Course 2020-2021 a.y.

The course consists of traditional lectures, exercise sessions, in-class experiments, in-class group assignments, and case study discussions, allowing students to understand the managerial implications of the theory and to develop the necessary analytical skills to assess the advantages and challenges of organizing the internal and external sources of innovation. The topics of the course are ideally divided into two parts.

1. The first part looks at the innovation process from a bargaining, contracting, and incentive perspective, using the lens of transaction costs economics and incomplete contracts to analyze interfirm relationships (e.g., collaborations, strategic alliances, open innovation).
2. The second part focuses on intrafirm relationships based on coordination and competition, and analyzes the strategic management of human capital.

Part I – Interfirm relationships:

• Negotiation and bargaining models.
• Incomplete contracts.
• Managing (open) innovation.
• Co-opetition in strategic alliances.
• Cooperation with repeated alliances.

Part II – Intrafirm relationships:

• Intro to theory of incentives.
• Coordination and competition within hierarchies.
• Managing under asymmetry of information.
• Delegation of autonomy and incentives.

Strategic management of human capital.

• Assess the challenges faced by entrepreneurial and established firms when collaborating with external partners.
• Understand partners’ strategic behavior in short-lived and in repeated alliances.
• Understand the managerial implications of organizing external sources of innovation.
• Asses the challenges of organizational control and the provision of incentives.
• Understand the strategic management of human capital.

• Conceptualize the main economic frictions of an innovation process.
• Think about strategizing efforts when collaborating with external partners.
• Think about the provision of incentives in human-capital intensive firms.
• Formulate a value creation and capture proposition when organizing for innovation.

• Face-to-face lectures
• Online lectures
• Exercises (exercises, database, software etc.)
• Case studies /Incidents (traditional, online)
• Group assignments
• Interactive class activities (role playing, business game, simulation, online forum, instant polls)

• The course consists of traditional lectures with the support of slides. 
• Exercise sessions aimed to teach students how to set up, solve and interpret the solution to a model.
• In-class individual experiments where students face scenarios that mimick the problems studied formally in class.
• In-class assignments whereby the groups of students are asked to conceptualize specific economic problems.
• Case study discussions whereby the groups of students are required to write a short report, allowing students to understand the managerial implications of the conceptual and formal models developed during the course.

These in-class activities complement the traditional lectures and aim to develop the necessary analytical skills to assess the advantages and challenges of organizing the internal and external sources of innovation.

To be considered attending, students must participate in group assignments as described below.

• In order to measure the acquisition of the learning outcomes, the students’ assessment is based on two main components:
  • Individual experiments and group assignments for both exercise sessions and business cases aimed to test the students’ ability to think critically when applying the conceptual and formal models illustrated during the course.
  • Final written exam aimed to assess students’ ability to apply the analytical tools illustrated during the course, to solve and interpret models of contracting, bargaining, and the provision of incentives.
• Attending students will participate to the (online and in-class) individual experiments and group assignments for both exercise sessions and business cases that will count for 60% toward the final grade, whereas the final exam will count for 40% toward the final grade.

Students’ assessment is based on a final written exam at the end of the course that is mainly aimed at

verifying learning of the conceptual and formal models learned when studying the course material (slides, articles, and books) made available on Bboard.

A suggested (non mandatory) list of readings for each one of the topics covered in class is provided. The readings consist of a mixture of book chapters, journal articles, and business cases. The readings are posted in Bboard (or in the course reserve of the Bocconi Library). Slides of the lectures, problem sets, and their solutions are also posted.

A list of readings is made availabe on Bboard together with slides of the lectures, problem sets, and their solutions.