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Richard Hawkins

This chapter examines standards within the historical development of the systems of innovation concept, which has become a core paradigm for the development of science, technology and innovation policy. The historical roots of this concept are traced alongside the evolution of thinking about the role of standards in the economy. The increasingly networked nature of both technology and market is identified as a key conceptual bridge between the subjects of innovation and standards that has cross-fertilized both fields to this day. However, the focus on disruption and change in innovation policy has overshadowed the complementary need for stability, consolidation and industry building, which is where the functional role of standards becomes most visible. A framework is proposed that situates standards and standardization as specific functions in the systems of innovation model.

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Tineke M. Egyedi and J. Roland Ortt

This chapter seeks to define a functional classification that distinguishes between different kinds of standards in order to understand in more detail the different effects of standards on processes of innovation and diffusion. Analysis of relevant standards classifications already in the literature shows rough consensus among a variety of authors as to what these basic functions are, but contains many inconsistencies and omissions. The authors draw up a new classification of primary and secondary functions and test its applicability for innovation research. The effects of innovation as identified in academic and standards practitioner literature are sorted according to these functions, and explore the implications for possible new avenues of innovation research.

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John Hudson and Marta Orviska

This chapter reviews the literature on the use of standards by firms. It deals with the reasons why firms adopt standards and the benefits they bring to the firm, with a particular focus on innovations. In doing so the authors distinguish between the many different types of standards, including but not limited to: (1) international management quality standards; (2) regulatory standards such as health and safety; (3) de facto standards such as Windows; and (4) firm-specific standards. They review both the theoretical and empirical literatures, and differentiate between different types of firms, small and large, rural and urban, and also between different sectors, for example manufacturing and services.

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Rudi Bekkers

This chapter examines the history and context of standardization and patenting. It begins by looking at how the discussion arose as to the relationship between patents and standards, and how this topic became more prominent on the agenda of companies, standard setting organizations, and regulators. It then looks at the empirical facts about patents in standards, focusing on standard-essential patents to describe how this phenomenon developed over time, but also how it is distributed among technology areas, standard setting organizations and specific standards. Concerns and problems are identified that could arise when patented technology is included in standards, leading to a discussion of patent policies in standard setting organizations. Likely reasons are identified as to why companies encounter more frequent conflicts over patents in standards, and a range of policy measures are examined.

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Edited by Franco Malerba, Sunil Mani and Pamela Adams

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Pamela Adams, Franco Malerba and Sunil Mani

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Franco Malerba, Sunil Mani and Pamela Adams

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Sunil Mani

This chapter examines the case of Tata Motors Limited (TML), one of the leading automotive firms in India’s automotive industry. It demonstrates that TML is a market leader in India’s fast-growing automotive industry. TML fulfils the three market-leadership conditions – market share, global reach and innovation – exceptionally well. The sources of this leadership are described through a series of firm, sector and country level factors. However, maintaining leadership on a continuous basis for a reasonably long time must not be taken for granted. Leadership positions may be easily challenged in a globalized market and potential new leaders may emerge to challenge what is currently presumed to be an unassailable leadership position. For this reason, a leader must continue to be vigilant from the innovation point of view. In this respect, for TML, continued innovation is the accepted corporate strategy.

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Hong Song and Wensong Bai

The pharmaceutical industry, especially the biopharmaceutical segment, is a high-tech sector characterized by high investments and high prices. But it is also a sector with high risk. Traditionally, only advanced industrialized economies have been able to support such an industry. Recently, however, the internationalization of R & D activities for new drug development, combined with favourable local factor conditions in emerging economies, has worked to change this situation. Small and specialized biopharmaceutical firms from emerging markets have begun to compete successfully along the global value chain. This study examines three of the leading Chinese firms in this sector to illustrate the primary factors that have driven their growth. The study shows that the global shift of R & D activities to developing countries has provided market demand to stimulate the growth of indigenous firms. At the same time, the local, sectoral innovation system in China, including universities, state research institutions and the regulatory environment, has provided financial and human resources, as well as infrastructure to support this growth. Yet the histories of these firms also underline the critical role played by the entrepreneurial founders of these firms in pursuing innovation through capability building and development. How these companies may continue to develop within the Chinese context and become more global players as the industry grows and matures is an interesting question for research.

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Bruno César Araújo and Rodrigo Abdalla Filgueiras de Sousa

This chapter examines the firm, sector and country factors that supported the emergence of two market leaders in specialized fields of the information and communications technology (ICT) sector in Brazil. The first company is Totvs, a software house dedicated to the Enterprise Resource Planning (ERP) segment. The second company is Positivo, a producer of personal computers (PCs), which emerged as a spin-off from a firm focused on educational services. In both cases, the characteristics of the national context have supported the emergence and consolidation of each company as a market leader. Notwithstanding that economies of scale and scope are essential sources of competitive advantage in the ICT sector in general, both cases exhibit a combination of two other factors that counterbalance their initial disadvantages with respect to their international competitors. First, government support has been crucial, although different policies were applied in these two cases: Totvs’s leading position has been reinforced by financial support from the Brazilian National Development Bank (BNDES), while Positivo has benefited from trade protectionism, under the ‘infant industry’ argument. Second, both companies have achieved market leadership through the development of customized products and solutions targeted to specific market segments that have not been properly addressed by world industry leaders. These strategies required the combination of strong technological and marketing capabilities. Recently, both companies have made efforts to enter the global market by focusing on countries with cultural, idiomatic and institutional similarities with Brazil.