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Lecture 8

Lecture 8 March 13:20.doc

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Political Science

Table of contents1What is innovation2Linear model of technological change3Productcycle theory4Extensions and critique5Interactive model of technological change6Longwave theory7Foundations of regulation theory8Fordist accumulation and crisis9Toward postFordismT1What is innovationWInnovations are new combinations that compete successfully against older combinations Schumpeter 1911Distinction inventions vs innovations inventionsmight not become successful in the market If they enter the market they are called innovations Can be products processes organizational processes ex just in time process in the automobile industrybuilt upon strict hierarchies where automobile industry controlled their suppliers this has changed a lot Different types of power relations now sTypes of combinations productprocessorganizational market innovations TRadical vs incremental innovations Radical innovations set new standards Incremental innovationssmall changes that result from learning processes and interactions with customers Some views say the radical innovations are most important others say incremental innovations keep firms alive and make them competitive over the longterm Compare a certain automobile when its first introduced to the market and 5 years later and there are hardly any of the same products in that car pSchumpeters notion of the entrepreneurSHeshe is not necessarily the owner of a firm BUT the person who introduces new combinations to the market cSemiconductor industryvery expensive to innovate In the pharmaceutical industry there are hundreds of products that wont make the market tWhy do people become entrepreneursleave everyday routines WPotential monopoly rent vs uncertaintyPFollowers also receive a rent BUT it declines over time FIf they are successful there is a huge monopoly rent They can introduce it at a very high price and have a high profit If they follow the crowd they could lose their competitiveness The followers still benefit from the introduction of a new technology but the monopoly rent for example Apple Ipads goes to someone else and their rent declinesa2Linear model of technological changeLTraditional view innovations result from a discrete sequence of stages Basicapplied researchProductprocess developmentProductionMarketingdiffusionBIn this model new products enter markets in their final form The model does not measure incremental innovations iOrganization of research differsOSmall firms often no research laboratorydevelopment focus
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