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Purpose – This chapter analyzes the effects that the international integration of product markets induced by globalization exerts on the direction of technological change at the industry level.

Methodology/approach – In order to do so it elaborates an interpretative framework that complements the classical inducement hypotheses with the Schumpeterian literature and the localized technological change approach, putting forward the hypothesis that technological change is biased by the dynamics of both factor and product markets. We argue and show that not only the changing levels of input costs but also the changing prevalence of product and process innovations affect the direction of technological change: specifically when product innovations prevail technological change is skill-biased, while when process innovations play a major role innovation is capital intensive.

Findings – Following this perspective we analyze the interindustrial variance of the output elasticities of labor of the main advanced economies in recent years and claim that such heterogeneity can be understood as the result of differentiated innovative reactions of firms to changes induced by the globalization of the markets: fast-growing sectors innovate mainly through (skilled) labor-augmenting technological change, while mature industries rely more on capital-enhancing innovations. The empirical evidence supports our hypotheses and shows that the variance of the output elasticity of labor in a panel data estimate across 17 manufacturing sectors in 16 OECD countries from 1995 to 2006, is significantly and positively associated with the rates of growth of employment, wage levels and their rates of increase, and R&D intensity.

Originality/value of paper – By investigating the variance of output elasticities at the industry level the chapter provides new insights within the literature focused on the bias of technological change.

Understanding when entrants might have an advantage over an industry’s incumbent firms in developing and adopting new technologies is a question which several scholars have explained in terms of technological capabilities or organizational dynamics. This paper proposes that the value network—the context within which a firm competes and solves customers’ problems—is an important factor affecting whether incumbent or entrant firms will most successfully innovate. In a study of technology development in the disk drive industry, the authors found that incumbents led the industry in developing and adopting new technologies of every sort identified by earlier scholars—at component and architectural levels; competency-enhancing and competency-destroying; incremental and radical—as long as the technology addressed customers’ needs within the value network in which the incumbents competed. Entrants led in developing and adopting technologies which addressed user needs in different, emerging value networks. It is in these innovations, which disrupted established trajectories of technological progress in established markets, that attackers proved to have an advantage. The rate of improvement in product performance which technologists provide may exceed the rate of improvement demanded in established markets. This mismatch between trajectories enables firms entering emerging value networks subsequently to attack the industry’s established markets as well.

Information and communications technology (ICT) offers enormous opportunities for individuals, businesses and society. The application of ICT is equally important to economic and non-economic activities. Researchers have increasingly focused on the adoption and use of ICT by small and medium enterprises (SMEs) as the economic development of a country is largely dependent on them. Following the success of ICT utilisation in SMEs in developed countries, many developing countries are looking to utilise the potential of the technology to develop SMEs. Past studies have shown that the contribution of ICT to the performance of SMEs is not clear and certain. Thus, it is crucial to determine the effectiveness of ICT in generating firm performance since this has implications for SMEs’ expenditure on the technology. This research examines the diffusion of ICT among SMEs with respect to the typical stages from innovation adoption to post-adoption, by analysing the actual usage of ICT and value creation. The mediating effects of integration and utilisation on SME performance are also studied. Grounded in the innovation diffusion literature, institutional theory and resource-based theory, this study has developed a comprehensive integrated research model focused on the research objectives. Following a positivist research paradigm, this study employs a mixed-method research approach. A preliminary conceptual framework is developed through an extensive literature review and is refined by results from an in-depth field study. During the field study, a total of 11 SME owners or decision-makers were interviewed. The recorded interviews were transcribed and analysed using NVivo 10 to refine the model to develop the research hypotheses. The final research model is composed of 30 first-order and five higher-order constructs which involve both reflective and formative measures. Partial least squares-based structural equation modelling (PLS-SEM) is employed to test the theoretical model with a cross-sectional data set of 282 SMEs in Bangladesh. Survey data were collected using a structured questionnaire issued to SMEs selected by applying a stratified random sampling technique. The structural equation modelling utilises a two-step procedure of data analysis. Prior to estimating the structural model, the measurement model is examined for construct validity of the study variables (i.e. convergent and discriminant validity).

The estimates show cognitive evaluation as an important antecedent for expectation which is shaped primarily by the entrepreneurs’ beliefs (perception) and also influenced by the owners’ innovativeness and culture. Culture further influences expectation. The study finds that facilitating condition, environmental pressure and country readiness are important antecedents of expectation and ICT use. The results also reveal that integration and the degree of ICT utilisation significantly affect SMEs’ performance. Surprisingly, the findings do not reveal any significant impact of ICT usage on performance which apparently suggests the possibility of the ICT productivity paradox. However, the analysis finally proves the non-existence of the paradox by demonstrating the mediating role of ICT integration and degree of utilisation explain the influence of information technology (IT) usage on firm performance which is consistent with the resource-based theory. The results suggest that the use of ICT can enhance SMEs’ performance if the technology is integrated and properly utilised. SME owners or managers, interested stakeholders and policy makers may follow the study’s outcomes and focus on ICT integration and degree of utilisation with a view to attaining superior organisational performance.

This study urges concerned business enterprises and government to look at the environmental and cultural factors with a view to achieving ICT usage success in terms of enhanced firm performance. In particular, improving organisational practices and procedures by eliminating the traditional power distance inside organisations and implementing necessary rules and regulations are important actions for managing environmental and cultural uncertainties. The application of a Bengali user interface may help to ensure the productivity of ICT use by SMEs in Bangladesh. Establishing a favourable national technology infrastructure and legal environment may contribute positively to improving the overall situation. This study also suggests some changes and modifications in the country’s existing policies and strategies. The government and policy makers should undertake mass promotional programs to disseminate information about the various uses of computers and their contribution in developing better organisational performance. Organising specialised training programs for SME capacity building may succeed in attaining the motivation for SMEs to use ICT. Ensuring easy access to the technology by providing loans, grants and subsidies is important. Various stakeholders, partners and related organisations should come forward to support government policies and priorities in order to ensure the productive use of ICT among SMEs which finally will help to foster Bangladesh’s economic development.

Many studies have proven that innovation performance is an important factor that increases corporate’s performance. In this context, companies need to be successful in innovation management, and they need to innovate. The technological turbulence that may occur in the sector where the companies are located will affect the innovation performance negatively if the companies fail to manage innovation. As a result of factors such as increasing competitive pressure with globalization, the elimination of time and space obstacles of technology, expanding purchasing alternatives, and increasing awareness levels, the newest products bring the highest revenues. These developments have led to a dramatic increase in the importance of developing new products as a competitive weapon, making product innovation an important element of the organizational strategy. Therefore, innovation strategies to be implemented and dynamic skills that are owned are needed to be managed correctly by companies. In this study, innovation management, technological turbulence, innovation strategies, and dynamic capabilities are examined.

Purpose: The purpose of this chapter is to scientifically verify the credibility (prove or disprove) the existing argument for the global technological inequality within the conflict of traditions and innovations, as well as from the perspective of social consequences of the innovative development of the economy and the basics of conflict management.

Design/methodology/approach: A review of existing sources of research literature has shown that they formed an insufficient scientific basis for determining the essence and scope of social consequences of the innovative development of the economy and the basics of conflict management in terms of global technological inequality. The method of comparative analysis of statistical data over time is used to fill the identified gap in the scientific knowledge system in this chapter. The top 10 countries of the world, which are characterized by the highest level of the innovative development of the economy, were chosen as the objects of study.

Findings: This chapter presents a review of facts determining that there are arguments for the conflict of traditions and innovations against the backdrop of global technological progress from a scientific perspective, a conflict that has social consequences for the innovative development of the economy and the basics of conflict management. Today, the protection and promotion of national interests are being increasingly determined by digitalization as the primary function of diplomatic services. For example, cybersecurity affects national security; web platforms support the economic well-being of citizens and companies; the Internet contributes to the development of healthcare, education and other essential social services, especially during the crisis caused by the COVID-19.

Originality/value: It is expected that wide introduction of high technologies in developed countries will reduce the competitive ability of currently less industrialized economies of Asia and Africa in terms of cost of labour, will increase the technological gap between them and developed countries that will diversify their economies and create more jobs. In the past, countries such as China, Mexico, Brazil and several Asian countries were climbing the income ladder, transferring labour force and capital from the relatively inefficient agricultural economy to the more efficient products and services. Today, there are fears that high technologies and Industry 4.0 will revolutionize these conventional development processes, making a thorny path even more thorny, and will lead to conflicts of traditions and innovations as a source of global technological inequality.

The impact of competition on innovation has been extensively studied, but with ambiguous findings. We study the impact of import competition on U.S. corporate innovation and present some new perspectives. We conjecture that U.S. firms view import competition from high-wage countries (HWCs) as “neck-and-neck” competition and will respond by intensifying innovation. In contrast, U.S. firms will reduce innovation in response to import competition from low-wage countries (LWCs), because such competition does not always increase the potential benefits from innovation. Our empirical results are supportive. We find that, when confronting HWC import competition, U.S. firms increase R&D spending while intensifying and improving innovation output (file more patents, receive more citations to their patents, and produce more breakthrough patents). Moreover, U.S. firms closest to the technological frontier – largest firms, firms with the largest stocks of knowledge, and most profitable firms – increase and improve their innovation the most in response to HWC competition. These results shed light on the relationship between product market competition and innovation, and point to the origin of import competition as a determinant of innovation decisions made by different U.S. companies.

“It should also be noted that the objective of convergence and equal distribution, including across under-performing areas, can hinder efforts to generate growth. Contrariwise, the objective of competitiveness can exacerbate regional and social inequalities, by targeting efforts on zones of excellence where projects achieve greater returns (dynamic major cities, higher levels of general education, the most advanced projects, infrastructures with the heaviest traffic, and so on). If cohesion policy and the Lisbon Strategy come into conflict, it must be borne in mind that the former, for the moment, is founded on a rather more solid legal foundation than the latter” European Commission (2005, p. 9)Adaptation of Cohesion Policy to the Enlarged Europe and the Lisbon and Gothenburg Objectives.

For at least the last 10 years, the Russian authorities have been declaring the need to move to an innovative path of economic development. The government actively initiates and applies various instruments and measures to promote innovation. However, the effectiveness of the Russian innovation policy is still in question. The chapter examines the evolution of state policy to foster innovation growth in Russia since 2000 and describes some sets of achievements and problems for different stages of this policy. In addition to analysis of changes in the innovation sphere at the macro-level, we discuss the primary motivations and limitations at the micro-level (firm level). As a result, the critical institutional barriers to innovation-based growth are revealed. In the same time, certain successes have been achieved in some sectors, and we consider various opportunities to improve Russian technological and innovation policy.

Broadly speaking, internationalisation means the entry to new-country markets. It may, therefore, be described as a process of innovation (Bilkey & Tesar, 1977; Andersen, 1993; Casson, 2000). Faced with increasing international competition, innovation has become a central focus in firms’ long-term strategies. Firms competing in global markets face the challenges and opportunities of change in markets and technologies. One important aspect within innovation management is the optimal integration of external knowledge, since innovation increasingly is derived from a network of companies interacting in a variety of ways (Veugelers & Cassiman, 1999).

Purpose – This chapter aims at exploring the effects of globalization on technological change by focusing on the determinants of the direction of technological change at the firm level of analysis by following the induced technological change approach implemented by the localized technological change hypothesis.

Methodology/approach – In the empirical analysis, we proxy the direction of technological change by means of the changes in the output elasticity of capital and analyze how it is affected by the changes in factor market costs and firms' attributes for a panel of 1,113 companies listed on UK and the main continental Europe financial markets for the period 1995–2003.

Findings – We find that small firms are more likely to introduce capital-intensive technological changes while large firms will introduce skill-intensive technological changes.

Research limitations/implications – Our model provides a clear analytical framework that interprets the growing skill intensity of the advanced economies as the result of the introduction of new technologies induced by the growing globalization and biased by the characteristics and the types of innovation strategies of the firms.

Originality/value of paper – In so doing, the chapter adds to the existing literature in that it first explores the effects of globalization upon factor markets and, second, it investigates the effects of the direction of technological change within a microeconomic perspective.