Download or read book Innovation by Entrants and Incumbents written by Daron Acemoglu and published by . This book was released on 2010 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We extend the basic Schumpeterian endogenous growth model by allowing incumbents to undertake innovations to improve their products, while entrants engage in more "radical" innovations to replace incumbents. Our model provides a tractable framework for the analysis of growth driven by both entry of new firms and productivity improvements by continuing firms. Unlike in the basic Schumpeterian models, subsidies to potential entrants might decrease economic growth because they discourage productivity improvements by incumbents in response to reduced entry, which may outweigh the positive effect of greater creative destruction. As the model features entry of new firms and expansion and exit of existing firms, it also generates a non-degenerate equilibrium firm size distribution. We show that when there is also costly imitation preventing any sector from falling too far below the average, the stationary firm size distribution is Pareto with an exponent approximately equal to one (the so-called "Zipf" distribution"). Keywords: Innovation, Entrants, Incumbents. JEL Classifications: O30, O31, O33, L11.

Download or read book How the Sunk Costs of Incumbents Make Entrants Important for Innovation written by Dimitry Rtischev and published by . This book was released on 2016 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper clarifies how sunk costs can lead a rational incumbent to innovate less than an entrant. It also demonstrates that competition among incumbents yields less adoption of new and more efficient production technology than competition which includes entrants. The results suggest that policy promoting adoption of next-generation production technology should distinguish among firms based on their sunk costs in current-generation technology and encourage entry by industry outsiders such as startups or firms from other industries.

Download or read book Handbook of Research on Current Trends in Asian Economics Business and Administration written by Akkaya, Bülent and published by IGI Global. This book was released on 2021-10-08 with total page 497 pages. Available in PDF, EPUB and Kindle. Book excerpt: Social sciences have always been an important tool that enables human beings to examine and understand society. Through social sciences, researchers gain understandings of social phenomena and changes by providing commentaries, producing explanations, and attempting to synthesize a diversity of information sets to formulate theories. Since the concept of change has been the hallmark of the new millennium, researchers have witnessed a transformation in every aspect of the modern world at an ever-increasing speed, particularly in the social facet of human life. Ways of thinking that had previously been upheld and taught may, therefore, no longer be appropriate or effective as tools to understand contemporary phenomena and changes. The Handbook of Research on Current Trends in Asian Economics, Business, and Administration is a critical reference source that examines different aspects of social sciences, management, sociology, and education to better understand today’s society and social life in the Asian context. The book identifies trends, impacts, and implications of disruptive technologies for business and socio-economic development as well as strategic advantage on different levels of business and administration. Covering topics that include e-commerce, green management, information technology, economic growth, and distance learning, this book is essential for economists, academicians, government officials, policymakers, social scientists, managers, leaders, behavioral scientists, academicians, researchers, and students.

Download or read book Productivity Implications of R D Innovation and Capital Accumulation for Incumbents and Entrants the Case of Estonia written by Jaan Masso and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Response Strategies of Incumbent Firms to Disruptive Innovation written by Olga Piskunova and published by . This book was released on 2007 with total page 88 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research on the phenomenon of innovation shows that companies with initially leading positions in the industry often fail when the competitive situation changes and entrants come to the market with disruptive innovations. This raises the important question of what incumbents should do in order to optimally encounter such a situation. Should an incumbent respond at all? Which type of response should it pursue? How could the preferred response be implemented most effectively in terms of structure and management? To answer these questions the author Olga Piskunova analyses the existing recommendations to incumbent firms faced with the disruptive innovation along the response strategy framework consisting of following steps: decision to respond, response formulation and choice, response implementation. She shows further how non-innovation related research streams, such as game theory, contagion theory, marketing, and diversification research, could contribute to the disputable issues in the framework and fill some gaps. This book could be valuable for practitioners, as well as for scholars, researching the theoretical aspects of the phenomena of competition and innovation.

Download or read book The Impact of Startup Entry on the Innovativeness of Incumbents written by Kilian Gundlach and published by GRIN Verlag. This book was released on 2019-05-22 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2017 in the subject Business economics - Company formation, Business Plans, grade: 1,0, Católica Lisbon School of Business & Economics (Strategy, Entrepreneurship and Innovation), language: English, abstract: This paper investigates the relationship between startup entrants and innovation behavior of incumbents. In specific, the insurance industry is empirically analyzed, since many technology driven insurance startups have recently entered this market. After an extensive literature review on the competition-innovation relationship, hypotheses are derived. In detail, it is expected that startup entry has a positive effect on the innovativeness of incumbents, and that this effect will eventually diminish with rising competition, therewith creating an inverted-U relationship. In addition, it is assumed that the positive effect of startup entry will be more impactful for younger incumbents. To evaluate these hypotheses, an innovation score is constructed based on companies’ annual reports. It measures innovation within six broad areas, ranging from organizational changes to new product launches. The population of this study incorporates 10 major insurance companies from Europe and the United States over a period from 2011 to 2015 and 244 InsurTech startups that entered the market in this observation period. In line with prior research, the evidence suggests that startup entrance has a curvilinear effect on incumbents’ innovativeness. Therewith, this study finds that the inverted-U relationship between competition and innovation holds, also when considering startup entry. Lastly, the findings suggest that the positive effect of startup entry is stronger for younger incumbents. In conclusion, an extensive understanding of the given relationship between startup entry and incumbents innovativeness is crucial for practitioners in order to further shift their mindset to a more proactive innovation behavior. The field of innovation is important for both practitioners and scholars. The Boston Consulting Group ́s annual global survey of the state of innovation supports the importance of innovation, as 79 percent of the respondents’ ranked innovation as a top-three priority for their company. Especially in industries with (rising) competition, innovation is considered a crucial activity in order to distinguish oneself from competition. Still, evidence found in literature is contradictory as not all economic theories follow this positive competition-innovation relationship. For example, Schumpeter (1942) as well as Dixit and Stiglitz (1977) and Salop (1977) with their theories of industrial organization suggest that with rising competition, innovation should decline.

Download or read book The Performance of Incumbent Firms in the Face of Radical Technological Innovation written by Charles W. L. Hill and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: A persistent theme in the academic literature on technological innovation is that incumbent enterprises have great difficulty crossing the abyss created by a radical technological innovation. It is argued that incumbents go into decline, while new entrants rise to market dominance by exploiting the new technology. While many incumbent organizations do decline when markets embrace radical new technological innovations, this tendency is not universal. There are outliers in any population, and much can be learned from examining this group. Herein we identify a number of factors that help to explain incumbent performance in markets shaken by a radical technological innovation.

Download or read book How Destructive is Innovation written by Daniel Garcia-Macia and published by . This book was released on 2016 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Entrants and incumbents can create new products and displace the products of competitors. Incumbents can also improve their existing products. How much of aggregate productivity growth occurs through each of these channels? Using data from the U.S. Longitudinal Business Database on all non-farm private businesses from 1976-1986 and 2003-2013, we arrive at three main conclusions: First, most growth appears to come from incumbents. We infer this from the modest employment share of entering firms (defined as those less than 5 years old). Second, most growth seems to occur through improvements of existing varieties rather than creation of brand new varieties. Third, own-product improvements by incumbents appear to be more important than creative destruction. We infer this because the distribution of job creation and destruction has thinner tails than implied by a model with a dominant role for creative destruction.

Download or read book Growth Through Heterogeneous Innovations written by Ufuk Akcigit and published by . This book was released on 2015 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study how external versus internal innovations promote economic growth through a tractable endogenous growth framework with multiple innovation sizes, multi-product firms, and entry/exit. Firms invest in external R&D to acquire new product lines and in internal R&D to improve their existing product lines. A baseline model derives the theoretical implications of weaker scaling for external R&D versus internal R&D, and the resulting predictions align with observed empirical regularities for innovative firms. Quantifying a generalized model for the recent U.S. economy using matched Census Bureau and patent data, we observe a modest departure for external R&D from perfect scaling frameworks.

Download or read book The Effects of Entry on Incumbent Innovation and Productuvity written by Philippe Aghion and published by . This book was released on 2005 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Incumbent s Curse Incumbency Size and Radical Product Innovation written by Gerard J. Tellis and published by . This book was released on 2007 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: A common perception in the field of innovation is that large, incumbent firms rarely introduce radical product innovations. Such firms tend to solidify their market positions with relatively incremental innovations. They may even turn away entrepreneurs who come up with radical innovations, though they themselves had such entrepreneurial roots. As a result, radical innovations tend to come from small firms, the outsiders. This thesis, which we term the incumbent's curse, is commonly accepted in academic and popular accounts of radical innovation. This topic is important, because radical product innovation is an engine of economic growth that has created entire industries and brought down giants while catapulting small firms to market leadership. Yet a review of the literature suggests that the evidence for the incumbent's curse is based on anecdotes and scattered case studies of highly specialized innovations. It is not clear if it applies widely across several product categories. The authors reexamine the incumbent's curse using a historical analysis of a relatively large number of radical innovations in the consumer durables and office products categories. In particular, the authors seek to answer the following questions: (1) How prevalent is this phenomenon? What percentage of radical innovations do incumbents versus nonincumbents introduce? What percentage of radical innovations do small firms versus large firms introduce? (2) Is the phenomenon a curse that invariably afflicts large incumbents in current industries? Is it driven by incumbency or size? and (3) How consistent is the phenomenon? Has the increasing size and complexity of firms over time accentuated it? Does it vary across national boundaries? Results from the study suggest that conventional wisdom about the incumbent's cursemay not always be valid.

Download or read book Brand Relevance written by David A. Aaker and published by John Wiley & Sons. This book was released on 2011-01-25 with total page 400 pages. Available in PDF, EPUB and Kindle. Book excerpt: Branding guru Aaker shows how to eliminate the competition and become the lead brand in your market This ground-breaking book defines the concept of brand relevance using dozens of case studies-Prius, Whole Foods, Westin, iPad and more-and explains how brand relevance drives market dynamics, which generates opportunities for your brand and threats for the competition. Aaker reveals how these companies have made other brands in their categories irrelevant. Key points: When managing a new category of product, treat it as if it were a brand; By failing to produce what customers want or losing momentum and visibility, your brand becomes irrelevant; and create barriers to competitors by supporting innovation at every level of the organization. Using dozens of case studies, shows how to create or dominate new categories or subcategories, making competitors irrelevant Shows how to manage the new category or subcategory as if it were a brand and how to create barriers to competitors Describes the threat of becoming irrelevant by failing to make what customer are buying or losing energy David Aaker, the author of four brand books, has been called the father of branding This book offers insight for creating and/or owning a new business arena. Instead of being the best, the goal is to be the only brand around-making competitors irrelevant.

Download or read book Innovation Reallocation and Growth written by Daron Acemoglu and published by . This book was released on 2019 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: We build a model of firm-level innovation, productivity growth and reallocation featuring endogenous entry and exit. A new and central economic force is the selection between highand low-type firms, which differ in terms of their innovative capacity. We estimate the parameters of the model using US Census micro data on firm-level output, R&D and patenting. The model provides a good fit to the dynamics of firm entry and exit, output and R&D. Taxing the continued operation of incumbents can lead to sizable gains (of the order of 1.4% improvement in welfare) by encouraging exit of less productive firms and freeing up skilled labor to be used for R&D by high-type incumbents. Subsidies to the R&D of incumbents do not achieve this objective because they encourage the survival and expansion of low-type firms.

Download or read book And the Winner Is acquired written by Joachim Henkel and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: R&D incentives of new entrants to a market may be shaped by the prospects of being acquired by an incumbent. In this paper, we analyze a two-stage innovation game between one incumbent and a large number of entrants. In the first stage, firms compete to develop innovations of high quality. They do so by choosing, at equal cost, the success probability of their R&D approach, where a lower probability goes along with a higher value in case of success - that is, a more radical innovation. In the second stage, successful entrants bid to be acquired by the incumbent. We assume that entrants cannot survive on their own, so being acquired amounts to a 'prize' in a contest. We identify an equilibrium in which the incumbent chooses the least radical project. Entrants pick projects of pairwise different success probabilities, and the larger the number of entrants, the more radical the most radical project becomes. Under certain conditions, we can show uniqueness of this equilibrium and robustness to changes in the timing of the game. Generally, entrants tend to choose more radical R&D approaches than the incumbent and are more likely to generate the highest value innovation. Thus, the need of entrants to be acquired yields yet another explanation, beyond cannibalization and organizational issues, of why radical innovations tend to come from entrants rather than from incumbents. We illustrate our theoretical findings by a qualitative empirical study of the Electronic Design Automation Industry, and derive implications for research and management.

Download or read book Entry and Incumbent Innovation written by Philipp Weinschenk and published by . This book was released on 2010 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Disruptive Innovation written by Marion E. Hambrick and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This publication describes the theory of disruptive innovation. New goods and services offered by entrants, or new firms, can transform the market and present a challenge to incumbents, or existing firms. This publication outlines the theory of disruptive innovation by describing the interplay between entrants and incumbents and how firms and innovations exist within this environment.

Download or read book Macroeconomic Modelling of R D and Innovation Policies written by Ufuk Akcigit and published by Palgrave Macmillan. This book was released on 2021-12-03 with total page 211 pages. Available in PDF, EPUB and Kindle. Book excerpt: This open access book encompasses a collection of in-depth analyses showcasing the challenges and ways forward for macroeconomic modelling of R&D and innovation policies. Based upon the proceedings of the EC-DG JRC-IEA workshop held in Brussels in 2017, it presents cutting-edge contributions from a number of leading economists in the field. It provides a comprehensive overview of the current academic and policy challenges surrounding R&D as well as of the state-of-the-art modelling techniques. The book brings to the forefront outstanding issues related to the assessment of the macroeconomic impact of R&D policies and its modelling. It speaks to the rising importance of R&D and innovation policy, and the proliferation of macroeconomic models featuring endogenous technological change. The contents of this book will be of interest to both academic and policy audiences working in the fields of R&D and innovation.