Arbeitspapier
Discrete innovation, continuous improvement, and competitive pressure
Does competitive pressure foster innovation? In addressing this important question, prior studies ignored a distinction between discrete innovation aiming at entirely new technology and continuous improvement consisting of numerous incremental improvements and modifications made upon the existing technology. This paper shows that distinguishing between these two types of innovation will lead to a much richer understanding of the interplay between firms' incentives to innovate and competitive pressure. In particular, our model predicts that, in contrast to previous theoretical findings, an increase in competitive pressure measured by product substitutability may decrease firms' incentives to conduct continuous improvement, and that an increase in the size of discrete innovation may decrease firms' incentives to conduct continuous improvement. A unique feature of this paper is its exploration of the model's real-world relevance and usefulness through field research. Motivated by recent declines in levels of continuous improvement in Japanese manufacturing, we conducted extensive field research at two Japanese manufacturing firms. After presenting our findings, we demonstrate that our model guides us to focus on several key changes taking place at these two firms; discover their interconnectedness; and finally ascertain powerful underlying forces behind each firm's decision to weaken its investment in traditional continuous improvement activities.
- Language
-
Englisch
- Bibliographic citation
-
Series: IZA Discussion Papers ; No. 3132
- Classification
-
Wirtschaft
- Subject
-
Competitive pressure
continuous improvement
discrete innovation
field research
location model
product substitutability
small group activities
technical progress
Innovation
Ökonomischer Anreiz
Wettbewerb
Produktsubstitution
Innovationswettbewerb
Verarbeitendes Gewerbe
Technischer Fortschritt
Theorie
Japan
- Event
-
Geistige Schöpfung
- (who)
-
Ghosh, Arghya
Kato, Takao
Morita, Hodaka
- Event
-
Veröffentlichung
- (who)
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Institute for the Study of Labor (IZA)
- (where)
-
Bonn
- (when)
-
2007
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Ghosh, Arghya
- Kato, Takao
- Morita, Hodaka
- Institute for the Study of Labor (IZA)
Time of origin
- 2007
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