Deck 6: Technology-Based Industries and the Management of Innovation

Question 1

Property rights in innovation mainly include; patents, trademarks, and copyright.

Answer 1

True

Question 2

Those firms who spend more on research and development are nearly always more successful at making profit from innovation.

Answer 2

False

Question 3

The main factors in determining whether the innovator can make a good profit from an innovation are luck, and good timing.

Answer 3

False

Question 4

One major factor to first-mover advantage is how quickly and easily an innovation can be copied.

Question 5

Which exploitation strategy is best for an innovation depends entirely on whether the innovator prefers to licence out the underlying patent or copyright.

Question 6

The potential to make a profit from an innovation is greatly enhanced if a rival would need 2 or 3 years to copy it.

Question 7

An innovation which comes to dominate the market does NOT always lead to superior profits for the innovator.

Question 8

An innovation is more likely to diffuse more quickly throughout an industry if it is perceived as worth imitating by competitors.

Question 9

Most inventions are based on new technology.

Question 10

Only digital technology is of interest outside of the science-based industries.

Question 11

Regarding innovations, complementary resources are all the other things apart from the invention or idea necessary to achieve commercial success.

Question 12

Having a patent is NOT much use if a rival is expert enough to quickly come up with an alternative way to achieve the same thing.

Question 13

Companies that own industry standards earn about the same returns as those companies with other competitive advantages.

Question 14

Innovation must involve the attempted commercialisation of a new invention, or new idea.

Question 15

Close co-operation with a major potential customer during innovation development is inadvisable, in case they copy the innovation themselves.

Question 16

A major constraint for start-up innovators is that they are unlikely to possess sufficient complementary resources for exploiting their innovation.

Question 17

The "regime of appropriability" refers to the extent to which the innovator can appropriate value i.e., make a profit.

Question 18

If a firm or a person secures a patent, then commercial success is assured.

Question 19

Technology is NOT very important to established, mature industries.

Question 20

The risk of failure of an innovation is a combination of technological risk and market risk.

Question 21

To determine the amount of the value created between players appropriated by the innovator, 4 factors are critical:

A)complementary resources, tacitness and complexity of technology, corporate culture, and HR management.
B)property rights, tacitness and complexity of technology, lead-time, and complementary resources.
C)tacitness and complexity of technology, lead-time, excellence of top management teams, and luck.
D)lead-time, complementary resources, relative bargaining power, and structure of the industry.

Question 22

The cycle of innovation has recently

A)speeded up.
B)slowed down.
C)become more aggressive.
D)become more uncertain.

Question 23

The extent to which an innovation can be imitated by a competitor depends on

A)whether the competitors' experts are as clever as our experts.
B)whether a competitor can get a photocopy of the patent details.
C)how ruthless the competitor is.
D)how possible it is for the competitors' experts to comprehend, codify and replicate the technology.

Question 24

Industry standard solutions always appear.

Question 25

It is wise to manage the creative departments in a firm separately from the operational departments.

Question 26

Network externalities lead to positive feedback, so that products tend to rapidly coalesce to an industry standard.

Question 27

Why is innovation no guarantee of success and fortune for the innovator?

A)Success depends on the value created.
B)Implementation of innovation may be a failure due to internal organizational factors.
C)Success depends on sufficient value being created and a sufficient portion of that value being appropriated by the innovator.
D)Nothing is guaranteed in the corporate world and in life in general.

Question 28

Firms innovate because

A)the human race is naturally inventive.
B)competitive advantages tend to erode over time - so new ones need to be found.
C)consumers are always looking for the next new gadget.
D)it gets boring doing the same old things.

Question 29

The connection between invention and innovation is

A)they are exactly the same.
B)they have nothing in common.
C)innovation is the commercialisation of invention.
D)largely a matter of personal opinion.

Question 30

Firms innovate because they are seeking

A)Market share.
B)leadership of the industry.
C)a competitive advantage.
D)lower costs.

Question 31

Network externalities are what cause technical standards to appear in industries where the important thing to a customer is how many other customers he is connected to.

Question 32

An innovation diffuses

A)mainly on the supply side.
B)by industrial espionage and leaked information.
C)through the purchase of products by customers and the imitation by competitors.
D)b and c.

Question 33

The chief examples of property rights concerning innovations are

A)copyrights, patents, and trademarks.
B)patents, goodwill, and trademarks.
C)know-how, skills, and trade secrets.
D)trademarks, copyrights, and tangible assets.

Question 34

If a strong system of appropriability exists, the innovator

A)cannot capture a significant portion of the created value.
B)cannot acquire the property rights of its innovation.
C)can capture a significant portion of the created value.
D)should try to sell its innovation to a large firm.

Question 35

The most important standards in technology industries are interoperability standards.

Question 36

In the past decade the impact of technology has

A)been limited to science-based industries.
B)been limited to digital technologies.
C)witnessed the pervasive influence of digital electronics technologies.
D)overwhelmingly been social networking services.

Question 37

Inventions are the creation of

A)new products based on new technology.
B)new products or processes, often based on existing technology and know-how.
C)usually several decades of research.
D)individual scientists or engineers, working alone.

Question 38

The effectiveness of the different laws used to protect property rights depends on

A)the country in which a firm wants to protect its property rights.
B)the role of specialized state agencies in that protection.
C)the state of the economy.
D)the type of innovation that is being protected.

Question 39

The value created by an innovation is

A)shared equally among the players.
B)determined by customer loyalty.
C)captured by the player possessing the largest market share of the industry.
D)distributed amongst the various players involved in no certain way.

Question 40

Competitive advantage and technology are linked by

A)innovation.
B)corporate culture.
C)invention.
D)organizational culture.

Question 41

Network externalities arise NOT just when users are linked on a network but also when

A)much value is gained from compatibility with associated ancillary products and services.
B)downstream costs of switching from a failed alternative candidate standard are high.
C)there are clear price and availability advantages to buying the market leader's product.
D)all of the above.

Question 42

Cooperation with lead users is

A)a risk because they may imitate the innovation themselves.
B)a burden to costs and times the time of key people, so is best avoided unless they insist.
C)essential in some cases to ensure development follows a path which customers actually want.
D)useful because it makes the customer feel important.

Question 43

Network externalities exist when

A)the value of a product for a customer lies in how many others he can connect to.
B)the value of a product for a customer depends significantly on the number of other users of the same product.
C)there are large benefits to other customers.
D)there are huge drawbacks for other customers.

Question 44

A patent is usually the best protection for an innovation.

A)This statement is correct.
B)No one can confirm or disprove this statement.
C)It depends.
D)This statement is incorrect.

Question 45

Complementary resources include

A)ancillary products.
B)give-away promotional products such as free pens, mouse mats etc.
C)bundled products. for example, for a pc, what software is included in the package.
D)financial, production, sales and marketing resources needed to gain market success.

Question 46

Regarding de facto standards, a "tipping point" is when

A)a certain threshold of market share is reached, beyond which it just keeps rising irreversibly.
B)the market losers basically have to "tip" their excess product away.
C)it's as though the market losers "tip" their market shares into the winners bag.
D)customers finally realise who has the best product.

Question 47

The choice of a strategy to exploit innovation depends on two factors:

A)luck and past experience in the industry.
B)characteristics of the innovation and a firm's financial resources.
C)characteristics of the innovation and a firm's resources and capabilities.
D)the nature of the innovation, and how large the firm is.

Question 48

The determinants of the choice between a leader versus a follower strategy are

A)the extent of protection of the innovation, the nature of the knowledge involved, and the potential to establish a standard.
B)the development cost of the innovation, the importance of complementary resources, and the shape of the economy.
C)the extent of protection of the innovation, the potential to establish a standard, and the importance of complementary resources.
D)the potential to establish a standard, the relative powers of the other players in the industry, and the development cost of the innovation.

Question 49

A classic example of network externalities, illustrating that the value of a product is a direct function of the number of users, is

A)fashion items.
B)the automobile.
C)the telephone.
D)public transport, such as the train.

Question 50

Technological uncertainty means

A)uncertainty as to which technical standards will be adopted or emerge.
B)the uncertainty from it not being possible to predict how long it may take or even whether a technical problem will be solved.
C)the uncertainty of whether a rival is secretly developing the same technology more quickly.
D)all of the above.

Question 51

The main advantage of licensing as a strategy to exploit innovation is

A)it requires little involvement in complementary resources by the innovator.
B)it's a way to operate as a virtual company.
C)it saves on costs, so is vastly more profitable for the innovator.
D)it's always successful and highly profitable.

Question 52

Risk in emerging industries is created by the following factors:

A)market and technological uncertainties.
B)market and cost uncertainties.
C)rivalry and political uncertainties.
D)customer tastes and technology development costs.

Question 53

Standards are important in an industry because

A)they underpin interoperability (where relevant)and facilitate industry growth.
B)every industry needs a market leader.
C)they are imposed by the government and have the force of law behind them.
D)most industries cannot effectively function without standards.

Question 54

Lead-time in this context refers to

A)the period of time during which a firm is the leader of an industry.
B)the period of time it takes for equipment to arrive after it's been ordered.
C)the time it takes a follower to catch up.
D)the time it takes for a competitor to realise you've done something innovative.

Question 55

Complexity of technology relates to lead-time to catch up because

A)the more complex the design and technology, the longer it will take to replicate.
B)complex products tend to be subject to a long lead-time for delivery.
C)it takes even experts a long time to understand complex theory.
D)competitors are reluctant to get involved in complex issues, if they know they're complex.

Question 56

Public versus private standards are respectively

A)standards set by public firms vs. standards established by privately-owned companies.
B)standards established by governments vs. standards set by companies.
C)standards available for all organizations and industry players versus standards owned by firms or individuals.
D)free standards versus standards users have to pay for.

Question 57

When complementary resources are critical to the market success of an innovation,

A)the technical risks are relatively unimportant.
B)the costs and risks are amplified.
C)a larger firm with established complementary resources is better placed than a start-up.
D)b and c.

Question 58

One huge potential problem with licensing is

A)the licensee may seek to imitate the innovation themselves.
B)the innovator is wholly dependent on the licensee's commitment and effectiveness.
C)the innovator cannot issue another licence.
D)the licensee may be a bad payer.

Question 59

De facto standards suffer from the following weakness:

A)they are characterized by uncertainty.
B)they tend to emerge slowly and / or haphazardly.
C)they are characterized by high development costs.
D)rivals may not accept them and fight against their adoption by the industry.

Question 60

The only way to cope with true uncertainty is

A)to be flexible enough to quickly react to the unexpected.
B)prepare multiple scenario plans.
C)to construct a computer model simulation.
D)to calculate all the risks and analyse the chances of success in a spreadsheet model.

Question 61

Where they exist, network externalities are critical phenomena because

A)they create positive feedback which often leads to a winner-takes-all situation.
B)they create a winner-takes-all situation which is unfair from a competition standpoint.
C)technological innovations tend to be resilient.
D)governments are more and more concerned with supporting networks.

Question 62

To win a standard war, a firm often needs to

A)first identify the future standard and then assemble allies to win.
B)share the value created by its technology with third parties.
C)wait, and try to network and lobby the government authorities.
D)increase marketing and advertising.

Question 63

One problem with innovation in large, rigidly procedural firms is that

A)innovation tends to be resisted.
B)innovation is seen as unimportant.
C)there is less need to innovate.
D)none of the above; large firms are just as innovation-friendly as small ones.

Question 64

The difference between "evolutionary" and "revolutionary" standards strategies is

A)revolutionary strategies are more dramatic, and so more effective.
B)evolutionary strategies maintain compatibility with what went before.
C)revolutionary strategies are more likely to gain investor attention.
D)revolutionary strategies show greater determination and commitment.

Question 65

The essence to winning a standards war is

A)having the best technology.
B)building a strong market presence, and some powerful allies - complementers and leading customers.
C)owning the most intellectual property.
D)simply being the first in the market.

Question 66

The inventing or innovation-initiating team should be managed

A)with the same discipline that any other company department is subject to.
B)in a way which is probably less restrictive or hierarchical than the rest of the company.
C)more strictly than other departments, to prevent creative people losing direction.
D)in accordance with a target-driven, methodical philosophy.

Question 67

Invention and innovation

A)are closely related, so the same ingredients to success are required for both.
B)are related - but invention requires creativity whereas innovation requires subsequent cross functional collaboration.
C)are best performed by a single, integrated team.
D)are a cultural phenomenon which must be inculcated into the entire workforce.