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This paper reviews the recent rapidly growing literature on technical change in the economy. It concentrates on innovations and their diffusion at firm and industry level since this was the area designated as relatively weak in earlier literature surveys. The review argues that the extensive empirical evidence and theoretical analysis now available presents a basic challenge to neoclassical theory. After indicating some weaknesses in the 'neo-Schumpeterian' literature, the paper concludes by advocating an experiment with a new form of assessment by neighboring disciplines to economics itself, which would take full account of the fundamental issues at stake in this modern Methodenstreit. (c) 1994 Academic Press, Inc. Copyright 1994 by Oxford University Press.
Christopher Freeman (Sat,) studied this question.