funda 4 Flashcards
session 4 (18 cards)
What are the main types of learning in the economics of innovation?
Learning by doing, learning by using, learning by searching, learning by interacting, and learning by monitoring
Describe “learning by doing” and give an example
Learning by doing refers to productivity gains from on-the-job experience as a firm produces more of a given item, also known as the Horndahl effect. The aircraft industry is a classic example
Explain “learning by using.”
Learning by using occurs when users learn how to use new products and equipment, which is particularly relevant in complex systems and the diffusion of innovations. An example is the learning by users of machinery in various downstream industries
What is the difference between exploration and exploitation in organizational learning?
Exploration is the search for completely new knowledge and technologies, while exploitation is cumulatively building upon what is already known. There is a tension between the two and a balance must be found
What are the characteristics of tacit knowledge?
Tacit knowledge is based on experience, results from personal interactions, is contextual, and localized
What are the characteristics of codified knowledge?
Codified knowledge has increased with information technology, characterizes the diffusion of new technologies, and is present in product design due to ICT
What is absorptive capability?
Absorptive capability is a firm’s ability to identify, select, and absorb external knowledge from scientific and technological sources that is important for innovation. Firms do R&D to build this capacity
What is an architectural innovation?
An architectural innovation involves changes in the architecture of a system product. It is often not easily recognized as superior by established firms, which can lead to new firms taking over
Define capabilities in the context of a firm.
Capabilities are the purposive combinations of resources that enable an organization to perform functional activities and deal with change. They represent how a firm uses its inputs not just the inputs themselves. They are based on knowledge and routines that evolve through adaptation and search.
What is the relationship between routines and capabilities?
Routines are the building blocks of capabilities. They are the ways things are done in an organization without deliberation or conscious choice.
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Capabilities are built from these routines and have intentionality, meaning they are aimed towards specific outcomes. They are a set of skills, routines and complementary assets, partly tacit, based on procedural knowledge linked to a specific application domain and not easily transferable among firms
What are dynamic capabilities?
Dynamic capabilities are a firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments. They allow firms to adapt their skills, resources, and functions to new environments and competition. Dynamic capabilities involve three basic processes:
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Sensing: Spotting and identifying opportunities.
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Seizing: Investing in R&D and competence building to capture value from opportunities.
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Transforming: Recombining and changing the organization to adapt to new environments and maintain competitiveness
What is a competence-destroying technological change?
A competence-destroying technological change occurs when radically new technologies destroy existing competences tied to the old technologies. This can lead to a major entry of new firms
This type of change requires firms to develop entirely new skills and knowledge to compete, and can lead to a major entry of new firms and a shake-out in the industry
What is a disruptive innovation?
A disruptive innovation initially underperforms existing products in mainstream markets but has features appealing to a small niche, and over time, it improves to capture mainstream markets
How might established companies react to disruptive innovations?
Established companies may react to disruptive innovations in several ways:
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Focus on existing distinctive competences: They may continue to focus on their existing strengths and customer base, ignoring the threat from disruptive innovations.
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Attack the new entrant: They may try to compete directly with the new entrant in the new market.
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Innovate in the same way: They may try to improve their existing products, not recognizing the value in the disruptive innovation.
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Innovate in a different way: They may introduce a completely new product or service that competes with the disruptive innovation using an alternative approach, like Swatch did when responding to Japanese quartz watches
Capabilities
Edith penrose view
Resourse based view
evolutionary view
What is Edith Penrose’s definition of firm capabilities in her 1959 book The Theory of the Growth of the Firm?
Penrose sees firms as a set of intangible assets and productive resources.
Capabilities arise from the unique combination of these resources.
Firms use their capabilities to organize, deploy, and create value from resources like knowledge, skills, and expertise.
Example: A firm’s capabilities are how it uses its resources to innovate, produce, and deliver products.
How does the Resource-Based View (RBV) define capabilities in contrast to resources?
Resources are the inputs that firms use (e.g., capital, equipment, talent).
Capabilities are how firms use and organize these resources to gain a competitive advantage.
Resources are what firms own or acquire, while capabilities are what firms do with these resources to create value.
Example: A tech firm’s resources might include skilled employees and cutting-edge technology, while its capabilities lie in using these resources to innovate faster than competitors.
What is the evolutionary view of firm capabilities according to Nelson and Winter (1982)?
Firms are seen as learning organizations that develop unique, idiosyncratic capabilities over time.
Capabilities emerge from organizational routines, which are often tacit and hard to codify.
Firms evolve through adaptation to the environment and search for new ways to solve problems and innovate.
Example: A smartphone manufacturer adapts its product features over time based on consumer feedback and market trends.
