Funda Class 2 Flashcards
What is a technological regime?
A technological regime is defined by the specific combination of four factors:
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Technological Opportunities: The likelihood of innovating for a given investment. High opportunities provide incentives for innovation, while low opportunities limit it.
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Appropriability of Innovations: The ability to protect innovations from imitation and profit from them. High appropriability incentivizes R&D spending but can reduce knowledge diffusion.
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Cumulativeness of Technical Advances: The degree to which current knowledge builds on past innovations. High cumulativeness leads to continuous improvements and increasing returns.
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Properties of the Knowledge Base: The nature of knowledge, which can be generic (broad, related to basic science) or specific (specialized, related to applied science
What are the two main Schumpeterian patterns of innovation?
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Schumpeter Mark I (Widening): Characterized by “creative destruction,” where new firms enter the market with new ideas and innovations, challenging established firms. It is associated with a turbulent population of innovators.
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Schumpeter Mark II (Deepening): Characterized by “creative accumulation,” where large, established firms dominate innovation by building on their existing knowledge and capabilities. It is associated with a more stable and concentrated population of innovators
How do technological opportunities influence innovation patterns?
High technological opportunities tend to favor the entry of new innovators by increasing the expected returns of R&D.
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High opportunities can reduce concentration by enabling new firms to enter, unless coupled with high appropriability and cumulativeness, which may increase concentration.
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Higher opportunities are also associated with less stable hierarchies of innovators.
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Conversely, low technological opportunities limit innovative entry
How does appropriability of innovations influence innovation patterns?
High appropriability provides incentives for individual firms to increase R&D spending.
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It can lead to a higher level of concentration of innovative activities by limiting knowledge spillovers.
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It contributes to stability in the ranking of innovative firms, as successful innovators can maintain their positions.
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Low appropriability can lead to a wider diffusion of knowledge and a larger population of innovators
How does cumulativeness of technical advances influence innovation patterns?
High cumulativeness means that current knowledge and innovation builds upon past efforts.
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It can result in a higher concentration of innovative activities as established firms build on existing capabilities.
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It also contributes to stability in the hierarchy of innovators.
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Low cumulativeness facilitates entry, as new innovators are not at a disadvantage compared to incumbents
How does cumulativeness of technical advances influence innovation patterns?
High cumulativeness means that current knowledge and innovation builds upon past efforts.
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It can result in a higher concentration of innovative activities as established firms build on existing capabilities.
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It also contributes to stability in the hierarchy of innovators.
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Low cumulativeness facilitates entry, as new innovators are not at a disadvantage compared to incumbents
How does the nature of the knowledge base influence innovation patterns?
Generic Knowledge (related to basic sciences):
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Negatively related to entry because firms need absorptive capacities to integrate and use this knowledge.
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May increase concentration due to the need for absorptive capabilities which favors existing firms.
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Associated with a “deepening” (Schumpeter Mark II) pattern of innovation.
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Specific Knowledge (related to applied sciences):
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Positively related to entry because new innovators can profit from it.
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Has a negative effect on the level of innovative concentration because it is accessible to new and established firms.
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Associated with a “widening” (Schumpeter Mark I) pattern of innovation.
What is the relationship between technological regimes and Schumpeterian patterns of innovation?
Schumpeter Mark I (Widening) Pattern: Associated with high technological opportunities, low appropriability, low cumulativeness, and a limited role of generic knowledge. It is characterized by a large and turbulent population of innovators, high rates of entry and high instability in the hierarchy of innovators.
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Schumpeter Mark II (Deepening) Pattern: Associated with low opportunity conditions, high appropriability, high cumulativeness, and a generic knowledge base. It is characterized by a concentrated and stable population of innovators, low rates of entry and stability in the hierarchy of innovators. It may also occur with high opportunity when coupled with high appropriability
What empirical measures are used to study Schumpeterian patterns of innovation?
ENTRY: Percentage of patent applications by new firms in a given period.
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STABILITY: Stability of the hierarchy of innovating firms, measured by the Spearman rank correlation coefficient.
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C4: Concentration ratio of the top four patenting firms.
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SCHUMP: Synthetic indicator of the Schumpeterian pattern of innovation (Mark I or Mark II) obtained through principal component analysis of ENTRY, STABILITY and C4
What are the main empirical findings from the study?
Higher technological opportunities increase entry and reduce stability.
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Higher appropriability and cumulativeness reduce entry and increase stability and concentration.
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A generic knowledge base (related to basic sciences) favors the Schumpeter Mark II pattern, while specific knowledge (related to applied sciences) favors the Schumpeter Mark I pattern.
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Country-specific effects influence the patterns of innovation with Italy and the UK having more turbulent and less stable innovation than Germany
Variables used by Pavitt
*Type of innovations
*Sources of innovation
*Net generation of technology or net use of technology
*Factors affecting competitiveness
*Appropriability mechanisms of innovation
*Size of firms
*Vertical integration, diversification and specialization of firms
