ECON 1 Lecture Notes - Lecture 14: Joseph Schumpeter, Centralisation, Fixed Cost
Document Summary
In this ch: focus on structural dimensions such as formalisation, standardisation, and centralisation: some structures may be better for encouraging creativity, leading to idea generation, other structures may be better suited for efficient production of new products. Spending more on r&d in absolute sense may get better and more efficient over time: by reaping economies of scale and learning curve advantages in r&d, e. g. Strategic commitments to customers and suppliers can tie the firm to its existing businesses and technologies, making it more difficult to respond to technological change. Icarus paradox a firm"s prior success in the market can hinder its ability to respond to new technological generations. Disadvantages of a large firm advantages of a small firm. Structural dimensions of the firm: 3 key structural dimensions: 1) centralisation; 2) formalisation and 3) standardisation. Improves the coherence of the firm"s new product development efforts: avoids the possibility that valuable new technologies are underutilised throughout the organisation.
