Philip E. Auerswald

Valleys of Death and Darwinian Seas: Financing the Invention to Innovation Transition in the United States

The basic science and technology research enterprise of the United States—sources of funding, performing institutions, researcher incentives and motivations—is reasonably well understood by academics and policy makers alike. Similarly corporate motivations, governance, finance, strategy, and competitive advantage have been much studied and are relatively well understood. But the process by which a technical idea of possible commercial value is converted into one or more commercially successful products—the transition from invention to innovation—is highly complex, poorly documented, and little studied. In this paper we discuss the process by which basic research is converted into successful commercial innovations. Following Arrow (1962) and Zeckhauser (1996), we explore the hypothesis that asymmetries of informaion and motivation, as well as institutional “gaps,” may systematically deter private investment into early stage technology development. We describe the role of governments—federal and state (or provincial)—in promoting the commercial transition from an invention to an innovation. We conclude by suggesting some lessons that may be learned from the experience of the Advanced Technology Program (ATP) of the United States Department of Commerce, among the few Federal programs specifically intended to meet this need.

The production recipes approach to modeling technological innovation: An application to learning by doing

We do two things in this paper. First, we put forward some elements of a microeconomic theory of technological evolution. This involves adding nascent (essentially undiscovered) technologies to the existing technologies of neoclassical production theory, and, more importantly, expanding the notion of the production plan to include the recipe---the complete description of the underlying engineering process. Second, we use the recipes approach in constructing a simple microeconomic model of shop-floor learning by doing. We simulate the dynamics of the model and report the effects of changes in the basic parameters on the resulting engineering experience curves. For correctly chosen values of these parameters, the predictions of the model match the observed data on experience curves. Journal of Economic Literature Classification Numbers: D20, D21, D24, D83, L23, O30. Submitted to Journal of Economic Dynamics and Control.

The Simple Economics of Technology Entrepreneurship: Market Failure Reconsidered

This unique Handbook provides a solid foundation for essential study in the nascent field of entrepreneurship policy research. This foundation is initially developed via the exploration of two significant propositions underpinning the nature of entrepreneurship policy research. The first is that entrepreneurship has emerged as a bona fide focus of public policy, particularly with respect to economic growth and employment creation. The second is that neither scholars nor policy makers are presently equipped to understand the public policy role for entrepreneurship.

Start-Ups and Spin-Offs: Collective Entrepreneurship between Invention and Innovation

In this paper we argue that specific institutional and behavioral disjunctures in the process of technology development may systematically impede the flow of financial and other resources to even the most promising nascent technology ventures. Our particular focus is on the role of technology entrepreneurs in managing early stage technology development (ESTD) projects - the transition from invention to innovation. We introduce the term collective entrepreneurship to describe the trust- and reputation based process by which entrepreneurs work collaboratively to overcome informational and contracting challenges inherent in ESTD. We then examine in some detail two paradigmatic contexts in which collective entrepreneurship occurs: university-based start-ups and corporate spin-offs.

Enabling Entrepreneurial Ecosystems: Insights from Ecology to Inform Effective Entrepreneurship Policy

Inspired by research on the importance of entrepreneurship for sustained economic growth and improved well-being, many governments and non-governmental grant-making organizations have sought over the past decade to implement policies and programs intended to support entrepreneurs. Over this interval, growing appreciation of the limits of strategies focused narrowly on financing or training entrepreneurs has prompted a number of such entities to shift their efforts toward more broad-based strategies aimed at enabling “entrepreneurial ecosystems” at the city or sub-national regional scale. This paper takes the metaphor of the “ecosystem” seriously, seeking to draw lessons from evolutionary biology and ecology to inform policy for entrepreneurship. In so doing, the paper provides a framework for data gathering and analysis of practical value in assessing the vibrancy of entrepreneurial ecosystems.

Managing for the Unexpected: Reliability and Organizational Resilience

The way issues are framed determines much about how they are managed and decided. We noted in the introduction to this volume that the domain of critical infrastructure protection is no exception. Since the issue surfaced in the early 1990s, public and business leaders have directed the publics attention toward critical infrastructures , rather than, say, essential services ; toward protection of those infrastructures, rather than assurance of the services these infrastructures deliver. The widespread adoption of the terminology of critical infrastructure protection focused scarce attention on basic protective measures, such as erecting better perimeter controls around sensitive areas, checking for redundancy in cable routing, and avoiding collocation of several sensitive systems and potential single points of failure. Taking such protective measures was an obvious first step after the abrupt realization, forced by the attacks of Sept-ember 11, 2001, that our society was remarkably vulnerable to predatory action. Disaster and emergency management communities, however, describe their core concerns differently. They would emphasize mitigation of potential disasters by building away from hazardous areas; prevention of emergencies through prudent management or maintenance; response to disasters by mobilizing emergency fire, medical, police, and rescue crews to help people in dire need; and recovery of disaster zones through clean up of damaged areas, restoration of services, relocation, and rebuilding. Despite the valuable contributions of both these approaches, they obscure an important dimension of essential service assurance: reliable and continuous operations of large technical systems at times of extreme stress during natural disasters such as hurricanes Katrina or Rita, technological disasters, such as the U.S. and Canada blackout of August 2003, or terrorist attack, such as those of September 11, 2001.

PLACING INNOVATION: AN APPROACH TO IDENTIFYING EMERGENT TECHNOLOGICAL ACTIVITY

Identifying the elements of physical and organizational infrastructure most important for technological innovation is challenging for at least two reasons: measuring technological innovation is difficult; and establishing causality is difficult. In this paper, we partially address these paired challenges by (1) describing a new approach for measuring innovation, and (2) employing that approach to compare established technology regions with emerging ones, and to describe how technologies migrate as they develop.

Leadership: Who Will Act? Integrating Public and Private Interests to Make a Safer World

“To be courageous . . . requires no exceptional qualifications, no magic formulas. . . . It is an opportunity that sooner or later is presented to us all. The stories of past courage can define that ingredient, – they can teach, they can offer hope, they can provide inspiration. But they cannot supply courage itself. For this each man must look into his soul.” John F. Kennedy, Profiles in Courage, 1956

Integrating Technology and Institutional Change: Toward the Design and Deployment of 21st Century Digital Property Rights Institutions

long term, you are likely to get one of two answers: technological change and innovation, or institutions, notably those that enable the definition and defense of formal property rights. While the individual importance of each of these factors is largely uncontested, the interaction between the two is almost unstudied. Granted, human societies existed for millennia before the development of formal property rights—deeds, titles, and the like. In some societies, the very concept of private property is still almost alien. Yet in the absence of both robust informal mechanisms to structure social relationships and formal mechanisms to establish clear ownership over goods, the incentive to engage in economic exchange is severely attenuated. After all, how is it possible to engage in exchange if the parties involved do not know who owns what, or what is implied by a trade? Moreover, without property rights, individuals have less of an incentive to engage in productive activities and invest their assets to create economic value. Property rights also are crucial to the functioning of credit markets, where individuals and businesses pledge assets as collateral; credit markets in turn are a key to economy-wide growth. For these reasons, wherever societies have grown and informal mechanisms for tracking reputations have become strained, the definition and enforcement of formal property rights have correspondingly increased in importance. Over the past 25 years, economists and policymakers have increasingly recognized the role played by institutions in general, and property rights in particular,

Creating a Place for the Future Strategies for Entrepreneurship-Led Development in Pakistan

For six decades, Pakistan has faced, and overcome, conflict and calamity. Despite many obstacles, the country’s economy has grown steadily. At critical junctures, successive governments have adopted strategies suited to the circumstances of the day, and the nation has developed steadily due to these particular well-conceived initiatives. Yet, as a consequence of the reactive nature of policy formulation and implementation, the institutions of government are conditioned to think in terms of projects rather than strategies to support growth. Today Pakistan confronts a new round of immediate challenges and urgent demands. Yet, it is precisely at this moment of apparent crisis—in the aftermath of the devastating flood of 2010 and with security concerns continuing to dominate the national agenda—that the need to change the discourse about the country’s development has become most apparent. Reactive tactics and dependence on external aid have not helped Pakistan to develop or to realize its potential. Sustained and sustainable development cannot come from a collection of projects, no matter how well intended. A new development approach is needed: Building markets. Building opportunity. Building cities. Building good governance. Including youth. To realize Pakistan’s 21st-century potential, the nation’s political and business leaders must not only meet the demands of the present, but also—and perhaps more importantly—create a space for the future.