The unavoidable linear thinking: Or the need to consider what type of economic model a forecast is based upon
2013 (English)In: IMP Conference Atlanta 2013, 2013Conference paper, Abstract (Refereed)
Linear thinking is both prevalent and questioned. Regardless of how much an economic actor distrusts linear thinking, as a representative for a private, public or business economy she has to make forecasts. And as soon a forecast is made, some type of linear thinking have to be accepted. The research question of this paper concerns what type of economic model the assumed linear relation among the present and the future is based upon.
In order to shed light over this question we are taking a closer look at three economic actors considering the opportunity to invest in a specific innovation journey. Based on the recognition that the potential innovation corresponded to an important societal and economic need; to carry out fast and accurate DNA analysis, two of the economic actors; one venture capital firm and one governmental policy agency, forecasted a very positive relation among the scientific discovery and a successful innovation while the third one – an experienced company made a much more negative forecast.
In the conclusion of the paper it is argued that when the forecast is based on a market model of the business landscape, the point of departure is the preferences of the buyer. I.e. the linearity is assumed to be affected by if there is a demand for such a function as the potential innovation can offer, and if it can correspond to this demand in a more efficient way than established products. The two actors making a positive forecast are basing it on such analysis. If the forecast is based on a network model of the business landscape, the point of departure is the investments in place. I.e. the linearity is assumed to be affected by a context full of material and immaterial investments which are related – across company borders, and were the new has to contribute with positive economic effects in order to be embedded. Hence, if a forecast is based on, or is close to, a network model, the linearity among an investment decision and the economic outcome is assumed to be influenced by the existing substance. This was also the type of analysis made by the company making a more negative evaluation. And in this specific case this was also the right forecast.
Place, publisher, year, edition, pages
Economic forecasting, Market model, Network model, Innovation
IdentifiersURN: urn:nbn:se:uu:diva-214553OAI: oai:DiVA.org:uu-214553DiVA: diva2:685041
IMP Conference Atlanta 2013