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Summary UU Market Dynamics and Corporate Innovation Articles
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Summaries of all articles of the Market Dynamics and Corporate Innovation course.
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Market dynamics and corporateinnovation: papers
Week 37
Acs, Z.J. and Audretsch, D.B. (1988). Innovation in
Large and Small Firms: An Empirical Analysis.
Quantitative research
Model that suggests innovative output is influenced by R&D and market structure characteristics.
Most research on innovations focused on large firms, while small firms (<500 employees)
contributed over half of all innovations.
The paper tests 2 hypotheses:
1. The degree to which R&D expenditures produce innovative output is conditioned by the
market structure characteristics.
2. Small- and large-firm innovative activity respond to distinct technological and economic
regimes.
Conclusions:
- The total number of innovations is closely linked to R&D expenditures and patented
inventions, especially at aggregate level. However relation between R&D and innovation is
different than the relations between R&D and patents.
- Number of innovations increases with increased R&D spending in the industry, but at a
decreasing rate.
- Industry innovations tend to decrease as the concentration (the extent to which market
shares are concentrated between a small number of firms) rises.
- Evidence that unionization is negatively related to innovative activity.
Main contribution of this paper: A model that suggests that innovation output is influenced by R&D
and market structure. Better measurement of innovation input (R&D expenditure) and output
(recorded innovations, not only patent activity). Evidence that small firms and large firms react
differently to technological and economic regimes/situation.
What are the applied methods: Regression analysis
How does this fit in Christensen & Sundahl’s framework: They used a hypothesis so they use theory
to confirm their hypothesis: deductive.
Strengths:
Weaknesses:
,Nooteboom, B. (1994). Innovation and diffusion in small
firms: theory and evidence.
Literary & qualitative research
The article provides an inventory of the strengths and weaknesses of small firms in a dynamic
context.
The most important characteristic of small businesses is its diversity. Others are small scale,
diversity, independence and personality.
Nooteboom proposes that particularly in studies of small business in innovation and diffusion,
economics and sociology should be combined. Because for innovation knowledge and learning is
necessary and diffusion takes place in a social system.
, Conclusions:
- The most important aspect of small business is its diversity, due to a lesser compulsion from
outside to conform to common standards of profit and conduct, and due to a variety of
internal motives and goals of entrepreneurship.
- Due to smaller scale, small firms are less vested with interests that hold innovation back.
- Too risky small business innovations are automatically filtered out because a small firm can
seize activity or go bankrupt with much less hassle than a large firm.
- Advantages for small businesses: Greater flexibility, closeness to customer.
- Disadvantages for small businesses: Lack of economies of scale, scope and experience.
- This leads to small firms being strong in satisfying niche or residual markets. small and
large firms play complementary roles in the life cycle of technologies.
Main contribution of this paper: Provides a comparison of large and small firms in terms of
innovation and diffusion. Provides an overview of the strengths and weaknesses of small firms in a
dynamic context.
What are the applied methods: Literature review + qualitative descriptions
How does this fit in Christensen & Sundahl’s framework: It gives an overview of literature and
previous findings, and shows circumstances in which small firms engage in diffusion and innovation.
Thus it bridges between theory and classification.
Strengths:
Weaknesses:
Week 38
Mintzberg, H., Waters J.A. (1985). Of Strategies,
deliberate and emergent.
Deliberate and emergent strategies may be conceived as a continuum along which real world
strategies lie.
Definition of strategy: a pattern in a stream of decisions.
Realized strategy is a combination of deliberate strategy and emergent strategy.
Types of strategies from deliberate to emergent:
- Planned: Strategies originate in formal plans: precise intentions; formulated by central
leadership; backed up by formal control to ensure surprise free implementation;
controllable or predictive environment.
- Entrepreneurial: Strategies originate in central vision: intentions exist as personal,
unarticulated vision of the leader, thus adaptable to new situations; organization under
personal control of leader and usually serving a niche in the market environment.
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