leisure time. Think about how many of your daily tasks would be performed in the same way or differently a decade or a century ago. Would you prepare your food, keep up with your friends and family, undertake your studies or perform any part your job in the same way? It is likely that the answer to (at least some of) these questions is no! The extent of the importance of various innovative products and services (think about smartphones, computers, various apps, etc.) has been, even more than ever, apparent during the pandemic.

Innovation – e.g. development of the vaccine and availability of different technologies – has affected significantly how we coped with the pandemic and our way out of the pandemic. Economists suggest that our ability to work from home has prevented more catastrophic consequences of the pandemic on the economy (Bloom, 2021). In my previous blog, I wrote about how the pandemic has affected firms and in particular, how it affected innovation undertaken by firms. To be able to survive, large number of firms relied on innovation. For example, firms decided to sell their products online as they were unable to sell their products in any other way, or to introduce completely new products. These innovations may even have prevented some firms from closing and employees were able to keep their jobs.

Why does it matter for us if the firms operating around us are more or less innovative? Besides the obvious reason – availability of certain and potentially superior products and services – the research has shown that innovative firms pay higher wages to their employees (Bleaney and Wakelin, 2002). Being employed in an innovative firm can benefit workers performing jobs that require different ranges of skills. Using the data for the United Kingdom for the period 2004-2016, Aghion et al. (2019) show that employees in some of the low skilled occupations employed in innovative firms earn more compared to their counterparts employed in firms that do not innovate.

Finally, does innovation have any impact on our quality of life or well-being? The answer seems to be yes! There are number of anecdotal evidences that might support this. Again, think about different technologies that we relied on during the pandemic. Additionally, the research has shown the existence of the link between innovation and our subjective well-being (Dolan and Metcalfe, 2012).

Steve Jobs once said that it is innovation that distinguishes between leaders and followers and this applies to many areas of life – not just business. Innovation is an ingredient without which the world would not be able to thrive and as we have seen, innovation impacts all of us and all spheres of life, including our well-being and quality of our lives.

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References:

Aghion, P., Bergeaud, A., Blundell, R., and Griffith, R. (2019) ‘The innovation premium for soft skills in low skilled occupations’, CEP Discussion Paper. Available at: https://cep.lse.ac.uk/_NEW/PUBLICATIONS/abstract.asp?index=6763 (Accessed: 19 June 2021)

Bleaney, M., and Wakelin, K. (2002) ‘Efficiency, innovation and exports’, Oxford Bulletin of Economics and Statistics, 64(3), pp. 3-15. doi: https://doi.org/10.1111/1468-0084.00001

Bloom, N. (2021) Working from home is working. What it will look like post-pandemic?. Available at: https://www.youtube.com/watch?v=bUByJJgPlAo (Accessed: 19 June 2021)

Dolan, P., and Metcalfe, R. (2012) ‘The relationship between innovation and subjective wellbeing’, Research Policy, 41, pp. 1489-1498. doi: https://doi.org/10.1016/j.respol.2012.04.001