Transcript growth theories - Dipartimento di Comunicazione e Ricerca Sociale

Technical Progress
introduction
• The technical progress in the Solow model, the
exogenous cause of the growth of per capita income
steady state.
• Before explaining the causes of technical progress
(growth theories endogena), this raises the problem of its
measurement.
• The 'approach' growth accounting 'is proposed to
decompose the growth rate of the economy in the
contributions of the accumulation of factors of production
on the one hand and technical progress on the other.
Technical Progress
The Production Function
• The product of an 'economy is represented by:
Y  f ( K , L, t )
• The increase of production may 'be due to:
• Increase in the factors of production, capital (K) and
labor (L).
• Technological change. The shape of the production
function changes over time (t).
Technical Progress
The representation of the output through isoquants
• The isoquants of the production function provide a
geometric representation of the production function are
the pairs of K and L that produce a given output Y.
K
Y=200
Y=100
L
Technical Progress
The representation of the output through isoquants
• The production increases for the following
reasons:
• Increase of only one of the factors. But given the
diminishing returns of the single factor, that
increase will stop.
• Increase of both factors:
• Constant returns, increasing or decreasing.
• The Solow model assumes constant returns to
use the theory of marginal distribution
• Technological improvement.
Technical Progress
taxonomy
Initial date technology with an infinite number of production techniques
(possible combinations of K and L), technical progress is said:
- 'Labor augmenting', or Harrod neutral, if it increases the productivity
'of the work of all production techniques leaving the productivity' of
capital unchanged. (Hypothesis of the Solow model).
Yt  f ( K t , (1   ) Lt )
t
where γ and 'the growth rate of productivity' of work
- 'Factor augmenting' or Hicks neutral, if increases in equal measure
productivity 'of labor and capital of all production techniques, leaving
the ratio K / L unchanged.
Yt  f ((1   )t Kt , (1   )t Lt )  f ((1   )t Kt , (1   )t Lt ) 
(1   )t f ( Kt , Lt )
Technical Progress
growth accounting
• Separates the effect of the accumulation of factors from that
of technical progress on the rate of growth of the economy
•
DY = f DK + f DL + f , f = df / dx :
K
L
t
x
ft
Y
f K K K
f L L LK



Y
Y
K
Y
L
Y
•
The growth rate of the economy and 'equal to the sum of the
growth rates of factors, each multiplied by the relative
elasticity of production, and a measure of technological
change.
• Note that the elasticity of production are not directly
observable, but under the assumptions of the Solow model,
same as the percentage of national income of the factors.
• where χ and 'the growth rate of productivity' of capital
Technical Progress
growth accounting
• TFP, or measure of technical progress, is measured as a residual:
•
ft
 gY  g K  (1   ) g L
Y
where π and 'the share of profits in national income, eg
expressing growth rates.
• This method, first suggested by Solow (1957), is typically applied
using the Cobb-Douglas production and Hicks neutral technical
process:
Y  AK  L1
• Where α turns out to be both the elasticity 'of production to capital,
and the share of profits in income.
Technical Progress
growth accounting –results• The first estimates for the United States for the first half
'of the century ('56 Abramovitz, Solow '57) show that
TFP is responsible for almost 90% of the growth of
output per capita.
• However, this result is' vitiated by errors of measurement
in the quality of the factors that tend to underestimate
their impact.
Technical Progress
growth accounting – insights –
1) Technical progress embodied in capital goods.
The new technologies, at least in part, are incorporated in
the new capital goods. Need 'to measure the stock of
capital in units' efficiency (τ):
t
 t   K i (1  k ) i
i 0
where λk and 'the rate of improvement of the quality' of
capital goods. The growth rate (τ) depends on: the
growth of the stock of physical capital, the rate of
improvement of the quality 'of goods, changes in the age'
average stock of capital.
Technical Progress
growth accounting –insights 2) Improvements in the quality 'of the work.
Each one unit 'of physical work can' increase its efficiency
by:
- Accumulation of human capital (eg education)
- job experience (learning by doing)
These two channels have become the starting point of
the analysis of endogenous growth
Technical Progress
growth accounting – insights 3) structural change in the use of factors in favor of the
activities 'more' productive.
The aggregation of the factors K and L hides the different
productivity of the various capital goods quality and
heterogeneous work.
The contribution of a factor shifting resources from one
sector with low productivity to high productivity increases
(ex from 'agriculture industry).
Technical Progress
growth accounting – developing countries
• Main trends (1960-94):
• The key role of accumulation of factors
• Important but limited compared to developed countries
TFP
• Important role in the reallocation of resources between
sectors.
• interpretation:
• The industrialized countries are more 'close steady state
and have to resort to technical progress in order to grow,
on the contrary the developing countries can use the
initial benefits from capital accumulation
Schumpeter’s entrepreneurship,
business cycles and the new
growth theory
MJ
Timeless writers: Joseph Alois Schumpeter
and some of his well-known followers
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In the beginning of the 20th century, when Joseph Alois Schumpeter, a
member of the German Historical School and, later, the father of
entrepreneurship started his academic career, and, somewhat later political
career in Vienna, the dominant doctrine of neoclassical economics was laid
down.
Joseph Schumpeter wrote Theorie der wirtschaftlichen Entwicklung in
1911 that was published it as Theory of Economic Development in 1934.
Schumpeter tried to introduce the concept of entrepreneurs into the set-up
of neoclassical economics or the Walrasian System.
Schumpeter could easily define the function of his type of entrepreneurs in
this manner, but the analysis of the overall process of evolution required a
radical reinterpretation of the system of general economic equilibrium. He
made clear that he could not accept the standard interpretation of the quick
Walrasian process of adaptation.
Schumpeter distinguished innovation as the function of the entrepreneur.
During his career, Schumpeter insisted on the discontinuity between the
Walrasian mathematically perfect model and innovative entrepreneurship.
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Schumpeter made clear that he could not accept the orthodox interpretation
of microeconomics. Although a general equilibrium system is
observationally equivalent to a system in which everyone is a completely
rational optimizer, Schumpeter declares this to be an illusion.
Schumpeter distinguished innovation as the function of the entrepreneur.
Since that there has been the “unfortunate” discontinuity between the
orthodox microeconomics and the Schumpeterian entrepreneurship.
Schumpeter was the most influential Harvard professor in the 1930s and
1940s. Schumpeter has been mentioned as the father of
entrepreneurship and (irregular) growth theories. Schumpeter have
never received the Nobel Prize.
Schumpeter is today more important than never earlier. Today, clustered
multinationals (MNCs) are powerful players in the global markets. Because
(MNCs) dominate the global markets of commodities, they can collectively
determine the rules of the game in the core market segments. The global
economy is in expansion.
We need new radical innovation and, thereby, economic growth. There are
one billion young people (15-24 years old), 80% in developing countries, in
the labor market with few opportunities for productive work. Capacitybuilding is the major instrument that the World Youth Report 2005 by the
UN stresses.
We point is that the Schumpeterian entrepreneurship is the key area of
capacity-building to resolve the global crisis.
• His writings were, at least temporarily, ignored by many brilliant
Nobel prize-winners, economists like John Maynard Keynes,
Wassily Leontief, Milton Friedman and Paul Samuelson.
Schumpeter admitted that the Walrasian model is a beautiful
construct and, therefore, the dominant theory of the firm.
• Joseph Schumpeter proposed that an entrepreneur, as innovator,
creates profit opportunities by devising a new product, a production
process, or a marketing strategy. An entrepreneurial discovery
occurs, when an entrepreneur makes the conjecture that a set of
resources is not allocated to its best use. Schumpeter did not define
what an entrepreneur looks like.
• Perhaps, the reason to that was that Alfred Marshall focused the
interest of neoclassical economists on the concepts of
representative firm instead of innovative entrepreneur.
• Marshall was British economist at Cambridge, where he exerted
great influence on the development of economic thought of the time
Marshall was concerned with theories of costs, value, and
distribution and developed a concept of marginal utility. His
book Principles of Economics from the year 1890 was for years the
standard work.
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In his book Business Cycles, Schumpeter now a Harvard professor
referred to the fundamental problem of economic change. He argued that
entrepreneurs create innovations in the face of competition and thereby
generate (irregular) economic growth. By contrast of Walras, Schumpeter
gave much credit to human agency. Although a general equilibrium system
is observationally equivalent to a system in which everyone is a completely
rational optimizer, Schumpeter declared this to be an illusion (Schumpeter
1934, p. 40). Schumpeter (1939) proposed a three-cycle model of economic
fluctuations or waves:
Kitchin inventory cycle (3-5 years)
Kuznets infrastructural investment cycle (15-25 years)
Kondratieff long cycle (45-60 years)
What are the relevant waves of today in the emerging global economy? We
might say that there are continous chaos in the markets like Tom Peter has
exposed it in his book Thriving on Chaos
What is evident is that all kinds of waves are much more shorter than in the
30s when Schumpeter wrote his book. Especially, Alfred Chandler, a wellknown economic historian has discuss about economies of speed in this
excellent book Scale and Scope. What is important to notice and what I
know from experience is that various types of industries are different. When
Schmpeter’s definition of entrepreneurship is genarally applicable, the
fundamental problem of economic change is very much industry or even
continent specific.
Schumpeter redefined the function
of entrepreneurs in a society
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He believed that an entrepreneur is motivated by the temporary monopoly
profit that is the return on the entrepreneur of the innovation that leads to
increased productivity and is the fundamental source of wealth in a society.
(Lahti, 1991; Lintunen, 2000) Innovations are considered as the major driver of
an economy.
Following Schumpeter (1934), contributors to the scholarly literature on
innovation typically distinguish between invention, an idea made manifest, and
innovation, ideas applied successfully in practice. Since the social returns of
innovations exceed the private returns the factors that facilitate innovativeness
are considered to be critical to policy makers in any of market economies.
The key to innovativeness is to allow firms to appropriate more of the social
benefits of their new products or processes, as through broadening intellectual
property rights or relaxing post-innovation antitrust enforcement. This is what
happened in the U.S. in the early 1980s (Haour, 2003).
Innovations are not continuously
distributed in time
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Innovations are not continuously distributed in time, but proceeds by leaps
which upset the existing equilibrium in markets and generate (irregular)
economic growth (Schumpeter, 1939).
A parallel explanation of long waves in economics lies in the Kuhn’s (1970)
model of scientific development. Kuhn used the term paradigm shift to refer
to the mark of maturity of a science or techno-economic paradigm that
refers to an innovation or an innovation chain that affects the whole
economy, e.g. electric power or computers (Freeman and Perez, 1988).
Schumpeter defined the innovative transformation as a relatively slow and
conflict-ridden process and, thereby, distinguished innovation as the
function of entrepreneur that is separate from the administrative function of
manager (compare Penrose, 1959). This reinterpretation helped him outline
his theory of business cycles as reflecting the wave-form process of
economic evolution.
entrepreneurs create radical
innovations in the face of competition
• Schumpeter regards technological uncertainty as neither a
sufficient nor a necessary determinant of fluctuations but
postulates that fluctuations are caused by supply shifts based
on uneven technological changes.
• Schumpeter (1939) argued that entrepreneurs create radical
innovations in the face of competition. His notion has been
generally accepted. In Schumpeter’s (1939) economic
system, business cycles, waves are the major catalyst of
economic growth.
• Schumpeter (1939) proposed a typology of business cycles
according to their periodicity, so that a number of particular
cycles were named after their discoverers or proposers:
Kitchin inventory cycle, 3-5 years
• The Kitchin cycle is related to time lags in information movements
affecting the decision making of firms. Andrew Tylecote who has
contributed to the long wave economic theory viewed the Kitchin
cycle as endogenous (Tylecote, 1992). Firms build up their
inventories to anticipate future sales, but as sales sink over time the
stocks pile up. As a result, within a certain period of time the market
gets flooded with products whose quantity becomes gradually
excessive. The demand declines, prices drop, the produced
commodities get accumulated in inventories, which informs
entrepreneurs of the necessity to reduce output. After the balance is
achieved and demand grows, the firm will again build up its
inventory. Since the 1980s, the wide adaption of the “Just in Time”
(JIT) production strategy (or modification of it) have helped firms to
improve their financial returns on inventories by reducing in-process
inventory and associated carrying costs. Today, the e-commerce
model makes it easier to balance inventories.
Juglar fixed investment cycle, 7-11 years
• Clément Juglar (1819- 1905) was a French statistician. A Juglar cycle can
be observed in periodic fluctuation of investments into fixed capital and not
just changes in the level of employment of the fixed capital and respective
changes in inventories. The firm behavior is based on their mutual
dependence. In this respect the Juglar fixed investment cycle can be viewed
as endogenous. Firms in the same business use to invest heavily in their
infrastructure with the desire of expanding and modernizing their capacity. In
the end of the cycle, firms’ infrastructures need to be modernized again. A
reason for this kind of periodic fluctuations in investment is the strong
believe in technology as the main competitive edge that was signaled by
organizations like the WIPO, the World Bank and the WTO. As Solow (1980)
has noticed, technology and know-how is the most important contributor on
GDP growth by nations. Neoclassical economists have traditionally viewed
technology as the exogenous production factor. Robert Solow (1987) and
Paul Romer (1989, 1990) are examples of economists who have accepted
Schumpeter’s view that certain elements of technology are endogenous.
The recent research employing spectral analysis has confirmed the
presence of Juglar cycles e.g. in the EU (Sellaa et al, 2012).
Kuznets infrastructural investment cycle, 15-25 years
• Simon Kuznets (1901-1985) was a Russian economist who won the
1971 Nobel Prize "for his empirically founded interpretation of
economic growth which has led to new and deepened insight into
the economic and social structure and process of development"
(www.nobelprize.org/nobel_prizes/... As the professor at the
Wharton School in the U.S. Kuznets connected these waves with
demographic processes, in particular with immigrant inflows/
outflows and the changes in construction intensity that they caused,
that is why he denoted them as demographic or building cycles. The
Kuznets cycles have been also interpreted as infrastructural
investment cycles that are primarily exogenous. Referring to the U.S
history, Kuznets (1940) suggested that US population growth, with
its large immigration ratio between the 1870s and the 1920s, caused
fluctuations in the construction of houses and investments in the
railways.
Kondratieff long cycle, 45-60 years
• Schumpeter used the findings of Russian economist Nikolai
Kondratieff (1892-1938) who was a proponent of the New Economic
Policy (NEP) in the Soviet Union. He proposed a theory that
Western capitalist economies have long term (50 to 60 years) cycles
of boom followed by depression. The logic of long waves is that in
times of slow growth entrepreneurs are reluctant to apply new
innovations and so they pile up. When growth picks up these
innovations are exploited and inserted into the production process
causing the rapid growth of the business (Kondratieff, 1935; Barnett,
2002). In this way, the dynamics of the Kondratieff long cycle is
views as endogenous. Kondratieff himself could not enjoy of long
life. When writing his major publication, he was the director of the
Institute of Conjuncture, and he worked on a five-year plan for the
development of Soviet agriculture. He was also allowed to visit
universities travel in England, Germany, Canada and the U.S.
However, during the dark 1930s Kondratieff was arrested and
executed. (Wikipedia)
“Cycles” do not tend to repeat at
regular time intervals.
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The business cycle refers to the ups and downs in the
economy, measured using mainly the real gross
domestic product (GDP). The cycle involves shifts
between growth periods (recovery and prosperity), and
stagnation periods (contraction or recession). To call
fluctuations "cycles" can be misleading. “Cycles” do not
tend to repeat at regular time intervals. As Chiarella et al
(2008) pointed out the word "fluctuations" should be
used instead of “cycles” since in capitalist economies
there are not similar mechanisms that generate
recessions and/or booms.
The problem of how business cycles come about
is therefore inseparable from the problem of how a
capitalist economy functions.
• Business cycles in the OECD countries after World War II have been
more restrained than the earlier business cycles. Economic stabilization
policy using fiscal policy and monetary policy has dampened the worst
fears of recession, and automatic stabilization due to the aspects of the
government's budget also helped mitigate the cycle even without
conscious action by policy-makers (Elwell, 2011).
• An exception is Russia that experienced prolonged depressions,
following the end of the Soviet Union in 1991-1998. Business cycles
are a type of fluctuation found in the aggregate economic activity of
nations that organize their work mainly in business enterprises.
Business cycles are not merely fluctuations in aggregate economic
activity. The critical feature is that the fluctuations are widely diffused
over the economy. The economy of the western world is a system of
closely interrelated parts. This was the main concern of Schumpeter
during his entire career.
The Keynesian school argues for
endogenous causes of fluctuations
• The main framework for explaining fluctuations is Keynesian
economics (Minsky, 2008). In the Keynesian view, business cycles
reflect the possibility that the economy may reach equilibrium at
various levels of employment. If the economy is in recession and
unemployment is high, the Keynesian theory states that monetary
policy and fiscal policy can have a positive role to play in smoothing
the fluctuations of the business cycle. The neoclassical school is
arguing for exogenous causes of business cycles. Neoclassical
economists, such as Paul Krugman and Joseph Stiglitz, argue for
minimal government regulations (laissez faire) since efficient
markets and competition are the best ways to win a recession. The
Keynesian economists largely argue for larger government policy
and regulation, as absent regulation, the market will move from
crisis to crisis.
Schumpeter’s (1939) theory of business cycles is
difficult to apply to the global economy
• Although Schumpeter’s (1939) theory of business cycles is difficult
to apply to the global economy, there is no doubt of the fact that the
ongoing technology revolution will impact on the global markets,
although we may not know the full implications (see Peters, 1990).
Jensen (1993) made an elegant study of the Schumpeterian
dynamics. Comparing the growth of GNP with R&D statistics,
Jensen noticed that since the chock of the oil crisis in the mid 1970s
the growth of R&D expenditures in the industrialized countries has
been approximately double higher than the growth of GNPs. This
trend has accelerated during the two decades of globalization, the
1990s and the 2000s. The revolution of information technology (IT)
was the major source of Schumpeterian dynamics in the
industrialized countries in the 1990s.
The Schumpeterian market chock created new waves of
innovative growth firms, and destroyed the obsolete ones.
• In the early 90s, Finland was hit by serious crisis in the
bank industry and about 20% of the firm population was
lost. During the crisis the positive entrepreneurial event
was the unexpected global success of Nokia. Two
decades later Nokia is in a crisis signaling the new kind
of creative destruction of today. In the EU crisis countries
(Greece, Italy, Spain, Portugal and Ireland) the
Schumpeterian market chock may be in full force. The
negative end results are already known by economists.
Hopefully, the positive end results are somewhere
waiting for the growth boom in the near future.
Period Description
Period
The key factors of technological change
First Kondratieff
1780s–1840s
Industrial Revolution: factory production for textiles Cotton
Second Kondratieff
1840s–1890s
Invention of steam power and its application in railways
Third Kondratieff
1890s–1940s
Invention of electricity, steel, etc. and their applications in the process
industry
Fourth Kondratieff
1940s–1980s
Mass production of automotives and synthetic materials, especially
petroleum
Fifth Kondratieff
1980s -2010s
Digital information techniques, the internet and micro-electronics
Sixth Kondratieff
2010s-???
Nano-engineering and nano-manufacturing
Schumpeter held two different approaches
• Schumpeter held two different approaches. Schumpeter
(1934) emphasized the role of entrepreneurs entering
niches of markets. By innovating, entrepreneurs
challenged existing firms through a process of “creative
destruction”, which was regarded as the engine of
economic progress. Schumpeter (1942) paid attention to
the key role of large firms as engines for economic
growth by accumulating non-transferable knowledge in
specific technological areas and markets. There is a
strong positive feedback loop from successful innovation
to increased R&D activities leading to renewed impulses
to increased market concentration (Gilbert, 2005, 2006,
2007).
The neo-Schumpeterian
approach
• The neo-Schumpeterian approach analyses the generation,
implementation and diffusion of knowledge and technology, putting
emphasis on the decisive role and impacts of entrepreneurship and
innovation on dynamics and qualitative changes in structures of
industries or markets to which the innovation dynamics is targeted
and thereby the society as the whole (Freeman, 2008).
Unfortunately, Neo-Schumpeterian economists scarcely analyze the
“destructive” part of the “creative destruction” processes nor
consider the destinies of the people who are not lucky or able to
take advantage of innovation dynamics (Hartmann, 2009).
• Looking at Schumpeter writings (1934, 1939, and 1942) it is possible
to distinguished two different types of mechanisms underlying
innovation by firms:
Creative destruction
• Schumpeter (1934) gave economists food for thought
with the concept of creative destruction. Creative
destruction creates economic discontinuities, and in
doing so, an entrepreneurial environment for the
introduction of innovation, and earning monopoly profits.
Competition is a self-destructive mechanism that
normalizes profits when the innovation effect has been
utilized. Creative destruction is associated with
innovation of entrepreneurs (or small firms) entering
unexplored market where there are low entry barriers for
new entrants utilizing the common pool of knowledge
stock.
Creative destruction
• Creative destruction is a microeconomic process by its
nature but has considerable macroeconomic implication for
economic growth (Aghion and Howitt, 1992, 1998). In
creative destruction competition between firms and sectors
is mainly driven by technological factors when technological
innovations overturn the existing dominant technologies and
shakes the status quo in the market (Christensen, 1997;
Hart, 2005). An example is the meteoric rise of Linux
operating system, which can be traced to Linus Torvalds,
and the subsequent creation of the Linux community. The
Linux community of volunteers, like ad hoc programmers,
has fostered the rapid development of the Linux software
without firm-centric product development budgets.
Creative accumulation
• Creative accumulation is associated with institutionalized
innovation by MNCs that carry out innovation along
established technological trajectories and even try to
prevent the entrance of newcomers (Schumpeter, 1942;
Pavitt et al, 1989; Malerba and Orsenigo, 1995; Paap
and Katz, 2004). MNCs dominate global commodity
markets (Karlinger, 1997, 2005; Kumar, 1994, 1998). By
providing world-class technologies and logistics, MNCs
are important partners for local entrepreneurs (Markusen
and Venables, 1997; Lööf, 2009), MNCs are claimed to
utilize monopoly power to create high barriers to entry of
new entrants (Scherer and Ross, 1990), and impact on
industry life cycles (Klepper, 1996) and market structures
(Scherer, 1999; Chandler, 1990).
Creative accumulation
•
When entrepreneurs under creative destruction draw from the
public domain only to place their own innovations within the reach of
imitators, large firms under creative accumulation appropriate and
build on proprietary knowledge stocks through in-house R&D
departments. Thomas Edison (1847-1931) owned over a thousand
U.S. patents. Edison himself was a pioneer investor creating
technological breakthroughs. In the 1890s he established General
Electric (GE). GE was among the first ones organizing creative
accumulation built on its proprietary knowledge stocks through wellorganized R&D departments, including lighting, transportation,
power transmission, and medical equipment. (GE) GE is still
continuing the infinite quality-improvement process (Cheng and
Dinopoulos, 1996; Bingham, 2003).
The influence of the degree of concentration
on R&D expenditure
• The Schumpeterian analysis is confined to the influence of the
degree of concentration on R&D expenditure (Cohen and Levin,
1989; Cohen and Klepper, 1996). The heterogeneity of industries is
the reason why the relation between concentration and innovative
output has often found to be non-significant (Scherer, 1986, 2001,
2003) or even negative (Koeller, 1995; Koeller and Lechler, 2006).
Relying on historical analyses, Chandler (1962, 1990) claimed that
the strategy process is the key managerial innovation by which large
firms integrate the core elements of vertical production system or
value chain (Porter, 1985). Large firms with integrated
manufacturing and R&D can be successful in generating radical
product and process innovations (Freeman, 2008; Mowery and
Rosenberg, 1989; Greenstein and Ramey, 1998; Gilbert, 2006,
2007) although the “escape competition” strategy is common in the
global patent race by MNCs.
Vertical integration is the most
valid strategy for MNCs
• As Buckley and Casson (1976, 1985) have noticed, internalizing,
e.g. vertical integration is the most valid strategy for MNCs.
Schumpeter’s (1942) argued for a positive relationship between the
rate of R&D investments and the firm size. According to the
prediction of Schumpeter (1942), large firms would inevitably gain
dominance over small firms, and thus slow the rate of radical
inventions in the overall economy. His contradictory claim was that
monopolies favour innovations (Baldwin and Scott, 1987; Baker,
2007). In broad terms, this is true still today. Big MNCs are the major
suppliers in global innovation and technology markets. The quality of
supply is, however, important to assess. The most common
competitive model for global commodities supplied by MNCs is
oligopoly.
A market leader in oligopoly is not ready to
take the risk of radical or drastic innovations
• Referring to the neoclassical standard doctrine, Kenneth Arrow (1962),
the Nobel Prize-winner, claimed that a market leader in oligopoly is not
ready to take the risk of radical or drastic innovations since the firm
might jeopardize its dominant market position. Market leaders can earn
profits by replacing itself (the “Arrow effect”) what small firms in
oligopoly, by definition, cannot do. A market leaders inventing in new
products or processes can (1) pre-empting potential rivals (Gilbert and
Newbery, 1982; Gilbert and Sunshine, 1995; Gilbert and Willar, 2001;
Gilbert and Weinschel, 2005); (2) slow down the diffusion of radical
technological invention by new entrants (Gilbert and Riordan, 2005);
and (3) maintain a permanent leadership (Denicolo, 2001). A classical
case is Microsoft being the subject of antitrust investigations in the US
and in the EU Microsoft. Federico (2008) has analyzed the case
Microsoft. He could not find an evidence of the misuse of monopoly
power although he noticed that Microsoft’s aggressive product
strategies may harm competitors.
U.S. managerial capitalism
• Chandler (1990) compared the history of corporate capitalism in the
U.S., Britain, and Germany. He noticed that the U.S. managerial
capitalism was the winners for about one hundred years, from the
1880s to the 1980s. As Chandler remarked the hated US trusts were
the ones that succeeded to increase output, lower costs, compete
vigorously, and expand into more distant markets leading to the
growing population of MNCs that are able to develop products
competitive in markets and so to become multiproduct enterprises).
Large vertically integrated firms replaced fragmented structures of
production and distribution and started to agglomerate their
competitive capabilities over industrial districts. Chandler has been
the most influential writer of economic historians since Schumpeter.
His writing opened the Marshall’s (1920) black-box of managerial
decision-making in large firms (see Chandler, 1962, 1977, 1990).
Schumpeter strongly believed in human
incentive in innovation dynamics.
• Some writers have continued to deal with dynamic transformation process in
economies driven by the introduction of innovations (e.g. Freeman, 2008;
Dosi, 1982, 1988; Anderson and Tushman, 1990). Schumpeter strongly
believed in human incentive in innovation dynamics. This notion is well
elaborated by Robert Lucas (1981, 1988). Following the notion of increasing
return, Romer (1989) claimed that every generation has underestimated the
potential for finding new recipes and ideas. Romer (1990) argued that
technology is not a mysterious outside force, as economists thought in the
past, but an internal one that can be cultivated to increase growth. His main
slogan in terms of Schumpeter has been: “The emerging economy is based
on ideas more than objects”. The greatest innovations are likely to occur
from the cross-fertilization of sectors and professions. For example, artists/
scientists and businessmen work models are interrelated but different. A
major difference is that artists/ scientists are more likely to think laterally and
holistically, businessmen are linkers of people and concepts whilst
businessmen involve a linear thinking pattern.
Success of Communications
Applications
IM
E-mail
SMS
time
Source: Durlacher
M-Commerce Hype Curve
Mobile
Commerce
Reality
Disappointment
Growth
Hype
Source: Durlacher
2004
2003
2002
2001
2000
1999
1998
Realism
M-Commerce Development Model
Value creation /
Business activity
Interactivity
One-to-one marketing /
mobile advertising
Transactions
Mobile
banking / broking
Information channel
SMS / WAP
based
E-mail
Complexity / Interoperability
Source: Durlacher
An example of neo-Schumpeterian
discovery is the famous Gordon Moore's
law of the new cost curve
•
•
In 1965, Gordon Moore, co-founder of Intel, declared the law that the
number of transistors on a chip doubles every 24 months. A similar law has
held for hard disk torage cost per unit of information and to some extent for
many other technical devices. This law has remained true through countless
cycles of high-tech development. It predicts technological progress and
explains why the computer industry has been able consistently to come out
with products that are smaller, more powerful and less expensive than their
predecessors.
Ilkka Tuomi has noticed that the semiconductor technology has evolved
during four decades under very special economic conditions. The rapid
development of microelectronics implies that economic and social demand
has played a limited role. Contrary to popular claims, Tuomi believes that
the common versions of Moore's Law have not been valid during the last
decades.
Moore's original statement can be found in his publication "Cramming more
components onto integrated circuits”, Electronic Magazine, 19.4.1965.
Tuomi, Ilkka “The Lives and Death of Moore's Law”.
http://www.firstmonday.org/issues/issue7_11/tuomi/
•
Creative destruction and economic discontinuities are typical characteristics
of the entrepreneurial environment for the introduction of innovation and
earning monopoly profits. Competition is a self-destructive mechanism;
effective competition normalizes the profits. It is no doubt that much of the
future technology revolution will impact on global environment, although we
may not yet know the full implications. Creative destruction are going on.
One of the most devastating periods was in the early 1930s, when the
industrialized countries transferred from industrial to post-industrial society.
•
Michael Jensen(Jensen, Michael. (1992) The Modern Industrial Revolution,
Exit, and Failure of Internal Control Systems, Journal of Finance.) has made
an elegant contemporary interpretation of the Schumpeterian creative
destruction. Comparing the growth of GNP with R&D statistics, Jensen
predicted the dynamics of modern industrial revolution. Because of the
chock of the oil crisis in the mid 1970s, the western countries invested in
R&D. The growth of R&D expenditures has been double higher than the
growth of GNPs. The revolution of information technology (IT) has been
the major source of Schumpeterian creative destruction and
innovations in the industrialized countries.
•
The greatest innovations are likely to occur from the cross-fertilization of
different sectors and professions. Entrepreneurs, as innovators, are more
likely to think laterally and holistically, while adaptive business managers
involve a linear thinking pattern. Through this notion, Schumpeter was the
first one who recognized the importance of knowledge in the economy
by his reference to ‘new combinations of knowledge’ at the heart of
innovation and entrepreneurship.
•
•
•
Schumpeter argued that entrepreneurs create innovations in the face of
competition and, thereby, generate (irregular) economic growth. In
Schumpeter’s own vision of the economic system, the theory of business
cycles and the theory of growth are inseparable.
Referring to concept of 'true uncertainty’ from Frank Knight’s book Risk,
Uncertainty, and Profit , we might expect that there is more chaos than
business cycles in the global markets. In this kinds of circumstances, the
rational and linear management tools are only partly applicable. The
probabilistic tools are another option if the decision-maker knows the
relevant alternatives and their probabilities. Sometimes this is the case.
Sometimes the true uncertainty is the prevailing contingency that is the
situation where entrepreneurs are champions.
Schumpeter suggests (Lintunen, Liisa (2000) Who Is the Winner
Entrepreneur? An Epistomological Study of the Schumpeterian
Entrepreneur (dissertation), Helsinki School of Economics, series A-180,
Helsinki, 2000):
– An entrepreneurial function is the act of will of the entrepreneur for the
introduction of innovation in an economy, and a source of evolution in a
whole society
– Entrepreneurial leadership is the source of creative energy for
innovation and evolution
– Entrepreneurial profit is the temporary monopoly return on the
personal activity of the entrepreneur
•
•
•
During his career until the 1950s, Schumpeter gave economists food for
thought with the concept of creative destruction. Schumpeter was well
aware of the monopolistic power of big firms. In his book Capitalism,
Socialism and Democracy, Schumpeter made his prediction of the
transition from the competitive capitalism to the trustified capitalism. He
predicted that the success of capitalism will lead to a form of corporatism
and to values that are hostile to entrepreneurship, especially among
intellectuals. Schumpeter himself believed that free market capitalism is the
best economic system.
Since the 60s, Schumpeter’s prediction was almost fulfilled in Europe. The
social climate needed to allow entrepreneurship to thrive did not exist and
competitive capitalism collapsed from within as democratic majorities voted
for the creation of a welfare state and placed restrictions and social costs
upon entrepreneurship
John Kenneth Galbraight’s book American Capitalism: The Concept of
Countervailing Power completed Schumpeter's prediction of corporatism.
He launched as a parallel concept to Schumpeter’s trustified capitalism. He
believed that large firms have the countervailing power that describes a
certain level of collusion between large firms and the government. Like
Schumpeter Galbraith found that the static economic efficiency was a
barrier to innovate.
Schumpeter’s and Galbraight’s predictions of trustified capatalism is
important in globalized economy because international governmental
organizations like the WTO, the IMF, the World bank, the EU ja most of
industrialized countries give strong merits to the Chicago school by
Friedman, monetrism that probagate for multinationals.
•
•
•
•
•
•
•
Joshua Karliner’s book The Corporate Planet gives some figures that
describe multinationals’ positions:
The number of multinationals jumped from 7.000 in 1979 to 40.000 in 1995.
The growth of multinationals in number has been remarkable since the
UNCTAD assess the number multinationals been grown to 60.000 in 2001
These corporations and their 250.000 foreign affiliates account for most of
the world’s industrial capacity, technological knowledge and international
financial transactions.
They hold 90% of all technology and product patents worldwide and are
involved in 70% of world trade.
While the world economy is growing by 2-3% per year, multinationals are,
as a group, growing at a rate of 8-10%.
Multinationals that are operating in all continents and markets (goods,
services, financing, IPRs - Immaterial Property Rights, etc) represent
trustified capitalism, not of an orthodox monopoly. Multinationals invest in
countries like China, owing to impressive economic growth rates in coming
years. Schumpeterian entrepreneurs cannot compete against multinationals
in the commodity markets where the static economic efficiency is decisive.
According to Schumpeter’s thinking, creative destruction creates
economic discontinuities, and in doing so, an entrepreneurial environment
for the introduction of innovations, and earning monopoly profits.
Schumpeterian creative destruction is continuously going on. Multinationals
are champions in the modern technology, in technology transfer over
continents, in the cross-licensing of technology rights, etc. Multinationals are
needed in any region.
•
•
•
Entrepreneurship cannot be excluded, like William Baumol has claimed in
his book Entrepreneurship, management, and the structure of payoffs.
Michael Jensen has made an interpretation of the Schumpeterian creative
destruction. Comparing the growth of GNP with R&D statistics after the oil
crisis in the mid 1970s, Jensen noticed the oil crisis obliged the Western
countries to invest in R&D. The growth of R&D expenditures has been twice
as high as the growth of GNPs. The revolution of information technology
(ITC) has been the source of Schumpeterian creative destruction and
innovations in the industrialized countries. A Schumpeterian global shock
has also its negative implications since the inefficient firms are being
divested. The driving forces of the global economy is:
1. The process of Schumpeterian dynamics, proprietary capitalism that
requires policies which nurture processes of catalyzing investments in
innovations, venture capital, startups, etc. The Silicon Valley region is an
example of entrepreneurial, proprietary capitalism, personified by Bill Gates.
One of the bottlenecks of the EU is weakly developed private venture
capital markets, especially, compared to the USA.
2. The formation of globally competitive clusters of multinationals.
Geographic concentration of firms has been particular to Europe, as Alfred
Marshall wrote in Principles of Economics, and later to the US. Michael
Porter’s book The Competitive Advantage of Nations proposes the
diamond model as a doctrine for clustering that incorporates the
determinants of a company’s environment, which influence the firm’s ability
to create and sustain competitive advantage in the global markets.
Schumpeterian entrepreneurship as the combination of proprietary and
collective capitalism is functioning in regional clusters like Silicon Valley
somewhere between local networks and global clusters (figure).
ROI
•
The rise of
growth fims
PROPRIETARY
CAPITALISM
and
successful
COLLECTIVE
CAPITALISM
start-ups
SMALL
MEDIUM SIZED
BIG
FIRM SIZE
•
•
•
•
•
•
•
Of many followers of Schumpeter, Peter Drucker is unique with his book
Innovation and Entrepreneurship. Drucker has identified four fascinating
entrepreneurial strategies that are widely used in many countries:
1. Being fustest with the mostest
2. Hitting them where they ain't
3. Finding and occupying a specialized ecological niche
4. Changing the economic characteristics of a product, a market, or an
industry
Being fustest with the mostest is the strategy that a Confederate cavalry
general in America's Civil War used to win battles. The entrepreneur striving
for leadership is the entrepreneurial strategy par excellence. Drucker
warned that this strategy is the greatest gamble, making no allowances for
mistakes and permitting no second chance. But if successful, it is highly
rewarding.
The case Nokia is exactly the kind what Drucker described. Nokia won the
battle although a market failure was also possible. The strategic leader in
Nokia since the early 1990s has been Jorma Ollila, the CEO and, later,
chairman of the board. He is an example of a Schumpeterian entrepreneur.
Peter Gyllenhammar in Volvo in the 1970s and 1980s match well the
characteristics of Schumpeter’s charismatic leader. They also fulfill the
commonly used metaphor that the Schumpeterian entrepreneur is the hero
of the drama.
From the exogenous and endogenous
growth theory: Robert Solow
•
According to neoclassical or exogenous growth theory, the main
determinants of long-run economic growth are not influenced by economic
incentives of human agents that are the core ingredient of Schumpter’s
thinking. The analysis on growth factor of nations has been based on
residual analysis. Robert Solow, a Nobel Prize-winner, advanced the
neoclassical growth model. Solow found that technology progress has in the
western countries been the most important input factor allowing long-run
growth in real wages and the standard of living. In Solow’s model, the
growth is caused by capital accumulation and autonomous technological
change.
Y = F(K, L)
where
K = the capital stock and
L = the labor force
Formula 1: Solow’ model
Solow, Robert M. (2000) Growth Theory, An Exposition. Oxford University
Press.
The technology progress has in western
countries been the most important input
factor allowing long-run growth in real wages
and the standard of living.
•
Solow postulated that the production function displays constant returns to scale, so
that doubling all inputs would double output. This kind of a simplifying assumption
is the major weakness, since holding one input constant (labor) and doubling
capital will yield less than double the amount of output. This is the famous law of
diminishing marginal returns. Solow’s model is a typical example of the ones of the
exogenous growth theories. Through his residual analysis, Solow broke down
changes in labor productivity into two parts:
1.
2.
increase in the amount of capital per unit of labor and
technological progress that includes improvements in the human factor.
•
In his Nobel Prize lecture, Robert Solow referred to the rivalry (or occasional
complementarities) as the catalyst of innovations. Solow highly appreciated
Schumpeter’s thinking. Solow admitted in his lecture that, over the long run,
countries appear to have accelerating growth rates and, among countries, growth
rates differ substantially.
Solow, Robert M. (1987); Lecture to the memory of Alfred Nobel, December 8, 1987:
Growth Theory and After.
Endogenous growth theory is based on the
idea that the long-run growth is determined
by economic incentives
•
•
•
The new or endogenous growth theory has became popular during the
two last decades, when Paul Romer recognized that technology (and the
knowledge on which it is based) has to be viewed as an equivalent third
factor along with capital and land in leading economies. Paul Romer has
found that an economy’s increased openness raises domestic productivity,
and hence must have a positive effect on the living standards of a nation.
The new or endogenous growth theory has become popular during the two
last decades in the USA and, later, in newly industrialized countries like
China and India that invest heavily in innovations. Multinationals expect that
the EU could follow the new growth theory in its policy making like other
major players in the global game.
Like Schumpter, Romer maintains that inventions are intentional and
generate technological spillovers that lower the cost of future
innovations. An educated work force plays a special role in
determining the rate of long-run growth.
Romer, Paul (1989) Increasing Returns and New Developments in the Theory
of Growth, University of Chicago, Chicago.
New growth theorists, believe like William
Baumol, that the study of business without
understanding of entrepreneurship is biased
•
The new growth theory has been advanced by neo-Schumpeterian writers, like
Kenichi Ohmae, Tom Peters and Alvin Toffler. They have offered a perspective
on economic growth that differs in important ways from the traditional view.
• Growth theorists seem to believe that the incentives created by the markets
affect profoundly on the pace and direction of economic progress. When
humans do set to work in an unexplored area, important new discoveries will
emerge.
• The key in the growth process is the market system, supported by the hybrid
institutions like universities or R&D labs and by other more informal networks
like consultants and technology parks.
• Traditionally, social scientists and policymakers saw economic progress as a
result of progress in knowledge or technology (Kuhn's paradigm). Revolution
instead of evolution is the core content of neo-Schumpeterian writers.
Ohmae, Kenichi (1996) The Evolving Global Economy, A Harvard Business Review
Book, Cambridge.
Peters, Thomas (1990) Thriving on Chaos, Harper & Row, New York.
Toffler, Alvin (1980) Third Wave, Bantam, New York.
Return on
Investments
Increasing
returm
Decreasing
return
Increasing
returm
Investments
Negative
return
Break-even-point1
Break-even-point 2 Optimal 1
Optimal 2
The POM-model by Reijo Luostarinen
Home Country Market Factors
Components
of Internationalization
Strategy
Domestic Growth
Opportunities
Small Size
Push Factors
Openness
Growth Strategies
Internationalization
The Dynamics of
Internationalization
Product
Strategy
Operational
Strategy
Market
Strategy
Internationalization
Process of
a Firm
•
David McClelland’s book The achieving society proposed that an
individual's specific needs are shaped by one's life experiences. There are
three personal characteristics that a particular to successful entrepreneurs:
– Entrepreneurs with a high need for achievement seek to excel. They
prefer work that has a moderate probability of success, ideally a 50%
chance.
– Entrepreneurs have also a strong human motivation, a high need for
affiliation is referring to harmonious relationships with other people. This
is the reason why entrepreneur performs well in customer service and
client interaction situations.
– The third highly entrepreneurial characteristic is a high need for
personal power. These types of entrepreneurs are striving for
leadership and may follow the Machiavellian behavior. Entrepreneurs
are socially embedded with their partners, employees or customers.
•
McClelland’s findings of highly rewarding entrepreneurial characteristics
have become popular. What is important to notice is that successful people
in general have the same kinds of personal characteristics all over the
world. So do top artists or politicians. The spesific group that is very near
the characteristics of successful entrepreneurs is successful managers.
Therefore, retired managers often startup their own company.
•
How an entrepreneur can be so good in all the key personal abilities that
are needed to succeed?
– An answer is given by Henry Mintzberg’ book The Nature of
Managerial Work (1980) that has identified the entrepreneurial mode
of strategy making as the one in which the power is highly centralized in
the hands of one person. Strategy making in these firms tends to be
intuitive rather than analytical.
– Mark Casson’s book The Entrepreneur: An Economic Theory (1982)
summarized that for an entrepreneur to obtain control over resources in
a way that makes the opportunity profitable, his or her conjecture about
the accuracy of resource prices must differ from those of resource
owners and other potential entrepreneurs.
– As Kirzner’s book Perception, Opportunity and Profit: studies in the
theory of entrepreneurship (1979) has observed, the process of
discovery in a market setting requires the participants to guess each
other’s expectations about a wide variety of things.
•
•
Entrepreneurs seems to know a lot of their business environment. Most of
them are practicians. They are not aware of the neoclassical economics.
But although entrepreneur does not know the demand and supply curves of
his (or her) product or service, he has a good qut feeling of the markets. He
follows the marginalism in his business. The method is learning by
doing. Making continous changes in his offerings, he makes his business
more profitable. This is actually what marginalism is all about.
This is the core area of entrepreneurial operative management.
•
David Silver’s book from the year 1985) is one of the first writers of this socalled team work that is well applicable to complex business problems. The
rubric of his book Entrepreneurial Megabucks. The 100 Greatest Entrepreneurs of the Last 25 Years tells to key content of innovative, strategic
management.
•
Based on his 100 case-studies, Silver developed his model as fundamental
law of entrepreneurial process. In Silver’s thinking the goal of investors, as
well as entrepreneurs is the creation of wealth or high valuation (V), through
the process of selecting a potentially successful entrepreneurial team (E)
that can identify and conceptualize a large, multidisciplinary problem (P)
and create an elegant solutions (S) which they intend to convey to the
problem via a new company.
V=ExPxS
Where
V = Wealth or high valuation of a venture
E = Successful entrepreneurial team
P = Large, multidisciplinary problem
S = Elegant solutions
Formula 1: Silver’s model of the valuation of business ventures
•
•
•
•
•
•
•
Utilizing the model, Silver analyzed ’the 100 greatest entrepreneurs of the
last 25 years’. His ’entrepreneurial scorecard’ is inspiring since a company
with high value (V) has many beneficiaries – entrepreneur, managers,
employees and investors.
In the epilogue Silver summarizes that ’being an entrepreneur is like
being the builder of civilization’.
In Silver’s thinking an entrepreneurial team takes holistic responsibility of
the Schumpeterian process of ’creative destruction’
Why entrepreneurs are so good in the construction of new products or
business methods/ models. Their most important characteristics is their
ability in the recognition of entrepreneurial opportunities
Entrepreneur way to look at markets is very personal, subjective process.
When managers usually used analytical business tools as accounting
methods, entrepreneurs rely on their own feeling that is very much
experience based.
Entrepreneurs are champions, winners and megabucks because of their
unique way to perceive their target markets. This is what a Swedish
economist Staffan Burenstam Linder noticed in his dissertation An Essay
on Trade and Transformation from the year 1961.
An extraordinary personality of most entrepreneurs has an inherent
weakness of internal locus of control (Rotter, Julian (1966) Generalized
expectancies of internal versus external control of reinforcements,
Psychological Monographs).
• Entrepreneurs have to believe their on visions because they cannot
analyze the hard market facts. The risk of market failure is evident.
•
Following the model of Jung & Hull’s book Psychological Types (1991) of
human mind, Hurst, Rush and White’ article (Top Management Team and
Organizational Renewal, Strategic Management Journal, Vol. 10, 87-105,
1989) elaborate creative management in four levels: (1) Intuition, (2)
Feeling, (3) Thinking, and (4) Sensing.
Future (Potential)
Present (Actual)
Past (Remembered)
7. REALIZATION
1. IMAGINATION
Intuition
Vision
Mission
Reality
Achievement
2. MOTIVATION
Feeling
6. SATISFACTION
Values
Objectives
Competence
Standards
3. PLANNING
Thinking
Strategies
Task
5. EVALUATION
Routines
Results
4. ACTION
Sensing
•
Human behaviour is the logical result of a few basic, observable differences
in mental functioning (Allinson & Hayes, The Cognitive Style Index: A
measure of intuition-analysis for organisational research. Journal of
Management Studies. 1996, 33(1), 119-135). These differences concern the
way people use their minds to develop their skills as the decision-maker
(Argyris, Chris & Schön, Donald Organizational learning. London: Addison
Wesley, 1978). There are two ways of perceiving:
– indirect perception by way of the subconscious intuition and
– becoming aware of things through sensing.
•
There are two ways of judging:
– Feeling, consisting of things that have personal, subjective value and
– Thinking, a logical process aimed at an impersonal finding.
•
•
We can assume that an entrepreneurial decision-maker is focused on
perceiving when managerial decision-making is focused on judging. In
both groups, there are many combinations of personal styles of making
decisions.
Jung holds that one process of sensing, intuition, feeling or thinking must be
developed, if a person is to be really effective. Although people must use
both perception and judgment, they cannot be used at the same
moment. People use the judging and have to shut off perception for the
time being. In the perceptive attitude, judgment is shut off.
The Nordic perspective: Small and open countries
that are the most Schumpeterian of all countries
•
During the past hundred year, the Nordic industrial companies have been
especially skillful in their internationalization processes. Their market
strategies have been innovative.
•
According to my own research findings, the Nordic winners can match the
five critical elements of innovative, entrepreneurial strategy making:
– 1. Differentiating – to be able combine various positioning of product
and related pricing strategies (Chamberlin)
– 2. Revolutionary – the architect of industry revolution that is often
technological takes the position of market leader (Schumpeter)
– 3. Holistic – the current markets are not the ones at which a company
will win; the winner is able the see potential markets (Thomas)
– 4. Competitive – a winner has continuous cost-cutting going on; even
when market demand is in a high growth, the cost-cutting strategy is
needed (Marshall)
– 5. Realistic – fact and experience based (Drucker)
•
•
•
•
•
There are two regional success stories in the Nordic countries:
1. Western Denmark of Jylland
Western Denmark is referred to be a success story of job creation in
traditional industries during the period 1970-1990. In that region the
agricultural sector is bigger than elsewhere in Denmark. The number of
inhabitants is about 700,000 and more than 50,000 new jobs were created
in private trades and industries. Furthermore, there was a considerable
growth in the number of jobs in the public sector. The big industrial
development in rural communities and mainly in Western Denmark is a
result of vertical disintegration (networking) of industries. Local
entrepreneurs have a relatively good educational background especially
within craftsman professions.
2. The Oulu region in Finland
During the past three decades, the Oulu region in Finland has been the
success story. Entering the elite of technology clusters is not a bad
achievement for Oulu that was mainly known for the forest and chemical
industry until the end of the 1980s. In the Oulu region, high-tech firms
employ about 12 000 people, 20 % of all jobs. The collaboration between
entrepreneurs, governmental/ municipality authorities and universities is
unique. The “Pro Oulu” group worked at a finer level of policy making than
national states and often propagated across national boundaries within the
EU and globally. Nokia is the driving force of Oulu’s ITC economy. The case
of Oulu that has some common characteristics with the Silicon Valley shows
that the Nordic model of Schumpeter’s entrepreneurship is, in some cases,
successful.
•
•
Nordic Small Business Research (Lahti, Arto and Pirnes, Hannu (1988)
Nordic Small Business Research, ISBC 88, Helsinki) is an example of
empirical study to elaborate opportunistic behaviour. This study from the
year 1987 includes in an in-depth empirical analysis of 60 companies in
three Nordic countries (Finland, Sweden and Denmark) and in four
industries (clothing, furniture, metal and engineering and the IT-industry).
The collected extensive database contains information on the
entrepreneurial background and the company’s strategy and performance.
The model of entrepreneurial strategy making was made so that it covers
the two stereotypes and three contingencies in-between:
– Craftsman behaviour is characterized by low social awareness and
involvement, feeling of incompetence in dealing with a complex
environment, and limited time orientation.
– Opportunistic behaviour is characterized by high social awareness
and involvement, confidence in his ability to deal with a complex
environment, and an awareness of, and orientation to, the future.
Craftsmen are historical stereotypes of entrepreneur. Incapable in dealing
with a complex environment, this type of entrepreneur are not successful in
the global industries. An opportunistic entrepreneur characterised by
broadness in capability and openness in mind is the winner-type. These
personality trails are also particular to successful scientists or artists. Based
on the research of the Nordic countries, positionistic behavior with 80%
opportunism and 20% craftsmanship is identified as the potential winner. In
the Nordic countries the inevitable success of regional ITC clusters (like
Oulu) has much to do with Ericsson and Nokia.
Referring to Hamel & Prahalad’s book Competing for the future have
suggested in Nordic IT companies have shifted their focus from market
share to opportunity share.
Craftsman
behaviour
Expansionistic
behaviour
Managerial
behaviour
Positionistic
behaviour
Opportunistic
behaviour
High
The rate of
managerial
competence
tic
Low
nis
rtu
po al
op eri
m ag
ro an
nf m
tio r to
olu ou
Ev havi our
be havi
be
Evo
beh lution
beh aviou from
c
avi r to
ou r
ma raftsm
na g
eria an
l
•
Low
•
•
•
Nordic Small Business Research is an example of empirical study to
elaborate opportunistic behaviour in the Nordic countries. The most
important competitive weapon of Nordic business companies has over past
century been technology. This is exactly what the Stockholm School of
Economics has claimed since the 1930s. The most prominent researchers
of the doctrine have been Bertel Ohlin and Gunnar Myrdal, Nobel-price
winners. But it is not the abstract neoclassical economics that is the
speciality of the Nordic countries. It is more question of pragmatism.
Based on the research of the Nordic countries, positionistic behavior with 80
% opportunism and 20 % craftsmanship is the potential winner strategy.
The practical interpretation of this market strategy is that a company have to
be innovative most of time but still maintain enough common sense and
operationally efficient business processes. Lahti’s model of strategy and
performance is modified to integrate both the strategic and operational
aspects of performance. Typical strategy models are constructed from the
top-down-pespective. This means that the operative implementation of
strategy selected is a specific problem. Lahti’s model include both aspects
from the bottom-up perspectice.
The incentives created by the markets affect profoundly on the pace and
direction of economic progress. When humans do set to work in an
unexplored area, important new discoveries will emerge. Therefore, the
market system should be supported by the hybrid institutions, like
universities or R&D labs and by other more informal networks like
consultants and technology parks. This pragmatic interpretation of the
modern growth theory is exactly what the Nordic countries are championing.
How societies progress
technologically
Schumpeter and technical progress
Giulio Giangaspero (PhD in Sviluppo Economico,
Finanza e Cooperazione Internazionale)
Introduzione
TEMI PRINCIPALI
• I cicli economici
• La figura
dell’imprenditore
• La distruzione
creatrice
• Il progresso tecnico
Perché Schumpeter è un
economista attuale e
affascinante
•
•
•
•
Propone la massima
flessibilità metodologica (poca
formalizzazione, molto intuito)
Ha un approccio dinamico
all’analisi del sistema
economico
Usa strumenti diversi,
provenienti sia dell’analisi
economica sia sociologica
L’obiettivo del suo studio è
proporre una teoria del
cambiamento sociale
Una teoria del
cambiamento
Citazione da:
Schumpeter, J.A. (1934). The Theory
of Economic Development. TRAD. IT
Le innovazioni nel sistema economico
non avvengono di regola in maniera
tale che prima sorgono spontaneamente
nei consumatori nuovi bisogni e poi, sotto
la loro pressione, l’apparato produttivo
riceve un nuovo orientamento. Noi non
neghiamo il verificarsi di questo nesso.
Però è il produttore che di regola inizia il
cambiamento economico e i consumatori,
se necessario, sono da lui educati; essi
sono, come pure erano, considerati
come persone che vogliono cose nuove, o
cose che differiscono per qualche aspetto.
Pertanto, (…) è ammissibile che i bisogni
dei consumatori siano una forza autonoma
nella teoria del flusso circolare, ma noi
dobbiamo invece assumere una differente
attitudine appena ci rivolgiamo ad
analizzare il ‘cambiamento’.
(…) Sviluppo produttivo, cicli economici e innovazioni tecnologiche sono
tre aspetti di un unico processo: è questa la concezione di Schumpeter.
(Sylos Labini, P., Nuove tecnologie e disoccupazione, 1989)
Cicli economici
•
L’andamento ondulatorio (ciclo) è la forma che lo sviluppo economico assume
nell’era del capitalismo. Il progresso rende instabile il meccanismo economico
e lo fa muovere secondo un andamento ciclico. Presupponendo di partire da
un qualsiasi punto di equilibrio statico, cosa mette in moto l’andamento ciclico?
• Schumpeter individua cause esterne (guerre, terremoti, ecc.) e cause interne
al sistema economico  le innovazioni
• Il processo ciclico è strutturalmente irregolare: la durata dipende per lo più
dall’intensità dell’innovazione. In più, esistono periodi espansivi e fenomeni
recessivi.
• Le innovazioni sono alla radice delle fluttuazioni cicliche  non si crea un
unico movimento ondulatorio, perché i periodi di gestazione e di assorbimento
degli effetti da parte del sistema economico non sono uguali per tutte le
innovazioni. Schumpeter individua 3movimenti ondulatori simultanei che si
alternano nella dinamica capitalistica. Il ciclo Kondratieff si compie in 50-60
anni, il Juglar in 7-10 anni, il Kitchin in 2-3 anni
Esempi:
• 1786-1842 (I◦ Kondratieff): ciclo legato alla crescente utilizzazione a fini
industriali dell’energia idrica
• 1843-1897 (II◦ Kondratieff): ciclo legato all’affermazione delle ferrovie
• 1898-1913: il III◦ Kondratieff, legato all’elettrificazione
L’imprenditore
• L’idea del contributo di Schumpeter alla teoria economica
che si richiama più spesso è che “il processo di sviluppo
economico è generato da una successione di innovazioni
realizzate dagli imprenditori (con il potere d’acquisto loro
fornito dalle banche)” (Roncaglia, A., La ricchezza delle
idee, Laterza, 2001)
• L’analisi dell’imprenditore è da considerarsi organica alla
teoria del cambiamento produttivo
• L’imprenditore non è un attore economico che agisce al di
fuori del contesto in cui si trova
• Non si tratta di un soggetto irrazionale: persegue il profitto
L’imprenditore
Citazione da:
“Teoria dello sviluppo economico”,
1911
• (…) la nostra analisi
dell’imprenditore non
implica alcuna
glorificazione del tipo (…)
non abbiamo mai definito
ogni imprenditore un genio
o un benefattore
dell’umanità, e nemmeno
desideriamo esprimere
qualsiasi opinione circa i
meriti comparativi
dell’organizzazione sociale
nella quale questi esplica il
suo ruolo (…)
Distruzione creatrice
Citazione da:
“Capitalismo, socialismo,
democrazia”, 1942
Capitalism [...] is by nature a form or
method of economic change and not
only never is but never can be
stationary. [...] The opening up of
new markets, foreign or domestic,
and the organizational
delevelopment from the craft shop
and factory to such concerns as
U.S. Steel illustrate the same
process of industrial mutation [...]
that incessantly revolutionizes the
economic structure from within,
incessantly destroying the old one,
incessantly creating a new one. This
process of Creative Destruction is
the essential fact about capitalism. It
is what capitalism consists in and
what every capitalist concern has
got to live in.
Definizioni di progresso tecnico e la teoria schumpeteriana
IL PROGRESSO TECNICO
Il progresso tecnico: richiami
Il prodotto complessivo di un paese non dipende
solo dalla quantità dei fattori usati ma anche dal
modo in cui si combinano tra loro:
•Questo è ciò che si definisce lo “stato della
tecnologia”, e attraverso questa definizione ci si
ricollega all’impostazione classica
La tecnologia è una variabile “immateriale”
(anche se la frontiera attuale della ricerca è la
misurazione della tecnologia)
Definizioni di Progresso tecnico
• Def. ampia: gli effetti sull’economia dei cambiamenti
nella tecnologia, cioè tutti i fattori che contribuiscono
alla crescita della produttività
• Def. specialistica: carattere del miglioramento
tecnologico (es. capital-saving, labour-saving,
neutrale)
• Def. avanzata: il cambiamento tecnologico per se,
cioè i miglioramenti nella conoscenza legata ai modi
di produzione
Miglioramenti nel modo della
produzione
Il progresso tecnico risulta da una combinazione di:
• Ricerca
• Invenzione
• Sviluppo
• Innovazione
 Ma è anche fondamentale il processo di adozione e diffusione della
tecnologia
(in questo ambito è importante la disciplina della sociologia dello sviluppo)
Bibliografia
Testi di Schumpeter:
Schumpeter, J.A. (1934). The Theory of Economic Development. Cambridge,
Massachusetts: Harvard University Press.
Schumpeter, J.A. (1939). Business Cycles. A Theoretical, Historical and
Statistical Analysis of the CapitalistProcess. New York: Mc Graw Hill.
Schumpeter, J.A., Capitalismo, socialismo, democrazia, ETAS, Milano , 2002
(1942).
Altri testi
Thirlwall, A.P., Growth and development, Palgrave Macmillan, N.Y., 2003
Roncaglia, A., La ricchezza delle idee, Laterza, Bari, 2001
Sylos Labini, P. (1989). Nuove tecnologie e disoccupazione. Bari: Laterza.
Teorie della crescita a confronto, CIDEM, Edizioni Nuova Cultura, Roma, Giugno
2009
Contatti: [email protected]