گسترش نوآوری و فناوری در زنجیره رقابتی عرضه Innovation and Technology Diffusion in Competitive Supply Chains

1. Introduction and Motivation In addition to technological innovations that are achieved by the producers of final consumer products, technological innovations that improve various observable capabilities of products used by consumers are created in the upper tiers of supply chains. Considering the supply chain of technology starting from basic research in natural sciences and extending into final products for consumers, we refer to these as “upstream technologies” in this paper. The computation power of personal computers is determined and limited by the power of microprocessors produced by upstream firms Intel and AMD. Many durable goods rely on chemical and material technologies which are developed through substantial R&D activities by upper-tier chemical firms such as DuPont and BASF. This strongly dependent supply chain relationship is widely recognized in the literature, e.g., Bhaskaran and Krishnan (2009). Given the necessity of concomitant investments by multiple supply chain tiers, it is not usually clear why certain technological capabilities of consumer products are not improving as quickly as seemingly desired. This is especially true for upstream technologies. Contemporary smart cell-phones with a multitude of capabilities still lack a good battery-life until the next recharge. The battery charge lasts so much less than those available a decade ago that municipalities are coming up with innovative ideas for recharging cell-phones and similar devices in public places, including artificial trees (Curcic, 2014). Consumers are openly demanding cell-phones with battery longevity longer than half-a-day. On the other hand, batteries for electrical cars seem to be developing faster to overcome “range anxiety” (Clark, 2014), and might change the automobile industry rapidly in the next decades. Since these upstream technologies are usually incorporated into consumer products by downstream industries, it is likely that consumer market factors will shed light on the problem of why some technologies “succeed” and others stagnate. Hence, we ask the following research questions: (1) How does the nature of competition and other fundamental factors in the consumer markets influence the successful development of different types of upstream technologies that may improve consumer products’ observable capabilities? (2) Why are some technologies that are created by upstream firms never sold to the downstream firms and why do the upstream firms not develop some technological capabilities that are seemingly highly desired in the consumer products fast enough? The Industrial Organization literature on innovative activity does not typically study vertical relationships between industries. However, industry level factors such as product market demand, technological opportunity, and conditions of appropriation are empirically shown to be behind innovative activity and output, e.g., Schmookler (1962) and Pakes and Schankerman (1984). Hence, our demand model is imbued with these downstream market factors to explain the development and adoption of technologies into a two-tier supply chain model.