Question 1

Being the leader in introducing an innovation to the market is usually better than being a follower.

Accepted Answer

Being the first mover in introducing an innovation does offer advantages such as market dominance and brand recognition, but it also comes with high risks and costs associated with research and development, market education, and infrastructure development. Followers can learn from the first mover's mistakes, refine the innovation, and enter the market with a more competitive offering.

Question 2

Invention and innovation are essentially the same.

Accepted Answer

Invention is the creation of a new idea or product, while innovation is the successful implementation and improvement of that idea or product. Invention is the starting point, while innovation is the ongoing development and improvement of that invention.

Question 3

The primary consideration in managing the risks of innovation is minimizing commitments in order to maximize flexibility.

Accepted Answer

Minimizing commitments enables a business to easily pivot or adjust their strategies as they learn from their innovation initiatives. This flexibility allows them to better manage the risks associated with innovation. By contrast, maxing out on commitments could limit a business's ability to pivot, which could ultimately increase the risks associated with innovation.

Question 4

The network externalities that support eBay's dominance of the market online auctions are primarily the result of user-based network effects.

Accepted Answer

User-based network effects occur when the value of a product or service increases as more users adopt it. In the case of eBay, the more buyers and sellers that use the platform, the more valuable it becomes to all users, leading to a strong network effect that has helped eBay dominate the online auction market.

Question 5

Research shows that across firms,R&D intensity and frequency of new product introductions is positively correlated with profitability

Accepted Answer

The answer of Research shows that across firms,R&D intensity and...

Question 6

In the markets for digital products,"platforms"-the principal type of interface within two-sided markets is an operating system.

Accepted Answer

Platforms in the markets for digital products typically use operating systems as the primary interface for two-sided markets.

Question 7

A standard is a format or interface that allows interoperability.

Accepted Answer

A standard establishes a set of rules, guidelines or characteristics for products, processes or services. By adhering to these standards, different systems and devices can work together seamlessly, ensuring interoperability.

Question 8

A shopping mall provides an interface between two types of customer: the retailers which lease retail stores and the consumers that shop at these stores.Hence a shopping mall may be regarded as a platform.

Accepted Answer

The statement correctly defines a shopping mall as a platform that connects retailers and consumers.

Question 9

In relation to innovation,the term "regime of appropriability" describes the conditions which influence how the returns to innovation are distributed between the innovator and other parties

Accepted Answer

The regime of appropriability is a term widely used in the field of innovation to describe the system of incentives that determines how the benefits of innovation are allocated among different actors involved in the process. It refers to the legal, economic, and social frameworks that shape the dynamics of appropriation, replication, imitation, and competition in innovation activities. The regime of appropriability includes factors such as patents, copyrights, trademarks, trade secrets, standards, contracts, networks, and institutions that affect the ability of innovators to capture the value of their innovations and the degree of spillovers to other stakeholders. Therefore, the regime of appropriability is a key determinant of innovation outcomes and the alignment of incentives among actors in the innovation ecosystem.

Question 10

The cycle of innovation-from the generation of new scientific knowledge to the diffusion of the innovation-takes about the same length of time for digital products as for analogue products.

Accepted Answer

Digital products often have a faster cycle of innovation due to the rapid pace of technological advancements and the ease of distributing updates over the internet, compared to analogue products which may require more time for physical manufacturing and distribution.

Question 11

Empirical research shows that for both product and process innovations,patents are more effective at protecting innovation than secrecy.

Accepted Answer

Empirical research indicates that for both product and process innovations, firms often consider secrecy to be a more effective method of protecting their innovations than patents. This is because patents require disclosure of information, which can sometimes enable competitors to invent around the patent.

Question 12

Willie Wonka's (Charlie and the Chocolate Factory)commitment to secrecy suggests that his innovative candies probably lacked patent protection.

Accepted Answer

If Willie Wonka was so committed to secrecy, it is likely that he did not seek patent protection for his innovative candies, as patents require public disclosure of the invention.

Question 13

The history of innovation supports Emerson's prediction that superior technology ("a better mousetrap")is usually translated into commercial success.

Accepted Answer

While superior technology can lead to commercial success, history shows that other factors such as marketing, timing, and consumer needs also play crucial roles in determining commercial success.

Question 14

Across most industries patents offer the greater protection to product innovations than to process innovations.

Accepted Answer

Patents generally offer stronger protection to product innovations, which can be easily identified and distinguished from other products, as well as to the unique features or functions of the product. However, process innovations may be protected by patents if they involve novel and non-obvious methods of producing a product or delivering a service. In some cases, trade secrets or other forms of intellectual property protection may be more appropriate than patents for protecting process innovations.

Question 15

The main advantage of licensing as a means of exploiting an innovation is that the innovator can profit from the innovation without the need to invest in the complementary resources and capabilities required for commercialization

Accepted Answer

Licensing allows the innovator to give permission to another company to use their innovation in exchange for royalties or fees, without the need for them to invest in the resources and capabilities required for commercialization, such as manufacturing facilities, distribution channels, and marketing expertise. This can be a more cost-effective way for the innovator to profit from their innovation.

Question 16

The ability of an innovating firm to appropriation of returns to its innovation is wholly dependent on establishing property rights in the innovation

Accepted Answer

While establishing property rights through patents or copyrights is one way to appropriate returns from innovation, firms can also use secrecy, lead time advantages, complementary assets, and network effects to protect and benefit from their innovations.

Question 17

'Freedom to design' refers to firms' ability to use each other's patents through a comprehensive cross licensing agreement

Accepted Answer

The statement is correct. Cross-licensing agreements allow firms to use each other's patents, which gives them the freedom to design and develop new products without the risk of infringing on each other's intellectual property.

Question 18

Network externalities exist when the value of a product to an individual depends on the number of other users.

Accepted Answer

Network externalities, also known as network effects, arise when the value of a product or service increases as more people use it. This can be seen in social networks, online marketplaces, and other platforms where the more users there are, the more valuable the platform becomes for each individual user.

Question 19

The best strategy for exploiting an innovation depends on two major factors: first,the strength of the firm's intellectual property in the innovation and,second,the resources and capabilities available to the firm.

Accepted Answer

The statement accurately describes the two major factors that determine the best strategy for exploiting an innovation. The first factor is the strength of the firm's intellectual property protection, which can impact its ability to prevent competitors from copying or imitating the innovation. The second factor is the resources and capabilities available to the firm, which can determine its ability to successfully commercialize the innovation through activities such as marketing, distribution, and production.

Question 20

It is difficult to be successful as a first mover unless your innovation has strong patent protection.

Accepted Answer

Being a first mover means that you are introducing a new product or service to the market before your competitors. However, if your innovation does not have strong patent protection, there is a high risk of competitors copying your idea and offering the same product or service. This can result in losing your market share and revenue. Therefore, it is difficult to be successful as a first mover unless your innovation has strong patent protection.

Quiz 9: Technology-Based Industries and the Management of Innovation