V02 Science, Technology and Innovation (the macro Story)

1. Time saving innovation in the cotton industry (mechanization)

2. Flexible Energy (Steam Power)

3. Large Scale Production (chemicals, steel)

4. Cheap Mobility (Combustion Engine)

5. Cheap Computational Power (Semiconductors, Software)

1. Factory Work to control time and pace

2. Factory Work to control time and pace

3. Cost accounting + Time & Motion Studies

4. Moving assembly line (Fliesssbandarbeit)

5. Networks

1. Radical Innovation -> Exploratory improvements

2. Trajectory Defined -> Clear direction for accelerated improvemtns and successsive models

3. Trajectory constricted -> Maturity

• Era of Ferment
• Dominant Design emerges
• Era of Incremental Change (Wolf's law: Diminishing returns)

• Process Efficiency: Increases from very inefficient to highly efficient
• Number of Competitors: Grows in first Era then declines.
• Involved Actors: Incresingly during Innovation (Suppliers, Distributors, Consumers, etc.)

• Expenditure on R&D generally increasing (Switzerland highest)
• Basic research expenditure in US constant.
• Business-financed expenditure R&D generally increasing (Switzerland highest)
• Government-financed expenditure generally decreasing (exept Switzerland is increasing) -> Swiss strategy relies on innovation & technology bc. no industry market.

• Scientific knowledge as input into invention (new knowledge, infos before publication)
• Increasing Absorptive capacity (building up firm-intern scientific knowledge to understand others discoveries)
• Attracting talented inventors
• Signaling to consumers, investors, regulations (Higher Reputation)

• Globalizing competition: Driving commercial application and protection of knowledge
• Specialization: Knowledge is less likely to be useful the less you do
• Focus on short-term and incremental progress
• Universities agressively license and commercialize their discoveries
• Scientists found it increasingliy attractive to start their own business

No.
Without advances in the stock of scientific knowledge, technical progress will eventually falter, as will the rate of innovation.

• Scientific knowledge: Publications
• Inventive activity: Patents
• Invention used or built upon knowledge of publications: Citations by a patent to a coporate publication
• Invention used of built upon knowledge of own publications: Citations by a patent to a own publication

The implied value of a firm's publication stock

• is greater when the publications are cited by its own patents
• is lower when the publications are cited by the patents of its rivals

• Corporate research is useful for invention as it is more likely to be cited ba a patnet relative to the comparable iniversity publications
• Internal and external use of science in invention is related to investment in research
• The overlap of invention and research teams within a firm can explain the use of own science as an input to innovation.

• Scientific knowledge: Papers
• Inventive activity: Patents

Technological progress will eventuelly falter, as will the rate of innovation.

Prediction that the number of transistors in an integrated circuit should double every two years.

Problem 1: Overheating Problem
Problem 2: Size of Transistors too small -> quantum effects
Problem 3: Economics -> Cost of Transistors not decreasing as expected

Intel & AMD

• Power
• Frequency
• (Performance)

• AMD developped the first dual core processor to contribute the overheating problem in 2005 but was still behind in the fabrication process
• AMD acquired ATI (graphics card manufacturer) to get into a market niche in graphic processing.-> they expected increasing needs because of higher qualiti of digital images and higher internet speeds.
• 2009 AMD spun-off its fabrication branch to focus on processor design. (Specialization)
• 2012 AMD focussed on graphics processing efficiency for the gaming industry (PS4 and X-Box)

• Intel was alway more efficient in the fabrication process
• 1 year after AMD developped the dual-core processsor intel also brought one to the market -> market share of intel was secured again. 
• Intel invested heavily in fabrication process and highly general applications. 
• After 2012 (when transistors didn't get as cheap as expected) intel started to integrate more capabilities like graphics cards, telecomunnication to their CPU's.

Firms like Gooogle, Tesla, Apple are now building their own semiconductor.

- Because they cannot expect large improvements from Intel or AMD after the "end" of moore's law
- So they can build their application-specific chip -> more efficient!

This shows that specialization of the Players lead to lower barrier of entry to the market.

Intel: Flexibility
AMD: Efficiency