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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    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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