ITIS407

IS Innovation and New

Technologies

Fall 2021
Sources of Innovation
Part: II
 Encouraging productive links
between research and development
• Give researchers financial encouragements to
work on projects that are aligned with
development goals
• Require your research laboratories to use the
same equipment and materials as your product
development laboratories
• Expose basic researchers to development,
perhaps for a temporary period when they first
join your company
• Make fit with company strategy a principle in the
evaluation of proposals for research funding
 Innovation in Collaborative
Networks
• Collaborations include (but are not limited to):
▪ Joint projects
▪ Licensing and second-sourcing agreements
▪ Research associations
▪ Government-sponsored joint research programs
▪ Value-added networks for technical and scientific
exchange
▪ Informal networks
• Collaborative networks are especially important
in high-technology sectors where individual firms
rarely own all necessary resources and
capabilities
 Innovation in Collaborative
Networks
• Technology Clusters are regional clusters
of firms that have a connection to a
common technology
• May work with the same suppliers, customers, or
complements.
• Agglomeration(Group) Economies:
– Proximity facilitates knowledge exchange.
– Cluster of firms can attract other firms to area.
– Supplier and distributor markets grow to service the cluster.
– Cluster of firms may make local labor pool more valuable by
giving them experience.
– Cluster can lead to infrastructure improvements (e.g., better
roads, utilities, schools, etc.)
 Basic Characteristics OF
Clusters
• Strategic associations of companies
• Established on the bases of a value chain
• Dominate(Control) sectors;
• United against external competition
• Complementary industries
• Common local interest
• Formal and informal relations between firms
• Gives small and medium enterprises economic
power of large consumers and mass producers
 Atlanta Information Technology Cluster
Distribution Related Services

Communications Computers Government Policy and

Equipment Regulatory Environment
Electronic Components GRA, Yamacraw, ICAPP
and Assemblies
Instruments
Specialized Services
Peripherals (Banking, Accounting,
Legal,)
Other Electronic
Components Software

Specialized Risk Capital

Parts Communications Services VC firms, Angel Networks

Universities and Training Research Organizations Cluster Organizations

Institutions Georgia Research Technology Alliance of
Georgia Tech, Emory Alliance, GA; Georgia Research
Community Colleges Georgia Tech Institutes, Alliance
GCATT Among National Leaders (1–5)
Competitive (6–20)
Source: Clusters of Innovation Initiative Report: Council on Competitiveness, Position Established (21–40)
Harvard Institute on Strategy & Competitiveness, Cluster Mapping Project ,
U. S. County Business Pattern Data; ontheFRONTIER interviews Less Developed (41+)
 Innovation is tied to Place

• The creative center of the economy is tied to

geographic location.
• Most innovative work occurs in face-to-face
exchange within teams.
• Geographic clustering is a powerful
mechanism for sharing personal knowledge.
 What’s So Good About
Clusters?
• Increase Efficiency
▪ Efficient access to information, specialized inputs and
employees, institutions, and “public goods”
▪ Easier to achieve complementarities across businesses

• Spur Innovation
▪ Improved ability to recognize and respond to innovation
opportunities
▪ More rapid diffusion of improvements

• Facilitate New Business Formation

▪ Easier to identify opportunities for new businesses
▪ Lowers blocks to entry (including perceived risk)

Source: Professor Michael E. Porter, Harvard Business School

Industry Clusters Can Be Used
as...

• An analytical tool (e.g., to better

understand the economy and deploy
resources strategically);
• An organizational tool (e.g., to engage
industry leaders in a regional strategy and
foster communication, networking and
improvement among companies); and
• A service delivery tool (e.g., to provide
high-value specialized services)
 Identifying Industry Clusters
Export Oriented:
Many of the companies in the cluster sell products or services to
companies outside the region.
Concentration:
Employment in the cluster is more concentrated in the region than the
national average, and the cluster is an existing or emerging area of
specialization.
Business Interdependence:
Businesses relate to each other through the buyer-supplier “food chain,”
as competitors, or as partners.
Significant Size or Rapid Growth:
The cluster is of a significant size or, if new, has an above average
growth rate compared to that of the U.S. as a whole.
Continuum of collaborative activity

Jointly inform
newsletters, electronic links, cluster directories
Jointly learn
seminars, conferences, training
Jointly market
strategic plans for exports, cluster brochures
Jointly purchase
buyer-supplier linkages
Jointly produce
bid on projects, joint ventures, federal labs
Jointly build economic foundations
centers of excellence, telecom, tech transfer,
How Do Clusters Develop?
▪ Initial (Natural) Resource Base
• Pittsburgh’s Steel
▪ Historical Legacy (Large Local Markets)
• Chicago’s food processing
▪ Luck/Serendipity
• Galveston’s Insurance
▪ Supportive Business/Regulatory Environment
• Wilmington’s Credit Cards
▪ Consciously Designed Initiatives
• Research Triangle’s Information Technology

Now, usually a mix of reasons…

 Innovation in Collaborative
Networks
• Chances of innovation activities being
geographically clustered depends on:
▪ The nature of the technology
• e.g., its underlying knowledge base or the degree to which it
can be protected by patents or copyright, the degree to which
its communication requires close and frequent interaction;
▪ Industry characteristics
• e.g., degree of market concentration or stage of the industry
lifecycle, transportation costs, availability of supplier and
distributor markets; and,
▪ The cultural context of the technology
• e.g., population density of labor or customers, infrastructure
development, national differences in how technology
development is funded or protected.
 Innovation in Collaborative
Networks
▪ Technological spillovers occur when the
benefits from the research activities of one
entity spill over to other entities.
• Likelihood of spillovers is a function of:
– Strength of protection mechanisms (e.g., patents, copyright,
trade secrets)
– Nature of underlying knowledge base (e.g., tacit, complex)
– Mobility(Flexibility) of the labor pool
 Transforming Creativity into
Innovation
• Universities and Government-Funded
Research
▪ Universities
• Many universities encourage research that leads to
useful innovations
• Bayh-Dole Act of 1980 allows universities to collect
royalties on inventions funded with taxpayer dollars
– Led to rapid increase in establishment of technology-
transfer offices.
• Revenues from university inventions are still very
small, but universities also contribute to innovation
through publication of research results.
 Transforming Creativity into
Innovation
• Universities and Government-Funded
Research
▪ Governments invest in research through:
• Their own laboratories
• Science parks and incubators
• Grants for other public or private research organizations
 Why Universities Transfer
Technology
• Facilitate commercialization of research
for the public good
• Reward, retain and recruit faculty,
students
• Induce closer ties to industry
• Promote economic growth
 Total Sponsored Research
Expenditures - U.S. Universities

Source: AUTM Licensing Survey: FY 2000

 Forms of Innovation and
Technology Strategy
• Affects the value that can be generated
and captured
• Affects ability to attract customers
 Industry and the Nature
of Innovation
• The nature of innovation varies across
industries
• Depends on the production process in an
industry:
▪ Non-assembled
▪ Simple assembled
▪ Assembled systems