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Globalization of Software Innovation
Get PDFRecent field research has provided some evidence of an increase in innovative activity in software development occurring in
new locations outside of the United States. However, there has been little systematic analysis of the extent of this
phenomenon, nor of the sectors involved. Using patent data from the United States, we provide evidence on the geographic
distribution of inventive activity in software. We show that at present inventive activity in software remains concentrated in
locations within the United States and among U.S. firms. We also provide evidence on recent trends in immigration and
educational enrollments in the United States. We do find evidence of some declines in enrollments in U.S. computer science
in recent years. However, of likely equal or greater importance in the short run may be the increasing incentives for skilled
foreign workers to remain in their home countries or to depart from the United States immediately or some years after
degree conferral. Nonetheless, there are powerful forces at work that are likely to keep the development of new software
products and software innovation concentrated in the United States for some time to come
Adding Behavioral Economics Field Experiments to the Industry Studies Toolkit: Predicting Truck Driver Job Exits in a High Turnover Setting
Get PDFThe Truckers and Turnover Project is an intensive case study of a single firm and its employees which matches proprietary
personnel and operational data to new information collected by the researchers to create a two-year panel study of a large
subset of new hires. The project’s most distinctive innovation is the data collection process, which combines traditional
survey instruments with behavioral economics experiments used to measure individual participant characteristics. The
survey data include information on demographics, risk and loss aversion, time preference, planning, non-verbal IQ, and the
MPQ personality profile. The data collected by behavioral economics experiments include risk and loss aversion, time
preferences (discount rates), backward induction ability, patience, and the preference for cooperation in a social dilemma
setting. Subjects are being followed over two years of their work lives. Among the major design goals are to discover the
extent to which the survey and experimental measures are correlated, and whether and how much predictive power, with
respect to key on-the-job outcome variables, is added by the behavioral measures. The panel study of new hires is being
carried out against the backdrop of a second research component, the development of a more conventional in-depth
statistical case study of the cooperating firm and its employees. This is a high-turnover service industry setting, and the focus
is on the use of survival analysis to model the flow of new employees into and out of employment, and on the correct
estimation of the tenure-productivity curve for new hires, accounting for the selection effects of the high turnover
Is Working for a Start-up Worth It? Evidence from the Semiconductor Industry
Get PDFThis paper examines the long-term earnings implications of workers’ decisions to work for early-stage firms. Using quarterly
data, 1990-2002, from the California Unemployment Insurance System covering workers in California’s semiconductor
industry, I compare the career trajectories of charter employees (i.e. employees who leave established firms to join a start-up
firm in the start-up’s first quarter of record) with a matched sample of comparable workers at each charter employee’s
pre-start-up employer. Estimating a fixed-effects model using the matched sample, I find that joining an early-stage firm has
higher expected value and higher variance than staying at an established firm or than changing jobs to a different established
firm. Additionally, I demonstrate that firm death and initial public offerings both have very little effect on the earnings levels
and trajectories of charter employees. Finally, I look at the coefficient of relative risk aversion at which workers are
indifferent between working at a start-up and staying at their previous employer. I conclude that joining a start-up in
California’s semiconductor industry is utility maximizing for all workers with a low to moderate level of risk aversion
The Internationalization of Industry Supply Chains and the Location of Innovation Activities
Get PDFCurrent policy discussions on offshoring mostly focus on its impact on lower skilled manufacturing and services jobs,
assuming that higher-value-added jobs and, especially, the location of innovation activities are not affected by offshoring.
Contrary to this view, we suggest that innovation mainly driven by R&D activities can also move abroad as a result of
offshoring. We suggest that the movement of innovation abroad will be conditioned by the nature of technology innovation
processes, in particular knowledge spillovers, causing some innovation activities to remain in the United States while driving
other activities away. To explore this idea we conduct an in-depth study of the rare earth industry which provides critical raw
materials for numerous technology based applications. This industry is pertinent because it has experienced significant
supply chain relocation away from the United States and to developing countries. Using industry accounts and patent
information, we examine the impact of the movement of rare earth production from the United States to China on the
location of rare earth innovation over the past two decades. We find that, while supply chain offshoring has caused rare earth
magnet innovation activities to move away from the United States, innovation activities in rare earth catalysts remains in the
country. Direct observations and industry reports suggest this dichotomous response to supply chain internationalization is
driven by the role of knowledge spillovers across value chain actors and the changing nature of technology innovation
processes. We employ rare earth technology patents to perform regression analyses and develop a model that empirically
validates these critical drivers in the co-location of production and innovation activities
Changing Paths: The Impact of Manufacturing Offshore on Technology Development Incentives in the Optoelectronics Industry
Get PDFThis paper presents a case study of the impact of manufacturing offshore on the technological trajectory of the firm and the
industry. It looks in particular at the optoelectronics industry. The paper uses a combination of simulation modeling and
qualitative research methods to develop grounded theory. The results suggest that firms face an important dilemma. In the
case of optoelectronic firms, they are able to reduce short-term costs by manufacturing offshore; however, manufacturing
offshore creates a combination of cost and knowledge constraints which limit the firms’ ability to pursue critical
innovations. These results are also of interest to those concerned with trade policy. The interest here is two fold. First, the
optoelectronics industry is of strategic importance in the evolution of industrial technology and thus is important to
national policy. The paper’s principal finding that manufacturing offshore reduces incentives for innovation raises serious
questions about the appropriateness of an offshore manufacturing policy in the long run. Second, the case challenges more
generally conventional theories of trade, particularly their underlying assumptions about the long term dynamic effects
which work through technological change. This case raises the troublesome question of whether these effects might be
generally perverse and reduce or possibly eliminate the gains from trade over the long term
Optimum Investments to Mitigate Catastrophic Risk: Application to Food Industry Firms
Get PDFThe incidence of food security breaches has been on the rise over the past decade. The goal of this paper is to devise an
optimum investment strategy by food companies (retailers and manufacturers) to mitigate exposure to catastrophic risks. To
do this, we develop and estimate a simple analytical model, using probability measures for catastrophic risks associated with
food, from our prior research, together with the results of a "Benchmarking and Assessment Survey" of food companies. The
limitations on the availability of catastrophic risk insurance and their high level of deductibility, together with the one-time
nature of the alternative risk-mitigating investments suggest that such investments should be undertaken whether or not
catastrophic risk insurance is available, particularly since these investments have a large impact on risk financing. Such
investments may protect long term reputations and brand ratings in addition to mitigating potential catastrophic losses
Disruption Lies in the Eyes of the Beholder: Firm Capabilities and Endogeneity of Technological Disruption
Get PDFFailure of leading firms to respond to disruptive technological changes has been explained in terms of their “choices.” I
investigate the disruptive technological changes in the global industrial robotics industry and suggest that ‘ability’ of the
firms play an important role in determining their survival chances. This paper suggests that what may be disruptive (or a
sustaining) change may also be a competence-destroying (or a competence-enhancing) change for a firm. Hence, survival
during a disruptive change is endogenous to the firm's component and architectural capabilities
Old Technology Meets New Technology: Complementarities, Similarities, and Alliance Formation
Get PDFAlliance formation is commonplace in many high-technology industries experiencing radical technological change, where
established firms use alliances with new entrants to adapt to technological change, while new entrants benefit from the
ability of established players to commercialize the new technology. Despite the prevalence of these alliances, we know little
about how these firms choose to ally with specific firms given the range of possible partners they may choose from. This
study explores factors that lead to alliance formation between pharmaceutical and biotechnology companies. We focus on
the alliance tie as the unit of analysis and argue that dyadic complementarities and similarities directly influence alliance
formation. We then introduce a contingency model in which the positive effect of complementarities and similarities on
alliance formation is moderated by the age of the new technology firm. We draw theoretical attention to the intersection
between levels of analysis, in particular, the intersection between dyadic and firm-level constructs. We find that a
pharmaceutical and a biotechnology firm are more likely to enter an alliance based on complementarities when the
biotechnology firm is younger. Another noteworthy contribution is the finding that proxies for broad capabilities appear to
be at least as, if not more, effective in predicting alliance formation compared to fine-grained science and technology-related
indicators, like patent cross citations or patent common citations. We conclude by suggesting that future studies on alliance
formation need to take into account interactions across levels; for example, how dyadic capabilities interact with firm-level
factors
Managing Outsourced Product Design: The Effectiveness of Alternative Integration Mechanisms
Get PDFMany firms have moved from outsourcing only manufacturing and staff support activities (e.g., janitorial services) to
outsourcing more complex and central activities such as product and process development. Outsourcing these more
complex, nuanced, and time-sensitive activities increases the difficulties of coordinating with suppliers. We examine the
frequency with which firms use various interorganizational integration mechanisms and project coordination tools to
coordinate outsourced product development. We further examine the impact of these mechanisms and tools on project
performance. We report descriptive and some preliminary regression statistics from the first three years of a four-year
multi-firm, multi-industry research project. These preliminary results suggest that nearly all firms employ personnel
dedicated to managing the outsourcing relationship. However, firms also use other integration modalities concomitantly.
Specifically, firms initially rely on ad hoc face-to-face communication rather than co-location to manage the interface with
outsourcing partners. However, over time, firms move to co-location to manage relationships with non-domestic suppliers.
Surprisingly, firms make relatively little use of either sophisticated information technology or modular product designs. We
find that the effects of a single integration mechanism or tool can vary dramatically across different outcomes. For example,
co-locating employees appears to improve product quality but are associated with poor schedule peformance. Given the
frequency with which firms employ dedicated individuals to manage the interface, we also present some preliminary
evidence on the skills and training of these individuals; this evidence suggests that (1) they have received little formal
training in key skills and that firms rely solely on experiential learning to train these individuals and (2) for the training they
have received, whether they received it from their university training or from company-sponsored initiatives may have
differential effects on project outcomes
The Evolving Indian Offshore Services Environment: Greater Breadth, Depth, and Scope
Get PDFSince 1995 the offshoring of administrative, technical and software services to India has rapidly evolved from an
insignificant curiosity only studied by a few scholars of international development to a major issue discussed by many in the
United States and Western Europe. India’s position has expanded and evolved in terms of numbers of employees, the
sophistication or value-added of the work performed, and the types of service activities. Drawing upon more than 100
interviews conducted in India in 2004, 2005, and 2006 and presentations by executives at two Sloan Foundation funded
conferences in 2005 and 2006, this paper argues that two separate but related ecosystems have recently emerged in India to
provide services and, more recently, high technology products for the global economy. The first ecosystem is for service
provision. Here we suggest that today the service provision ecosystem is so sophisticated that it can endogenously create
new service offerings and attract overseas firms to transfer new activities in new industry verticals. The second ecosystem,
which is smaller and only recently emergent, is gestating new venture capital-financed, high technology startups. We
provide a typology of these firms and suggest that some have bi-national roots linked to the U.S. Silicon Valley. We explore
the possibility that the leading Indian information technology systems integrators may have created a new business model
that is superior to that of the incumbent global market leaders such as IBM, EDS, and Accenture. Finally, we provide
insight into the evolutionary trajectory of the Indian offshore service provision infrastructure suggesting that it will only
grow in size, complexity, and centrality to the world economy