Persistent heterogeneity and sustainable innovation

摘要: One of the concerns with strategy as a field is that its goal (durable profits) appears at odds microeconomics (homogeneous firms zero profits). Thus even if we can find sources durable profits, maybe shouldn't—because doing so comes expense social welfare. In this sense, an ‘economic bad.’ Probably most vivid evidence tension fact Porter's Competitive Strategy (1982) Industrial Organization turned on head—exploiting indications anti-competitive behavior to create prescriptions for profits. This study presents parallax view in which economic good. view, heterogeneity stimulates innovation and growth. The underlying logic fuels diffusion; diffusion erodes leaders' shares; loss shares innovation, turn new diffusion. I develop through simple model embedded industry, then evaluate via simulation. key issue whether there are steady states sustain innovation. Results indicate persists roughly half industry conditions examined. Furthermore growth sustained under those conditions. What comforting about set they accommodate (and indeed require) all things hold dear: industrial policy, strategic well routine by firms. insights follows: (1) (thus ‘strategy’ good, rather than anathema allocative efficiency); (2) persistent feasible presence spillovers (without isolating mechanisms); (3) but (while persistent) requires managers actively preserve inherent value their resource advantages—firms can't rest laurels; (4) policy differ from prior models. Copyright © 2003 John Wiley & Sons, Ltd.