Implications of nanotechnology on Industrial and Corporate Dynamics

1
Implications of nanotechnology on Industrial
and Corporate Dynamics Lessons from Economics
of InnovationJens Frøslev
ChristensenCopenhagen Business School
2
Impacts of technology on the economy

• RD is generally associated with economic growth
  and rise in productivity.
• Some general-purpose technologies (i.e. the steam
  engine, the electric motor, ICT) have had
  significant impacts.
• These impacts only materialize in the mature
  stages of the technology 30-50 (or more) years
  after the early breakthroughs
• Biotechnology has not yet demonstrated any
  significant impact and even less so
  nanotechnology.

3
Techno-economic paradigms and long waves in the
economy
Technical/org. innovations
Examples of visible innovations
Carrier industries
Core input
Managerial/ organizationa changes
Timing of upswing and downswing
Steam-powered mechanization of industry
Liverpool-Manchester railroad (1784)
Railways Steam-engines Machine tools
Iron Coal
Joint stock companies Subcontracting
1848-1873 1873-1895
Electrification of industry and society
Edisons New York electric power station (1882)
Electrical equip. Heavy engin. and chemicals
Steel Copper Metal alloys
Taylorism Giant firms
1895-1918 1918-1940
Motorization of transport, civil economy and war
Fords Highland Park car assembly line (1913)
Automobiles Diesel engines Aircrafts Refineries
Oil Gas Synthetic materials
Fordism Hierarchies
1941-1973 1973-
Computeri-zation of entire economy
IBM 360 series (1960s) and Intel
micro-processor(1972)
Computers Software Telecom
Integrated circuits
Networks internal, local, and global
??
Source Freeman and Loucã, 2001
4
Sequences of Economic Impacts from a
technological Revolution

• Long gestation time without significant impact
• Then a spurt of growth, productivity and demand
  in a few core industries with some impact on
  aggregate economy
• Finally, sustainable growth of the economy as a
  whole requires changes in
• a) national/regional social and institutional
  context, and in
• b) institutional conditions to sustain worldwide
  diffusion
• (No linear determinism!)

5
The expanding global science-technology base
Expanding scope of technological opportunities
Increasing number of technical fields
(differentiation, merging)
Increasing depth/funding pr technical field
(specialization)
6
Nanotechnologyan emergent science-technology
paradigm

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

7
Public funding in nanotechnology RD

• Public expenditure in nanotechnology is growing
  by 40 annually to around 3.5 billion / in
  2003.

Public expenditure ( 1M 1M )
Source European Commission (2003)
NNI National Nanotechlogy Initiative. FP6 The
6. EU Frame Program
8
Nanotechnology science notations 1990 2002
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.
Source ETC group, january 2003
9
Nanotechnology patents
Source VDI Technologiezentrum GmbH and
Bundesministerium für Bildung und Forschung,
September 2004
10
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 TVs Brighter, more efficient
Source TDO, 2003
11
Prospects for the future Car
12
What kind of technology is Nanotechnology

• General-Purpose rather than Narrow-purpose
• Inter-disciplinary rather than One distinctive
  discipline
• Complementing rather than Substituting
• Platform technology not One distinctive
  technology

13
What kind of science is nano-science?
Much (most?) research - Wissenshaft
Source Stokes, 1997
14
What is the science-technology nexus in
nanotechnology?

• Technology is science-driven - not exclusively
  engineering/technology-driven. But
• Technology also drives science not exclusively
  invention and innovation.
• Technology/industry and science engage in
  interactive dance (based on IP incentives and
  market visions)

15
The Global Race for Nanotechnology - The new
thrust after landing of the New Economy

• USA (again) took the lead and set the agenda (NNI
  in 2000)
• Germany and Japan envision prospects for
  techno-economic renaissance
• Korea and China see opportunities to become the
  new technological tigers?
• The poor world is left behind

16
Worldwide spendings on nanotechnology research
and development

• Governments, corporations, and venture
  capitalists will spend nearly 9 billion
  worldwide on nanotechnology research and
  development (RD) in 2004.
• National and local governments across the world
  will invest close to 5 billion in nanotechnology
  RD 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 RD 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
17
Worldwide Public Expenditures in Nanotechnology
RD 2003
Public expenditure ( 1M 1M )
Source European Commission (2003)
18
Government Investment in European Nanotechnology
RD, 2003
Public expenditure ( M )
Source European Commission (2003)
19
Public Funding of Nanotechnology RD outside
Europe, Japan and the US
Public expenditure ( M )

• Note that the purchasing power can vary widely

Source European Commission (2003)
20
Leading countries within nanotechnology, based on
patenting activity. (including patents from
2002, 2003 and 2004)
Source VDI Technologiezentrum GmbH and
Bundesministerium für Bildung und Forschung,
September 2004
21
Opportunities and constraints in corporate
technology strategy
Constant corporate RD funding
Pressures for expanding the technology base
Number of technical fields
Depth/funding pr technical field (specialization)
22
Types of RD in large multi-technology
corporations
Technology Strength
Nano entry
Low
High
Current importance / Level of RD
Low
High
Inspired by Granstrand, Patel and Pavitt, 1997
23
Chain-Linked Model of Innovation
Detailed design and test
Distribu-tion and marketing
Invention and analytical design
Redesign and produktion
Source Kline and Rosenberg, 1986
24
The scope for Nanotechnology in corporate RD

• Multi-technology companies (large incumbents)
  domain- and application specific and synergistic
  RD improving cost and performance in existing
  product markets.
• Dedicated nanotechnology firms. Will we see a
  replication of DBFs in biotech?

25
Major US Corporations in Nanotechnology
Source NanoBusiness Alliance, 2003
26
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.

27
Chris Freeman (2001)

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

28
Cognitive Presbyopia?
Seeing the distant future with a clear focus,
while seing the intervening events in a hazy or
indistinct manner.

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

• Cognitive presbyopia leads to hypes.

29
Types of Technology polcies

• Mission oriented strong positions at the cutting
  edge of science and technology
• Diffusion oriented focus on effective absorptive
  capacity for absorbing and widely diffusing new
  technology
• Application/domain oriented Focus on particular
  domains of social and environmental relevance.

30
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/

31
Supplementary statistics
32
Nanotechnology patents within chemistry
Source VDI Technologiezentrum GmbH and
Bundesministerium für Bildung und Forschung,
September 2004
33
Nanotechnology patents within optics
Source VDI Technologiezentrum GmbH and
Bundesministerium für Bildung und Forschung,
September 2004
34
Nanotechnology patents within automotives
Source VDI Technologiezentrum GmbH and
Bundesministerium für Bildung und Forschung,
September 2004
35
Who is patenting?
Source ETC group , 2003
36
Top 10 Nanobiotechnology Companies Ranked by
Amount of Venture Capital Raised, 2003
Source ETC Group, 2003
37
Top 15 performers in per capita public funding of
nanotechnology RD 2003
Public expenditure ( or / per capita )
Source European Commission (2003)