Innovation Management and Strategy
Required readings
Part I: Technology and innovation management: Key concepts and Insights
BAUMOL W. (2004) Entrepreneurial Enterprises, Large Established Firms and Other Components of
the Free-Market Growth Machine. Small Business Economics, 23, 1.
ABERNATHY W. & UTTERBACK J. (1975). A dynamic model of process and product innovation. The
International Journal of Management Science
PINCH, T. & BIJKER, W. (1987) The social construction of facts and artifacts: or how the sociology of
science and the sociology of technology might benefit each other. In; The Social Construction of
Technological Systems, Bijker W., Hughes T. & Pinch T. (eds), MIT Press.
ENCAOUA D., GUELLEC D. & MARTINEZ C. (2006). Patent systems for encouraging innovation:
Lessons from economic analysis. Research Policy, 35, 1423-1440.
VAN LOOY, B. (2009). The role of universities within innovation systems; an overview and
assessment. Review of Business and Economics, 1.
DOSI G., LLERENA P. & LABINI M. (2006) The relationships between science, technologies and their
industrial exploitation: An illustration through the myths and realities of the so-called ‘European
Paradox’. Policy Review, 1450-1464
Part II: Models of the innovation process and innovation strategy (firm level)
WHEELWRIGHT S.C. & CLARK K. (1992) Creating Project Plans to Focus Product Development.
Harvard Business Review, 70, 2, 70-82.
COOPER, Robert G. G. "New Problems, New Solutions: Making Portfolio Management More
Effective." Research technology management 43.2 (2000): 18-33.
BOWER, J.L. and CHRISTENSEN, C.M.(1996). Customer Power, Strategic Investment, and the
Failure of Leading Firms. Strategic Management Journal, 197-218
CHRISTENSEN, C.M., RAYNOR, M., & MCDONALD, R. (2015). What is disruptive innovation?
Harvard Business Review, 44-53
O’REILLY C. & TUSHMAN M. (2004) The ambidextrous organization. Harvard Business Review.
O’REILLY C. & TUSHMAN M. (2013). Organizational, ambidexterity: past, present, and future. The
Academy of Management Perspectives, 324-338
VAN LOOY B., MARTENS T. & DEBACKERE K. (2006) Organizing for continuous innovation: On the
sustainability of ambidextrous organizations; Creativity and Innovation Management, Vol. 14, No.
TRIPSAS M. (1999) Unraveling the process of creative destruction: complementary assets and
incumbent survival in the typesetter industry. Strategic Management Journal, 18, 119-142.
1
,CHESBROUGH H. (2003) The era of Open Innovation. MIT Sloan Management Review, 35 – 41.
FAEMS D. , JANSSENS M., MADHOOK A. & VAN LOOY B Toward an integrative perspective on
alliance governance: Connecting contract design, contract application, and trust dynamics, Academy
of Management Journal, 2008, 51(6), 1053-1078.
von HIPPEL, E. (1986) Lead users: A source of novel product concepts. Management Science, 32, 7.
GRANDSTRAND O. (1999) Chapter 7:.Intellectual Property Policies and Strategies. In: The
economics and management of intellectual property. Edgar Elgar Publishers.
Part III: Operational issues in innovation management (people & projects)
BROWN, S. L. & EISENHARDT, K. M. (1995) Product development: past research, present findings,
and future directions. Academy of Management Review, 20 (2): 343-378
ALLEN, T.J. Architecture and Communication among Product Development Engineers. California
Management Review, 2007, Vol. 49 no. 2, pp. 23-41.
ALLEN T. (2001) Organizing for Product Development. MIT Working Paper.
VAN LOOY B. & VISSCHER K.J. (2011) Organizing Innovation within Incumbent Firms: Structure
Enabling Strategic Autonomy. Review of Business and Economics, Vol. LVI, p. 147- 167.
2
,Part I: Technology and innovation management: Key concepts and Insights
BAUMOL W. (2004) Entrepreneurial Enterprises, Large Established Firms and Other
Components of the Free-Market Growth Machine. Small Business Economics, 23, 1.
Argument and Purpose
The author argues that the "miraculous" growth of capitalist economies is driven by a partnership
between four sectors: small entrepreneurial firms, large established companies, universities,
and the government. The purpose of the paper is to show that these groups do not just compete;
they specialize in different parts of the innovation process. Baumol aims to prove that both small
entrepreneurs and giant corporations are necessary for economic progress, as they provide different
but complementary types of innovation.
Key Findings
● Specialization in Innovation:
○ Small Firms: Most revolutionary breakthroughs (like the airplane, PC, and FM
radio) come from small entrepreneurial businesses. They are more likely to take
big risks on "leaps of faith".
○ Large Firms: These firms specialize in "incremental improvements". They take
existing inventions and make them faster, more reliable, and easier to use
through routinized R&D.
● The Power of Small Steps: While individual small improvements seem minor, they add
up to massive results. For example, Intel’s steady, incremental improvements to the
microprocessor have increased computing speed by millions of percent since 1971.
● Market Pressures: In high-tech industries, large firms are forced to innovate constantly
just to survive. This "innovation arms race" ensures a steady stream of new technology.
● Technology Sharing: Surprisingly, many firms voluntarily share or license their
technology to competitors. This happens because it provides a revenue source, reduces
the high cost of R&D, and acts as an "insurance policy" against falling behind.
● Public Sector Roles: Universities and governments are the primary sources of basic
research. This type of research is too risky or unprofitable for private companies but is
essential for long-term growth.
Conclusion
The paper concludes that future prosperity depends on the success of all four sectors working
together. Governments should act as "facilitators" by funding basic research and creating policies that
help domestic firms acquire and adapt technology from abroad. Ultimately, the free-market "growth
machine" works best when it combines the radical imagination of the entrepreneur with the
disciplined, steady improvements of large-scale industry
3
, ABERNATHY W. & UTTERBACK J. (1975). A dynamic model of process and product
innovation. The International Journal of Management Science
Argument and Purpose
The authors argue that a firm’s ability to innovate is not random but is deeply connected to its
competitive strategy and the stage of development of its production technology. The purpose of
the paper is to move beyond just describing successful innovations and instead provide a theory that
predicts how the nature, source, and cost of innovation will change as a product and its manufacturing
process mature.
Key Findings
The researchers identify three distinct stages of development, each with a different "pattern" of
innovation:
● Stage I: Uncoordinated (Performance-Maximizing)
○ Focus: Companies compete by making the best-performing, most unique
products.
○ Innovation: Mostly radical product innovations stimulated by market needs.
○ Process: The production process is "fluid" and manual, using general-purpose
equipment that is easy to change.
○ Firm Type: Typically smaller firms.
● Stage II: Segmental (Sales-Maximizing)
○ Focus: As the market grows, firms compete on product variety and features to
maximize sales.
○ Innovation: A mix of product and process changes, often stimulated by
technological opportunities.
○ Process: Production becomes more automated and rigid in some areas
(segments) but remains flexible in others.
● Stage III: Systemic (Cost-Minizing)
○ Focus: Products become highly standardized, and firms compete primarily on
having the lowest price.
○ Innovation: Mostly incremental process innovations aimed at reducing costs.
○ Process: The system is highly integrated and automated; even minor changes
are very expensive because everything is linked.
○ Firm Type: Typically a few large firms.
Conclusion
The paper concludes that there is a strong "internal consistency" between a firm's strategy and its
innovation. While moving toward the Systemic stage (Stage III) leads to high efficiency and low costs,
it comes at the price of decreased flexibility. Companies in the final stage often find it very difficult to
innovate further and may eventually be threatened by new, flexible competitors or radical new
technologies.
4
Required readings
Part I: Technology and innovation management: Key concepts and Insights
BAUMOL W. (2004) Entrepreneurial Enterprises, Large Established Firms and Other Components of
the Free-Market Growth Machine. Small Business Economics, 23, 1.
ABERNATHY W. & UTTERBACK J. (1975). A dynamic model of process and product innovation. The
International Journal of Management Science
PINCH, T. & BIJKER, W. (1987) The social construction of facts and artifacts: or how the sociology of
science and the sociology of technology might benefit each other. In; The Social Construction of
Technological Systems, Bijker W., Hughes T. & Pinch T. (eds), MIT Press.
ENCAOUA D., GUELLEC D. & MARTINEZ C. (2006). Patent systems for encouraging innovation:
Lessons from economic analysis. Research Policy, 35, 1423-1440.
VAN LOOY, B. (2009). The role of universities within innovation systems; an overview and
assessment. Review of Business and Economics, 1.
DOSI G., LLERENA P. & LABINI M. (2006) The relationships between science, technologies and their
industrial exploitation: An illustration through the myths and realities of the so-called ‘European
Paradox’. Policy Review, 1450-1464
Part II: Models of the innovation process and innovation strategy (firm level)
WHEELWRIGHT S.C. & CLARK K. (1992) Creating Project Plans to Focus Product Development.
Harvard Business Review, 70, 2, 70-82.
COOPER, Robert G. G. "New Problems, New Solutions: Making Portfolio Management More
Effective." Research technology management 43.2 (2000): 18-33.
BOWER, J.L. and CHRISTENSEN, C.M.(1996). Customer Power, Strategic Investment, and the
Failure of Leading Firms. Strategic Management Journal, 197-218
CHRISTENSEN, C.M., RAYNOR, M., & MCDONALD, R. (2015). What is disruptive innovation?
Harvard Business Review, 44-53
O’REILLY C. & TUSHMAN M. (2004) The ambidextrous organization. Harvard Business Review.
O’REILLY C. & TUSHMAN M. (2013). Organizational, ambidexterity: past, present, and future. The
Academy of Management Perspectives, 324-338
VAN LOOY B., MARTENS T. & DEBACKERE K. (2006) Organizing for continuous innovation: On the
sustainability of ambidextrous organizations; Creativity and Innovation Management, Vol. 14, No.
TRIPSAS M. (1999) Unraveling the process of creative destruction: complementary assets and
incumbent survival in the typesetter industry. Strategic Management Journal, 18, 119-142.
1
,CHESBROUGH H. (2003) The era of Open Innovation. MIT Sloan Management Review, 35 – 41.
FAEMS D. , JANSSENS M., MADHOOK A. & VAN LOOY B Toward an integrative perspective on
alliance governance: Connecting contract design, contract application, and trust dynamics, Academy
of Management Journal, 2008, 51(6), 1053-1078.
von HIPPEL, E. (1986) Lead users: A source of novel product concepts. Management Science, 32, 7.
GRANDSTRAND O. (1999) Chapter 7:.Intellectual Property Policies and Strategies. In: The
economics and management of intellectual property. Edgar Elgar Publishers.
Part III: Operational issues in innovation management (people & projects)
BROWN, S. L. & EISENHARDT, K. M. (1995) Product development: past research, present findings,
and future directions. Academy of Management Review, 20 (2): 343-378
ALLEN, T.J. Architecture and Communication among Product Development Engineers. California
Management Review, 2007, Vol. 49 no. 2, pp. 23-41.
ALLEN T. (2001) Organizing for Product Development. MIT Working Paper.
VAN LOOY B. & VISSCHER K.J. (2011) Organizing Innovation within Incumbent Firms: Structure
Enabling Strategic Autonomy. Review of Business and Economics, Vol. LVI, p. 147- 167.
2
,Part I: Technology and innovation management: Key concepts and Insights
BAUMOL W. (2004) Entrepreneurial Enterprises, Large Established Firms and Other
Components of the Free-Market Growth Machine. Small Business Economics, 23, 1.
Argument and Purpose
The author argues that the "miraculous" growth of capitalist economies is driven by a partnership
between four sectors: small entrepreneurial firms, large established companies, universities,
and the government. The purpose of the paper is to show that these groups do not just compete;
they specialize in different parts of the innovation process. Baumol aims to prove that both small
entrepreneurs and giant corporations are necessary for economic progress, as they provide different
but complementary types of innovation.
Key Findings
● Specialization in Innovation:
○ Small Firms: Most revolutionary breakthroughs (like the airplane, PC, and FM
radio) come from small entrepreneurial businesses. They are more likely to take
big risks on "leaps of faith".
○ Large Firms: These firms specialize in "incremental improvements". They take
existing inventions and make them faster, more reliable, and easier to use
through routinized R&D.
● The Power of Small Steps: While individual small improvements seem minor, they add
up to massive results. For example, Intel’s steady, incremental improvements to the
microprocessor have increased computing speed by millions of percent since 1971.
● Market Pressures: In high-tech industries, large firms are forced to innovate constantly
just to survive. This "innovation arms race" ensures a steady stream of new technology.
● Technology Sharing: Surprisingly, many firms voluntarily share or license their
technology to competitors. This happens because it provides a revenue source, reduces
the high cost of R&D, and acts as an "insurance policy" against falling behind.
● Public Sector Roles: Universities and governments are the primary sources of basic
research. This type of research is too risky or unprofitable for private companies but is
essential for long-term growth.
Conclusion
The paper concludes that future prosperity depends on the success of all four sectors working
together. Governments should act as "facilitators" by funding basic research and creating policies that
help domestic firms acquire and adapt technology from abroad. Ultimately, the free-market "growth
machine" works best when it combines the radical imagination of the entrepreneur with the
disciplined, steady improvements of large-scale industry
3
, ABERNATHY W. & UTTERBACK J. (1975). A dynamic model of process and product
innovation. The International Journal of Management Science
Argument and Purpose
The authors argue that a firm’s ability to innovate is not random but is deeply connected to its
competitive strategy and the stage of development of its production technology. The purpose of
the paper is to move beyond just describing successful innovations and instead provide a theory that
predicts how the nature, source, and cost of innovation will change as a product and its manufacturing
process mature.
Key Findings
The researchers identify three distinct stages of development, each with a different "pattern" of
innovation:
● Stage I: Uncoordinated (Performance-Maximizing)
○ Focus: Companies compete by making the best-performing, most unique
products.
○ Innovation: Mostly radical product innovations stimulated by market needs.
○ Process: The production process is "fluid" and manual, using general-purpose
equipment that is easy to change.
○ Firm Type: Typically smaller firms.
● Stage II: Segmental (Sales-Maximizing)
○ Focus: As the market grows, firms compete on product variety and features to
maximize sales.
○ Innovation: A mix of product and process changes, often stimulated by
technological opportunities.
○ Process: Production becomes more automated and rigid in some areas
(segments) but remains flexible in others.
● Stage III: Systemic (Cost-Minizing)
○ Focus: Products become highly standardized, and firms compete primarily on
having the lowest price.
○ Innovation: Mostly incremental process innovations aimed at reducing costs.
○ Process: The system is highly integrated and automated; even minor changes
are very expensive because everything is linked.
○ Firm Type: Typically a few large firms.
Conclusion
The paper concludes that there is a strong "internal consistency" between a firm's strategy and its
innovation. While moving toward the Systemic stage (Stage III) leads to high efficiency and low costs,
it comes at the price of decreased flexibility. Companies in the final stage often find it very difficult to
innovate further and may eventually be threatened by new, flexible competitors or radical new
technologies.
4
