Types of Innovation and Who Innovates
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Questions and Answers

What type of innovation may not be perceived as such by suppliers, customers, or complementary innovators?

  • Radical innovation
  • Incremental innovation (correct)
  • Disruptive innovation
  • Competence-enhancing innovation

    • Why may an incumbent firm still succeed despite a competence-destroying innovation?

  • Because the innovation is radical
  • Because the innovation is incremental
  • Because the innovation is competence-enhancing to its value chain (correct)
  • Because the innovation is disruptive

    • What is a key factor in a firm's success in exploiting an innovation?

  • The type of innovation
  • The size of the firm
  • What the innovation does to the firm's capabilities (correct)
  • The industry the firm operates in

    • According to Figure 2.7, what is impacted by an innovation?

    <p>The innovation value-added chain</p> Signup and view all the answers

    What is meant by an innovation being 'competence-enhancing' to a firm's value chain?

    <p>It increases the firm's capabilities</p> Signup and view all the answers

    What is a potential advantage of an innovation being competence-enhancing to a firm's value chain?

    <p>It makes it easier to establish relationships with suppliers</p> Signup and view all the answers

    What is the main argument made about innovation in the given content?

    <p>Innovations can have different impacts on different parts of the value chain</p> Signup and view all the answers

    What is the implication of an innovation being 'competence-destroying' for a firm?

    <p>It reduces the firm's capabilities</p> Signup and view all the answers

    What is the role of suppliers, customers, and complementary innovators in the context of innovation?

    <p>They can have varying perceptions of an innovation</p> Signup and view all the answers

    What is the focus of some research regarding innovation?

    <p>The type of innovation, whether incremental or radical</p> Signup and view all the answers

    What is the relationship between a firm's size and market power, and its innovative activity?

    <p>A clear and direct relationship</p> Signup and view all the answers

    What is the definition of innovation used in the text?

    <p>The development of new knowledge and products</p> Signup and view all the answers

    What is the impact of an innovation on a firm's ability to offer products?

    <p>It implies a change in the firm's ability to offer products</p> Signup and view all the answers

    What is the difference between incremental and radical innovation?

    <p>Incremental innovation involves small changes, while radical innovation involves large changes</p> Signup and view all the answers

    What is the role of knowledge in a firm's ability to offer products?

    <p>Knowledge underpins a firm's ability to offer products</p> Signup and view all the answers

    What is the impact of an innovation on a firm's knowledge?

    <p>It implies a change in the firm's knowledge</p> Signup and view all the answers

    What is the relationship between innovation and a firm's competitiveness?

    <p>Innovation is a determinant of a firm's competitiveness</p> Signup and view all the answers

    What is the focus of the static models of innovation?

    <p>The organizational and economic implications of innovation</p> Signup and view all the answers

    What is a characteristic of a radical innovation?

    <p>It results in a product that is so superior it renders existing products noncompetitive.</p> Signup and view all the answers

    Who first suggested that small entrepreneurial firms were the sources of most innovations?

    <p>Schumpeter</p> Signup and view all the answers

    What is an example of a radical innovation in the economic sense?

    <p>The development of electronic point-of-sale systems (EPOSs).</p> Signup and view all the answers

    What is a characteristic of an incremental innovation?

    <p>It leads to a product that is slightly better than existing ones.</p> Signup and view all the answers

    Why did Schumpeter later change his view on who is most likely to innovate?

    <p>Because he realized that large firms with monopoly power were more likely to innovate.</p> Signup and view all the answers

    What is a consequence of a radical innovation?

    <p>Existing products are rendered noncompetitive.</p> Signup and view all the answers

    Which of the following is an example of an incremental innovation?

    <p>The development of diet soda.</p> Signup and view all the answers

    What is the main difference between radical and incremental innovations?

    <p>The degree of superiority of the innovation over existing products.</p> Signup and view all the answers

    Who is more likely to innovate, according to Schumpeter's later view?

    <p>Large firms with some degree of monopoly power.</p> Signup and view all the answers

    What is the main concept depicted in the diagram?

    <p>Value-added chain</p> Signup and view all the answers

    What is the direction of the arrows in the diagram?

    <p>From left to right</p> Signup and view all the answers

    What is the purpose of the value-added chain?

    <p>To add value to a product or service</p> Signup and view all the answers

    What is the first stage of the value-added chain?

    <p>Inclemil</p> Signup and view all the answers

    What is the relationship between the stages in the value-added chain?

    <p>Sequential</p> Signup and view all the answers

    What is the final stage of the value-added chain?

    <p>J</p> Signup and view all the answers

    What is the advantage of large firms in R&D according to the argument?

    <p>They are more diversified and willing to take risks.</p> Signup and view all the answers

    What is the purpose of the arrows between the stages?

    <p>To show the direction of value addition</p> Signup and view all the answers

    Why do large firms have an advantage in commercializing an invention?

    <p>They have the necessary production and complementary assets.</p> Signup and view all the answers

    What is the underlying concept of the value-added chain?

    <p>Value creation</p> Signup and view all the answers

    What is the main benefit of the value-added chain?

    <p>Enhanced customer satisfaction</p> Signup and view all the answers

    What is the advantage of large firms in terms of capital access?

    <p>They have better access to capital.</p> Signup and view all the answers

    Why do large firms not face competition in innovating?

    <p>They are monopolists and do not have competitors.</p> Signup and view all the answers

    What do large firms have that allows them to exploit economies of scale in R&D?

    <p>Size to exploit economies of scale.</p> Signup and view all the answers

    What is the result of large firms being more diversified?

    <p>They are more willing to take risks.</p> Signup and view all the answers

    What is the advantage of large firms in terms of innovation?

    <p>They are more likely to invest in innovations.</p> Signup and view all the answers

    Why do large firms have an advantage in R&D?

    <p>They are more diversified and willing to take risks.</p> Signup and view all the answers

    What is the relationship between large firms and their competitors?

    <p>They have no competitors ready to imitate their innovations.</p> Signup and view all the answers

    Study Notes

    Types of Innovation

    • A radical innovation results in a product that is so superior (lower cost, better attributes, or new attributes) that existing products are rendered noncompetitive.
    • An incremental innovation allows existing products to stay competitive.

    Who Innovates?

    • The debate over who is most likely to innovate dates back to Schumpeter, who suggested that small entrepreneurial firms were the sources of most innovations.
    • Later, Schumpeter changed his view and suggested that large firms with some degree of monopoly power were more likely to be the sources of technological innovation.
    • Large firms have the production and other complementary assets necessary to commercialize an invention, exploit economies of scale in R&D, and have better access to capital.

    Incremental vs Radical Innovation

    • Whether incumbents or new entrants are able to introduce and exploit innovation is a function of whether the innovation is incremental or radical.
    • The type of innovation (incremental or radical) depends on how new the new knowledge and the new product are.

    Impact of Innovation on a Firm

    • An innovation has two kinds of impact on a firm: it changes the firm's ability to offer products and it affects the firm's capabilities and its value-added chain.
    • An innovation can be competence-destroying or competence-enhancing to a firm's value-added chain.
    • A firm's success in exploiting an innovation may depend as much on what the innovation does to the capabilities of its value-added chain as on what it does to the firm's capabilities.

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    Models Of Innovation PDF

    Description

    Learn about the different types of innovation, such as radical and incremental, and who is most likely to innovate. Understand the debates and views of Schumpeter on innovation.

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