Chapter 26 Technology, R.pptVIP

Chapter 26: Technology, RD, and Efficiency By: Ashley Shepple Javier Gonzalez Technological Advance Technological Advance - broadly defined as new and better goods and services or new and better ways of distributing them. Technological Advances occurs over a theoretical time period called the very long run. Technological Advance has a three-step process: Invention Innovation Diffusion Invention Invention – The discovery of a product or process through the use of imagination, ingenious thinking, and experimentation and the first proof that it will work. It’s a process and the result of the process called an invention. Innovation Innovation – is the first successful commercial introduction of a new product, the first use of a new method, or the creation of a new product form of business enterprise. Two Types of Innovation: Product Innovation - which refers to new $ improved products or services. Process Innovation – which refers to new and improved methods of production or distribution. Diffusion Diffusion – is the spread of innovation through imitation or copying. To take advantage of new profit opportunities or to slow the erosion of profit both new and existing, firms emulate the successful innovations of others. Research and Development Expenditures As related to business, their term “research and development” is used loosely to include direct efforts toward invention, innovation, and diffusion. However, government also engages in RD, particularly RD having to do with National Defense. In 2002, total U.S. RD expenditures business plus government were $292 billion. Research and Development Expenditures American businesses spent $211 billion on RD in 2002. The U.S. firms collectively channeled their RD: ?72%: “Development” innovation and imitation, the route to diffusion ?22%: Applied Research, or on pursuing invention ? 6%: Basic Research, the search for general scientific principles Role of Entrepreneurs and Other Innovators Entre