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Instructions – PLEASE READ THEM CAREFULLY The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.Assignments submitted through email will not be accepted.Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.Students must mention question number clearly in their answer.Late submission will NOT be accepted.Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).Submissions without this cover page will NOT be accepted. Course Learning Outcomes-Covered Recognize the dynamics and the importance of managing technological innovation strategically. (LO 1) Reference Source: Textbook:- Schilling M.A (2020),Strategic Management of Technology Innovation (6th Edition). Mc-Graw Hill Education. Electronic Version: ISBN-13: 978-1260087956ISBN-10: 1260087956, Printed Version: ISBN-13: 978-1260087956 ISBN-10: 1260087956 Weight: 10 Marks
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المملكة العربية السعودية
وزارة التعليم
الجامعة السعودية اإللكترونية
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 1
Management of Technology (MGT 325)
Due Date: 9th March 2024 @ 23:59
Course Name: Management of Technology
Student’s Name:
Course Code: MGT325
Student’s ID Number:
Semester: 2nd
CRN:
Academic Year:2023-24
For Instructor’s Use only
Instructor’s Name: Dr. XXXXXXXXXXXXXX
Students’ Grade: 00 /10
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism).
• Submissions without this cover page will NOT be accepted.
Course Learning Outcomes-Covered
➢ Recognize the dynamics and the importance of managing technological innovation
strategically. (LO 1)
Reference Source:
Textbook:Schilling M.A (2020),Strategic Management of Technology Innovation (6th Edition). McGraw Hill Education. Electronic Version: ISBN-13: 978-1260087956 ISBN-10:
1260087956, Printed Version: ISBN-13: 978-1260087956 ISBN-10: 1260087956
Weight: 10 Marks
Students are required to refer to chapter 1 ‘Introduction’ of their textbook.
Clear understanding of the chapter along with continuous critical analyzation of each
topic and subtopic is highly recommended.
Based on the knowledge and information gathered by referring to the textbook and the
students own thorough research write a detailed report on “Analyzing the Impact of
Technological Innovation in KSA”
In a detailed report of 1500-2000 words, critically analyse the role of technological
innovation in the socio-economic development of the Kingdom of Saudi Arabia. Your report
should focus on how technological advancements have influenced various sectors such as
energy, education, healthcare, and urban development in KSA. Additionally, evaluate the
potential future impacts of technology on Saudi society, considering both opportunities and
challenges.
Guidelines:
Introduction (1 marks):
✓ Briefly introduce the concept of technological innovation.
✓ Highlight its importance in the global context and its relevance to KSA.
Historical Context (2 marks):
✓ Provide an overview of KSA’s technological landscape before the initiation of Vision
2030.
✓ Discuss the government’s initiatives to promote technological innovation as part of
Vision 2030.
Impact (3 marks):
✓ Economic Development: Discuss how technological innovations have contributed to
diversifying the economy beyond oil, focusing on sectors like renewable energy,
tourism, and digital infrastructure.
✓ Societal Impact: Analyse the effects of technological advancements on education,
healthcare, and urban living in KSA. Include examples of significant technological
projects or initiatives.
Challenges and Opportunities (2 marks):
✓ Identify and discuss the challenges KSA faces in implementing technological
innovations, such as resource allocation, skill gaps, and cultural resistance.
✓ Highlight the opportunities that technological advancements present for KSA’s future,
including job creation, international collaboration, and sustainable development.
Conclusion and Recommendations (1 mark):
✓ Summarize your findings and propose recommendations for KSA to maximize the
benefits of technological innovation while mitigating potential drawbacks.
References (1 Mark)
✓ Cite at least five reputable sources to support your arguments and claims.
✓ Use proper citation formatting.
Directions:
✓ All students are encouraged to use their own words.
✓ The assignment should be approximately 1500-2000 words in length.
✓ Use Saudi Electronic University academic writing standards and APA style
guidelines.
✓ Use proper referencing (APA style) to reference, other styles will not be accepted.
✓ Support your submission with course material concepts, principles, and theories from
the textbook and at least two scholarly, peer-reviewed journal articles unless the
assignment calls for more.
✓ It is strongly encouraged that you submit all assignments into the safe assignment
Originality Check prior to submitting it to your instructor for grading and review the
grading rubric to understand how you will be graded for this assignment.
Chapter One
Introduction
THE IMPORTANCE OF TECHNOLOGICAL INNOVATION
technological
innovation
The act of
introducing a
new device,
method, or
material for
application to
commercial
or practical
objectives.
In many industries, technological innovation is now the most important driver of
competitive success. Firms in a wide range of industries rely on products developed
within the past five years for almost one-third (or more) of their sales and profits.
For example, at Johnson & Johnson, products developed within the last five years
account for over 30 percent of sales, and sales from products developed within the past
five years at 3M have hit as high as 45 percent in recent years.
The increasing importance of innovation is due in part to the globalization of
markets. Foreign competition has put pressure on firms to continuously innovate
in order to produce differentiated products and services. Introducing new products
helps firms protect their margins, while investing in process innovation helps firms
lower their costs. Advances in information technology also have played a role in
speeding the pace of innovation. Computer-aided design and computer-aided manufacturing have made it easier and faster for firms to design and produce new products, while flexible manufacturing technologies have made shorter production runs
economical and have reduced the importance of production economies of scale.1
These technologies help firms develop and produce more product variants that
closely meet the needs of narrowly defined customer groups, thus achieving differentiation from competitors. For example, in 2018, Toyota offered 22 different
passenger vehicle lines under the Toyota brand (e.g., Camry, Prius, Highlander, and
Tundra). Within each of the vehicle lines, Toyota also offered several different models (e.g., Camry L, Camry LE, Camry SE, Camry Hybrid SE, etc.) with different
features and at different price points. In total, Toyota offered 193 car models ranging in price from $15,635 (for the Yaris three-door liftback) to $84,315 (for the
Land Cruiser), and seating anywhere from three passengers (e.g., Tacoma Regular
Cab truck) to eight passengers (Sienna Minivan). On top of this, Toyota also produced a range of luxury vehicles under its Lexus brand. Similarly, in 2018 Samsung
produced more than 30 unique smartphones. Companies can use broad portfolios
of product models to help ensure they can penetrate almost every conceivable market niche. While producing multiple product variations used to be expensive and
1
2 Chapter 1 Introduction
time-consuming, flexible manufacturing technologies now enable firms to seamlessly transition from producing one product model to the next, adjusting production
schedules with real-time information on demand. Firms further reduce production
costs by using common components in many of the models.
As firms such as Toyota, Samsung, and others adopt these new technologies
and increase their pace of innovation, they raise the bar for competitors, triggering
an industry-wide shift to shortened development cycles and more rapid new product introductions. The net results are greater market segmentation and rapid product
obsolescence.2 Product life cycles (the time between a product’s introduction and
its withdrawal from the market or replacement by a next-generation product) have
become as short as 4 to 12 months for software, 12 to 24 months for computer hardware and consumer electronics, and 18 to 36 months for large home appliances.3
This spurs firms to focus increasingly on innovation as a strategic imperative—a
firm that does not innovate quickly finds its margins diminishing as its products
become obsolete.
THE IMPACT OF TECHNOLOGICAL INNOVATION ON SOCIETY
gross
domestic
product (GDP)
The total annual
output of an
economy as
measured by its
final purchase
price.
If the push for innovation has raised the competitive bar for industries, arguably making success just that much more complicated for organizations, its net effect on society
is more clearly positive. Innovation enables a wider range of goods and services to be
delivered to people worldwide. It has made the production of food and other necessities more efficient, yielded medical treatments that improve health conditions, and
enabled people to travel to and communicate with almost every part of the world. To
get a real sense of the magnitude of the effect of technological innovation on society,
look at Figure 1.1, which shows a timeline of some of the most important technological innovations developed over the last 200 years. Imagine how different life would be
without these innovations!
The aggregate impact of technological innovation can be observed by looking at
gross domestic product (GDP). The gross domestic product of an economy is its
total annual output, measured by final purchase price. Figure 1.2 shows the average
GDP per capita (i.e., GDP divided by the population) for the world from 1980 to
2016. The figures have been converted into U.S. dollars and adjusted for inflation.
As shown in the figure, the average world GDP per capita has risen steadily since
1980. In a series of studies of economic growth conducted at the National Bureau of
Economic Research, economists showed that the historic rate of economic growth
in GDP could not be accounted for entirely by growth in labor and capital inputs.
Economist Robert Merton Solow argued that this unaccounted-for residual growth
represented technological change: Technological innovation increased the amount of
output achievable from a given quantity of labor and capital. This explanation was
not immediately accepted; many researchers attempted to explain the residual away
in terms of measurement error, inaccurate price deflation, or labor improvement.
Chapter 1 Introduction 3
FIGURE 1.1
Timeline
of Some of
the Most
Important
Technological
Innovations
in the Last
200 Years
externalities
Costs (or benefits)
that are borne
(or reaped) by
individuals
other than those
responsible
for creating
them. Thus, if a
business emits
pollutants in a
community, it
imposes a negative externality
on the community members;
if a business
builds a park in
a community, it
creates a positive externality
for community
members.
1800 –
1800—Electric battery
1804—Steam locomotive
1807—Internal combustion engine
1809—Telegraph
1817—Bicycle
1820 –
1821—Dynamo
1824—Braille writing system
1828—Hot blast furnace
1831—Electric generator
1836—Five-shot revolver
1840 –
1841—Bunsen battery (voltaic cell)
1842—Sulfuric ether-based anesthesia
1846—Hydraulic crane
1850—Petroleum refining
1856—Aniline dyes
1860 –
1862—Gatling gun
1867—Typewriter
1876—Telephone
1877—Phonograph
1878—Incandescent lightbulb
1880 –
1885—Light steel skyscrapers
1886—Internal combustion automobile
1887—Pneumatic tire
1892—Electric stove
1895—X-ray machine
1900 –
1902—Air conditioner (electric)
1903—Wright biplane
1906—Electric vacuum cleaner
1910—Electric washing machine
1914—Rocket
1920 –
1921—Insulin (extracted)
1927—Television
1928—Penicillin
1936—First programmable computer
1939—Atom fission
1940 –
1942—Aqua lung
1943—Nuclear reactor
1947—Transistor
1957—Satellite
1958—Integrated circuit
1960 –
1967—Portable handheld calculator
1969—ARPANET (precursor to Internet)
1971—Microprocessor
1973—Mobile (portable cellular) phone
1976—Supercomputer
1980 –
1981—Space shuttle (reusable)
1987—Disposable contact lenses
1989—High-definition television
1990—World Wide Web protocol
1996—Wireless Internet
2000 –
2003—Map of human genome
But in each case the additional variables were unable to eliminate
this residual growth component.
A consensus gradually emerged
that the residual did in fact capture technological change. Solow
received a Nobel Prize for his work
in 1981, and the residual became
known as the Solow Residual.4
While GDP has its shortcomings
as a measure of standard of living,
it does relate very directly to the
amount of goods consumers can
purchase. Thus, to the extent that
goods improve quality of life, we
can ascribe some beneficial impact
of technological innovation.
Sometimes technological innovation results in negative externalities.
Production technologies may create
pollution that is harmful to the
surrounding communities; agricultural and fishing technologies
can result in erosion, elimination
of natural habitats, and depletion of
ocean stocks; medical technologies
can result in unanticipated consequences such as antibiotic-resistant
strains of bacteria or moral dilemmas
regarding the use of genetic modification. However, technology is, in
its purest essence, knowledge—
knowledge to solve our problems
and pursue our goals.5 Technological innovation is thus the creation
of new knowledge that is applied
to practical problems. Sometimes
this knowledge is applied to problems hastily, without full consideration of the consequences and
alternatives, but overall it will
probably serve us better to have
more knowledge than less.
4 Chapter 1 Introduction
FIGURE 1.2
Gross
Domestic
Product per
Capita, 1989–
2016 (in Real
2010 $US
Billions)
90,000
Source: USDA Economic Research Service,
www.ers.usda.gov,
accessed April 16th,
2018.
50,000
80,000
70,000
60,000
40,000
30,000
20,000
10,000
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
98
20
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
19
19
80
–
INNOVATION BY INDUSTRY: THE IMPORTANCE OF STRATEGY
As will be shown in Chapter Two, the majority of effort and money invested in technological innovation comes from industrial firms. However, in the frenetic race to
innovate, many firms charge headlong into new product development without clear
strategies or well-developed processes for choosing and managing projects. Such firms
often initiate more projects than they can effectively support, choose projects that are
a poor fit with the firm’s resources and objectives, and suffer long development cycles
and high project failure rates as a consequence (see the accompanying Research Brief
for a recent study of the length of new product development cycles). While innovation is popularly depicted as a freewheeling process that is unconstrained by rules and
plans, study after study has revealed that successful innovators have clearly defined
innovation strategies and management processes.6
The Innovation Funnel
Most innovative ideas do not become successful new products. Many studies suggest
that only one out of several thousand ideas results in a successful new product: Many
projects do not result in technically feasible products and, of those that do, many fail
to earn a commercial return. According to a 2012 study by the Product Development
and Management Association, only about one in nine projects that are initiated is successful, and of those that make it to the point of being launched to the market, only
about half earn a profit.7 Furthermore, many ideas are sifted through and abandoned
before a project is even formally initiated. According to one study that combined data
from prior studies of innovation success rates with data on patents, venture capital
Chapter 1 Introduction 5
Research Brief
How Long Does New Product
Development Take?a
In a large-scale survey administered by the Product Development and Management Association
(PDMA), researchers examined the length of time it
took firms to develop a new product from initial concept to market introduction. The study divided new
product development projects into categories representing their degree of innovativeness: “radical”
projects, “more innovative” projects, and “incremental” projects. On average, incremental projects took
only 33 weeks from concept to market introduction.
More innovative projects took significantly longer,
clocking in at 57 weeks. The development of radical
products or technologies took the longest, averaging
82 weeks. The study also found that on average, for
more innovative and radical projects, firms reported
significantly shorter cycle times than those reported
in the previous PDMA surveys conducted in 1995
and 2004.
a
Adapted from Markham, S. K., and H. Lee, “Product Development and Management Association’s 2012 Comparative Performance Assessment Study,” Journal of Product
Innovation Management 30, no. 3 (2013): 408–29.
funding, and surveys, it takes about 3000 raw ideas to produce one significantly new
and successful commercial product.8 The pharmaceutical industry demonstrates this
well—only one out of every 5000 compounds makes it to the pharmacist’s shelf, and
only one-third of those will be successful enough to recoup their R&D costs.9 Furthermore, most studies indicate that it costs at least $1.4 billion and a decade of research to
bring a new Food and Drug Administration (FDA)–approved pharmaceutical product
to market!10 The innovation process is thus often conceived of as a funnel, with many
potential new product ideas going in the wide end, but very few making it through the
development process (see Figure 1.3).
FIGURE 1.3
The New Product Development Funnel in
Pharmaceuticals
5000
Compounds
125
Leads
Discovery & Preclinical
3–6 years
2–3 drugs tested
Clinical Trials
6–7 years
1 drug
Approval
½–2 years
Rx
6 Chapter 1 Introduction
The Strategic Management of Technological Innovation
Improving a firm’s innovation success rate requires a well-crafted strategy. A firm’s
innovation projects should align with its resources and objectives, leveraging its core
competencies and helping it achieve its strategic intent. A firm’s organizational structure and control systems should encourage the generation of innovative ideas while
also ensuring efficient implementation. A firm’s new product development process
should maximize the likelihood of projects being both technically and commercially
successful. To achieve these things, a firm needs (a) an in-depth understanding of the
dynamics of innovation, (b) a well-crafted innovation strategy, and (c) well-designed
processes for implementing the innovation strategy. We will cover each of these in turn
(see Figure 1.4).
In Part One, we will cover the foundations of technological innovation, gaining an
in-depth understanding of how and why innovation occurs in an industry, and why
some innovations rise to dominate others. First, we will look at the sources of innovation in Chapter Two. We will address questions such as: Where do great ideas come
from? How can firms harness the power of individual creativity? What role do customers, government organizations, universities, and alliance networks play in creating
innovation? In this chapter, we will first explore the role of creativity in the generation
of novel and useful ideas. We then look at various sources of innovation, including
the role of individual inventors, firms, publicly sponsored research, and collaborative
networks.
In Chapter Three, we will review models of types of innovation (such as radical
versus incremental and architectural versus modular) and patterns of innovation
(including s-curves of technology performance and diffusion, and technology cycles).
We will address questions such as: Why are some innovations much harder to create
and implement than others? Why do innovations often diffuse slowly even when they
appear to offer a great advantage? What factors influence the rate at which a technology tends to improve over time? Familiarity with these types and patterns of innovation
will help us distinguish how one project is different from another and the underlying
factors that shape the project’s likelihood of technical or commercial success.
In Chapter Four, we will turn to the particularly interesting dynamics that emerge
in industries characterized by network externalities and other sources of increasing returns that can lead to standards battles and winner-take-all markets. We will
address questions such as: Why do some industries choose a single dominant standard rather than enabling multiple standards to coexist? What makes one technological innovation rise to dominate all others, even when other seemingly superior
technologies are offered? How can a firm avoid being locked out? Is there anything
a firm can do to influence the likelihood of its technology becoming the dominant
design? When are platform ecosystems likely to displace other forms of competition
in an industry?
In Chapter Five, we will discuss the impact of entry timing, including first-mover
advantages, first-mover disadvantages, and the factors that will determine the firm’s
optimal entry strategy. This chapter will address such questions as: What are the advantages and disadvantages of being first to market, early but not first, and late? What
determines the optimal timing of entry for a new innovation? This chapter reveals a
number of consistent patterns in how timing of entry impacts innovation success, and
Chapter 1 Introduction 7
FIGURE 1.4
The Strategic Management of Technological Innovation
Part 1: Industry Dynamics of
Technological Innovation
Chapter 2
Sources of
Innovation
Chapter 3
Types and Patterns
of Innovation
Chapter 4
Standards Battles,
Modularity, and
Platform Competition
Chapter 5
Timing of Entry
Part 2: Formulating Technological
Innovation Strategy
Chapter 6
Defining the Organization’s
Strategic Direction
Chapter 7
Choosing Innovation
Projects
Chapter 8
Collaboration
Strategies
Chapter 9
Protecting Innovation
Part 3: Implementing Technological
Innovation Strategy
Chapter 10
Organizing for
Innovation
Chapter 11
Managing the New
Product Development
Process
Feedback
Chapter 12
Managing New
Product
Development Teams
Chapter 13
Crafting a
Deployment
Strategy
8 Chapter 1 Introduction
it outlines what factors will influence a firm’s optimal timing of entry, thus beginning
the transition from understanding the dynamics of technological innovation to formulating technology strategy.
In Part Two, we will turn to formulating technological innovation strategy.
Chapter Six reviews the basic strategic analysis tools managers can use to assess the
firm’s current position and define its strategic direction for the future. This chapter
will address such questions as: What are the firm’s sources of sustainable competitive
advantage? Where in the firm’s value chain do its strengths and weaknesses lie? What
are the firm’s core competencies, and how should it leverage and build upon them?
What is the firm’s strategic intent—that is, where does the firm want to be 10 years
from now? Only after the firm has thoroughly appraised where it is currently can it
formulate a coherent technological innovation strategy for the future.
In Chapter Seven, we will examine a variety of methods of choosing innovation
projects. These include quantitative methods such as discounted cash flow and options
valuation techniques, qualitative methods such as screening questions and balancing
the research and development portfolio, as well as methods that combine qualitative
and quantitative approaches such as conjoint analysis and data envelopment analysis.
Each of these methods has its advantages and disadvantages, leading many firms to
use a multiple-method approach to choosing innovation projects.
In Chapter Eight, we will examine collaboration strategies for innovation. This
chapter addresses questions such as: Should the firm partner on a particular project or
go solo? How does the firm decide which activities to do in-house and which to access
through collaborative arrangements? If the firm chooses to work with a partner, how
should the partnership be structured? How does the firm choose and monitor partners? We will begin by looking at the reasons a firm might choose to go solo versus
working with a partner. We then will look at the pros and cons of various partnering
methods, including joint ventures, alliances, licensing, outsourcing, and participating in collaborative research organizations. The chapter also reviews the factors that
should influence partner selection and monitoring.
In Chapter Nine, we will address the options the firm has for appropriating the
returns to its innovation efforts. We will look at the mechanics of patents, copyright,
trademarks, and trade secrets. We will also address such questions as: Are there ever
times when it would benefit the firm to not protect its technological innovation so
vigorously? How does a firm decide between a wholly proprietary, wholly open, or
partially open strategy for protecting its innovation? When will open strategies have
advantages over wholly proprietary strategies? This chapter examines the range of
protection options available to the firm, and the complex series of trade-offs a firm
must consider in its protection strategy.
In Part Three, we will turn to implementing the technological innovation strategy.
This begins in Chapter Ten with an examination of how the organization’s size and
structure influence its overall rate of innovativeness. The chapter addresses such questions as: Do bigger firms outperform smaller firms at innovation? How do formalization, standardization, and centralization impact the likelihood of generating innovative
ideas and the organization’s ability to implement those ideas quickly and efficiently?
Is it possible to achieve creativity and flexibility at the same time as efficiency and
reliability? How do multinational firms decide where to perform their development
Chapter 1 Introduction 9
activities? How do multinational firms coordinate their development activities toward
a common goal when the activities occur in multiple countries? This chapter examines
how organizations can balance the benefits and trade-offs of flexibility, economies of
scale, standardization, centralization, and tapping local market knowledge.
In Chapter Eleven, we will review a series of “best practices” that have been identified in managing the new product development process. This includes such questions
as: Should new product development processes be performed sequentially or in parallel? What are the advantages and disadvantages of using project champions? What
are the benefits and risks of involving customers and/or suppliers in the development
process? What tools can the firm use to improve the effectiveness and efficiency of its
new product development processes? How does the firm assess whether its new product development process is successful? This chapter provides an extensive review of
methods that have been developed to improve the management of new product development projects and to measure their performance.
Chapter Twelve builds on the previous chapter by illuminating how team composition and structure will influence project outcomes. This chapter addresses questions
such as: How big should teams be? What are the advantages and disadvantages of
choosing highly diverse team members? Do teams need to be colocated? When should
teams be full time and/or permanent? What type of team leader and management practices should be used for the team? This chapter provides detailed guidelines for constructing new product development teams that are matched to the type of new product
development project under way.
Finally, in Chapter Thirteen, we will look at innovation deployment strategies. This
chapter will address such questions as: How do we accelerate the adoption of the technological innovation? How do we decide whether to use licensing or OEM agreements? Does it make more sense to use penetration pricing or a market-skimming
price? When should we sell direct versus using intermediaries? What strategies can
the firm use to encourage distributors and complementary goods providers to support the innovation? What are the advantages and disadvantages of major marketing
methods? This chapter complements traditional marketing, distribution, and pricing
courses by looking at how a deployment strategy can be crafted that especially targets
the needs of a new technological innovation.
Summary
of
Chapter
1. Technological innovation is now often the single most important competitive
driver in many industries. Many firms receive more than one-third of their sales
and profits from products developed within the past five years.
2. The increasing importance of innovation has been driven largely by the globalization of markets and the advent of advanced technologies that enable more rapid
product design and allow shorter production runs to be economically feasible.
3. Technological innovation has a number of important effects on society, including fostering increased GDP, enabling greater communication and mobility, and
improving medical treatments.
10 Chapter 1 Introduction
4. Technological innovation may also pose some negative externalities, including
pollution, resource depletion, and other unintended consequences of technological
change.
5. While government plays a significant role in innovation, industry provides the
majority of R&D funds that are ultimately applied to technological innovation.
6. Successful innovation requires an in-depth understanding of the dynamics of
innovation, a well-crafted innovation strategy, and well-developed processes for
implementing the innovation strategy.
Discussion
Questions
1. Why is innovation so important for firms to compete in many industries?
2. What are some advantages and disadvantages of technological innovation?
3. Why do you think so many innovation projects fail to generate an economic return?
Suggested
Further
Reading
Classics
Arrow, K. J., “Economic welfare and the allocation of resources for inventions,” in The
Rate and Direction of Inventive Activity: Economic and Social Factors, ed. R. Nelson
(Princeton, NJ: Princeton University Press, 1962), pp. 609–25.
Baumol, W. J., The Free Market Innovation Machine: Analyzing the Growth Miracle
of Capitalism (Princeton, NJ: Princeton University Press, 2002).
Mansfield, E., “Contributions of R and D to economic growth in the United States,”
Science CLXXV (1972), pp. 477–86.
Schumpeter, J. A., The Theory of Economic Development (1911; English translation,
Cambridge, MA: Harvard University Press, 1936).
Recent Work
Ahlstrom, D., “Innovation and Growth: How Business Contributes to Society,”
Academy of Management Perspectives (August 2010): 10–23.
Lichtenberg, F. R., “Pharmaceutical Innovation and Longevity Growth in 30 Developing and High-Income Countries, 2000–2009,” Health Policy and Technology
3 (2014):36–58.
“The 25 Best Inventions of 2017,” Time (December 1, 2017).
Schilling, M. A., “Towards Dynamic Efficiency: Innovation and Its Implications for
Antitrust,” Antitrust Bulletin 60, no. 3 (2015): 191–207.
Endnotes
1. J. P. Womack, D. T. Jones, and D. Roos, The Machine That Changed the World (New York:
Rawson Associates, 1990).
2. W. Qualls, R. W. Olshavsky, and R. E. Michaels, “Shortening of the PLC—An Empirical Test,”
Journal of Marketing 45 (1981), pp. 76–80.
3. M. A. Schilling and C. E. Vasco, “Product and Process Technological Change and the Adoption of
Modular Organizational Forms,” in Winning Strategies in a Deconstructing World, eds. R. Bresser,
M. Hitt, R. Nixon, and D. Heuskel (Sussex, England: John Wiley & Sons, 2000), pp. 25–50.
Chapter 1 Introduction 11
4. N. Crafts, “The First Industrial Revolution: A Guided Tour for Growth Economists,” The
American Economic Review 86, no. 2 (1996), pp. 197–202; R. Solow, “Technical Change and
the Aggregate Production Function,” Review of Economics and Statistics 39 (1957), pp. 312–20;
and N. E. Terleckyj, “What Do R&D Numbers Tell Us about Technological Change?” American
Economic Association 70, no. 2 (1980), pp. 55–61.
5. H. A. Simon, “Technology and Environment,” Management Science 19 (1973), pp. 1110–21.
6. S. Brown and K. Eisenhardt, “The Art of Continuous Change: Linking Complexity Theory
and Time-Paced Evolution in Relentlessly Shifting Organizations,” Administrative Science
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