Innovation and digital economy GapFill

One way in which firms can grow is through innovation. There are two key types of innovation.  ExperimentalResearch and developmentProductProcess innovation can increase the efficiency of production and thus  increases revenuescarries a high risk of failurereduces pricesreduces costs.  Research and developmentExperimentalProductProcess innovation can boost demand among the customer base and thus  reduces costscarries a high risk of failurereduces pricesincreases revenues. Innovation tends to be a costly endeavour, however, and successful innovations run the risk of being reproduced by competitors. While this can be negative for an innovating firm, it is beneficial for consumers and the economy as it increases customer choice and  reduces pricesreduces costscarries a high risk of failureincreases revenues.

One type of innovation which involves very high costs is  experimentalproductprocessresearch and development innovation. This type of innovation involves more  processexperimentalresearch and developmentproduct investment in the very first stages of a product or process cycle. This type of innovation is usually only taken on by very large firms, often in collaboration with governments, as it requires intensive resources and  carries a high risk of failurereduces costsincreases revenuesreduces prices.