Module 4 Flashcards
(35 cards)
Why are outcomes of innovation processes hard to measure?
Due to randomness and difficulty in attributing outcomes to individuals.
Why is equal treatment in R&D teams potentially demotivating?
It ignores productivity differences and may lead top performers to leave.
Outcomes of innovation processes …
− are ____ to measure
− have a strong ____ element
− are often difficult to ____ to individuals and their contributions
hard
random
attribute
What did the PatVal EU Survey (2004) find about patent value distribution?
50% of value comes from 3% of patents; 80% from 10%.
What is the implication of highly skewed patent value?
Firms must identify and retain key inventors.
What was the most valued incentive among inventors based on an empirical study?
Inventor’s bonuses (71%)
Which incentive had the highest gap between importance and realization?
Own research opportunities (77% said realization needs improvement)
What incentive was least important but highly lacking in realization?
Recognition (13% said important; 69% said improvement needed).
Three most important incentives?
- Inventor’s boni
- Professional development
- Seminars, trade shows
According to economists, what drives innovation?
Cost-benefit analysis—those with most to gain or lowest costs innovate.
What does non-patentability (e.g., in Human Genome Project) imply for incentives?
It reduces private investment incentives in non-protectable discoveries.
What are the 4 organizational incentives?
- Market Structure
- Demand-Side Effects
- Technological Opportunities
- Externalities (Spillovers)
Schumpeter’s classical question?
What market structure is most conducive to innovation?
What market type does Schumpeter I (1912, Theory of Economic Development) associate with innovation?
→ fragmented markets
What about Schumpeter II (1942, Capitalism, Socialism, Democracy)?
→ markets with (some) monopoly power
What is the “replacement effect” for monopolists?
Innovation may cannibalize existing profits, lowering their incentive.
Who has the highest incentive to innovate according to theory?
social planner, not a monopolist.
What is a patent race?
Competitive race to develop and patent new tech, possibly causing overinvestment.
Competition for a technology or a patent can provide incentives to invest in innovation, as well. The problem?
→ might lead to overinvestment in R&D, resulting in duplication and a waste of valuable resources
What are the 2 demand side effects?
- Market attractiveness
- Form of demand function
Market ____ (total demand) and market ____ influence innovative activity positively.
size
growth
Analysis of time-series data showed that an ____ in demand for a good is followed by an ____ in patenting activity
increase x2
How does price elasticity affect innovation types?
High elasticity favors process innovation over product innovation.
What drives technological opportunity in the long run?
Basic research by universities and institutions.
