Markets for technology in the knowledge economy

1999

This essay explores the nature, the functioning, and the economic and policy implications of markets for technology. Today, the outsourcing of research and development activities is more common than in the past, and specialized technology suppliers have emerged in many industries. In a sense, the Schumpeterian vision of integrating R&D with manufacturing and distribution is being confronted by the older Smithian vision of division of labor. The existence and efficacy of markets for technology can profoundly influence the creation and diffusion of new knowledge, and hence, economic growth of countries and the competitive position of companies. The economic and managerial literatures have touched upon some aspects of the nature of these markets. However, a thorough understanding of how markets for technology work is still lacking. In this essay we address two main questions. First, what are the factors that enable a market for technology to exist and function effectively? Specifically we look at the role of industry structure, the nature of knowledge, and intellectual property rights and related institutions. Second, we ask what the implications of such markets are for the boundaries of the firm, the specialization and division of labor in the economy, industry structure, and economic growth. We build on this discussion to develop the implications of our work for public policy and corporate strategy.

The Knowledge Growth Regime, 2019

This introduction presents the analytical framework implemented by the book as the grafting of the tools elaborated by the economics of knowledge and the legacy of Joseph Schumpeter to explore the foundations of the new knowledge economy and the shift away from the corporate growth regime. It frames the innovation process as a creative response based upon the accumulation, generation and exploitation of knowledge and highlights the new structure of advanced economies where knowledge is at the same time the prime input and output. It emphasizes the limits of the new knowledge growth regime, raised by the role of finance, income distribution and intellectual property rights and recommends appropriate economic policies based upon an open technology approach. Keywords Economics of knowledge • Knowledge economy • Schumpeterian growth regimes • Open technology The economic profession is reluctant to understand the aggregate and macroeconomic implications of the radical structural discontinuity brought about by the transition to the knowledge economy and the challenges raised by the central role of knowledge as an economic good. The decline of the industrial economy and the transition to the knowledge economy in advanced countries take place amid several difficulties. A major effort is necessary to understand this transition as a radical CHAPTER 1

California Management Review, 1998

Building the economics of knowledge: A roadmap The analysis of the causes and consequences of the increase of the general efficiency of labor and the associated changes in production, consumption, and distribution brought about by the introduction of new technologies in economic systems is a field of economic investigation of growing interest and widening activity both in research and teaching. This field has evolved over time, partly in response to the changing focus of economic analysis. This area of investigation was identified as "the economics of technical progress" for a large part of the 20th century. In the 1960s and 1970s, it was referred to as "the economics of technological change," and through the 1980s and 1990s it became known as "the economics of innovation." Since then a new shift occurred to bring to the attention of scholars "the economics of knowledge" as a crucial crossing between the economics of science and the innovation.

2011

This paper outlines a set of fundamental changes in the global economy that have altered the nature of the innovation process, brought about global challenges, and stimulated cross border phenomena and network formation responses. These changes has brought about an increase of the demand for knowledge as well as changed the conditions for knowledge production and innovation. Against the background

2005

A radical evolution of intellectual property,law and practices has followed the rise in importance,of new technology,industries. Many patents today in the United States and in Europe directly protect new knowledge. We endeavour,to account,for this evolution in a simple growth,model. To deal with the non-convexitys property of technologies in which knowledge is an input, we construct two equilibria. The first

Cybermetrics, 2001

The concept of 'modes of knowledge production' was used by Gibbons et al. (1994) [1] to distinguish between transdisciplinary ('Mode 2') R&D and more traditional ('Mode 1') research. This paper explores whether the Internet provides a means to operationalize 'Mode 2' knowledge production as containing a differently codified communication pattern which can be compared to co-word and citation patterns in scientometric databases ('Mode 1'). Innovations on the drugs market, for example, can be indicated at the commercial end by using the trade names of the drugs (e.g., Evista), while the very same innovation can be retrieved in the patent and science citation databases using the generic names of the active substances involved (in this case, raloxifene). By using the generic names the new drugs can be traced back into their respective knowledge bases.

Industrial and Corporate Change, 2001

Although market transactions for technologies, ideas, knowledge or information are limited by several well-known imperfections, there is evidence that they have become more common than in the past. In this paper we analyze how the presence of markets for technology conditions the technology and corporate strategy of firms. The first and most obvious implication is that markets for technology increase the strategy space: firms can choose to license in the technology instead of developing it in-house or they can choose to license out their technology instead of (or in addition to) investing in the downstream assets needed to manufacture and commercialize the goods. The implications for management include more proactive management of intellectual property, greater attention to external monitoring of technologies, and organizational changes to support technology licensing, joint-ventures and acquisition of external technology. For entrepreneurial startups, markets for technology make a focused business model more attractive. At the industry level, markets for technology may lower barriers to entry and increase competition, with important implications for the firms' broader strategy as well. 1 This sharp distinction between markets and organizations which is made primarily for expository reasons is not completely faithful to history. Indeed, Chandler (1990) provides several examples of firms that within the in-house R&D paradigm have relied on external sources of knowledge. A classic reference is the reliance of DuPont on external technology until the 1930s (Hounshell and Smith, 1988). There are also important differences across sectors and countries. For instance, during the 1950s and the 1960s Japanese firms in the machinery construction and chemical industries were heavily licensing technologies, mainly from the USA (Chandler, 1990). 2 Elsewhere (see Arora et al., 2001a) we study the nature and functioning of markets for technology and the factors which limit or encourage their growth (see also Pavitt, 2000). We also discuss in detail how the actions of firms, particularly early in their history, have affected the evolution of markets for technology. Sometimes companies have helped, possibly not intentionally, to develop markets for technology. For instance, this is the case of oil companies that, with their early reliance on external technological services and refining technology, have promoted the rise of specialized suppliers (Arora and Gambardella, 1998). In other industries regulation and antitrust policy have played a major role, as for instance in technology licensing by AT&T and IBM (Grindley and Teece, 1997). Although we acknowledge the importance of these issues, the scope of the present paper is already too broad to analyze them here.