Implications of nanotechnology on Industrial and Corporate Dynamics – Lessons from Economics of...

Implications of nanotechnology on Industrial and Corporate Dynamics –

Lessons from Economics of Innovation

Jens Frøslev ChristensenCopenhagen Business School

Impacts of technology on the economyImpacts of technology on the economy

R&D is generally associated with economic growth R&D is generally associated with economic growth and rise in productivity.and rise in productivity.

Some general-purpose technologies (i.e. the steam Some general-purpose technologies (i.e. the steam engine, the electric motor, ICT) have had significant engine, the electric motor, ICT) have had significant impacts.impacts.

These impacts only materialize in the mature stages These impacts only materialize in the mature stages of the technology – 30-50 (or more) years after the of the technology – 30-50 (or more) years after the early breakthroughsearly breakthroughs

Biotechnology has not yet demonstrated any Biotechnology has not yet demonstrated any significant impact – and even less so significant impact – and even less so nanotechnology. nanotechnology.

Technical/org. innovations

Examples of visible innovations

Carrier industries

Core input Managerial/organizationa changes

Timing of upswing and downswing

Steam-powered mechanization of industry

Computeri-zation of entire economy

Motorization of transport, civil economy and war

Electrification of industry and society

Liverpool-Manchester railroad (1784)

IBM 360 series (1960s) and Intel micro-processor(1972)

Ford’s Highland Park car assembly line (1913)

Edison’s New York electric power station (1882)

RailwaysSteam-enginesMachine tools

ComputersSoftwareTelecom

AutomobilesDiesel engines Aircrafts Refineries

Electrical equip. Heavy engin. and chemicals

Iron

Coal

Integrated circuits

OilGasSynthetic materials

SteelCopper Metal alloys

Joint stock companies

Subcontracting

Networks; internal, local, and global

’Fordism’

Hierarchies

’Taylorism’Giant firms

1848-1873

1873-1895

1941-1973

1973-

1895-1918

1918-1940

Source: Freeman and Loucã, 2001

Techno-economic paradigms and long waves in the economy

??

Sequences of Economic Impacts from a Sequences of Economic Impacts from a technological Revolutiontechnological Revolution

Long gestation time without significant impactLong gestation time without significant impact Then a spurt of growth, productivity and demand Then a spurt of growth, productivity and demand

in a few core industries – with some impact on in a few core industries – with some impact on aggregate economyaggregate economy

Finally, sustainable growth of the economy as a Finally, sustainable growth of the economy as a whole – requires changes inwhole – requires changes ina) national/regional social and institutional context, and ina) national/regional social and institutional context, and in

b) institutional conditions to sustain worldwide diffusionb) institutional conditions to sustain worldwide diffusion

(No linear determinism!)(No linear determinism!)

The expanding global science-technology base

Incr

easi

ng

nu

mb

er o

f te

chn

ical

fie

lds

(dif

fere

nti

atio

n, m

ergi

ng)

Increasing depth/funding pr technical field (specialization)

Expan

ding s

cope

of

technolo

gical

oppo

rtuniti

es

Nanotechnology:Nanotechnology:an emergent science-technology paradigman emergent science-technology paradigm

Something is happening. Empirical indicatorsSomething is happening. Empirical indicators What kind of Science?What kind of Science? What kind of technology?What kind of technology? What kind of science-technology nexus?What kind of science-technology nexus? The global race for nanotechnologyThe global race for nanotechnology The industrial dynamics of nanotechnologyThe industrial dynamics of nanotechnology Propositions for future implicationsPropositions for future implications

Public expenditure in nanotechnology is growing by ~40% annually to around 3.5 billion €/$ in 2003.

Pu

blic

exp

end

itu

re (

1M

€ =

1M

$ )

Source: European Commission (2003) NNI: National Nanotechlogy Initiative. FP6: The 6. EU Frame Program

0

500

1000

1500

2000

2500

3000

3500

4000

1997 1998 1999 2000 2001 2002 2003

EuropeJapanUSAOthers

NNI(USA)

FP6(EU)

EU

Others

Japan

USA

Public funding in nanotechnology R&DPublic funding in nanotechnology R&D

Nanotechnology science notations 1990 –2002

Source: ETC group, january 2003

Source: A database of citations provided by ISI Citation Index tracks all references to key words (“nano” references) in peer-reviewed English language scientific publications.

Nanotechnology patents

Source: VDI Technologiezentrum GmbH and Bundesministerium für Bildung und Forschung, September 2004

Examples of current nano-products

The Company The Products Better, Faster, Stronger

Eddie Bauer / Dockers

Shirt, Pants and Ties Stain Resistant

General Motors Safari & Astro Van

Step Assists Lighter, stronger, rust-proof

Toyota Bumpers 60% lighter, twice as dent resistant

Wilson Tennis Balls Bounces twice as long

Samsung Carbon Nanotube TV’s Brighter, more efficient

Source: TDO, 2003

Prospects for the future Car

Carbon nanotubes based alloys are being examined as a replacement for automobile frames due to their high strength and reduced weight

Nano-scale metal oxide ceramic catalysts will further reduce harmful emissions

Nano-powders and coatings will increase durability of paint coatings

Nano-catalysts and membrane technologies will play critical role in making fuel cells economically viable and replacing the internal combustion engine

The unique combination of stiffness and toughness of nano-polymer composites will make these lightweight materials ideal substitutes for steel in automobiles. Additionally, nanopolymer composite panels enables electrostatic painting, greatly reducing paint costs and environmental issues

Source: AtomWorks
















Source: AtomWorks

Source: AtomWorks, 2003

What kind of technology is Nanotechnology What kind of technology is Nanotechnology

General-Purpose General-Purpose rather thanrather than Narrow-purposeNarrow-purpose

Inter-disciplinaryInter-disciplinary rather thanrather than One distinctive disciplineOne distinctive discipline

ComplementingComplementing rather thanrather than SubstitutingSubstituting

Platform technologyPlatform technology notnot One distinctive One distinctive technologytechnology

What kind of science is nano-science?

Use-inspired basic research

(Pasteur)

Pure basic research(Bohr)

Pure applied research(Edison)

Consideration of use?

No

No

Yes

Yes

Que

st f

or f

unda

men

tal

unde

rsta

ndin

g?

Source: Stokes, 1997

Much (most?) research -

Wissenshaft

What is the science-technology nexus What is the science-technology nexus in nanotechnology?in nanotechnology?

1.1. Technology is science-driven - not exclusively Technology is science-driven - not exclusively engineering/technology-driven. But…engineering/technology-driven. But…

2.2. Technology also drives science – not Technology also drives science – not exclusively invention and innovation.exclusively invention and innovation.

3.3. Technology/industry and science engage in Technology/industry and science engage in interactive dance (based on IP incentives and interactive dance (based on IP incentives and market visions)market visions)

The Global Race for Nanotechnology The Global Race for Nanotechnology - - The new thrust after landing of the New Economy The new thrust after landing of the New Economy

USA (again) took the lead and set the USA (again) took the lead and set the agenda (NNI in 2000)agenda (NNI in 2000)

Germany and Japan envision prospects for Germany and Japan envision prospects for techno-economic renaissancetechno-economic renaissance

Korea and China see opportunities to Korea and China see opportunities to become the new technological tigers?become the new technological tigers?

The poor world is left behind The poor world is left behind

Worldwide spendings on nanotechnology Worldwide spendings on nanotechnology research and developmentresearch and development

• Governments, corporations, and venture capitalists will spend nearly $9 billion worldwide on nanotechnology research and development (R&D) in 2004.

• National and local governments across the world will invest close to $5 billion in nanotechnology R&D in 2004 (35% in the US, 35% in Asia, 28% in Europe, and 2% in rest of the world).

• Established corporations will spend about $4 billion globally on nanotechnology R&D in 2004 (46% by US firms, 36% by Asian firms, 17% by European firms, less than 1% by companies in rest of world).

Source: Lux Research, 2004

Member and Associated States

800

USA States300

810

511

USA Federal770

EC350

0

200

400

600

800

1000

1200

Europe Japan USA Others

Pu

bli

c ex

pen

dit

ure

( 1

M€

= 1

M$

)

Source: European Commission (2003)

Worldwide Public Expenditures in Worldwide Public Expenditures in Nanotechnology R&D 2003Nanotechnology R&D 2003

Pu

bli

c ex

pen

dit

ure

( M

€ )


180

130

6043

22 15 15 145 5 3 1,5 1,2 0,5

250

50

0

50

100

150

200

250

300350

Government Investment in European Government Investment in European Nanotechnology R&D, 2003Nanotechnology R&D, 2003

Note that the purchasing power can vary widely

Pu

bli

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pen

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ure

( M

$ )


100 100

50

30

9 8 5 5 4

0

25

50

75

100

125

150

South

Kor

eaChi

na

Taiwan

Austra

lia

Canad

a

Singap

ore

New Z

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d

Mala

ysia

Thaila

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200

Public Funding of Nanotechnology R&D Public Funding of Nanotechnology R&D outside Europe, Japan and the USoutside Europe, Japan and the US

Leading countries within nanotechnology, based on patenting activity.

(including patents from 2002, 2003 and 2004)


Opportunities and constraints in corporate technology strategy

Nu

mb

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ical

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Depth/funding pr technical field (specialization)

Constant corporate R&D funding

Press

ures

for e

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ding

the t

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y bas

e

Types of R&D in large multi-technology corporations

Niche / emerging

fields

Marginal fields

Backgroundfields

Core fields

Technology Strength

Low

High

High

Low

Cur

rent

impo

rtan

ce /

L

evel

of

R&

D

Inspired by Granstrand, Patel and Pavitt, 1997

Nano entry

Chain-Linked Model of Innovation

Potental market

Research

Stock of Knowledge

Invention and analytical design

Detailed design and test

Redesign and produktion

Distribu-tion and marketing

Source: Kline and Rosenberg, 1986

The scope for Nanotechnology in The scope for Nanotechnology in corporate R&Dcorporate R&D

Multi-technology companies (large Multi-technology companies (large incumbents): domain- and application incumbents): domain- and application specific and synergistic R&D improving specific and synergistic R&D improving cost and performance in existing product cost and performance in existing product markets.markets.

Dedicated nanotechnology firms. Will we Dedicated nanotechnology firms. Will we see a replication of DBFs in biotech?see a replication of DBFs in biotech?

Major US Corporations in Nanotechnology

Source: NanoBusiness Alliance, 2003

Propositions/questions

• Nanotechnology will/may be absorped by existing/new disciplines.

• Enormous challenge for commercialization: The integration of nano-dimensions into domain-specific application areas in myriads of industries and technologies.

• Large incumbents will/may take a lead in this process• Dedicated nanotechnology firms (DNFs) will play a

smaller role as ”intermediaries” than the DBFs in biotech.

Chris Freeman (2001)Chris Freeman (2001)

Euphoric ideas about a ’new Euphoric ideas about a ’new economy’ have a rebirth with each economy’ have a rebirth with each great technological revolution. While great technological revolution. While there is some justification for such there is some justification for such ideas in relation to technology, there ideas in relation to technology, there is less justification for is less justification for underestimation of the economic underestimation of the economic turmoil accompanying these turmoil accompanying these changes.changes.

Cognitive Presbyopia?Cognitive Presbyopia?

Cognitive presbyopia leads to hypes.Cognitive presbyopia leads to hypes.

Seeing the distant future with a clear focus, Seeing the distant future with a clear focus, while seing the intervening events in a hazy or while seing the intervening events in a hazy or indistinct manner.indistinct manner.

Technology history is replete with examples of technologies Technology history is replete with examples of technologies whose eventual use and value were whose eventual use and value were 1)1) enormously different from the ideas of their inventors or those enormously different from the ideas of their inventors or those who were the first to apply them commercially, and/or who were the first to apply them commercially, and/or 2) much slower to materialize than originally envisioned2) much slower to materialize than originally envisioned

Types of Technology polcies Types of Technology polcies

Mission oriented: strong positions at the Mission oriented: strong positions at the cutting edge of science and technologycutting edge of science and technology

Diffusion oriented: focus on effective Diffusion oriented: focus on effective absorptive capacity for absorbing and absorptive capacity for absorbing and widely diffusing new technologywidely diffusing new technology

Application/domain oriented: Focus on Application/domain oriented: Focus on particular domains of social and particular domains of social and environmental relevance.environmental relevance.

Primary sources

•Cientifica, 2003. The Nanotechnology Opportunity Report, 2nd Edition, Executive Summary.

•NSF 2003. Government Nanotechnology Funding: An International Outlook.

•Etc Group, 2003. The Big Down.

•CMP Científica, 2002. Nanotechnology: The Tiny Revolution.

•Bundesministerium für Bildung und Forschung, 2004. Nanotechnologie als wirtschaftlicher Wachstumsmarkt. Innovations- und Technikanalyse.

•The National Science and Technology Council, 2004. National Nanotechnology Initiative – strategic plan.

•Lux Research Inc., 2004. The Nanotech Report 2004.

•European Commission, 2004. Towards a European Strategy for Nanotechnology.

National Nanotechnology Initiative: http://nano.gov EU Nanotechnology homepage: http://www.cordis.lu/nanotechnology/

Supplementary statistics

Nanotechnology patents within chemistry


Nanotechnology patents within optics


Nanotechnology patents within automotives


Who is patenting?

Source: ETC group , 2003

Top 10 Nanobiotechnology Companies Ranked by Amount of Venture Capital Raised, 2003

Source: ETC Group, 2003

Pu

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( €

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3,43,1 3,1 3,0 3,0 2,9 2,9 2,7

2,42,2

1,7 1,6

3,6

0,0

1,0

2,0

3,0

4,0

5,06.2 5.6


Top 15 performers in per capita public Top 15 performers in per capita public funding of nanotechnology R&D 2003funding of nanotechnology R&D 2003

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