Output in the Innovation Process
Discuss the three reasons as to why people demand money, according to the liquidity preference theory
October 31, 2022Role of Social Media in Online Shopping Advertisements
October 31, 2022Output in the Innovation Process
1. Measurement of Output in the Innovation Process
In terms of measuring output in the innovation process, patents have been used despite their shortcomings. First, one of the issues with viewing patents as output is the lag between receiving a patent and introducing a new product into the market incorporating this particular innovation (Alexopolous, 2011). Second, patents do not capture innovation that occurs outside of the patent system (Moser, 2013). Third, not all patented innovations enter the market embodied by a product (Gardner and Joutz, 1996).
If you need assistance with writing your essay, our professional essay writing service is here to help!
Considering these shortcomings of using patents as output in the innovation process, one of the recently proposed measurements of innovation implies new titles, which implies manuals describing a new technology or product. The important point about using new titles as a proxy for output is that they are not released until the product is already in the market. In other words, they precede diffusion. Therefore, new titles circumvent two of the shortcomings of patents, namely the discrepancy between receiving the patent and introducing the product into the market using this particular patent as well as the possibility that the patent may not lead to a new product at all (Alexopoulos, 2011).
2. Production and Determinants of Innovations
This section discusses the country- as well as the firm-level determinants of innovation.
Among the country-level determinants, a policy that is conducive to innovation includes strong property rights, effective patent laws, and a strong legislature. There needs to be an incentive for people to innovate. The patent system seeks to solve this by trying to provide inventors with monopoly status on their products. There are varying degrees of success in the effort. In the semiconductor industry, patents have not guaranteed monopolies, while in chemical companies they have been very successful (Flaherty, 1984). One would argue that when innovation applies to an intermediate good as in the case of semiconductors, it may be difficult to establish a monopoly position. However, when innovation is applied to the final product as in the case of chemical products a monopoly position may be possible.
