8 - innovation, information and networked economy Flashcards
what is a challenge to public policy?
making the mots of human creativity and inventiveness
what is the process of innovation influenced by?
state of knowledge, individual creativity, public policy, economic institutions and social norms
which make up the innovation system
when institutions of the capitalist economy work properly what should happen?
successful innovators gain innovation tents, eventually competed away by imitators
what does economies of scale and means of delaying imitation mean?
that knowledge producing firms are at least temporary monopolists and can profit form winner take all competition by setting prices about marginal costs of production
what is the patent system?
means of delaying imitation
gives companies a time limited monopoly and allows company to charge a higher price
why might companies invest in risky research and development?
due to patented research you can charge a higher price and therefore incentivised due to high profits
how is innovation a system?
it connects networks of users, private firms, indidivudals and government bodies
how is innovation a process?
it is a fundemantcal source of change in our life that itself is constantly undergoing change
what is meant by invention?
the development of new methods of production and new products
what is diffusion?
the spread of the invention throughout the economy
what is process innovation?§
produce a good or service at a lower cost than its competitors
how you get things done
what is product innovation?
produce a new good at a cost that will attract buyers
doing something new
what are the terms that are used to mean inevntion?
radical and incremental innovation
what is radical innovation?
blows up the existing systems or process and replaces t with something entirely new
e.g. walk man vs iPods
what is incremental innovations/
series of small improvements made
focuses on improving an existing products development
e.g. the improvement on the filaments in a lightbulb such as colours
why might companies way to copy others?
due to the prospect of innovation rents
why might late comers also be unwillingly be pushed towards innovation?
if they donate adopt then usually will go bankrupt as more people will move to companies in which have the innovation
when did the process of capitalist innovation start?
england 1750 with key technologies introduced in textiles, energy and transportation
what are general purpose technologies?
important technologies such as engines, electricity and transportation
explains why innovation didn’t end with the industrial revolution
what are some of the players in the innovation system?
givenremnt, educational institutions and firms
what is the difference between codified and tactic knowledge?
C - written down, coded in some way such as writing a recipe for a cake
T - something you can’t write down,
what is silicone valley famous for?
being a place with high growth in computer innovation
also become associated with an innovation system
what is venture capital?
financing that investors provide to startup companies that are believed to have long term growth potential
what are examples in which different types of innovation systems are used?
US - radical, labour can move easily between firms
Germany - Incremental, ties of workers to firms are stronger, finance comes from retaind profits and banks rather than venture capital
what does the silicon valley innovation system consist of?
entrpuenial innovation firms: firms specialising in producing new methods or startups
unis: Uni of Cal and Stanford work closely with firms to commercialise innovation
Gov:
entrepeneurs
industrial research centres: uni, gov and private
venture capital funding
relationships among firms
how can innovation contribute to rising living standards?
expanding set of products available to consumers and reducing prices of existing products
the successful capitalist innovation systems in SV and germany have what in common?
- innovation system not based on individual creativity (firms relies on relationships among all actors employees, owners, govs and sources of finance)
- invisible hand and a guiding hand ( combines profit seeking competition among ind and frisk with gov intervention)
how does germany show the essential role of the governments in innovation systems?
government subsided apprenticeship system, reduces training costs
what are three aspects of invention and diffusion that make innovation process a challenge to public ploy?
- external effects and the problem of coordination among innovators
- public goods
- economies of scale and winner take all competition
(all among sources of market failure also, simply letting market competition regulate the process of innovation will not generally result in an efficient outcome)
