UU Summary of the book The Economics of Innovation
The Economics of Innovation book summary
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Universiteit Utrecht (UU)
Economics and Business Economics
Market Dynamics and Corporate Innovation
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Market Dynamics & Innovation
Planning studeren tentamen
Dag Book Articles Gedaan?
26-10-2018 Chapter 1,2 Sundahl (2001) Samenvatting Stuvia
Acs & Audretsch(1988) + Ch.1 and Ch.2 extra
Nooteboom (1994) samengevat
27-10-2018 Chapter 3-6, 10 Mintzberg & Waters (1985) Lecture + alles gedaan en
Shane (2000) artikelen extra
Dew et al. (2004) samengevat
29-10-2018 Chapter 7,8 Lecture + chapters
30-10-2018 - Breschi et al. (2000) Artikelen samengevat
Yu & Hang (2010) Yu&Hang = moeilijk
02-11-2018 Chapter 18 Klepper (1997) Lecture + chapter 18 +
Christensen & Rosenbloom (1995) artikelen samengevat
Danneels (2004) Danneels = niet in SV
03-11-2018 Chapter 9,11 Cohen & Levinthal (1990) Guest lecture + chapters
Danneels (2002) + artikelen samengevat
Christensen et al. (2018) Christensen = niet in SV
04-11-2018 Chapter 15, 16 Dew et al. (2011) Lecture + chapters +
Suri et al. (2012) artikelen.
Kerr et al. (2014) Kerr et al = niet in SV
05-11-2018 - Edelman & Geradin (2016) Lecture + artikelen
Uzunca et al. (2018) gelezen + 1ste in eigen
Cohen et al. (2016) SV.
06-11-2018 - - Mock exam maken &
daarna herhalen wat niet
goed was
26-10-2018 Week 37
Lecture
Schumpeter/Austrian School Forces that change economic structure and industry
landscape can come from within the system (endogenous)
Schumpeter Mark I: Entrepreneurs are the driving force of economic development. (creative
destruction)
Schumpeter Mark II: Innovations originates primarily from large firms as they have the
resources for a significant R&D. (creative accumulation)
Deductive methods = You first have a theory and then start looking for data to confirm this
theory. Hypothesis testing quantitative research.
Inductive methods = First you collect data and look at this, then you come up with a theory
qualitative research.
Not one of them is better than the other. Depends on what you are looking at.
,Questions to ask every paper:
1. What is the main contribution? Why was this needed and what can you learn from
this?
2. What are the applied methods?
3. How does this fit in the Christensen & Sundahl`s framework?
4. What are according to you the strengths and weaknesses.
Christensen & Sundahl (2001)
Anomaly: something that was not expected
by the theory used.
Paradigm: the theory can be stated in simple
language and is based upon an unambiguous
categorization scheme.
A theory must be falsifiable example of
Porter`s Competitive Advantage of Nations
where he found anomalies Japan with no
iron ore and little coals became a successful
steel producer.
3 mechanisms for doing anomaly-seeking
research:
- Looking at the phenomena through the lenses of other academic disciplines
- Looking at the phenomena within the phenomena look at different levels of
phenomena, not only at group level but also at individual level.
- Looking at a broader variety of phenomena than previous researchers were able to
Important in building theories is proper classification. There are 2 stages of categorization:
1. Substantive classification: tends to be defined by the attributes of the phenomena.
2. Formal classification: tends to be defined by the circumstances of the phenomena.
Example of formal classification: Hayes & Wheelwright characterize four different
circumstances under which manufacturers might find themselves (low volume; one of a kind,
moderate volumes of multiple products etc.) and these circumstances predict a theory of
which of production systems would yield what kinds of operating profits.
Acs & Audretsch (1988)
Does innovation mostly come from large or small firms?
1st mostly measuring innovation by looking at patents. incomplete measure because not for
all innovations you can get a patent and not all patents make it to the market.
Patent = You are the only one with the rights to produce/use a new idea. Possible to suit
others who do use your idea. small firms to not have the capital to register patents or suit
lager firms when their ideas get stolen. easier for larger firms to gets patents makes the
measure with patents biased towards large firms.
R&D expenses = Research & Development expenses increasing your R&D expenses leads
to an increase in innovations. Note: this decreasingly increase
, Highly concentrated industries will have a lower innovation rate. Small firms do not have
the money and large firms do not feel the need, they already have a good market position.
- Large firms focus more on basic research (really broad) because they have more
resources.
- Small firms focus more on applied research (to find the solution for a problem because
they have less resources and will use them for clear problems.
Acts & Audretsch have found that:
1. The total number of innovations is negatively related to the concentration and
unionization, and positively related to R&D expenses, skilled labor, and the degree to
which large firms comprise the industry.
Concentration = the number of firms and their respective shares of the total production
in a market.
Unionization = the process of organizing the employees of a company into a labor
union which will act as an intermediary between the employees and the company
management.
2. These determinants have disparate effects on large and small firms.
Nooteboom (1994)
Inventory of strengths and weaknesses of small firms in innovation and diffusion:
Diversity: The most striking and important characteristic of small business Conditions lie
in the extent to which managers/entrepreneurs are disciplined to adhere to common standards
of profit or conduct depends on ownership and the market.
The more capital firms obtain from shareholders, the more they are subject to standards of
profit in relation to risk (the risk of being replaced due to intervention of shareholders or a
takeover when missing opportunities or not adhering to standers of profit).
Small businesses are more likely to have fewer risk due to less diversification, but at the same
time they face greater risks than managers of large firms (these have a more secure salary).
Sources of diversity:
1. Push (unhappy with current position) Relation between entrepreneurship and social
security (only way to provide for oneself/sick relatives) + relation between economic
downturn and self-employment.
2. Pull (attractiveness of self-employment) independence restricts financial re-
sources for growth.
3. Coincidence (an inheriting the family firm).
Advantages:
- Large business resources, knowledge, science, method, control of external
conditions MATERIAL
- Small business labor, entrepreneurship, motivation, design, ideas
BEHAVIORAL
Small businesses fill the niches = very small specific market.
Tacit knowledge: knowledge that we have typically learned by doing than by abstract learning
and teaching by explicit definition and explanation (something like “second nature”).
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