The double-edged sword of recombination in breakthrough innovation

We explore the double-edged sword of recombination in generating breakthrough innovation: recombination of distant or diverse knowledge is needed because knowledge in a narrow domain might trigger myopia, but recombination can be counterproductive when local search is needed to identify anomalies. We take into account how creativity shapes both the cognitive novelty of the idea and the subsequent realization of economic value. We develop a...