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Growing by leaps and inches: creative destruction, real cost reduction, and inching up

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  • Michael R. Darby
  • Lynne G. Zucker

Abstract

Most firms achieve perfective progress, incrementally improving commodities or productivity. But technological progress is concentrated in a few firms achieving metamorphic progress: forming or transforming industries with technological breakthroughs (e.g., biotechnology, lasers, semiconductors, nanotechnology). Unless congruent with incumbents' science and technology base, metamorphic progress promotes entry. Scientific breakthroughs embodied in discovering scientists, protected by natural excludability, and transferred by learning-by-doing-with at the bench generally drive metamorphic progress. Embodied knowledge is rivalrous and leads to entry and industry dominance by star-scientist-linked firms. Incorporating this scientific-entrepreneurial process is essential to improving - if not transforming - endogenous growth models.

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Bibliographic Info

Article provided by Federal Reserve Bank of Dallas in its journal Proceedings.

Volume (Year): (2003)
Issue (Month): Sep ()
Pages: 13-42

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Handle: RePEc:fip:feddpr:y:2003:i:sep:p:13-42

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Keywords: Research and development ; Intellectual property ; Venture capital;

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References

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  1. Stephan, Paula E & Everhart, Stephen S, 1998. " The Changing Rewards to Science: The Case of Biotechnology," Small Business Economics, Springer, vol. 10(2), pages 141-51, March.
  2. Jerry G. Thursby & Marie C. Thursby, 2002. "Who Is Selling the Ivory Tower? Sources of Growth in University Licensing," Management Science, INFORMS, vol. 48(1), pages 90-104, January.
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  10. Richard Jensen & Marie Thursby, 1998. "Proofs and Prototypes for Sale: The Tale of University Licensing," NBER Working Papers 6698, National Bureau of Economic Research, Inc.
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  12. Michael R. Darby & Lynne G. Zucker, 2002. "Going Public When You Can in Biotechnology," NBER Working Papers 8954, National Bureau of Economic Research, Inc.
  13. Maximo Torero, 2000. "Analyzing the Spillover Mechanism on the Semiconductor Industry in the Silicon Valley and Route 128," Econometric Society World Congress 2000 Contributed Papers 0090, Econometric Society.
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  15. repec:fth:harver:1473 is not listed on IDEAS
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Cited by:
  1. Michael Storper & Anthony J. Venables, 2004. "Buzz: face-to-face contact and the urban economy," Journal of Economic Geography, Oxford University Press, vol. 4(4), pages 351-370, August.
  2. Lynne G. Zucker & Michael R. Darby & Jeff S. Armstrong, 2001. "Commercializing Knowledge: University Science, Knowledge Capture, and Firm Performance in Biotechnology," NBER Working Papers 8499, National Bureau of Economic Research, Inc.
  3. Entorf, Horst & Fegert, Jörg & Kölch, Michael, 2004. "Children in need of medical innovation," Darmstadt Discussion Papers in Economics 22605, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
  4. Chava, Sudheer & Oettl, Alexander & Subramanian, Ajay & Subramanian, Krishnamurthy V., 2013. "Banking deregulation and innovation," Journal of Financial Economics, Elsevier, vol. 109(3), pages 759-774.
  5. Lynne G. Zucker & Michael R. Darby, 2007. "Star Scientists, Innovation and Regional and National Immigration," NBER Working Papers 13547, National Bureau of Economic Research, Inc.
  6. Michael R. Darby & Lynne G. Zucker & Andrew Wang, 2003. "Universities, Joint Ventures, and Success in the Advanced Technology Program," NBER Working Papers 9463, National Bureau of Economic Research, Inc.
  7. Ouimet, Paige & Zarutskie, Rebecca, 2014. "Who works for startups? The relation between firm age, employee age, and growth," Journal of Financial Economics, Elsevier, vol. 112(3), pages 386-407.
  8. Michael R. Darby & Lynne G. Zucker, 2006. "Innovation, Competition and Welfare-Enhancing Monopoly," NBER Working Papers 12094, National Bureau of Economic Research, Inc.
  9. John V. Duca & Mine K. Yücel, 2002. "An overview of science and cents: exploring the economics of biotechnology," Economic and Financial Policy Review, Federal Reserve Bank of Dallas.

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