be reading group 5

8/6/2019 BE Reading Group 5

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Notions of BE

in the Economics of Innovation

BE reading group, A.Cuntz


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The nature of innovation

Invention and innovation are uncertainendeavors in addition, agents may be risk averse Investment nature the agents time horizon will influence the decision toinvest

Externalities of knowledge on technology i.e. spillover mechanisms (Appleyard 1996; Antonelli,1999)


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Innovation policy

Linear vs. system perspective

Sources: Industry Canada, 1996-97 Performance Report, Kline S.J. and N. Rosenberg

(1986), "An Overview of Innovation", in R. Landau and N. Rosenberg (eds). The Positive

Sum Strategy. Harnessing Technology for Economic Growth , National Academic Press,

Washington, DC, p. 289.


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some sample issues - agendacognitive aspects

#1 Innovation vs. imitation#2 Agents of change I - entrepreneurs#3

Adoption & diffusion

bio/health connects#4 Agents of change II effects on employees


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#1 Innovation vs. imitation

Experiment on inventory search process andheuristics (Cantner et al, 2009) A trial-and-error type (Dosi & Egidi, 1993) explorationof large product space, i.e. systematic search de facto

impossible

Learning process on ideal product specifications, assumptions on unbounded rationality and full info inpatent race lit

Patent-postponed imitation of discoveries in t+1


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Innovation vs. imitation

Protocol

Path-dependent trajectory, i.e. success breedssuccess

Basic attitudes & types in innovative search: pioneersor imitators? Leaders or followers? Bold or cautiousinvestors?

No support to leapfrogging idea (followers becoming leadersand vice versa), seldom

The more investment options left, the higher the probof investment (competition yet undecided) monetary saturation (own account level) slowsinnovative activity (investment),

i.e. subjects are aware of the fact that the profitability ofresearch decreases with the number of remaining options


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#2


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#2 Agents of change I -

entrepreneurship E.g., studies on entrepreneurial transition and mindsets measure scientists intentions*(Bird 1988), but also age,gender etc. explanatories on individual level Context-levelfactors such as connect to entrepreneurialpeers or university tradition (Bercovitz and Feldman,2008)

*Acting entrepreneurially is sth that people plan to do.(Shaver and Scott, 1991)


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#3


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Past 3-6-3 rule among US bankers

A gradual shift from an originate to hold

to an originate

to distribute business model in financial services aroundthe globe (Clarke, 2010)

#3 Adoption/diffusion ofbusiness model innovation


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Network dynamics

Source: Blind and Cuntz

(2010)


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indicators of business model change in financialsectors (selection)

modes of micro to macro aggregation

definition of boundaries of social peers in space

and time, and

adoption momentum

Methodological and

empirical issues


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Limited role of bank-specific characteristics, i.e.firm size and risk attitude

Strong peer country and bank impact ondiffusion from (direct and indirect) networkexposure The latter effect/peer information is processed viaherding (rather than fully rational, social learning)

Tentative conclusions


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#4


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#4 Agent of change II health effects

Innovation outcomes Analysis of the relationship betweenorganizational change and employee

health (Dahl, 2010)

organizational change (innovation): sixdimensions/degrees plus breadth of change

Excessive stress activates the

hypothalamus-pituitary-adrenal axis with avariety of symptoms
http://www.google.de/imgres?imgurl=http://farm1.static.flickr.com/110/255155175_a50b5eb7b8.jpg&imgrefurl=http://1fachtiere.wordpress.com/2008/01/07/tabu-fur-katzen-schokolade-und-aspirin/&usg=__5I7RbLPKBmb6Q-E2648HlqWaqZg=&h=418&w=500&sz=72&hl=de&start=2&zoom=1&um=1&itbs=1&tbnid=z7kiuSNr7bgi0M:&tbnh=109&tbnw=130&prev=/search%3Fq%3Daspirin%26um%3D1%26hl%3Dde%26sa%3DN%26biw%3D1259%26bih%3D784%26tbm%3Disch&ei=hToLTpLDFs7dsga6pP3DDg


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Study results Such change increases the probability of

increased stress for employees, in particular If simultaneous across multiple dimensions and inspecific dimensions If specific industry sectors If employee at lower hierarchical levels oforganization If employee in high-employment-growth firms (whileless probable in high-turnover-growth firms)*


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Related lit on disruptiveorganizational change

plausible explanations for these negative effectson employee level New learning challenges

altered power and information flow structures

Unfairness and injustice emerging in peer groups breach of implicit psychological contracts (Morrisonand Robinson, 1997) Lastly, cognitive limits in fully understanding changeenhances uncertainty associated with change


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Related lit on disruptiveorganizational change

However, mechanisms of creative destruction within changing organizations often not explicitlystudied


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*


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wrap-up I

BE role in organizational innovation, diffusionand inventory processes Firm level analysis in the economics of innovationmay underestimate BE role,

i.e. individuals embedded in multilevel organizational

mechanisms


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wrap-up II

scenarios of high uncertainty associated withinnovation are induced by (frequently) changing context of performance and riskassessments

Collective processes on innovation

norm building

and counteracting imitation, within and outsideorganizations

Imitation or adoption as behavioral compliance withsuch norms or rational choice?


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wrap-up III

i.e. individual (and rivals) innovation associatedwith individual behavioral and emotionalchanges, more specifically: rivals performance as a point of reference in searchfor innovation Intentions as traits to entrepreneurial transition Peer adoption inductive to own adoption (socialcontagion) and processing of related information

Bio/health effects on agents of innovating

organizations

Any other issue? The floor is yours.
http://4.bp.blogspot.com/_vGE2gtX_CCk/SohHC-_euZI/AAAAAAAAALI/Pby4yRK4N44/s1600-h/innovation.jpg


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Further reading

Uwe

Cantner, Werner Gueth, Andreas Nicklisch, and Torsten

Weiland

(2009) Competition in product design: An experiment exploring innovationbehavior. Metroeconomica, 60(4): 724752.

Gartner, W.B. (2007). Psychology, Entrepreneurship, and the Critical

Mess. In J. R. Baum, M. Frese

& R. A. Baron (Ed.), The Psychology of

Entrepreneurship (pp. 325-334). Mahwah, NJ: Erlbaum.

Bird, B.J. (1988). Implementing entrepreneurial ideas: The case forintention. Academy of Management Review, 13(3), 442-453.

Knut Blind and Alexander Cuntz

(2010) Global diffusion of the nontraditional

banking model and alliance networks: Social exposure, learning and

moderating regulatory effort. ERIM Report Series Reference No. ERS-2010-

044-LIS

Dahl, Michael S. (2010) Organizational Change and Employee Stress.

Management Science.

be reading group 5

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