This course explores the basis of competition in high-technology industries.
It introduces conceptual frameworks based on cutting-edge research in
economics and strategy. The frameworks may seem abstract at first,
but students who master them will gain an in-depth understanding of how
high-technology industries work and how to develop strategies for managing
firms in such industries. Students will learn how to apply such
frameworks through case studies, computer laboratory exercises and an
in-class negotiation exercise. Groupwork faciliates learning from your
peers, and a final paper allows you to explore topics you care about.
The focus of this course is on the strategic issues around how
a firm should manage its technology. Strategic issues include understanding
the technological and competitive landscape, incentives to innovate, alternative
commercialization paths for a new technology, ways to compete in the high-tech
marketplace, resource allocation and R&D investment decisions, and
managing factors that hinder or promote the diffusion of a new technology.
This course is NOT...
- This is NOT a course on new product development, human resource issues,
high-tech entrepreneurship, or national technology policy. Those issues
are addressed in passing, but the central issue here is managing strategy
in a high-tech environment.
- This is also NOT a course on corporate strategy. Instead, it examines
strategic issues in the context of high-technology industries. So the
tools learnt in a basic strategy course such as "Porter's Five
Forces" will not be covered here. MBA students should think of
Tech Strategy as an important follow-on module after having taken the
core strategy course.
- This is NOT a course on Information Technology, per se, although it
does include examples and cases from that industry. The main focus is
on strategic and managerial issues.
This is a challenging but ultimately rewarding course. You will
be expected to understand the key theoretical and empirical results in
research articles published in strategy and economics journals.
However, you are not expected to derive mathematical models.
The main goal is to relate these readings to what steps a manager or high-tech
entrepreneur should take to develop a technology strategy for his/her
There are four segments to this course (see detailed syllabus below).
The first part is on the productivity impact of technology, patterns of
technical change, diffusion of innovation and knowledge spillovers.
The second part of the course examines the relationship between technology
and market structure and strategies for competing in high-technology markets.
The third segment of the course is on investing in and developing R&D
capabilities. Finally, the ideas presented in the course are integrated
through case studies and an in-class negotiation exercise. Overall,
the early part of the course is loaded towards conceptual papers while
the later part is weighted towards applications.
|WHO SHOULD TAKE THIS CLASS
- This class is for MBA, MOT and M.Sc students. There are no
pre-requisites, however interested students would benefit from having
taken an introductory courses at the undergraduate level in Microeconomics.
Some background in Management of Technology (e.g. MMT5002) would also
be helpful. Students without these backgrounds may have to do
a few additional readings to catch up (these are listed as “review”
in the reading list below).
- Ph.D.(Management) and M.Sc. (Management by research) students who
exposure to the literature on technology strategy are welcome to participate.
However the requirements and grading will be different (see below).
- Cross-faculty and exchange students are welcome. You should apply
through your department office and ask them to register you for the
course via the NUS Business School MBA program office.
REQUIREMENTS AND GRADING
I. MBA/MOT/M.Sc/Cross-faculty students:
All assignments should be submitted electronically to facilitate sharing
and learning. The page layout should be A4-sized, with line spacing
set to 1.5 and font size 11 or above.
II. For PhD and M.Sc(Management) students:
- Regular attendance.
- A research-oriented paper to be discussed with the instructor (100%).
For example, this paper could present a critical literature review and
propose a research study.
What to do if you missed class:
- If you cannot make it to class, inform the instructor for that week
via email, download the class slides after class, and spend 10 minutes
with a classmate who did attend to learn what you missed.
- If you are absent for a valid reason, you can make up for your class
participation score by writing a short online
paper on the topic that you missed. It should not just be
a regurgitation/summary of that topic, but rather your own analysis
and extension of it. Your paper should clearly indicate which class
it was meant to make up for, and you should post it on IVLE. Make-up
papers must be submitted within one week of the missed class.
- Note that the 1st week does not count towards class participation.
- Textbooks: You are not required to purchase any textbooks.
- IVLE eLibrary: The main readings are available in digital format
via IVLE. The NUS Library has obtained copyright permission for you
on IVLE. This service is provided free of charge.
- Xanedu: You will be required to purchase an online coursepack
from Xanedu.com. It
will cost approximately USD40. It looks like this.
This reading list builds upon courses taught by Rebecca Henderson (MIT)
and Scott Stern (Northwestern University).
Topic and Readings
|PART 1: Technology: Productivity Impact and Managing
6 Jan 2004
i. What this course is about.
ii. Science, Technology and Productivity
- Read: Solow, Robert M. (1957), “Technical Change and the Aggregate
Production Function,” Review of Economics and Statistics, 39(3),
pp 312-320. [IVLE
- Skim: Williams Easterly (2001), The Elusive Quest for Growth,
MIT Press. The entire book is available online for free to NUS staff
and students [NUS
- Optional: Nelson, R.R. and Gavin Wright (1992), “The rise and
fall of American technological leadership,” Journal of Economic Literature,
Vol. 30 Issue 4, p1931-1965 [IVLE
- Optional: World Development Report 1998 [web].
- Optional: Griliches, Zvi (1998), R&D and Productivity:
The Econometric Evidence, Chicago: Chicago University Press.
13 Jan 2004
|Knowledge Spillovers and Learning Curves
- Read: Linda Argote and Dennis Epple (1990), "Learning
Curves in Manufacturing," Science, New Series, Vol. 247,
No. 4945. (Feb. 23, 1990), pp. 920-924.[IVLE
- Read: Griliches, Zvi (1992) “The Search for R&D Spillovers,”
The Scandinavian Journal of Economics, 94(Supplement): 29-47.
Free download from NBER [pdf].
Hands-on computer laboratory exercise on learning
curves and spillovers
Optional and review articles:
- Review: Utterback, James. (1994). “Dominant Designs and the
Survival of Firms”, Chapters 2 in Mastering the Dynamics of Innovation,
Harvard Business School Press, pp 23-55 and pp 79-102. [IVLE eLibrary]
- Optional: Learning Curves, Chapter 3 of The Practice of Econometrics:
Classic and Contemporary, Ernst R. Berndt, Addison-Wesley, 1990.
20 Jan 2004
|Diffusion of Technology
- Read: David, Paul (1990), “The Dynamo and the Computer: An
Historical Perspective on the Modern Productivity Paradox,” American
Economic Review, Vol. 80(2), pp. 355-361. [IVLE eLibrary][Jstor]
- Read: Rogers, Everett M. (1976), "New Product Adoption
and Diffusion,", The Journal of Consumer Research, Vol. 2, No.
4. (Mar., 1976), pp. 290-301.[IVLE eLibrary][Jstor]
- Prepare: HBS Case Study: EMI and the CT Scanner
Optional and review articles:
- Review: Foster, R. (1986). “The S-curve: A New Forecasting
Tool.” Chapter 4 in Innovation, The Attacker's Advantage, Summit Books,
Simon and Schuster, New York (NY). pp. 88-111. [IVLE eLibrary]
- Optional: Griliches, Z. (1957), “Hybrid Corn: An Exploration
in the Economics of Technological Change”, Econometrica, Vol. 25, No.
4., pp. 501-522. [Jstor]
- Optional: Jaffe, Adam B., Manuel Trajtenberg and Rebecca Henderson.
(1993) “Geographic Localization of Knowledge Spillovers as Evidenced
by Patent Citations,” Quarterly Journal of Economics, August
1993, Vol. 434, pp 578-598. [Jstor]
- Supplementary: Rogers, Everett M. “Innovativeness and Adopter
Categories”, Chapter 7 in Diffusion of Innovations (3rd edition), The
Free Press, 1983, pp 241-270.
|PART 2: Technology, Markets and Competition
27 Jan 2004
|Incumbents and Entrants
- Read: Henderson, R. (1993). “Underinvestment and Incompetence
as Responses to Radical Innovation: Evidence from the Photolithographic
Alignment Equipment Industry,” Rand Journal of Economics, 24(2). Read
pages 248-252 and Figure2; skim the rest.[IVLE eLibrary][Jstor]
- Read: Kwanghui’s summary of Incumbents vs Entrants [IVLE Readings
- Case Study: Eli Lilly & Company: Innovation
in Diabetes Care (HBS# 9-696-077) [Xanedu]
- Skim: Tirole, Jean (1988), The Theory of Industrial Organization,
Cambridge(MA): MIT Press, chapter 10, pp. 389-414
- Optional: Gilbert and Newbery (1982), “Preemptive Patenting
and the Persistence of Monopoly,” American Economic Review, Vol. 72(3),
pp. 314-26. [Jstor]
- Optional: Reinganum, J. F. (1983), “Uncertain Innovation and
the Persistence of Monopoly,” American Economic Review, Vol. 73, pp.
3 Feb 2004
Commercialization I (Intellectual Property and Complementary Assets)
- Review the following websites about patents, copyrights, trademarks,
- IPOS Spore - read the ABOUT IP section [ipos]
- US Patent Office [uspto]
- US copyright office, para 1&2 [click]
- Read: Gans, J. and Stern, S., “Managing Ideas: Commercialization
Strategies for Biotechnology” http://www.mbs.edu/home/jgans/research.htm
- Review: Teece, D., Profiting from Technological Innovation:
Implications for Integration, Collaboration, Licensing and Public Policy,
The Competitive Challenge, 1987.
- Optional: Teece, David J., “Capturing Value from Knowledge
Assets: The New Economy, Markets for Know-How and Intangible Assets,”
California Management Review, 1998, Volume 40, No 3, Spring 1998, pp
10 Feb 2004
Continued from last week...
- Case Study: IDEO Product Development (HBS#9-600-143)
- Carl Shapiro and Hal Varian (1999), Information Rules (chapter 7),
Boston: Harvard Business School Press. [IVLE eReserve]
- Besen, S. and Farrel, J (1994), "Choosing How to Compete: Strategies
and Tactics in Standardization", Journal of Economic Perspectives,
Vol. 8, No. 2. (Spring, 1994), pp. 117-131. [Jstor]
- Optional: Arthur, W.B., “Competing Technologies: An Overview,” in
Dosi, G. et al., Technical Change and Economic Theory, (New York, NY:
Columbia University Press, 1988). [an advanced version is published
in the Economic Journal and available from Jstor].
17 Feb 2004
Continued from last week...
- Case Study: Atheros Communications (HBS #9-802-073)
Commercialization II (Strategy)
- Readings (to be determined): Kwanghui Lim and David Hsu, "Commercialization
of the Cohen-Boyer Patent"
- In-class project on commercialization.
Optional and Review Articles
- Optional: Shane, S. (2001), “Technology Regimes and New Firm
Formation,” Management Science 47(9), pp 1173-1190.
- Optional: Raymond, Eric, “The Cathedral and the Bazaar” available
24 Feb 2004
Competing in High-tech Service industries
- Roger Schmenner (1986), "How can Service Businesses Survive and
Prosper", Sloan Management Review.
- Berry and Yadav (1996), "Capture and communicate value in the
pricing of services", Sloan Management Review, June 1996.
- In-Class Debate: Should online financial service
firms enter the Asian Market including Singapore? And if so, how?
- Case Study: Charles Schwab in 2002- (HBS
|PART 3: Investing in R&D capabilities
2 Mar 2004
Incentives to Innovate
- Read: Aghion, P. and J. Tirole (1994), "The Management of Innovation",
Quarterly Journal of Economics. pp. 1185-1209.[Jstor]
- Case Study: Xerox Technology Ventures: March
1995 (HBS #9-295-127) [Xanedu]
- Optional: Katz, M.: “An Analysis of Cooperative Research and
Development,” Rand Journal of Economics, Vol. 17, No. 4, Winter 1986.[Jstor]
- Optional: Holmstrom, B. (1989). “Agency Costs and Innovation,”
Journal of Economic Behavior and Organization, Vol. 12(3). pp.
9 Mar 2004
|Investing in basic/applied research; Real options and other
- Read: Dixit, A. and Pindyk, R., “The Options Approach to Capital
Investment,” Harvard Business Review May/June 1995.[Xanedu]
- Read: “Get Real” paper: http://www.capatcolumbia.com/Articles/FoFinance/Fof10.pdf
- Review: Cohen, W. and D. Levinthal (1990). “Absorptive
Capacity: A New Perspective on Learning and Innovation,” Administrative
Science Quarterly, Vol. 35.[Jstor]
- Case Study: Intel Capital and Berkeley Networks
(HBS #9-600-069). [Xanedu]
- Optional: Cockburn, Iain and Henderson, Rebecca: “Absorptive
Capacity, Coauthoring Behavior, and the Organization of Research in
Drug Discovery,” Journal of Industrial Economics, June 1998, Volume
XLVI, No. 2. pp. 157-182.
- Optional: Kwanghui
Lim (2004), "The Relationship between Research
and Innovation in the Semiconductor and Pharmaceutical Industries (1981-97)",
Research Policy, Vol. 33, No. 2, pp. 287-321.[download]
|PART 4: Applying the Concepts and Frameworks
16 Mar 2004
In-Class Computer Laboratory exercise:
- R&D Investment Decisions: Applying
the NPV, Real Options and Scenario-Planning Frameworks
Case study using all the concepts learnt this semester:
- Case Study: Surface Logix (HBS #9-802-050).
23 Mar 2004
IMPT: Group Project Report due by 5pm Today.
Please submit to IVLE Workbin.
In-class Negotiation Exercise
- INSEAD-CEDEP Case: Advanced Drug Delivery
Systems: Alza & Ciba-Geigy (A, B and D) [Xanedu]
- ADDS (A) is an overview of the industry and technology. ADDS(B) presents
details of the 1978 detail. ADDS(D) is an update 5 years later.
- Optional: Alza(Synopsis) and Ciba-Geigy Pharma (B).
30 Mar 2004
|Group Project Presentations and Conclusions
- Group projects presentations
- Wrap up
Final Papers are due next weekend.