Three Essays on Firm Innovation Strategy: Innovation of Internet of Things and Green Technologies

The last few decades have seen an accelerating pace of fundamental transformations in the business environment driven by digital technologies and the emergence of the green agenda. These are known as the digital and green transitions, largely pushed by technological advancements and innovation. Given the profound impact of such two transitions on the business operations and environment, it is crucial for both researchers and policy makers to improve their understanding of what these big trends mean for businesses and how market players should strategise for responding to these technological transformations to maximise the benefits and mitigate the risks. We attempt to tackle these big problems by probing into the fundamental technological trends underlying these two transitions. This thesis is developed to investigate how companies react to the ongoing economic and societal challenges during the digital and green transitions by searching for answers to three related research questions. In particular, we intend to understand how businesses develop their technological competence or capacity for creating ground-breaking innovation within Industry 4.0 as well as environmental innovation under the current global endeavour to achieve SDGs. We also propose to analyse how the wave of green technology influences economic performance of businesses in the wider economy through the diffusion of green innovation. The work is composed of three empirical chapters, mainly drawing upon patent information from the Bureau van Dijk’s Orbis Intellectual Property (Orbis IP) database, Environmental, Social and Governance (ESG) practices from the Thomson Reuters ASSET4 database, and firm-level information from the Orbis database

Redirecting research efforts on the diversification-performance linkage: The search for synergy

We review the literature on the diversification-performance (D-P) relationship to a) propose that the time is ripe for a renewed attack on understanding the relationship between diversification and firm performance, and b) outline a new approach to attacking the question. Our paper makes four main contributions. First, through a review of the literature we establish the inherent complexities in the D-P relationship and the methodological challenges confronted by the literature in reaching its current conclusion of a non-linear relationship between diversification and performance. Second, we argue that to better guide managers the literature needs to develop along a complementary path – whereas past research has often focused on answering the big question of does diversification affect firm performance, this second path would focus more on identifying the precise micro-mechanisms through which diversification adds or subtracts value. Third, we outline a new approach to the investigation of this topic, based on (a) identifying the precise underlying mechanisms through which diversification affects performance; (b) identifying performance outcomes that are “proximate” to the mechanism that the researcher is studying, and (c) identifying an appropriate research design that can enable a causal claim. Finally, we outline a set of directions for future research

From co-evolutionary perspective of production and innovation

학위논문(박사)--서울대학교 대학원 :공과대학 협동과정 기술경영·경제·정책전공,2020. 2. 이정동.경제 개발에 대한 연구는 기술 혁신을 노동력 증가 및 자본금 축적과 같은 전통적인 요소와 함께 경제 성장의 주요 요소로 인식하고 있다. 보다 최근의 연구는 국가의 산업 구조의 복잡성 차이가 경제 성장 패턴에 미치는 영향에 더 중점을 두었다. 기술 혁신이나 산업 구조에 중점을 둔 이전의 연구는 생산과 혁신의 경계를 종종 모호하게 다루고 있지만, 생산과 혁신의 중요성과 서로의 상호 의존성을 암묵적으로 인정하고 있다. 그러나 지금까지 생산과 혁신의 두 요소를 명시적으로 연결시키는 연구는 부족하였다. 본 연구는 경제 복잡화 또는 산업 개발이 순조롭고 부드럽게 이루어지는 전환 과정이 아니라, 생산 및 기술 역량의 축적 및 다각화 과정에서 몇 가지 함정과 이를 뛰어넘는 도약을 포함한다는 가설로 시작한다. 나아가 본 연구는 국가의 생산 역량과 기술 역량 간의 경로 의존적 패턴을 식별하고 기존의 연구에 다차원적 역량 관점을 제공하는 것을 목표로 한다. 이를 위해 이하의 장은 국제 수출 및 특허 데이터를 기반으로 한 제품 공간과 기술 공간을 바탕으로 진화론적 관점에서 경제적 복잡성 문제를 접근한다. 2장ㅇ은 산업 발전 과정에서 한 국가가 직면하는 도약과 함정을 제시하고, 진화론적 관점에서 국가의 성장 단계를 이해하기 위한 프레임워크를 설정하였다. 특히 이 장은 밀접하게 연결된 생산과 지식 사이의 3단계의 공진화를 통해 성공적인 국가가 진화한다고 주장한다. 이러한 공진화 단계에는 국가의 비교 우위를 따라가는 부드러운 경제구조의 전환이 아닌 빈번한 도약 및 함정이 산업 다각화 과정에서 발생한다. 이 연구에서는 제품 공간과 기술 공간 사이의 연결을 통한 분석을 통해 생산 능력과 지식 능력의 공진화 경로를 보여준다. 이 연구에서 제안하는 공진화 단계를 지난 수십 년 간의 한국의 개발 경험의 사례에 비추어볼 때, 경제 발전 중 국가가 마주하는 도약의 기회와 함정을 식별하여 성공적인 국가 발전을 이루기 위해 취해야 하는 다각화 경로를 제시한다. 3장은 생산 역량이 국가 차원에서 새로운 기술 역량의 발전을 촉발했는지 여부를 연구하였다. 이 장에서는 네트워크 분석을 위한 '제품 공간' 및 '기술 공간' 개념을 채택하고 현재 생산 역량이 연관된 기술의 미래 기술 역량에 영향을 미치는지 분석한다. 이를 위해 1980년부터 2005년까지의 수출 데이터 및 국제 특허 데이터와 생산 및 혁신을 연결하는 ALP (Algorithmic Links with Probabilities) 연계표를 기반으로 국가 간 비교 분석을 진행한다. 분석 결과, 국가의 과거 생산 우위가 새로운 기술 우위의 출현에 중요한 역할을 한다는 것을 확인하였다. 이 결과는 현재의 생산 역량이 신산업의 발현뿐만 아니라 기술 혁신과 기술 역량 발현에도 진화 경로의 역할을 맡는다는 것을 시사한다. 4장은 국가 별 산업 다각화 패턴과 국가의 핵심 기술 역량 간의 관계를 살펴보았다. 여기서 수출 구조의 변화에 의해 측정된 산업 다각화는 국가가 하고 있는 것을 나타내고, 특허 구조에 의해 측정된 지식 또는 기술 역량은 국가가 알고 있는 것을 나타낸다. 기업 동학 이론의 기존 연구에서 둘 간의 관계를 규명하였으며, 이 장은 이전 기업 차원의 다각화 연구를 생산 및 기술 역량의 국가 차원의 공진화 과정으로 확장시킨다. 이 장에서는 1980년부터 2010년까지 ALP 연계표에 의해 연결된 국제 수출 및 특허 데이터를 사용한다. 분석 결과, 미래의 산업 다각화 정도의 변화는 현재의 기술 역량과 양의 관계가 있으며, 특히 기술 역량은 미래 비연관다각화의 바탕이 된다는 점을 확인하였다. 이러한 연구 결과는 산업 다각화에서 기술 역량의 중요성을 제시한 이전 연구를 뒷받침하고, 기술 역량을 비연관다각화의 핵심 요소로 고려하여 해석하는 새로운 관점을 제안한다. 5장은 국가의 수출 구조 변화를 분석하여 역량과 경제 복잡성의 발전 유형을 국가가 특화 과정에서 마주하는 선택지와 함께 분석하였다. 이 장에서는 여러 경제 단계에서 국가의 특화 선택지를 대조하고 수년에 걸친 산업 구조와 지식 구조의 동적 변화 양상을 제시하였다. 분석 결과, 개발 도상국에는 복잡성이 높고 동시에 현재 생산 구조와의 유사성이 높은 목표 산업이 존재하지 않기 때문에, 국가의 특화 패턴에 대한 현재 연구의 정책적 시사점이 적용되지 않을 수 있음을 보여준다. 결과적으로 개발 도상국은 '고위험 고수익' 또는 '저위험 저수익'의 전략을 취할 수 있지만 기존 연구가 선진국에게 처방전으로 내놓는 '저위험 고수익' 전략은 선택할 수 없다. 이를 보완하기 위해, 이 장은 특화 과정의 경로의존성을 이해할 수 있는 제품 공간과 기술 공간 사이의 다자간 경로를 제안한다. 국가 단위의 비교 분석에 따르면, 새로운 역량 발전에 대한 현재 생산 및 지식 역량의 영향은 국가의 소득 수준에 따라 다르다는 것을 시사한다. 연구 결과는 국가의 복잡성 발전을 위해서는 생산 및 지식 구조에 대한 이해가 동시에 필요하며, 국가의 발전 수준에 따라 다른 전략이 필요하다는 정책적 시사점을 제공한다. 연구의 결과를 종합하면, 본 연구의 주된 의미는 생산과 기술 역량이 상호 의존적이며 경제가 복잡해짐에 따라 함께 발전한다는 것이다. 이 결과는 기술 역량이 산업 다각화 패턴을 설명하는 데 없어서는 안될 요소이며, 생산 역량이 기술 혁신을 촉진한다는 주장을 뒷받침한다. 특히, 생산과 기술 역량은 국가의 소득 수준에 따라 서로에게 다른 영향을 미치는 패턴을 보여준다. 이러한 연구 결과를 바탕으로, 본 연구는 현재의 생산 및 기술 역량이 각각 전략적 기술 및 산업 다각화에 대한 주요 지침이 되어야 한다는 새로운 정책적 관점을 제공한다.Studies on economic development have recognized the technological innovation as a key factor of economic growth, in addition to traditional factors including increase in labor and accumulation in capital stocks. More recent studies put more focus on the difference in complexity of industrial structures of countries and its effect on different growth patterns. Previous studies focusing on the technological innovation or the industrial structure implicitly acknowledge the importance and interdependence of each other, and boundaries between production and innovation often got blurred. However, there has been no study that link the two fields explicitly. This study starts with a hypothesis that the economic complexification, or industrial development is not a smooth transition process but rather involves several uneven jumps during the accumulation and diversification processes of production and technological capability. This study aims to identify the path-dependent patterns between production and technological capabilities across countries, and provide a multilateral capability perspective to current studies. The following chapters approach the question of economic complexity from co-evolutionary perspective on the product space and technology space based on international export and patent data. Chapter 2 studies the jumps and traps that a country faces during its industrial development, and sets up a framework to understand the growth stages of a country from an evolutionary point of view. In particular, this chapter argues that a successful country evolves through three stages of coevolution between closely interconnected production and knowledge. These coevolution stages include frequent jumps and traps during industrial diversification, rather than smooth transitions following the comparative advantage of countries. Analyses through linkage between the product space and the technology space show the co-evolutionary paths of production capability and knowledge capability. A case study of Korean development experience, which has gone through the coevolution stages suggested in this chapter during the past decades, identifies the jumps and traps during industrial development and suggests a successful path of diversification. Chapter 3 investigates whether production capabilities fostered the development of new technological capabilities at the national level. This chapter adopts the concept of product space and technology space for network analysis, and analyzes whether the current production capability in related technologies influences the future technological capability. The main comparative analysis is based on export data and international patent data from 1980 to 2005, and ALP (Algorithmic Links with Probabilities) concordance to link production and innovation. The results show that past production advantages of a country plays a significant role in the emergence of new technological advantages. This finding suggests that current production capability provides evolution paths not only to new products, but also to technological innovations. Chapter 4 examines the relationship between patterns of national-level industrial diversification and core-technology competence of countries. Industrial diversification measured by changes in export structure represents what a country does, and knowledge or technological competence measured by patent structure represents what a country knows. Similar relationship has been suggested by the firm dynamics theories, and this chapter expands the previous firm-level diversification literature into national-level co-evolution of production and technological competence. This chapter uses international export and patent data linked by the ALP concordance matrix, from 1980 through 2010. The analysis shows that the change in the degree of industrial diversification is positively related with their current technological competence, and more specifically, that technological competence is the driver of unrelated diversification. These findings support the previous studies on the importance of technological competence in diversification, and suggests an alternative way of interpreting unrelated diversification by considering technological competence as a key factor. Chapter 5 studies trends in the evolution of capability and economic complexity, along with the specialization options of countries by analyzing the changes in export structures at the national level. This chapter contrasts the specialization options of countries at different economic stages and shows their dynamic changes across years. The findings show that current research on specialization patterns of countries may not be applicable to developing countries because they do not include possible aims with both high complexity and similarity to the current production structure. As a result, developing countries can only take either the high-risk high-return or low-risk low-return tracks, but not the low-risk high-return tracks that developed countries aim for. This chapter suggests a multilateral path between product space and knowledge space to understand the driving forces of specialization. Based on a comparative analysis of countries, the results suggest that effects of production and knowledge capability on development of a new capability vary by the income levels of countries. The findings give policy implications to developing countries that complexity upgrading requires understanding of both production and knowledge structures. In summary, the main implication of this study is that production and technological capability are interdependent, and coevolve as the economy gets more complex. The findings support that technological capability is an indispensable factor in explaining the diversification pattern, and that production capability promotes technological innovation. Specifically, the effects of two capabilities on each other show different patterns by the income level of countries. Based on these findings, this study provides a unique industrial and innovation policy implication that the current production and technological capability should be a key guidance to strategic technological and industrial diversification, respectively.Chapter 1. Introduction 1 1.1 Motivation and objectives 1 1.2 Outline of the study 4 Chapter 2. Understanding the jumps and traps in the industrial development process: Coevolution of production and knowledge 9 2.1 Introduction 9 2.2 Co-evolutionary process between production and knowledge 13 2.2.1 Theory of production and knowledge diversification 13 2.2.2 Stages of development based on co-evolution between production and knowledge 15 2.2.3 Jumps and traps during jumps in the diversification process 21 2.3 Linkage and illustration of production and knowledge 26 2.4 Revisiting the Korean industrial development process 30 2.4.1 Korea from P0 to P1 (1965-1980) 31 2.4.2 Korea from P1 to T1 (1985-2000) 34 2.4.3 Korea from T1 to P2 (2000-) 37 2.5 Discussion 39 2.6 Conclusion 41 Chapter 3. Role of production in fostering innovation 43 3.1 Introduction 43 3.2 Previous Studies 46 3.2.1 Discussion on relationship between production and innovation 46 3.2.2 Path-Dependence characteristic of capability evolution through network analysis 48 3.3 Data 53 3.4 Model 58 3.5 Empirical Results 63 3.6 Conclusion 74 Chapter 4. Technological competence as a driver of industrial diversification 76 4.1 Introduction 76 4.2 Previous Studies 79 4.2.1 Technology as a factor of diversification 84 4.2.2 Different factors and patterns of related and unrelated diversification 84 4.3 Data 87 4.4 Model 89 4.5 Empirical Results 97 4.6 Conclusion 108 Chapter 5. Alternative Paths of Specialization for Developing Countries 112 5.1 Introduction 112 5.2 Previous literature 115 5.2.1 Studies on complexity and path-dependent specialization 115 5.2.2 Studies on industrial development and learning process 118 5.3 Data 120 5.4 Model 123 5.5 Results 127 5.5.1 Ex-post application of specialization framework 127 5.5.2 Empirical results 131 5.6 Conclusion 137 Chapter 6. Conclusion 142 6.1 Summary of the study 142 6.2 Implications 146 6.2.1 Implications for theory 146 6.2.2 Implications for practice 147 6.3 Limitations and direction for future research 149 Bibliography 153 Abstract (Korean) 172Docto

An entropy-based indicator system for measuring the potential of patents in technological innovation: rejecting moderation

© 2017, Akadémiai Kiadó, Budapest, Hungary. How to evaluate the value of a patent in technological innovation quantitatively and systematically challenges bibliometrics. Traditional indicator systems and weighting approaches mostly lead to “moderation” results; that is, patents ranked to a top list can have only good-looking values on all indicators rather than distinctive performances in certain individual indicators. Orienting patents authorized by the United States Patent and Trademark Office (USPTO), this paper constructs an entropy-based indicator system to measure their potential in technological innovation. Shannon’s entropy is introduced to quantitatively weight indicators and a collaborative filtering technique is used to iteratively remove negative patents. What remains is a small set of positive patents with potential in technological innovation as the output. A case study with 28,509 USPTO-authorized patents with Chinese assignees, covering the period from 1976 to 2014, demonstrates the feasibility and reliability of this method

Related and unrelated industry variety and the internationalization of start-ups

We study the relationship between industry variety in a start-up's home location and the start-up's internationalization in terms of both the likelihood of and persistence in exporting. Using a unique sample of Swedish start-ups, we find that related industry variety is positively associated with exporting likelihood and persistence, whereas unrelated industry variety is positively associated with exporting likelihood and persistence when the start-ups’ employees possess technological knowledge. We also find that employees’ international experience strengthens the positive relationship between related industry variety and start-ups’ export persistence. We provide auxiliary evidence of the proposed mechanisms through which related and unrelated industry variety affects start-ups’ internationalization—that is, through their effects on start-ups’ ability to launch novel products in foreign markets. The findings of our study provide policymakers preliminary evidence on th

Related and unrelated industry variety and the internationalization of start-ups

We study the relationship between industry variety in a start-up's home location and the start-up's internationalization in terms of both the likelihood of and persistence in exporting. Using a unique sample of Swedish start-ups, we find that related industry variety is positively associated with exporting likelihood and persistence, whereas unrelated industry variety is positively associated with exporting likelihood and persistence when the start-ups’ employees possess technological knowledge. We also find that employees’ international experience strengthens the positive relationship between related industry variety and start-ups’ export persistence. We provide auxiliary evidence of the proposed mechanisms through which related and unrelated industry variety affects start-ups

Cumulative and Combinatorial Knowledge Dynamics: Their Role for Continuity and Change in Regional Path Development

This thesis addresses the question of how regions can adapt to technological and social changes. In the face of recent economic rises, disruptive digitalization, and the need to transition towards sustainability, processes of diversification, transformation, and renewal have become increasingly important to strengthen the dynamics development of regions. While the creation or the lock-in of regional development paths has received a lot of attention by economic geographers, studies on the transformation of existing paths are relatively scarce. Instead, in recent decades scientific, political, and economic actors alike have promoted a logic of specialization to support regional competitiveness. Yet the processes outlined above require that these specializations are combined with novel, external knowledge inputs. In order to capture these processes of the accumulation and combination of knowledge, this thesis introduces and applies the concept of knowledge dynamics. It differentiates interaction processes by the degree of institutional and cognitive distance that actors have to bridge. In the theoretical framework of this thesis, these knowledge dynamics are brought together with path development research of the Evolutionary Economic Geography and Innovation Systems literature strands. At the center of this thesis stand the questions of how different knowledge dynamics influence, and are influenced by, the elements and institutions of regional economic landscapes. In four papers based on empirical material from different contexts, these interfaces are explored. Thereby the focus is laid on knowledge dynamics in symbolic knowledge bases of music scenes, as the field of non-technological innovation is relatively underexplored despite its increasing economic significance. In order to quantitatively measure innovation and knowledge dynamics in this creative industry, this thesis employs so-called resonance indicators derived from digital social data. The findings of this thesis show that the interplay of cumulative and combinatorial knowledge dynamics leads to processes of path modernization and branching. While cumulative knowledge dynamics guide the direction of potential diversification routes, combinatorial knowledge dynamics affect the creation and transformation of new organizations and institutions. In order to promote these dynamics, path plasticity and the openness to extralocal knowledge sources should be promoted

On inter-industry relatedness and regional economic development

The dissertation aims to advance our understanding about the role of local industry structure in regional economic development. More specifically, it investigates how relatedness between local industries (i.e. similarities in what kind of knowledge industries use) contributes to and constrains regional economic development. Empirically, the dissertation investigates Swedish regional development in 1991-2010.Inter-industry relatedness is a key concept in evolutionary economic geography and has a prominent role in narratives explaining the evolution of regional economies. The diversity of local industries and relatedness between them serve as sources of feedback and path dependencies that mould regional development trajectories. It is widely accepted that firms benefit from the local presence of other firms in related industries and such local related variety increases regional employment growth. Often these growth benefits are assumed to be ‘in the air’ or in local ‘buzz’ taking the form of pure knowledge spillovers via unintended interactions between individuals. The dissertation argues that the role of market-mediated knowledge flow channels like labour mobility is underestimated.Economic diversification is a major source of dynamics in regions. Researchers and policymakers increasingly recognise that existing industrial structure and local capabilities condition which new activities will be feasible to develop in regions. This is supported by empirical studies showing that regions tend to diversify into activities that are related to their current industry mix. For example, regions manufacturing cars are more likely to start producing motorcycles than tennis rackets. The dissertation demonstrates that regions’ potential for such related diversification has an inverted U-shaped relationship with regional size. The highest potential is in large and medium-sized regions, while core regions have few related diversification opportunities since they already host most industries. Actual diversification events are largely in line with the potential – fewer new related industries enter small and core regions than mediumsized and large regions. The dissertation also proposes a framework that connects various regional development paths (ranging from path shifting to path creation) to the features of local industrial structure that supports these paths (e.g. related variety, related diversification potential) and to the mechanisms associated the paths (e.g. incremental innovation, entrepreneurial cost discovery).Finally, the dissertation challenges the current static view of relatedness and demonstrates that relatedness is a dynamic phenomenon. Furthermore, growth impact of emerging, stable and disappearing relatedness linkages varies by regional type. Relatedness ties have a ‘best before date’ and over time deplete their potential to generate inter-industry knowledge spillovers and stimulate innovation. At a more general level, the dissertation calls for studying the role and evolution of inter-industry relatedness as part of broader structural change processes

Essays on Business Value Creation in Digital Platform Ecosystems

Digital platforms and the surrounding ecosystems have garnered great interest from researchers and practitioners. Notwithstanding this attention, it remains unclear how and when digital platforms create business value for platform owners and complementors. This three-essay dissertation focuses on understanding business value creation in digital platform ecosystems. The first essay reviews and synthesizes literature across disciplines and offers an integrative framework of digital platform business value. Advised by the findings from the review, the second and third essays focus on the value creation for platform complementors. The second essay examines how IT startups entering a platform ecosystem at different times can strategically design their products (i.e., product diversification across platform architectural layers and product differentiation) to gain competitive advantages. Longitudinal evidence from the Hadoop ecosystem demonstrates that product diversification has an inverted U-shaped relationship with complementors success, and such an effect is more salient for earlier entrants than later entrants. Earlier entrants should develop products that are similar to other ecosystem competitors to reduce uncertainty whereas later entrants are advised to explore market niche and differentiate their products.The third essay investigates how platform complementors strategies and products co-evolve over time in the co-created ecosystem network environment. Our longitudinal analysis of the Hadoop ecosystem indicates that complementors technological architecture coverage and alliance exploration strategies increase their product evolution rate. In turn, complementors with faster product evolution are more likely to explore new partners but less likely to cover a wider range of the focal platforms technological layers in subsequent periods. Network density, co-created by all platform complementors, weakens the effects of complementors strategies on their product evolution but amplifies the effects of past product evolutions on strategies.This three-essay dissertation uncovers various understudied competitive strategies in the digital platform context and enriches our understanding of business value creation in digital platform ecosystems

Economic Complexity and Human Development

This book combines the human development approach and innovation economics in order to explore the effects that structural economic change has on human development. The author discusses how innovation, social networks, economic dynamics and human development are interlinked, and provides several practical examples of social and micro-entrepreneurship in contexts as diverse as Peruvian rural villages and Brazil's urban area