Abstract
New knowledge has emerged as a key commodity in smart manufacturing and as a critical resource for innovation and entrepreneurship in Industry 4.0. Innovative firms develop competitive advantages for themselves and for their countries through knowledge exploitation and exploration and the creation of new technologies. Governments around the world constantly encourage innovation through an array of fiscal subsidies and regulatory interventions. Except for the very few economies that possess the ability to capitalize on emerging technologies, most countries continue to experiment with their support of innovation with admittedly mixed results. Kazakhstan is a unique case in that its continuously increasing support of innovation over the years, has yielded negative results. The objective of this exploratory paper is to illuminate specific aspects of this innovation paradox of Kazakhstan, in an effort to elicit useful insights for other countries in a similar stage of development attempting to advance their Industry 4.0 agendas. The analysis reveals that it may be necessary for Kazakhstan to abandon traditional linear development models and to adopt harmonic innovation principles for sustainable development.