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Determinants and effects of innovation are topics of intense research interest, particularly since the fundamental relationship between economic and technological change has become acknowledged more widely. As a result, the contributions of research and development activities (R&D) to innovation and industrial evolution, especially in the manufacturing industries are well appreciated. However, in economic models, as well as in many empirical studies, R&D is often conceptualized as an innovation production function. Such treatment may be a useful first approximation of the innovation process within a linear model of innovation. However, in qualitative empirical studies since the 1980s it has been observed that the organization of R&D is a critical determinant of both innovation (for example, Mowery, 1983) and economic performance (for example, Teece, 1986). Informal models of innovation emphasize …