UC Santa Cruz
Economics 138
MWF 12:30 - 1:40 pm
Porter Acad 144
Fall 2007
Jesus Sandoval-Hernandez
E2 434
Office hours MW 11-12 and by App
E-mail jsandova@ucsc.edu
ECON 138: ECONOMICS AND MANAGEMENT OF TECHNOLOGY AND
INNOVATION
Course web page: http://people.ucsc.edu/~jsandova/econ138.htm
1. COURSE OVERVIEW
The focus of this course is on the strategic management of technology and innovation in
established firms. Some fundamental ideas underlying the perspective of this course are: (i) a
firm's technology strategy emerges from its technological competencies and capabilities, (ii)
technology strategy is shaped by external (environmental) and internal (organizational) forces,
and (iii) the enactment of technology strategy, through the experience it generates, serves to
further develop the firm's technological competencies and capabilities. Within this perspective,
the course draws on strategic management, economics, and organization theory for analytical
tools to address important challenges faced by managers in technology-based firms.
2. COURSE OBJETIVES
1. To learn about the economic issues involved in technological change and innovation, and gain
some historical perspective on technological progress;
2. To develop an awareness of the range, scope, and complexity of the issues and problems
related to the strategic management of technology and innovation;
3. To develop an understanding of the "state of the art" of the strategic management of
technology and innovation;
4. To develop insight concerning the skills necessary to be effective as a general manager in the
innovation process.
5. To offer some practice in defining and working out strategic management problems related to
technological innovation and corporate entrepreneurship.
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To pursue the course objectives effectively, the following are required:
• Preparation and discussion of cases in class;
• Readings and lecture attendance;
• Completion of a research term paper.
3. COURSE MATERIAL
The
required
textbook
for
the
course
is
“STRATEGIC
MANAGEMENT
OF
TECHNOLOGY AND INNOVATION” Fourth Edition (McGraw-Hill, ISBN#: 0-07-253695-0)
by Robert A Burgelman, Clayton Christensen and Steven C. Wheelwright, (2004), and it is
available at the Bay Tree Bookstore.
4. COURSE REQUIREMENTS
The class will meet three times a week. Students are responsible for reading assigned materials,
and to actively participate in class. An active participation implies asking/answering questions,
sharing views, and participating in the presentation and discussion of “case studies” and a term
project.
The assignments for class should be prepared in advance. These require the identification of key
issues, problems, and opportunities; the articulation and evaluation of alternative approaches to
deal with the identified problems; the selection of a preferred strategy; and the formulation of a
concrete action plan to implement the strategy. From the comparison in class of different
approaches, we intend to highlight the nature of the tradeoffs, the importance of assumptions,
personal values, and orientations in the decision-making process, and the usefulness and
limitations of an informed, analytical approach.
5. EVALUATION/GRADING
Your course grade will be equally based on class participation and a final project - each 50%.
a. Class participation 50%: [Case presentations 20% (in groups), Class discussion and cases’
summaries 30%]
b. Final project 50%: [individual oral presentation 10%, paper 40%]
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The final project will consist of a brief oral presentation and paper. Final project paper is due the last day
of class: Friday, December 7 in class. Late papers will not be accepted.
Please note:
To pass the course, both requirements, class participation and project, must be fulfilled. In
particular, inadequate class participation and failing to present a case in group cannot be made
up by an outstanding paper.
Also note that punctuality and attendance will be highly regarded. In particular attendance is
required to pass this class. I may at any time take spot attendance roll. Please note carefully
that if you are absent more than three times without a valid justification, you will fail the class.
6. COURSE FORMAT
This is not a traditional lecture based course. The course will consist primarily of participantcentered case discussions. Case discussion and project activities will take place against a
background of conceptual material that is acquired through selected readings and brief lectures
(the readings are listed in the course outline). Your classmates and I expect you to attend and be
well prepared for each class, having read the required conceptual material and analyzed the
assigned case study ahead of time. We also expect you to play an active role in class discussion.
If all class members prepare for and actively participate in each class discussion, we will all
learn more from each other and enjoy the course more.
7. PREPARATION AND DISCUSSION OF CASES
In the first class, you will be asked to form groups of 4-6 members (group’s size is subject to
enrollment). Each group is responsible for thoughtfully preparing, presenting and leading the
discussion of at least one case study. However, the rest of the class has to be well prepared and
participate in the discussion.
In a typical class, I will ask one or more class members to start the class by answering a specific
question. Anyone who has thoroughly prepared the case with written conclusions should be able
to handle such a lead-off assignment. After a few minutes of initial analysis, the corresponding
group will take over and lead the discussion, which will be open to the rest of the class. As a
group, we will then build a complete analysis of the situation and address the problems and
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issues presented in the case. We will also spend time discussing the implications of those
recommendations.
The classroom should be considered a laboratory in which you can test your ability to convince
your peers of the correctness of your approach to complex problems and of your ability to
achieve the desired results through the use of that approach.
Your class contributions will be evaluated based on the quality of your input. Specifically, I am
looking for the following:
•
Is the participant a good listener?
•
Is the participant willing to interact with other class members?
• Are the points made relevant to the discussion? Are they linked to the comments of others?
•
Do the comments add to our understanding of the situation?
•
Does the participant distinguish among different kinds of data (i.e., facts, opinions, beliefs,
concepts)?
•
Is there a willingness to test new ideas, or are all comments "safe" (e.g., repetition of case
facts without analysis and conclusions)?
Additionally, you are asked to prepare written case summaries; these will be collected and
graded.
Case summaries: Each case summary you prepare will be a 2-page maximum response to the
preparation questions that I’ll provide in advance. These summaries are intended to help you
think through the issues in the case, and facilitate class discussion. Although you are free to
structure the summaries in ways that are the most helpful to you (e.g., topic heading & bullet
points, outline, narratives), at a minimum they should include information regarding the general
and industry level environmental conditions facing the firm, its value creating activities, the key
resources and core competency (if any) that provide the company with a competitive advantage,
its business and corporate level strategies, and the competitive dynamics that exist within the
industry.
Of the total of cases discussed over the course of the quarter, I expect you to prepare written
summaries for six of these cases. This does not mean that you are not required to read and
prepare the other cases, only that you do not have to write them up. All summaries are graded on
a plus (excellent), check (adequate), or minus (less than adequate) basis. If you fail to turn in a
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summary, you get a zero. Case summaries will be collected at the end of class, so that you may
refer to your summary during class discussions.
8. TERM PAPER
A. Topic
Choose a technology driven company or industry that is interesting to you. Examine new
technology choices made by your company or by competitors in your industry and relate them to
the company's general business strategy. Use the readings in the class text for an analytical
framework. Be systematic about the challenges presented by the new technology and discuss
how your company dealt with these challenges. The style and content of the case studies can
serve as a guide. Your analysis will be research based rather than dependent on interview
Your paper should include five sections:
1. A one-page executive summary, with a maximum of 250 words, in which one or two key
lessons from the paper are succinctly discussed. These should be cast in generalized terms.
2. Introduction and discussion of technology
3. Industry context
4. Strategic challenges
5. Recommendations
B. Length
The paper must not to exceed 20 pages excluding attachments such as appendixes, figures, tables,
etc. Papers must be typed, double-spaced with one-inch margins, no greater or smaller than a 12
point font size.
C. Important deadlines
October 15 Company Choice due
October 19 paper outline
November 7 Progress report #1
November 19 Progress report #2
December 7 Final paper due
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Progress reports will consist of a few paragraphs to indicate what has been accomplished to date
and what remains to be done. They are not graded. The final draft of your paper is due at the last
day of class, December, 7. Please note that late papers will not be accepted. The company
choice and progress reports are not graded but I can identify problems early on rather than in the
final paper.
D. Writing
Good writing habits are "portable" and will always reflect well on you. Shoddy written work can
have enormous negative consequences (in terms of lost opportunities for new positions or
advancement) when you hit the market. I expect a commitment to quality on your part. To this
end, you should proof your work for content (i.e. cohesion of argument, clarity of logic, support
of position, and conciseness), as well as for correct grammar, spelling, and punctuation. Unless
you are an uncommonly gifted writer and strategic analyst, your grade will inevitably suffer if
you wait until the last minute to complete your written assignment.
A good paper will be strong in the development of a conceptual framework and the descriptive
quality of the cases used to document its application, and show sound analysis and
recommendations. A very good paper will add depth of analysis and have specific conclusions.
An excellent paper will provide unexpected insights that have implications for the management
of innovation in general.
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TENTATIVE COURSE SCHEDULE
DATE
TOPIC AND/OR CASE
PRIOR READING
Week 1
Sep 28
Course Introduction/Orientation
I. INTEGRATING TECHNOLOGY AND
STRATEGY
BCW, p. 1-12
Oct 1
Technological Innovation
Case: Elio Engineering, Inc.
BCW, p. 13-31, & p. 32-48
“Profiting from Technological
Innovation: …”
Oct 3
Case: Advent Corporation (C)
Oct 5
Some Economics of Innovation
BCW, p. 49-61 & p. 62-66
“How to Put Technology into Corporate
Planning”
“From Schumpeter to the Economics of
Innovation” Hospers, G. 2003.
Intermediate micro textbook
Week 2
Oct 8
Microeconomics of Information
Technology
Intermediate micro textbook
Oct 10
Technological Innovation and Strategy
Case: Electronic Arts in 1995
BCW p. 102-130, & p. 67-82 “The Core
competence of the Corporation”
Oct 12
Week 3
Oct 15
Oct 17
II. DESIGN AND EVOLUTION OF
TECHNOLOGY STRATEGY
BCW, p. 141-152
Patterns and Evolution of Innovation
Case: The Optical Components Industry
BCW, p. 172-179, 179-189 & 202-208
“Management Criteria for Effective
Innovation” and “Patterns of Industrial
Innovation”
BCW, p. 245-264, 278-302, 362-378,
431-454, 478-490, 511-529, 529-541
BCW, p. 303-318 & p. 318-330
Oct 19
Week 4
Oct 22
Oct 24
Oct 26
Week 5
Oct 29
Case: Electronic Arts in 2002
BCW p. 82-102
Industries, Organizations and
Strategies
Case: The U.S. Telecom. Industry
(B): 1996-1999.
Case: Slouching Toward Broadband
Intellectual Property
Case: Digital Distribution & the
Music Industry
Case: Eli Lilly and Company: Drug
Development Strategy (A)
Case: Intel Corporation (A): The
DRAM Decision
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BCW, p. 378-398 & 398-410
“Finding the Balance: Intellectual
Property in the Digital Age”
BCW, p. 415-430 &398-415 “Notes on
New Drug Development in the US”
BCW, p. 454-477, 441-454 &478-488
“Strategic Dissonance”
“Architectural Innovation”
Oct 31
Case: Charles Schwab & Co. Inc. in BCW, p. 592-610
1999
Nov 2
Week 6
Nov 5
Case: Amazon.com
BCW, p. 610-629
III. ENACTMENT OF TECHNOLOGY
STRATEGY-DEV OF FIRM’S INNOV CAP.
Sources of Technology
Nov 7
Nov 9
BCW, p. 671-713 & 716-732
Case: Hewlett Packard: The Flight of
the Kittyhawk
BCW, p. 529-541 & 541-549
“Meeting the Challenge of Disruptive
Change”
Case: Inside Microsoft: The Untold
BCW, p. 550-585 & 587-592
Story of How the Internet Forced Bill “Strategic Intent”
Gates to Reverse Course
Week 7
Nov 12
Nov 14
Nov 16
IV. A DEVELOPMENT STRATEGY
HOLIDAY
BCW, p. 745-762 &773-780
“Making Sense of Corporate Capital”
Case Cisco Systems
New Product Development
Case: Product Development at Dell
Computer Corporation
BCW, p. 957-970 &970-976
“Communication between Engineering
and Production: A Critical Factor”
Week 8
Nov 19
Innovation Challenges
Case: Apple Computer, 1999
Nov 21
Nov 23
BCW, p. 1110-1127 & 1162-1180
“Building a Learning Organization”
*Case: Intel Beyond 2003
BCW, p. 1127-1162
HOLIDAY
Week 9
Nov 26
Nov 28
Project presentations
Nov30
Project presentations
Week 10
Dec 3
Dec 5
Project presentations
Dec 7
Project presentations. Final day of class.
Term paper due
Project presentations
Project presentations
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