Shane, S. (2001, Feb 2001). Technological opportunities and new firm creation

Question 1

What is research on the creation of new high-technology companies usually focused on?

Answer 1

• Industry level factors such as market structure and technology regime
• Individual-level factors such as the work experience of entrepreneurs

Question 2

What does this paper study? (Shane, S. (2001, Feb 2001)

Answer 2

The effect of technological opportunities on firm formation

Question 3

The probability that an invention will be commercialized through firm innovation is influenced by which factors?

Answer 3

• Importance
• Radicalness
• Patente scope

Question 4

What do entrepreneurs use technology for?

Answer 4

Bring new products, processes, and ways of organizing into existence through the creation of new firms.

Question 5

What are two categories of explanation for the creation of new technoloy firms?

Answer 5

1. Firm formation depends on industry level factors, such as market structure or technology regime
2. Firm formation depends on individual-level factors, such as the psychology of entrepreneur or their career experience

Question 6

What are 3 categories of factors that influence the decision to exploit an invention through firm creation?

Answer 6

1. Nature of the individual making the decision
2. Nature of the industry in which the opportunity would be exploited
3. Nature of the opportunity itself (importance, radicalness, patent scope)

Question 7

What is importance regarding the context of this article?

Answer 7

Importance measures the magnitude of the economic value of an invention

Importance increases the likelihood that a new firm will be founded to commercialize it because more important inventions have higher economic value and thus provide a larger potential payoff.

Question 8

What is radicalness regarding the context of this article?

Answer 8

Radicalness measures the degree to which an invention, however large or small in economic value, differs from previous inventions in the field.

Question 9

What is incremental improvement?

Answer 9

Refining and improving an existing echnology

-> reinforcing activities of established firms

Question 10

Radical improvement

Answer 10

Introducing a new approach to technical practice

-> undermines established activities

Question 11

Why are independent entrepreneurs more likely to introduce radical technological developments than managers?

Answer 11

• Radicxal technologies destory the capabilities of existing firms
• Established firms have less incentive to invest in the development of technologies that undermine the value of the assets they already possess
• Firms develop routines for filtering information based on what is likely to be valuable for what they are currently doing

Question 12

What is a patent scope regarding the context of this article?

Answer 12

Technological opportunities with broader intellectual property protection are more likely to be commercialized through firm creation.