Entrepreneurial Firms, Giant Firms and Growth

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Entrepreneurial Firms, Giant Firms and Growth

• The David-Goliath Symbiosis

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• The Bourgeoisie i.e., capitalism cannot exist
  without constantly revolutionizing the
  instruments of production.... Conservation of the
  old modes of production in unaltered form was, on
  the contrary, the first condition of existence
  for all earlier industrial classes.... The
  bourgeoisie, during its rule of scarce one
  hundred years has created more massive and more
  colossal productive forces than have all
  preceding generations together It has
  accomplished wonders far surpassing Egyptian
  pyramids, Roman aqueducts and Gothic
  cathedrals... Subjugation of natures forces to
  man, machinery, application of chemistry to
  industry and agriculture,clearing of whole
  continents for cultivationwhat earlier
  generation had even a presentiment that such
  productive forces slumbered? (Marx and Engels,
  The Communist Manifesto, 1847 ordering slightly
  modified).

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Small Firm Breakthroughs
Air Conditioning Airplane Assembly Line Audio
Tape Recorder Biosynthetic Insulin Catalytic
Petroleum Cracking Cotton Picker Defribrillator DN
A Fingerprinting Electronic Spreadsheet FM
Radio Heart Valve Helicopter Hydraulic
Brake Integrated Circuit Microprocessor __________
__________________________________________________
____________ Source U.S. Small Business
Administration, 1995, p. 114.

• Nuclear Magnetic Resonance Scanner
• Optical Scanner
• Oral Contraceptives
• Pacemaker
• Personal Computer
• Polaroid Camera
• Portable Computer
• Prefabricated Housing
• Quick-Frozen Food
• Safety Razor
• Soft Contact Lens
• Vacuum Tube
• Xerography
• X-Ray Telescope
• Zipper

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Large Firms Spend Most on RD

• In 2000, 46 percent of total U.S. industrial RD
  funds was spent by 167 companies, each of which
  employed 25,000 or more workers
• 60 percent of these funds was spent by 366
  companies with at least 10,000 employees.
• At the other end of the spectrum, about 15
  percent was spent by 32,000 companies, each of
  which employed fewer than 500 workers.
• National Science Foundation (National Science
  Board, 2000, Chapter 2, p. 24),

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Large Firm Ph.D.s

• Procter Gamble has a world class, global
  research and development organization, with over
  7,500 scientists working in 22 research centers
  in 12 countries around the world. This includes
  1,250 Ph.D. scientists. For perspective, this is
  larger than the combined science faculties at
  Harvard, Stanford and MIT

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Cautious Large-Firm RD

• In established businesses, innovation is mostly
  shaped through small, incremental steps of
  additional features to augment basic
  functionalities. With short product lifecycles,
  time to recoup RD investments is limited.
  Success is relatively predictable through the
  execution of well-defined innovation processes
  and in-depth knowledge of their markets in the
  respective business units.
• A. Huijser, Ph.D., executive vice president and
  chief technologyofficer, Royal Phillips
  Electronics, The Hague, September 2003.

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Incremental Innovation Adds Up

• During 1971-2003, the number of instructions each
  chip can carry out per second increased by some 3
  million percent, reaching about 3 billion
  computations per second today.
• During 1968-2003, the number of transistors
  embedded in a single chip has expanded more than
  10 million percent.
• The number of transistors that can be purchased
  for a dollar has grown by five billion percent.

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