An introduction to Innovation Studies and Technological Change

Anthony BartzokasUNU - MERIT

4 September 2006

Basic fact 1: Technology and Welfare

Basic fact 2: R&D and Economic Growth

Basic fact 3: Concentration of R&D activities (global 1000 leading R&D investors)

An overview: research on technology and innovation

• History of ideas: technology and theorizing [progress, power, ethics, man vs. nature]

• Technology per se was seen as given-like tastes• Schumpeter- innovation dynamics key to capitalism-• Adoption – migrant from sociology• Induce innovation-innovation as economic activity• Human capital-the dynamics of learning and accumulation of

knowledge• Knowledge as a public good• Innovation as an economic activity• Technology and catching up• Innovation and dual structures• Social innovation

The Policy relevance of these research programmes

• The development of scientific communities

• Emphasis on basic research in the US

• OECD and Innovation Policy processes

• Technological Development in Developing Countries

• Globalisation and diverging growth trajectories

Breaking down innovation

Usually thought of as composing three or four activities, all of which are required to achieve productivity growth: – Invention – the conception of a new idea; prototypes – Development - reducing the new idea to practice – Commercialization – bringing it to the marketplace – Diffusion – the result of adoption by consumers Diffusion can be very slow The importance of some innovations initially greatly underestimated

A broad definition of Innovation

Innovation is the creation and use of new products and processes, including:

• use of new equipment or materials• use of new markets or sources of supply• new organizational forms• creation of completely new products• product modifications and restyling• selling in new markets or new segments

N. Rosenberg ‘Transportation in boxes is one of the major innovations for the global economy’

Sources of Data

• OECD• NSF• Eurostat• European Report on S&T indicators• CIS and similar surveys• UNESCO report• World Bank Innovation Database• Firm level R&D data [IPTS, 700 larger

firms]• Several patents data bases• Scientific publications• Country level Technology and Innovation

statistics• MNC R&D data (UNCTAD and national

surveys)• Corporate assets: several publications

drawing on annual reports• Innovation and technological capabilities

indexes (RAND, Porter, ArCo, UNIDO)• Knowledge flows studies

• Technology spillovers data (variety of methodologies)

• Measurement of technological assets in regional clusters

• Agriculture R&D (IFPR)• Research and technology collaboration

data• Technology Diffusion (GPT) data• Technology transfer payments data• Business Environment Data (World Bank)• Technological infrastructure data (various

sources, especially for ICT)• Scientific publications data• ECLAC data base for the world economy• Several sources of information on the

quality of education• Case studies and ad hoc reports with

survey findings on a wide range of topics

A footnote: take the time to visit some of these sources on-line

100 x ki

kik

i PRODANBERD

=RDIP

For each country (or country group), this indicator expresses the R&D expenditures by sector relative to the production.

Description:

Where: ANBERD and PROD are the business enterprise Research and Development and production at current prices, respectively. For zones, data have been converted to common unit using the Purchasing Power Paritiesfor total GDP.

Formula:

R&D INTENSITY using PRODUCTIONIndicator:

An example

STAN Indicators Database 2005

A map of innovation inputs and outputs

Market structure and industry;Appropriability environment

Demand pull(taste, market size)Tech. Opportunity

(science base)R&D and other

Innovation investments

Firm size and Market share, Diversification,And experience

KnowledgeFirm-level capital createdBy innovation investment

Innovation output

Patents,Other IPR

Diffusion process

Outcomes: Productivity, Profitability,

And Economic Growth

Innovative sales

Physical capital Worker skills

CUSTOMERS INDUSTRY LINKAGE OTHER KNOWLEDGE SOURCES

Policy and Incentive Systems Financial and Funding SystemsLegal Frameworks Organisational Structures

INSTITUTIONAL CONTEXT

Foreign Technology

Sources

Metrology and Standards

Knowledge Linkage, Transfer andDevelopment Organisations

Export

Domestic

Large TNC

Large Domestic

SME

Start-Ups

ResearchInstitutes

Universities

VocationalTraining

The Innovation Development System: A Framework

Evolution of Industry Structure over the Life Cycle

INTRODUCTION GROWTH MATURITY DECLINE DEMAND Affluent buyers Increasing Mass market Knowledgeable,

penetration replacement customersdemand

TECHNOLOGY Competing Standardization Incremental Well-diffused technologies process innovation innovation technology

PRODUCTS Wide variety, Quality improves Standard- Comm-poor quality Dominant design ization oditization

MANUFACT- Short-runs, skill Capacity shortage, Deskilling Overcapacity URING intensive mass-production Overcapacity

TRADE -----Production shifts from advanced to developing countries-----

COMPETITION Few firms Entry, merger Shakeout & Price wars,& exit consolidation exit

KEY Product innovation Process techno- Cost efficiency Overhead red-SUCCESS Establish credible logy. Design for High quality uction, ration-FACTORS image for firm & mfg. Access to Fast product alization, low

product. Dist. Brands. development cost sourcing

Beyond simple metaphors…Research Programmes on Technology and Innovation

Points of Departure– From markets to incentives for rational and identical agents and

then to innovation– From agents (firms with asymmetrical capabilities) to markets

and innovation– From structural incentives (production system characteristics) to

incentives and innovation dynamics

• Additional Questions:– What is the driving force behind asymmetrical capabilities (codified

knowledge, corporate structures, core competences, networking…)– Stylized facts and the level of theorizing [general trends and valid

metaphors: product cycle, waves, critical technologies, paradigms etc.)

Critical thinking is needed…Myths and their implications

(i) Technology is (just) Applied Science � Set up R&D Institutes

(ii) Technological Self-reliance is Key, period � Indigenization as end in itself

(iii) More Technology is always Good � Focus on R&D Spending, not Content or Value Added

(iv) High tech is the Best technology � Expensive, high-tech Champions, State or Private

(v) Technology is well understood and easily transferred � Focus on Regulation

(vi) R&D is Key, and led by Research � Focus on Research, not Development

UNU –MERITPhD Programme

INNOVATION STUDIES AND DEVELOPMENT