20451 - FUNDAMENTALS OF INNOVATION AND INDUSTRIAL CHANGE

Innovation and industrial change are two key characteristics of modern economies. Firms and industries in advanced countries, as well as emerging economies, must deal with changes in technologies, markets, and the radical transformation of industrial structures. The course aims to provide a broad understanding of the processes and factors driving innovation and industrial change, and to equip students with the tools necessary to analyze the relevance and impact of innovation and industrial change for firms, sectors, and the economy. A basic understanding of microeconomics and industrial organization would be helpful for students.

Part I: The first part of the course will be taught by Franco Malerba. It will provide the key elements and basic framework needed to analyze technological change and innovation in firms, industries, and countries from an economic perspective. Starting with an overview of the innovation process, the course will review the evolutionary approach to technical change and the theory of the firm, based on the concepts of learning, competencies, and dynamic capabilities. It will then examine innovation at the sectoral level and in the dynamics and evolution of industries. Finally, the course will address the impact of demand on the innovation process, the role of public policy in affecting innovation, the international technological competition among countries, and the catch-up of emerging economies.

Part II: The second part of the course will be taught by Andrea Fosfuri and Myriam Mariani, and will shift the focus from industry to the firm level. It will cover fundamental questions about how technological change and innovation affect firm strategies and performance. The course will start by exploring how firms' incentives to innovate are influenced by the dynamics of competition. It will then examine the various strategic options available to firms to leverage their innovation. A crucial aspect is the ability of firms to trade technology on the market. The course will analyze how firms buy and sell technology, and the implications of the division of innovative labor for technology startups. It will also provide a detailed discussion on the economics of patents and how firms can benefit from, and sometimes abuse, the patent system. Finally, the course will briefly delve into the challenges of generating innovative ideas and conclude by examining the role and motivation of inventors at the individual level.

• Understand the relationship between innovation and economic growth, and between innovation and the dynamics and evolution of industries
• Identify public policies to support innovation and industrial change, including patent protection and technology transfers
• Develop a deep understanding of the role of innovation as a source of competitive advantage for both corporations and startups
• Understand the role and motivation of inventors 

• Design innovation policies and innovation strategies based on rigorous scientific methods
• Analyze the main issues related to innovation and industrial change that characterize the modern economy
• Build up up diagnostic and analytical skills, and enhance verbal skills via class and group discussions

• Face-to-face lectures
• Individual assignments
• Group assignments

• Individual assignments: Active participation during lectures and very short presentations of the readings in front of the class
• Group assignments: group presentations and discussions on topics selected jointly by the students and the instructors. Students are encouraged to propose projects they believe are worth exploring.

Students’ evaluation is based upon a written exam (80%) and the group project (20%).

Written Exam: The course assessment comprises a comprehensive written final exam, which accounts for 80% of the final grade. Alternatively, students can opt for a mid-term exam covering the first part of the course (40% of the final grade) and a second exam on the second part of the course (40% of the final grade). Exams consist of open questions designed to evaluate individual students’ ability to understand the concepts, methodologies, and theories presented during the course and to explain them in a concise, clear, and analytical manner.

Group Project: The group project accounts for 20% of the final grade and requires teams of 4-5 students to write on one of the course topics. The project aims to verify students’ ability to analyze the main issues related to one of the course topics, apply the proper methodology, and work in a group. While the topic of the project is open, it must be related to the topics of the course.

Active participation during lectures and very short presentations of the readings in front of the class is rewarded on top of the marks for the final essay and the term paper (one extra bonus point for deserving students to be added to the final grade from the exam(s) and project presentation).

Students’ evaluation is based upon a written exam (100%).

Written Exam: The course assessment comprises a comprehensive written final exam, which accounts for 100% of the final grade. Alternatively, students can opt for a mid-term exam covering the first part of the course (40% of the final grade) and a second exam on the second part of the course (60% of the final grade). Exams consist of open questions designed to evaluate individual students’ ability to understand the concepts, methodologies, and theories presented during the course and to explain them in a concise, clear, and analytical manner. The comprehensive written final exam and the exam on the second part of the course will also include a number of multiple-choice questions.