Willingness to share information when firms interact frequently, they can develop trust and reciprocity norms Agglomeration economies – the benefits firms reap by locating in close geographical proximity to each other. Downsides to geographic clustering: Competition reduces pricing power with suppliers and buyers Increases likelihood of a firm's competitors gaining access to the firm’s proprietary knowledge Clustering can potentially lead to traffic congestion, inordinately high housing costs, and higher concentrations of pollutions Knowledge brokers – individuals or organizations that transfer information from one domain to another in which it can be usefully applied. They put existing information to use in new and profitable ways The degree to which innovative activities are geographically clustered depends on: The nature of the technology, such as its underlying knowledge base or the degree to which its communication requires close and frequent interaction and to which patents and copyrights can protect it
Industry characteristics such as the degree of market concentration or stage of the industry life cycle, transportation costs, and the availability of supplier and distributor markets The cultural context of technology such as population density of labor or customers, infrastructure development or national differences in the way technology development is funded or protected Technological spillovers – a positive externality from R&D resulting from the spread of knowledge across organizational or regional boundaries Chapter 3: Types and Patterns of Innovation Product Innovation (the product) vs. Process innovation (efficiency and effectiveness of production) Radical innovation – an innovation that is very new and different from prior solutions Incremental innovation – An innovation that makes a relatively minor change from (or adjustment to) existing practices Competence-enhancing (-destroying) innovation – An innovation that builds on (renders obsolete) existing knowledge and skills. Whether an innovation is competence enhancing or competence destroying depends on whose perspective is being taken. An innovation can be competence enhancing to one firm and competence destroying to another. Component (or modular) innovation – An innovation to one or more components that does not significantly affect the overall configuration of the system Architectural innovation – An innovation that changes the overall design of a system or the way its components interact with each other S- Curves in Technological Improvement performance improvement over lifetime. Initially, slow improvement, then accelerated improvement then diminishing improvement 1. Early stages – slow because the fundamentals of the technology are poorly understood.
- Spring '14