Leeds University

Business School

The Globalization of Innovation

LUBS5217M

Lecture 1: Introduction

Dr. David Yoon

Leeds University Business School

Module Leader

Dr. David Yoon (DY)

Associate Professor of International Business

E-mail: h.yoon@leeds.ac.uk

Office hours: Please e-mail to make an appointment

Research: https://scholar.google.com/citations?user=vfdqCRIAAAAJ&hl=en

Scheduling Inquiry: Please contact the LUBS timetabling team.

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Why do we study innovation in the context of international
business?

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Key objectives of the module

• Understand how innovation enables a multinational

corporation to achieve positional advantage and superior
performance.
• Develop strategic plans that enable a multinational
corporation to benefit from the technological developments
and scientific knowledge of its competitors.
• Analyze the benefits and challenges arising from the
globalization of innovation networks.

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Lectures - Tentative

• Week 1: Introduction
• Week 2: Innovation and Corporate Performance
• Week 3: Organizing and Managing Innovation
• Week 4: Global Innovation Strategy
• Week 5: Guest Lecture on Innovation and Ethics
• Week 6: TBA
• Week 7: TBA
• Week 8: Knowledge Transfer and Spillovers
• Week 9: Foundations of Intellectual Capital
• Week 10: Technological Catching-up
• Week 11: Revision & Mock Exam Feedback

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 Seminars - Tentative

• Week 1: No Seminar!
• Week 2: GE reverse innovation
• Week 3: Sustainability transitions in automobile industry
• Week 4: Evolution of music industry
• Week 5: Guest seminar on innovation and ethics
• Week 6: Global R&D competition in computer industry
• Week 7: Mock exam
• Week 8: Space tour
• Week 9: Patent war
• Week 10: Technological Catch-up
• Week 11: Q&A

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Feedback

• Feedback will be provided to students in the classes (both

lectures and seminars) as they work through practical
problems and case studies to test their understanding.
• Exam preparation sessions (Weeks 7 and 11)
• Additionally, to improve their understanding of various
issues, students may also arrange a meeting with the
module leader, who will provide feedback on a one-to-one
basis, and discuss and identify aspects that students can
improve.
• Students’ progress will be assessed through a final exam.

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 Assessment – Subject to approval

• The course is assessed by means of a final

examination
• This accounts for 100 per cent of the assessment
• Answer two questions from a choice of four
• Online Time-Limited: 2.5 hours

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 Reading List

• No need to buy a book as most of the resources are digitized

• A detailed reading list is included in the last PowerPoint slide of each
lecture.

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Leeds University
Business School

The Globalization of Innovation

LUBS5217M

Lecture 1
Part 1: Basics of Innovation

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Why Innovate?

• To outperform our competitors

• Because competitors innovate as well
• Globalization makes it difficult to be the low-cost
high-volume provider
• Innovation is the key to market success for most
firms

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From R&D to innovation

R&D Inventions Innovations

Patents

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Research and Development (R&D)

• Research provides inventions

• Development provides marketable products
• Separate institutions are primarily responsible for each
– Academic for basic research
– Corporate for development

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Evolution of Research and
Development (R&D)

Evolution of understanding technology and innovation

(Rothwell,1990)

1 50’s:Technology Push model: R&D emphasis, scientist driven

2 60’:Market pull model: marketplace

3 70’s:Coupling model: science, technology, marketplace

4 80’s:Integrative model: Functional integration

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Evolution of Research and
Development (R&D)

•5 Today’s environment favors:

– Fast development cycles
– Greater integration of R with D
• Before mid-1990s, most US
companies used sequential
NPD process; now many
use partly parallel process.
• Partly parallel process
shortens overall
development time, and
enables closer coordination
between stages.

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Definitions of Innovation by Neo-
Schumpeterian

C.Freeman, 1982
Technical design, mfg., mgt and commercial activities involved marketing a new products or
the first commercial use of new process or equipment

R.Rowthwell, 1985
Radical and incremental (utilization of even small scale changes in technological know-how
P.Drucker, 1985
Specific tool of entrepreneurs, the means by which they exploit changes as an opportunity
for a different business

DTI, 1994
Successful exploitation of new ideas

Pavitt, 1997
Process of turning opportunity into new ideas and of putting these widely used practice

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Distinction between inventions and innovations

invention refers to the generation of new ideas,

products and processes
innovation is accomplished only with the commercial
application of the invention.

In other words, until an invention is applied, its

economic significance is low.

Note: Less than 2% of the new product ideas are commercially successful!

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Key definitions

Innovation = invention + commercialization

Innovation is a product, service or practice that is

(as a whole) new or that is commercialized in
some ways that open up new and important
uses.

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Key definitions

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Key definitions

• Invention and commercialization occur where

companies and individuals have particular:
– Knowledge or competences, and
– Assets / resources
• Capabilities = competences + assets
– Capabilities determine where a company can
innovate
• Some assets/resources can be purchased
• Competences are more complex; they have to be
accumulated and developed.

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Key definitions

Technology: Theoretical and practical knowledge

and skills that can be used to develop products,
services and processes ( Burgelman et al. 2009)

Technological Change: Advances in the state of

knowledge regarding products, processes and
management practices

R&D-intensity: R&D expenditure/total sales.

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Intelligent Commercialization

• Inventors often get the idea right but the

commercialization wrong

• Technological success and commercial success

do not always go hand in hand.

• Consequently someone else profits from their

invention

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Commercialization

• Commercialization depends on managing the customer

experience
• Management starts by defining what the customer thinks
is important
• This can be difficult, because many inventions have no
obvious use at the time of their invention

Example: the laser diode did not have a clear use

when it was first invented, but it is now one of the
most valuable commercial technologies in history.

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Innovation Value Chain

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Innovation Value Chain

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Types of Innovation

Product Innovation
- Develop new products or improve existing ones, e.g.
develop a new low-consumption car engine.
Process Innovation
- Develop new processes or improve the existing ones =>
reduce production costs
- It is often preferable when products have long life cycle.
Management Innovation
- Develop and implement new management practices that
may increase efficiency

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Types of Innovation

Radical vs. Incremental Innovation

- The radicalness of an innovation is the degree to which it
is new and different from previously existing products
and processes.
- Incremental innovations may involve only a minor
change from (or adjustment to) existing practices.

- Note: The radicalness of an innovation is relative; it may

change over time or with respect to different observers.
- E.g., digital photography a more radical innovation for
Kodak than for Sony.

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Sources of Innovation

Employee (or individual) creativity

- 20% Time
- Elon Musk, Steve Jobs
Users
- Snowboard
- LEGO
Firm’s collaborative network
- Suppliers, Competitors, Customers, and Complementors
- Joint ventures, Research programs, etc.
Technology clusters
- Agglomeration economies

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Basic and Applied R&D

Basic R&D
• It is the work undertaken in order to acquire new knowledge
of the underlying phenomena.
• It does not aim at any particular use. e.g. investigating what
physical properties make an alloy of metals tougher (without
aiming at a specific application)
Applied R&D
• it is directed towards a specific practical aim, i.e. knowledge
which can be used for specific applications.
• e.g. scientists who investigate the conductivity of different
materials in order to create a faster computer processor, are
carrying out Applied Research.

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Leeds University
Business School

The Globalization of Innovation

LUBS5217M

Lecture 1
Part 2: Innovation and Grand Challenges

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Dark side of Innovation

Innovation can be beneficial and increase the

interconnectedness of countries BUT:

- Not all countries benefit equally from innovation and

globalization
- Not all industries benefit equally
- Not all firms within a country benefit equally

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Grand Challenges

Grand challenges are defined as ‘‘ambitious but

achievable objectives that harness science,
technology, and innovation to solve important
national or global problems and that have the
potential to capture the public’s imagination’’ (US
Office of Science and Technology Policy, 2014).

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Grand Challenges

Climate change, poverty, migration, terrorism, and

infectious disease - these topics are examples of
problems that affect both MNEs and the societies
in which they are embedded (Buckley et al., 2017).

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Grand Challenges

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Innovate to solve problems

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Innovate to solve problems

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Innovate to solve problems

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Seminar questions and case study

You should read the case studies and prepare for the questions. You will be asked
randomly to answer them in the class. Please think about and research the
questions

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