Offshoring and product innovation

We propose an endogenous growth model with offshoring to investigate its effects on product innovation and growth in the country of origin. Offshoring is associated with reduced feedback from offshored plants to domestic labs as well as coordination problems between the offshored and domestic divisions of firms. Production and transport cost parameters affect the static decision to relocate plants but not R&D. Hence, offshoring may be chosen by firms when it damages the growth rate of their countries of origin. In particular, if offshoring reduces the feedback from plants to labs, it is likely to bring dynamic losses when the countries of origin are large, especially in sectors in which R&D is cheap and product differentiation is strong. It is also likely to slow growth in sectors in which contractual incompleteness gives a strong bargaining power to offshored divisions in intra-firm transactions. We thank Thierry Verdier, an anonymous referee and participants to the Final Conference of the EU funded Research Training Network “Trade, Industrialisation and Development”, held at Paris Jourdan Sciences Economiques on 26–27 October 2006, for helpful comments. The second author gratefully acknowledges financial support from MIUR.     

Firms’ skills as drivers of radical and incremental innovation

Using firm level data from the Irish Community Innovation Survey 2008–2010 we analyse the importance of eight skill sets for the innovation performance of firms. We distinguish between radical and incremental innovation. Our results suggest that there is substantial heterogeneity in the importance of skills for different types of innovation and that some skills are best sourced from outside the firm while others are best developed in-house.     

Stochastic innovation and product market organization

Summary This paper analyzes how different types of product market organization affect firms' R&D investments in a stochastic innovation framework. Product market competition determines payoffs to successful and unsuccessful firms. Restrictions on the research project success probability distribution are identified that yield an invariance result for expenditure per R&D project. The impact of the number of firms (n) on the amount of market R&D is shown to be sensitive to product market organization. For a major process innovation, firms undertake more R&D projects under Cournot product market competition than under Bertrand competition, forn sufficiently large. A numerical example is used to illustrate welfare tradeoffs.Tom Lyon, Herman Quirmbach, Ferenc Szidarovszky, Mark Walker and two anonymous referees gave us helpful comments and suggestions on prior versions of this paper. Lucy Atkinson provided expert research assistance on numerical computations. Special thanks to Ted Bergstrom who gave us valuable suggestions about the first proposition.     

The product innovation process and GDP dynamics

In this paper, we explain GDP dynamics through an analysis of the forces that modify the structure of the economy. These forces are represented by the entry of new firms and product innovations. Our model is inspired by Bak’s sand pile model, and the entry of a new firm or innovation is comparable to dropping a grain of sand in Bak’s model. The resulting model involves the insights of both Keynes and Schumpeter. It could be defined as Keynesian because the aggregate output is demand driven. That said, the model can mainly be labeled as Schumpeterian for several reasons: (i) innovations have a key role, (ii) credit is involved in supporting the innovation process, (iii) innovations partially destroy old industries, and finally (iv) without innovations, the system gradually approaches its stationary state. In this simple model, the change in the number of sectors (products) of the economy is the decisive factor with the following results: (1) the aggregate production has an increasing trend; (2) fluctuations are asymmetric; (3) recessions have a “creative destruction” explanation; (4) “classical” cycles are gradually replaced by “growth” cycles.     

Endogenous innovation and imitation in a model of equilibrium growth

This paper provides a growth model in which innovation as well as imitation occurs. Economic growth is due to product innovations. Innovators driven by the possibility to appropriate monopoly profits do not remain in their monopolistic position forever. Latecoming imitators get into possession of the private knowledge of production through investments in R & D. Imitated products are marketed in oligopolistic markets. Imitation proves to be profitable despite a single factor market and positive imitation costs. A steady-state equilibrium with positive imitation and innovation rates as well as different market structures can be derived. Finally, the effects of industrial policy measures are discussed.     

Schumpeterian patterns of innovation and the sources of breakthrough inventions: evidence from a data-set of R&D awards

This paper examines the relationship between Schumpeterian patterns of innovation and the generation of breakthrough inventions. Our data source for breakthrough inventions is the “R&D 100 awards” competition organized each year by the magazine Research & Development. Since 1963, this magazine has been awarding this prize to 100 most technologically significant new products available for sale or licensing in the year preceding the judgment. We use USPTO patent data to measure the relevant dimensions of the technological regime prevailing in each sector and, on this basis, we provide a characterization of each sector in terms of the Schumpeter Mark I/Schumpeter Mark II archetypes. Our main finding is that breakthrough inventions are more likely to emerge in ‘turbulent’ Schumpeter Mark I type of contexts.     

A model of technological breakthrough in the renewable energy sector

Models with induced technological change in the energy sector often predict a gradual expansion of renewable energies, and a substantial share of fossil fuels remaining in the energy mix through the end of our century. However, there are historical examples where new products or technologies expanded rapidly and achieved a high output in a relatively short period of time. This paper explores the possibility of a ‘technological breakthrough’ in the renewable energy sector, using a partial equilibrium model of energy generation with endogenous R&D. Our results indicate, that due to increasing returns-to-scale, a multiplicity of equilibria can arise. In the model, two stable states can coexist, one characterized by a lower and one by higher supply of renewable energy. The transition from the low-output to the high-output equilibrium is characterized by a discontinuous rise in R&D activity and capacity investments in the renewable energy sector. The transition can be triggered by a rise in world energy demand, by a drop in the supply of fossil fuels, or by policy intervention. Under market conditions, the transition occurs later than in the social optimum. Hence, we identify a market failure related to path-dependence and technological lock-in, that can justify a strong policy intervention initially. Paradoxically, well-intended energy-saving policies can actually lead to higher emissions, as they reduce the incentives to invest in renewable energies by having a cushioning effect on the energy price. Hence, these policies should be supplemented by other instruments that restore the incentives to invest in renewable energies. Finally, we discuss the influence of monopoly power in the market for innovations. We show that market power can alleviate the problem of technological lock-in, but creates a new market failure that reduces static efficiency.     

产品创新对组织绩效关系之研究

越来越多的企业利用不断推出新产品获得市场与消费者的青睐,以建立长期竞争优势。企业若能成功推出新产品,除能以独一无二的新产品提高产品与市场的价值之外,更能提升企业整体竞争力。然而,在现今竞争激烈导致产品生命周期急遽缩短的趋势下,使得产品创新在企业日常营运角色中的重要性日渐增加,企业若能掌握产品推出时机,并且藉由创新延长产品生命周期,就有机会维持企业在座业中的领导地位。本研究以3M作为个案研究之对象,探讨渐进式创新、技术突破、市场突破以及激追式创新等四种不同的产品创新类型对组织绩效的影响,期能藉由实际个案与相关数据显示产品创新与组织绩效间之关联性。研究结果显示,无论属于何种产品创新类型,对组织绩效都有正向的影响。若能激发激进式产品创新的产生,更能透过新产品或新技术创造新的产品践,亦能强化组织的竞争优势,成为组织竞争优势的根源。3M超过百年的发展历史以及不断创新的历程与经验,使它成为商业历史发展的裹程碑外,更成为现今各企业的典范与楷模。     

Risk identification in product innovation projects: new perspectives and lessons learned

The paper addresses the improvement of innovation project (IP) risk identification by applying the RBS (Risk Breakdown Structure) method, and represents a follow-up analysis of the subject (a case of IP before and after applying the method). The activities of risk identification are an initial phase in most of risk management processes and classifications. High-level risk-taking is one of the key characteristics of IPs, due to the fact that this type of projects is related to implementation of new ideas. An example illustrates the combination of RBS/WBS for evaluating the risk concentration, called Risk Breakdown Matrix. This research has proven that implementation of the presented approach in the context of the Serbian market can improve efficiency of all phases of the project, especially those related to planning phase.     

Demographic processes in a model of innovation diffusion with dynamic market

In this paper we study a binomial innovation diffusion model for a variable size market by modelling the demographic process of entrance-exit from each market compartment. We examine from a theoretical point of view the effect of the simultaneous presence of economic and demographic parameters under the exponential market growth hypothesis, by presenting some general results on the adoptions and sales time path. We also enlighten the relevance of considering these variables in relative terms and show how, in presence of a dynamic, the diffusion process never saturates the market. Finally, we test our model on a data set for cellular phones market in different countries.     

The evolution and performance of biotechnology regional systems of innovation

The paper maintains that biotechnology regions develop as complexsystems: they start with star scientists in research universities,generating knowledge spillovers, then move progressively towardsregional technology markets. In the process they attract venturecapital (or modify the behaviour of existing venture capitalfirms with the addition of biotechnology portfolios). The routinesof universities are also modified with the addition of intellectualproperty and technology transfer offices intervening as sellersin the newly created knowledge markets. The paper also considerswhether companies located in regional agglomerations grow fasterthan isolated ones, and whether companies spun-off from universitieshave a better performance than start-ups. The study is basedon about 90 Canadian-based publicly quoted biotechnology companies.     

Dynamic capabilities and radical innovation performance in established firms: a structural model

The paper extends Teece’s model of dynamic capabilities (2007 Teece, D. 2007. “Explicating Dynamic Capabilities: The Nature and Microfoundations of (Sustainable) Enterprise Performance.” Strategic Management Journal 28 (13): 1319–1350. doi: 10.1002/smj.640[Crossref], [Web of Science ®] , [Google Scholar]) into four types of capabilities: sensing, coordination, autonomy and reconfiguration capabilities. We further develop a structural model between four types of dynamic capabilities and radical innovation performance (RIP) in established firms. Based on a dataset of top 500 manufacturing established firms in Taiwan, the proposed hypotheses are tested using the structural equation models. The results reveal that four types of dynamic capabilities and RIP are positively correlated in a sequential and structural manner. This paper concludes the systemic development of dynamic capabilities can improve RIP in established firms. Finally, we point out some managerial implications for improving RIP in established firms.     

Direct and configurational paths of open innovation and organisational agility to business model innovation in SMEs

ABSTRACT

Discussions on opportunities and enablers have remained lacking despite the continued growth of business model innovation (BMI) research. In order to investigate the formation mechanism of BMI in small-medium enterprises (SMEs), we proposed an integrated model, which included factors derived from organisational internal resources and capabilities via the resource-based view (RBV) and dynamic capabilities view (DCV). Structural equation model (SEM) and fuzzy set qualitative comparative analysis (fsQCA) were utilised to test the survey data collected from 245 SMEs in China. SEM results support the hypotheses, except that on the impact of outbound open innovation on market capitalising agility and on BMI. The fsQCA analysis revealed that four configurations of open innovations and organisational agilities can sufficiently explain high levels of BMI, and two configurations of these factors lead to low BMI. The theoretical and practical implications of such findings were also provided.     

Knowledge integration methods,product innovation and high-tech new venture performance in China

Combining insights from knowledge-based theory (KBT) and the product innovation literature, this paper explores whether and how knowledge integration methods contribute to high-tech new venture performance in China’s emerging economy. Using data from 295 entrepreneurs and top executives in Chinese high-tech new ventures, we find that both the coordinated integration of knowledge and systemic integration of knowledge have positive effects on high-tech new venture performance and product innovation. Competitive intensity moderates the impact of knowledge integration methods on product innovation. Moreover, product innovation is a mediator in the relationship between knowledge integration methods and high-tech new venture performance. Our findings have important theoretical and practical implications.     

Knowledge transfer in an innovation simulation model

To understand the development of innovation processes in these knowledge-driven economies, one needs to focus on underlying processes of creating and sharing new knowledge. In this paper, an evolutionary simulation model is used to achieve some insights into these innovation processes. The model is based on the one hand on rules about market performance, investments and R&D strategies, and on the other hand on a model concerning knowledge creation (the ability of firms to create knowledge through intramural R&D efforts and the ability to discover and absorb new developments from basic academic research and competitors) and knowledge transfer based on an exponentionally expanding pool of (not necessarily new) knowledge of innovations in the own sector, but also from external sources. It is demonstrated that the imitative firm can be economically more successful but this strategy may prove to be superior only after a long time span.     

Simultaneity between strategic variables: Production,innovation, and product differentiation

This paper aims to analyze the existence of simultaneous effects among the variables production, product differentiation, and innovation. Microeconomic data from a sample of 2,160 firms are used as a base. Empirical results show that a positive correlation exists from innovation to product differentiation, thus showing that it is in the process of production itself, through technical improvements, where product differentiation is determined. On the other hand, no positive effect exists from product differentiation to innovation, i.e., once technical improvements have been established, firms exchange the barriers to entry created by brand image for the real barriers established by innovation itself. Lastly, the importance of the firm size in explaining the other endogenous variables analyzed is confirmed. This paper has received financial support from the Valencian Institut of Economic Research (IVIE). The study was carried out within the framework of research program SEC94-1357 of the Comisón Interministerial de Ciencia y Tecnología (CICYT).     

Brand/product innovation and the optimal length of trademark/patent protection

A simple CES model of product differentiation is used to consider brand innovation and compulsory trademark licensing. Judd has used a different but closely related model to study product innovation and optimal patent length. Under Cournot assumptions, computer simulations show that the optimal length of trademark/patent protection is finite and varies in an intuitive way with the costs of innovation and production, interest rates and taste parameters.