Radical Innovation: Literature Review and Development of an Indicator David Audretsch 1 and Taylor Aldridge 2 Draft Report to International Consortium on Entrepreneurship March 2008 Abstract This paper presents the genesis of radical innovation literature and illustrates how both small and large firms, to differing degrees, generate radical innovation. It then distinguishes the characteristics of incremental versus radical innovation. The paper goes on to demonstrate how scholars often contradict their findings by describing how large firms or small firms innovate or how small firms innovate more and, finally, suggests using a much needed quantifiable identification metric, in both ex ante and ex post analysis, the Dahlin-Behrens model of radical identification. 1 David Audretsch is Director of the Entrepreneurship, Growth and Public Policy division at the Max Planck Institute of Economics and a Ewing Marion Kauffman Scholar-in-Residence. 2 Taylor Aldridge is a Research Fellow in the Entrepreneurship, Growth and Public Policy division at the Max Planck Institute of Economics and a PhD candidate in Economics at the University of Augsburg.