Can IT Innovation become a Tool against Fiscal Crisis?: Findings from Europe

2. It Innovation And Fiscal Growth

The first question that this paper seeks to answer sounds trivial or obvious, while it can be considered “cliché to say so” (Lederman, 2010). However, it is important for innovation to be defined in economic terms and its relation with fiscal growth to be identified by policy makers. Schumpeter (1949) was the first scholar who discussed about innovation with economic terms during the decade of 30s and defines it as “opportunity identification, ideation or invention to development, prototyping, production marketing and sales, while entrepreneurship only needs to involve commercialization”. Moreover, Ettlie (2006) describes innovation as “invention capitalization”, while Porter (2003) commercializes innovation, aligns it to entrepreneurship’s strategic and competitive context, and positions it to the top level of national competitiveness. Innovation has to do more than technology; it deals with management systems that drive growth. Drucker (1985) defines innovation as “the action that endows resources with a new capacity to create wealth”. For example, in the beginning of the nineteenth century harvesting machines were not affordable to the farmers. Eventually one of the many harvesting-machine inventors, Cyrus McCormick, invented installment buying. This enabled the farmer to buy a harvesting machine with future earnings.