Business Strategies Towards the Creation, Absorption and Dissemination of New Technologies

This thesis aims to identify and to close some gaps in the literature dealing with business strategies towards the creation, absorption and dissemination of new technologies. In doing so it comprises four theoretical papers. The following abstracts and Figure 1 briefly link each paper to one ore more of the above mentioned topics (creation, absorption and dissemination) and report its main findings and contributions to the literature. For further details the reader is referred to the particular paper.Absorptive Capacity and Connectedness: Why Competing Firms also Adopt Identical R&D Approaches This paper explores firms' decisions regarding the dissemination and absorption of new technologies as well as their creation. In particular firms determine both the dissemination and absorption through their choices of R&D approaches. Whereas identical (broad) R&D approaches connect' firms with their R&D environment and maximize knowledge dissemination and absorptive capacities, the opposite holds for idiosyncratic R&D approaches. The model shows that competing firms choose identical R&D approaches in order to maximize knowledge flows between each other. In essence, this frees firms from the dilemma of aggressive investment in R&D. Our analysis contrasts with Kamien and Zang's (2000) finding that competing firms chose idiosyncratic R&D approaches. We demonstrate that their model also yields a Nash equilibrium for identical (broad) R&D approaches.Cooperation or Competition in R&D When Innovation and Absorption Are Costly This paper analyses cost-reducing R&D investments by firms that behave non-cooperatively or cooperatively. Firms face a trade-off between allocating their R&D investments to innovate or to imitate, i.e. to create ot to absorb new technologies. We find that the non-cooperative behavior not only induces more imitation (absorption) but also, for the most part, more innovation investments. Only the cooperative behavior, however, ensures that R&D investments are allocated efficiently to innovation and to imitation (absorption) in the sense that any given amount of industry-wide cost-reduction is obtained for the minimum overall R&D costs.Excess Absorptive Capacity and the Persistence of Monopoly This paper considers a monopolist's precommitment to absorb a potential entrant's innovation as a means of entry deterrence. This precommitment, i.e. excess absorptive capacity, always decreases the entrant's efforts to create new technologies whereas it increases (decreases) the monopolist's efforts if potential duopoly profits are low (high). If potential competition is à la Bertrand, a certain degree of excess absorptive capacity indeed suffices to render the monopolist more innovative than the entrant, such that even if the innovation is drastic, monopoly will tend to persist. More excess absorptive capacity increases the monopolist's equilibrium payoff whereas it decreases the entrant's.Knowledge Transfer in Buyer-Supplier Relationships: When It (Not) Occurs A buyer's technical knowledge may increase the efficiency of its supplier. Suppliers, however, frequently maintain relationships with additional buyers. Knowledge dissemination then bears the risk of benefiting one's own competitor due to opportunistic knowledge transmission through the common supplier. We show that in one-shot relationships no knowledge dissemination takes place because the supplier has an incentive for knowledge transmission and, in anticipation of this outcome, buyers refuse to disseminate any of their knowledge. In repeated relationships knowledge dissemination is stabilized by larger technological proximity between buyers and suppliers and destabilized by the absolute value of the knowledge.