Organizations and People Essay Example

movements, the market shares of all products are assured according to a rule-of-thumb.

The violent fluctuations in business investment often occur due to imitation. When one company introduces a new product and expands its production capacity, other companies in the market respond by doing the same to maintain their market share and capitalize on the increased demand (Apesteguia, Huck, & Oechssle, 2005, p. 2). In oligopolies, imitation can manifest as retaliation during price wars, where there is a realistic probability of opponents imitating each other.

The presence of a dominant market leader and one or more followers who simply adjust their prices allows the leader to establish a monopolistic price, thereby maximizing overall profits. The followers then adopt the same price while focusing on non-price competition and considering cost structures. Certain firms have not specialized in R or innovation, but rather in imitating, inventing around, producing, and marketing products that were often created elsewhere and sold over-the-counter. This group includes companies like Bristol-Myers, Warner-Lambert, Plough, American Home Products, as well as many firms in France, Italy, Spain, and Japan. Importing technology-intensive goods from developed countries presents an opportunity for developing countries to improve their situation by utilizing advanced inputs in production and gaining knowledge through reverse engineering these goods. This enhances their capacity for domestic imitation and technological expertise. Since the early 1990s, several countries such as India, Brazil, and Mexico have shifted from an import-substituting growth model to increased openness and liberalized trade regimes, granting them greater access to foreign technologies and goods. The dissemination of knowledge has played a crucial role in the economic growth of nations worldwide.

Studies have shown that economic integration between similar,

innovating countries leads to a higher overall rate of innovation and growth, as indicated by Rivera-Batiz and Romer (1991 a, b). Diffusion of knowledge through imitation is equally crucial for technological catch-up, as suggested by Vernon (1966), Krugman (1979), Dollar (1986), and Grossman and Helpman (1991 a, b) (Bottazzi et al., 1999, p. 2). Knowledge diffusion occurs through three channels. Firstly, temporal spillovers involve the time it takes for research and development to reveal its innovative output. Therefore, it is important to analyze the stock of existing ideas and the time structure of research and innovating activity. Secondly, sectoral spillovers occur when the level of knowledge in a sector depends on its own research and development investment as well as that in other technologically similar sectors or industries. Lastly, spatial spillovers refer to the possible effects of research and development that might depend on the physical proximity of industries and laboratories.

The concept of knowledge spillover is utilized by Economists to denote the transfer of ideas or information from one inventor to another without compensation, potentially improving the productivity of R efforts. This phenomenon is also known as a knowledge or technological externality.