Chapter 5 Wharton

Chapter five covers how public policies can affect emerging technologies. The chapter first describes the types of public policies that can influence emerging technologies:

• Institutional infrastructure allowing an intellectual property regime that has equal reward for innovators and follow-on inventions


• Research infrastructure - government lab structure that supports scholars and publications, as well as government funding for testing technologies


• Government directives that are interventionist in that the directives take a direct role in encouraging and protecting emerging technologies


• Standard setting, regulations, and subsidies

The authors then use the development of the internet to show ten lessons and give recommendations for managers to help mitigate risk and increase opportunity in light of government intervention:

• Government plays an important role in the early stages of emerging technologies
• managers should monitor research in their field at universities and government labs because they are usually subsidize
• Withdrawal of government support is strongly resisted once the emerging technology gains momentum
• Mangers should lobby hard for new (or continued) subsidies
• Government can help manage the transition from public to private arenas
• Managers should lobby hard and smart to have their standards adopted to help the transition go smoother
• Political solutions may be demanded because of public concerns about emerging technologies’ affect
• Managers should be prepared for what political solutions may ensue
• There is a cycle of commercial and government legal/political responses to disruptions that lead to more disruptions and legal/political responses
• Managers should anticipate both corporate and market interruptions and take advantage of them
• Highly valued technologies may have political demands for “universal service”
• These demands can position a company and help protect it from market competition
• Firms can ill treat customers causing intervention by regulators
• Managers should monitor customer satisfaction and emerging concerns as the technology emerges
• Natural monopolies may be intervened by government regulations
• Managers should be careful of situations where customers can claim there is a monopoly
• Bottlenecks could cause a need for government intervention to limit a firm’s ability to vertically integrate
• As a bottleneck firm, avoid aggressive behavior that may raise flags. Firms that must be in the bottleneck market should lobby hard to keep the bottleneck firm out of their market through governmental restrictions. Also, keep in mind that the aggressiveness of government interaction changes with administrations.
  
• Policies that look promising could have unintended side effects
  
  
  
  • If policies are needed, be sure to propose legislation that is market friendly to avoid regulations that can become destructive
  
  

  Further research
  
  This chapter is actually pretty timely. I’ve been following legislation related to the Internet and other technologies and read just this week in the Statesman that the Legislature has re-initiated the science and technology committee. Interestingly enough, the article actually parallels what the chapter says about the importance of government and education labs. The article writes, “Technologies developed at universities and federal laboratories are viewed as premium assets that could be developed into businesses and industries to benefit the state.” It will be interesting to see how this committee affects technology innovation in Idaho.
  
  http://voices.idahostatesman.com/2009/02/27/krichert/science_and_technology_council_returns_sort
  On a national level, the economic stimulus package is a good example of government subsidies and how they can affect innovation. According to one article, there will be $3 billion allocated for “basic research in fundamental science and engineering” and the National Institute of Standards and Technology will get $580 million, $360 of that sum will go to research facility construction.
  http://www.nextgenerationscience.com/science-news/us-economic-stimulus-expands-scientific-research-funding/
  
  http://www.sciam.com/article.cfm?id=us-economic-stimulus-to-b