How Nelson and Winter 1982 based on Market signal and demand explain about a main argument of the induced innovation hypothesis? (More explanation)?

Nelson and Winter (1982) argue that market signals and demand play a crucial role in shaping the direction of technological innovation. According to their induced innovation hypothesis, firms respond to changes in market conditions and demand by innovating and developing new technologies to meet the needs of consumers.

The main argument of the induced innovation hypothesis is that technological change is not driven solely by scientific discovery or technological progress, but is instead induced by changes in market conditions and demand. In other words, firms innovate in response to signals from the market, such as changes in consumer preferences, competition, or government regulations.

For example, if consumers start demanding more environmentally friendly products, firms may invest in developing new technologies that reduce carbon emissions or use renewable energy sources. Similarly, if there is increased competition in a particular industry, firms may innovate to stay ahead of their competitors and meet the changing demands of the market.

Overall, Nelson and Winter argue that market signals and demand are key drivers of technological innovation, and that firms respond to these signals by developing new technologies that meet the needs of consumers. This perspective challenges the traditional view that technological change is driven solely by scientific progress, and highlights the importance of market dynamics in shaping the direction of innovation.