14,372 research outputs found

    Exploration and exploitation in the presence of network externalities

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    This paper examines the conditions under which exploration of a new, incompatible technologyis conducive to firm growth in the presence of network externalities. In particular, this studyis motivated bythe divergent evolutions of the PC and the workstation markets in response to a new technology: reduced instruction set computing (RISC). In the PC market, Intel has developed new microprocessors bymaintaining compatibilitywith the established architecture, whereas it was radicallyr eplaced byRISC in the workstation market. History indicates that unlike the PC market, the workstation market consisted of a large number of power users, who are less sensitive to compatibilitythan ordinaryusers. Our numerical analysis indicates that the exploration of a new, incompatible technologyis more likelyto increase the chance of firm growth when there are a substantial number of power users or when a new technologyis introduced before an established technologytakes off. (; ; ;

    Cognitive & Relational Distance in Alliance Networks: Evidence on the Knowledge Value Chain in the European ICT Sector

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    This paper deals with the firms’ motives for entering into knowledge partnerships. We start by showing that networking strategies are designed to access external knowledge whilst maintaining at the same time a sufficient level of knowledge appropriation and tradability. The ICT sector (and interplaying ones) is particularly concerned by this accessibility/appropriation trade-off. The questions of modularity, complementarity, compatibility and standardisation are critical in the formation of corporate strategic and technological partnerships. Considering that knowledge in this sector is complex and systemic, we construct a theoretical typology of knowledge partnerships by crossing the levels of cognitive and relational proximity with the knowledge phases of exploration, examination and exploitation. This typology is then tested on empirical data through the use of a classification algorithm. The dataset is based on a sample of strategic alliances in the European ICT sector extracted from SDC Platinum. We show that strategic alliances are clustered in relation to the knowledge phases (exploration, examination, exploitation), and that the alliance categories are characterised by levels of relational and cognitive distance which actually are in keeping with the theoretical predictions.knowledge networks; knowledge phases; proximities; strategic alliances; ICT sector

    Truthful Learning Mechanisms for Multi-Slot Sponsored Search Auctions with Externalities

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    Sponsored search auctions constitute one of the most successful applications of microeconomic mechanisms. In mechanism design, auctions are usually designed to incentivize advertisers to bid their truthful valuations and to assure both the advertisers and the auctioneer a non-negative utility. Nonetheless, in sponsored search auctions, the click-through-rates (CTRs) of the advertisers are often unknown to the auctioneer and thus standard truthful mechanisms cannot be directly applied and must be paired with an effective learning algorithm for the estimation of the CTRs. This introduces the critical problem of designing a learning mechanism able to estimate the CTRs at the same time as implementing a truthful mechanism with a revenue loss as small as possible compared to an optimal mechanism designed with the true CTRs. Previous work showed that, when dominant-strategy truthfulness is adopted, in single-slot auctions the problem can be solved using suitable exploration-exploitation mechanisms able to achieve a per-step regret (over the auctioneer's revenue) of order O(T−1/3)O(T^{-1/3}) (where T is the number of times the auction is repeated). It is also known that, when truthfulness in expectation is adopted, a per-step regret (over the social welfare) of order O(T−1/2)O(T^{-1/2}) can be obtained. In this paper we extend the results known in the literature to the case of multi-slot auctions. In this case, a model of the user is needed to characterize how the advertisers' valuations change over the slots. We adopt the cascade model that is the most famous model in the literature for sponsored search auctions. We prove a number of novel upper bounds and lower bounds both on the auctioneer's revenue loss and social welfare w.r.t. to the VCG auction and we report numerical simulations investigating the accuracy of the bounds in predicting the dependency of the regret on the auction parameters

    R&D Subsidization effect and network centralization. Evidence from an agent-based micro-policy simulation

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    This paper presents an agent-based micro-policy simulation model assessing public R&D policy effect when R&D and non-R&D performing companies are located within a network. We set out by illustrating the behavioural structure and the computational logic of the proposed model; then, we provide a simulation experiment where the pattern of the total level of R&D activated by a fixed amount of public support is analysed as function of companies’ network topology. More specifically, the suggested simulation experiment shows that a larger “hubness” of the network is more likely accompanied with a decreasing median of the aggregated total R&D performance of the system. Since the aggregated firm idiosyncratic R&D (i.e., the part of total R&D independent of spillovers) is slightly increasing, we conclude that positive cross-firm spillover effects - in the presence of a given amount of support - have a sizeable impact within less centralized networks, where fewer hubs emerge. This may question the common wisdom suggesting that larger R&D externality effects should be more likely to arise when few central champions receive a support

    Market fields structure & dynamics in industrial automation

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    There is a research tradition in the economics of standards which addresses standards wars, antitrust concerns or positive externalities from standards. Recent research has also dealt with the process characteristics of standardisation, de facto standard-setting consortia and intellectual property concerns in the technology specification or implementation phase. Nonetheless, there are no studies which analyse capabilities, comparative industry dynamics or incentive structures sufficiently in the context of standard-setting. In my study, I address the characteristics of collaborative research and standard-setting as a new mode of deploying assets beyond motivations well-known from R&D consortia or market alliances. On the basis of a case study of a leading user organisation in the market for industrial automation technology, but also a descriptive network analysis of cross-community affiliations, I demonstrate that there must be a paradoxical relationship between cooperation and competition. More precisely, I explain how there can be a dual relationship between value creation and value capture respecting exploration and exploitation. My case study emphasises the dynamics between knowledge stocks (knowledge alignment, narrowing and deepening) produced by collaborative standard setting and innovation; it also sheds light on an evolutional relationship between the exploration of assets and use cases and each firm's exploitation activities in the market. I derive standard-setting capabilities from an empirical analysis of membership structures, policies and incumbent firm characteristics in selected, but leading, user organisations. The results are as follows: the market for industrial automation technology is characterised by collaboration on standards, high technology influences of other industries and network effects on standards. Further, system integrators play a decisive role in value creation in the customer-specific business case. Standard-setting activities appear to be loosely coupled to the products offered on the market. Core leaders in world standards in industrial automation own a variety of assets and they are affiliated to many standard-setting communities rather than exclusively committed to a few standards. Furthermore, their R&D ratios outperform those of peripheral members and experience in standard-setting processes can be assumed. Standard-setting communities specify common core concepts as the basis for the development of each member's proprietary products, complementary technologies and industrial services. From a knowledge-based perspective, the targeted disclosure of certain knowledge can be used to achieve high innovation returns through systemic products which add proprietary features to open standards. Finally, the interplay between exploitation and exploration respecting the deployment of standard-setting capabilities linked to cooperative, pre-competitive processes leads to an evolution in common technology owned and exploited by the standard-setting community as a particular kind of innovation ecosystem. --standard-setting,innovation,industry dynamics and context,industrial automation

    Regional science policy and the growth of knowledge megacentres in bioscience clusters

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    Changes in epistemology in biosciences are generating important spatial effects. The most notable of these is the emergence of a few Bioscience Megacentres of basic and applied bioscience (molecular, post-genomic, proteomics, etc.) medical and clinical research, biotechnology research, training in these and related fields, academic entrepreneurship and commercial exploitation by clusters of drug discovery start-up and spin-off companies, along with specialist venture capital and other innovation system support services. Large pharmaceutical firms that used to lead such knowledge generation and exploitation processes are becoming increasingly dependent upon innovative drug solutions produced in such clusters, and Megacentres are now the predominant source of such commercial knowledge. Big pharma is seldom at the heart of Megacentres such as those the paper will argue are found in about four locations each in the USA and Europe, but remains important for some risk capital (milestone payments), marketing and distribution of drugs discovered. The reasons for this shift (which is also spatial to some extent) are as follows: first, bioscientific research requires the formation of collaboratory relationships among hitherto cognitively dissonant disciplines molecular biology, combinatorial chemistry, high throughput screening, genomics, proteomics and bioinformatics to name a few. Second, the canonical chance discovery model of bioscientific research is being replaced by rational drug design based on those technologies because of the need massively to reduce search costs and delivery timeframes. Third, the US and to some extent European 'Crusade against Cancer' and other pathologies has seen major increases in basic research budgets (e.g. to 27.3billionin2003fortheUSNationalInstitutesofHealth)andfoundationexpenditure(e.g.27.3 billion in 2003 for the US National Institutes of Health) and foundation expenditure (e.g. 1billion in 2003 by the UK's Wellcome Trust; $1 billion approximately by the top ten US medical foundations, and a comparable sum from corporate foundations). Each of these tendencies weakens the knowledge generation role of 'big pharma'and strengthens that of Megacentres. But the process also creates major, new regional disparities, which some regional governances have recognised, causing them to develop responsibilities for regional science policy and funding to offset spatial biases intrinsic in traditional national (and in the EU, supranational) research funding regimes. Responses follow a variety of models ranging from market following to both regionalised (decentralising by the centre) and regionalist (ground-up), but in each case the role of Megacentres is justified in health terms. But their role in assisting fulfilment of regional economic growth visions is also clearly perceived and pronounced in policy terms.

    System failures and regional innovation policy

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    Although many recent contributions have directly analysed the different types of failures that might affect the systems of innovation it is still quite unclear how the system-failures framework can be applied at the regional level. This paper tries to fill this gap and in particular it investigates whether and how the system-failures framework, based on evolutionary and system perspectives, can guide the regional policy-maker intervention. The paper shows that the reach of the regional level of policy-making depends on the characteristics of the regional innovation system in terms of financial autonomy, institutional competences and knowledge base.

    Innovation, competition and public procurement in the pre-commercial phase

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    Should the supply or the demand side bear the risk connected to innovation? The two polar cases identified in the literature are the supply push and the demand pull. The former is the typical one, with the supplier bearing the costs and obtaining the benefits from innovating. The latter is technology procurement, where the buyer takes the risk, by procuring the innovative good or service. With respect to this, pre-commercial procurement is a peculiar solution that can explain the debate found in the literature relative to its configuration either as a supply-side or a demand-side instrument. The separation from the commercial phase allows the procurer to take only (part of) the risks connected to R&D services. Also, competition among suppliers gives the opportunity of evaluating different solutions and to obtain, in the commercial phase, a lower price for the innovative good. The counterpart of all this is a large portion of risk being left to the supplier. As a consequence, suppliers need to obtain a larger share of the benefits of the innovation process. This economic reason, besides the legal restrictions on State aid, explains the need for a shared risks-shared benefits approach, centred on the agreements on the assignment of IPRs

    The “Open Innovation” paradigm: A contingency perspective

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    The “open innovation” model is currently being touted as a superior path for achieving long-term success. Rather than relying on their own, limited resources for research and development in the traditional, closed invention system, firms are encouraged to share knowledge across firm boundaries to enhance their innovative potential. Yet, such sharing may also have adverse consequences by reducing the rarity of a firm’s inventions. This paper accordingly attempts to identify and analyze the parameters that determine whether open or closed types of innovation management are most appropriate for a given firm. Following a contingency perspective, we examine these determinants as various internal and external constraints (situational factors). More specifically, applying concepts related to absorptive capacity, complementary resources, game theory and others, we derive testable propositions and provide case study evidence regarding the value generating properties of open innovation.Peer Reviewe

    Open and closed industry clusters: The social structure of innovation

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    In this paper we discuss knowledge and innovation in clusters and the benefits of clustering from a knowledge-based perspective. Knowledge-based resources and innovations are important sources of competitive advantage for firms. Aware of the importance of continuously seeking new knowledge firms increasingly seek knowledge-rich locations such as specific industry clusters across the world. These are locations characterized by the concentration of firms operating in related and supporting activities, a specialized work force and a specialized institutional environment that nurtures the industry. However, it is not likely that these clusters are always locations from which the firms will be able to draw the intended knowledge benefits. The social structure of the relationships between individuals and firms determines the extent to which knowledge will be created, will flow between co-located firms and bounds the knowledge benefits the firms may capture. We finish with a discussion of the need of further examination of the network dynamics involved in an industry cluster to obtain a clearer identification of the actual positive externalities that may accrue to co-locating firms.Strategy; Industry clusters; Innovation
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