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Faculty
Martin Zagler, Wirtschaftsuniversität Wien

Course Coordinator
ISUP Secretariat

Prerequisite/progression of the course

Introduction to economics (necessary), intermediate macroeconomics and microeconomics (useful).

Course content, structure and teaching

The course will consist of three parts: Innovation and the Firm, Innovation and the Industry, Innovation and the Economy.

Innovation and the Firm (Literature: Schilling, 2005)

This part discusses fundamental topics on economic and organizational variables influencing the development of technological innovation in both manufacturing and service industries. The course introduces the most relevant concepts and frameworks developed and applied to manage innovations. Multiples source of innovations, organizational processes and industry dynamics are presented and discussed through examples and cases. The topics will include:

• Sources of innovation
• Types of innovation
• Pattern and model of innovation
• Technological diffusion
• Technological innovation strategy
• Appropriability regimes
• Organizating for innovation
• Growth of the Firm (Penrose)

Innovation and the Industry (Antonelli 2007)

This part of the course will cover industrial organization aspects of innovation. Topics included are:

• Innovation and market structure: How do different market forms (perfect competition, monopolistic competition, oligopolies, etc) influence innovation?
• Innovation and organisation: Building on my work with Brigitte Unger, this takes a broad view on the organizational form of the firm and its innovation process (e.g. are their cooperations with other firms, organizations, within the firm or the industry, etc.)
• Innovation and Incentives: Following Williamson's first insight into the distinction between market and firm (transaction costs), this asks which is the optimal organizational form for an innovative activity, and how several problems of industrial organisation (hold-up, principal agent, etc.) can be solved?

Innovation and the Economy (Jones 2005)

This part will take about the economic effects of innovation, and is based on Schumpeterian approach to innovation and economic growth. Topics covered include:

• Stylized facts of economics growth
• Capital accumulation as the source of growth (Solow model)
• Product innovation as the source of growth (cf. Romer)
• Process innovation as the source of growth (cf. Helpman and Grossman)
• Creative destruction as the source of economic growth (cf. Aghion and Howitt)
• Distance the technological frontier and economic growth (cf. Aghion)

The course's development of personal competences

Students shall understand the innovation process in its completeness, from managerial questions of the firm to market incentives for innovation to the economic consequences of innovation. The course should enhance analytical tools, critical thinking, interaction with other students simulating a workplace environment.

Learning Objectives

Students should be able to understand the sources of the long-run economic growth both for industrialized countries and developing economies, and apply these principles to policy relevant questions both for regions and nations.

Teaching methods

Lecture, Exercises, Classroom Discussion on Policy Relevance.

Examination

Voluntary mid-term feedack assignments: During the course, three voluntary homework assignments with approximately 3-5 questions will be handed out to students. This will be practical exercises that allow students to better understand the material covered in the course. It will also be an optimal preparation for the exam, as the exam will consist of similar exercises. Students will be asked to present their findings in class on a voluntary basis.

Final exam: 4-hour written exam (open book)

Exam aids: All slides and documents.

Re-take exam: 24-hour written exam.

Recommended literature

• Antonelli, Cristiano, 2007, The Economics of Innovation, New Technologies, and Structural Change, Routledge
• Jones, C. I. (2005), Introduction to Economic Growth, W.W. Norton, New York, Chapter 1 - 5.
• Schilling M., 2005, Strategic management of technological innovation, Mc Graw-Hill.
• Zagler, M. (2005) Lecture notes on Economic Growth (will be posted in public folder)
• Several papers and articles.

Last updated by ISUP Secretariat 29/01/2010