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International Business > Week 3 > Flashcards

Week 3 Flashcards

1
Q

Explain the difference between innovation and R&D.

A

R&D is the creation of new inventions and ideas
Innovation is the implementation of these inventions and ideas

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2
Q

Why are innovation and R&D so important?

A

Primary means through which firms establish, sustain, and enhance long run competitiveness and profitability

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3
Q

What is basic R&D?

A

Fundamental research with unclear objectives

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4
Q

What is problem solving R&D?

A

Research focused on producing innovations with particular applications for solving specific problems.

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5
Q

What is product/service improving R&D?

A

Intended to lead to incremental improvements in product/service

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6
Q

What is efficiency improving R&D?

A

Search for improvements in manufacturing/organisational process efficiency.

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7
Q

What is reverse R&D?

A

Strategic learning from other firms.
I.e. information and knowledge acquisition, reverse engineering, industrial espionage

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8
Q

What are alternative approaches to R&D?

A

Doing, using interacting

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9
Q

In what other areas could a firm innovate?

A

Managerial innovation - improve info flows and speed of decision making
Marketing innovation - new methods to reach customers

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10
Q

Why are technology intensive sectors dominated by large firms?

A

R&D and innovation are capital intensive and require substantial sunk costs. Scale economies are essential to reduce unit costs.

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11
Q

What is technological leapfrogging?

A

Firms that currently dominate markets may be sluggish and less likely to innovate. Complacent firms can be leapfrogged by rival firms

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12
Q

How is successful R&D and innovation incentivised.

A

Legal protection over tangible knowledge is extended which grants firms temporary monopolies

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13
Q

Why is innovation and R&D good?

A

Knowledge is a public good. New know-how and tech permanently improve product/process efficiency.

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14
Q

What gives firms long run competitiveness and profitability?

A

IPRs granting firms temporary monopolies in products and processes

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15
Q

What can we expect as IPR protection nears expiry

A

We can expect rivals to imitate either legally or illegally

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16
Q

What are patents?

A

Patents protect clearly definable and distinct product and process innovations.

17
Q

What is copyright?

A

Protects written, performance and recorded intellectual material. Includes blueprints

18
Q

What are trade marks?

A

Protect brand names etc

19
Q

Hymer observed that innovation was strongly related to the characteristics of what

A

Home country market

20
Q

What is the pattern of innovative activity and R&D?

A

Changes rapidly as an increasing number of countries develop technology capacity

21
Q

What does SPF identify as the three key factors for where innovation takes place?

A

National innovation infrastructure
Cluster specific environment
Quality of linkages

22
Q

How does national innovative infrastructure support national innovation?

A

Well it’s the country’s level of technological sophistication

It’s the government’s policies towards innovation activity (taxes, patent regime, openness to trade)

And the human and financial resources devoted to technological advance.

23
Q

How do cluster-specific environments support national innovation?

A

A disproportionate share of innovations are located in clusters. This is the concentration of inter-connected firms and institutions.
Therefore there’s high quality specialised inputs
A setting encouraging investment and rivalry

24
Q

How to the quality of linkages support national investment?

A

The strength of linkages between innovation infrastructure and clusters.

25
Q

How does the national innovation environment relate to patents.

A

SPF find that 99% of variation in patent output is explained by the national innovation environment

26
Q

What global trends have we been seeing in R&D and innovation?

A

New innovative activity has been occurring outside of OECD. Countries have been upgrading their national innovative capacity and a large increase in patent rates has followed

27
Q

What do SPF argue is important in choosing locations for R&D?

A

Have a presence in countries whose innovation environments are most favourable.
You do not want intra-cluster knowledge spillovers though

28
Q

What else is important to consider with R&D other than location?

A

Area of R&D - computers, measurement, comms etc

29
Q

What does it imply that innovation and R&D are changing locations?

A

Firms need to be increasingly aware of global developments. This will impact a firm’s future competitive advantage

30
Q

What does it mean that we are getting so many more BRIC graduates?

A

Increase in size and quality of global talent pool.
Still issues with university quality and the capacity of their economy to absorb graduates.

31
Q

What does more BRIC students in UK mean for UK economy?

A

UK firms get additional sources of talent

32
Q

What is Posner’s technology gap model?
What’s it about?

A

About innovation, monopolies and imitation.

33
Q

Outline how posners technology gap model works

A

Innovation creates a temporary technology gap which generates monopoly profits for the firm. Imitation by rivals erodes this competitive advantage and the market becomes perfectly competitive again

34
Q

What is the Vernon Product Cycle?
Who’s behaviour does it capture?

A

Extends technology gap approach to explain FDI behaviour of US MNEs in 1950s.

35
Q

What elements does Vernons product cycle add to posners technology gap?

A

The geography or spatial location element of international investment

36
Q

Outline the first stage of Vernon’s product cycle

A

The new product phase

Firms in wealthy counties generate new income elastic goods which are tech and human capital intensive. (Designed for home market)

Innovating firms enjoy monopoly power in home markets protected by patents

37
Q

Outline the second stage of Vernon’s product cycle

A

The Mature Product Phase

Demand rises domestically and abroad, production is standardised and they reap economies of scale. Imitation increases but barrier to entry is economies of scale

38
Q

Outline the third stage of Vernon’s product cycle

A

The Standardised Product Phase

Imitation by rivals erodes power of innovating firms. The pressure of increased competitive intensity forces firms to reduce costs by shifting production to Host countries through FDI

International Business (8 decks)

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