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Introduction to Innovation and Economic Organization. Rögnvaldur J. Sæmundsson ABMS January 16 2007. Overview. Who am I? Defining the problem/topic The innovation process Economic organization Basic structure of the current model. Rögnvaldur J. Sæmundsson.
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Introduction to Innovation and Economic Organization Rögnvaldur J. Sæmundsson ABMS January 16 2007
Overview • Who am I? • Defining the problem/topic • The innovation process • Economic organization • Basic structure of the current model
Rögnvaldur J. Sæmundsson • Electrical Engineering from UI. • Sleep Research Unit at Landspitalinn. • MS in Engineering from UI. • Director of Software Dev at Flaga. • PhD in Technology Man. from CTH. • Associate prof. RU School of Business. • Research on New Technology-Based Firms (NTBFs) and the growth of knowledge. • Teaching entrepreneurship, strategy&innovation, and ABMS.
Changes in specialization Source: Soubbotina (2004)
Summary of the problem/topic ∆Knowledge ∆Resources Innovation ∆Organization ∆Wants
Definition of innovation • New products or services • New ways of developing, producing, distributing, marketing or selling products or services
Science Technology Products The linear model Research Development Production Marketing
The chain-linked model Source: Kline and Rosenberg 1986
Characteristics of innovation processes • Interaction of markets and technology • Complex costs and benefits • Different degrees of novelty • Uncertain outcomes
Diffusion Market penetration Productivity of R&D $ Time
Innovation in an industry Source: Utterback 1994
Basic objective of organization Coordinate economic activity - Production and distribution - Exchange Enable specialization
Basic governance structures • Markets • Hierarchy (firms) • Hybrids (long-term contracting)
Distinguishing attributes Adapted from Williamson (1991)
Suitability of governance structure Market Hybrid Hierarchy Governance Costs 0 Asset Specificity Adapted from Williamson (1991)
Product market Factor market Firm Firm Individuals Individuals Individuals Individuals Individuals Individuals Basic modules Industry External knowledge generation
Point to remember “This is the course in advanced physics. That means the instructor finds the subject confusing. If he didn’t, the course would be called elementary physics.” Luis Alvarez, Nobel laureate, 1964