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About this book

This book focuses on exploring the relationship between spin-outs from incumbents and the patterns of innovation in general purpose technology. Do spin-outs really promote innovation? What happens if star scientists leave the incumbents and establish a startup to target untapped markets? Entrepreneurial spin-outs have been recognized as an engine of innovation. General purpose technology, such as the steam engine in the Industrial Revolution, has been considered an engine of growth. This book provides new perspectives on how entrepreneurial spin-outs shape the patterns of innovation in general purpose technology by integrating theoretical findings in industrial organizations and includes innovation studies and detailed evidence from a longitudinal case study. Concretely, by longitudinally exploring the technological development of laser diodes in the USA and Japan, this study examines how the existence or absence of an entrepreneurial strategic choice for spin-outs influences the patterns of subsequent technological development. The longitudinal analysis in this book shows that spin-outs could hinder the subsequent development of existing technology when that technology is still at a nascent level, because the cumulative effects of technological development could disappear if research and development personnel leave their parent firms in order to target different sub-markets. The findings of this book show that institutional settings designed to promote spin-outs do not necessarily promote innovation. The book offers novel theoretical insights into the relationship between institutions promoting spin-outs and the developments of general purpose technology.

Table of Contents

Frontmatter

Part I

Frontmatter

Chapter 1. Aim and Framework

Abstract
Startups, financing for ventures, flexible labor markets, and well-developed networks have gained considerable attention as source of innovation since the late 1980s. But do they really promote innovation in all dimensions? This simple question underlies this study.
Hiroshi Shimizu

Chapter 2. Theoretical Background: General Purpose Technology, Pattern of Innovation, and Spin-Out

Abstract
By reviewing previous research, this chapter aims to clarify the positioning of this study and the academic contributions of this study. This chapter is roughly divided into three parts. First, it outlines previous studies on innovation of highly versatile technology. Then, it looks at studies on patterns of innovation. Next, it analyzes discussions on the relationship between spin-outs, labor mobility, and innovation. Lastly, it positions this study’s own the academic contributions in the context of this previous literature.
Hiroshi Shimizu

Chapter 3. Data

Abstract
This study uses various kinds of data to perform longitudinal analysis. Since these data shed light on an aspect of entangled complex social phenomena respectively, it is important to critically review each data source: how the data are collected, embedded biases in the data, data collection methods, and how the data are used in this study.
Hiroshi Shimizu

Chapter 4. Technological Characteristics of Laser and Laser Diode

Abstract
This section reviews the basic technological characteristics of laser and laser diode. The purpose here is to help understand the case analysis of Part II. Therefore, the technological details are limited to a minimum as much as possible. However, there will still be a good portion of technical explanation of laser diode in this chapter. Hence, you may wish to treat this chapter as a dictionary by skimming through this chapter and come back if you do not understand something technological while reading the case analysis. First, this chapter describes the characteristics of a laser and its basic principles and then outlines the technological features of a laser diode. It then provides an examination of the application and market of laser diodes.
Hiroshi Shimizu

Part II

Frontmatter

Chapter 5. Birth of the Laser Diode: It All Started in the U.S.

Abstract
The first laser oscillation in the world was achieved by Theodore Maiman at Hughes Research Laboratories in California in 1960. Two years after that, in 1962, four American organizations almost simultaneously succeeded in oscillating the first laser diode. How exactly were these laser diodes first developed? This chapter explores the process and history of the laser diode’s development.
Hiroshi Shimizu

Chapter 6. Continuous Wave Operation at Room Temperature and Long Operating Life: Catch Up of the Japanese Firms

Abstract
As we have seen thus far, the oscillation of the first laser was achieved by Maiman from Hughes in California in 1960. After that, various types of lasers were developed one after another. By 1962, four research groups in the U.S. achieved laser oscillation using the first laser diode almost simultaneously. However, this early laser diode employed pulse oscillation at liquid nitrogen temperature. If the laser could be operated only at liquid nitrogen temperature with pulse oscillation, the practical application of the laser would have remained seriously limited. Therefore, firms, universities, and research institutes competed to create a viable continuous wave operation of the laser diode at room temperature.
Hiroshi Shimizu

Chapter 7. Competition over Communications: Long-Wavelength Laser Diode

Abstract
As we have discussed, the year 1970 was an important year for the laser diode. That was the year Bell Laboratories achieved the continuous wave operation of laser diode in room temperature and Corning developed the low-loss optical fiber. By chance, the wavelength at which the low transmission loss was achieved, 800 nm band, matched the wavelength of the GaAs substrate laser diode that achieved the continuous wave operation in room temperature. As the previous chapter described, these innovations facilitated the advancement of laser diode R&D into the 1970s and focused R&D attention on optical communication.
Hiroshi Shimizu

Chapter 8. Aiming for a New Market: From CD to DVD

Abstract
As we saw in Chap. 7, when laser diode R&D began in the 1960s, specific application had not yet been identified nor was it the clear driving force behind R&D. Optical communication later became the most common application of laser diode from the beginning of 1970s.
Hiroshi Shimizu

Chapter 9. From Red to Blue: Competition for Shorter Wavelengths

Abstract
The previous chapter looked at the competition for shorter wavelengths in laser diodes for the recording of optical information. The wavelength was shortened from 780 nm for CDs to the 600-nm band. In this chapter, we will look at the competition for even shorter wavelengths from the 600-nm band (red) to the 400-nm band (blue).
Hiroshi Shimizu

Chapter 10. Strategic Behaviors of Japanese Firms on the Technological Trajectory

Abstract
Chapters 8 and 9 examined the competition for shortening the wavelength of a laser diode, from the 780-nanometer for CDs, to the 400-nanometer wavelength range. The technological problems faced in shortening the wavelength, and the approaches and solutions to it, had been widely shared among the researchers. As discussed in the previous chapter, there were different approaches and theories among researchers regarding the prospects of each laser diode material. R&D was conducted with the recognition of advantages and disadvantages of each material. In other words, it can be said that they were competing on the same technological trajectory. It had been pointed out that competitive strategy was lacking in such homogeneous competition. Certainly, R&D activities on the same technological trajectory are cumulative in nature, and, therefore, it might seem that no strategy existed in such environment. When examining it on a micro level, however, we see that the firms were indeed moving in a strategic way. Let us take the cases of Panasonic and Sumitomo Electric Industries (hereinafter referred to as Sumitomo Electric) as representative examples. Both of these firms yielded notable technological achievements, both of which received the Okochi Award. Looking at each case, you can see the strategic positioning and entry of each firm.
Hiroshi Shimizu

Chapter 11. Changes in the Industrial Organization: Rise of Spin-Outs

Abstract
As we have seen, laser diode R&D emerged primarily for optical communication applications. Due to technological developments in optical fibers, the wavelength resulting in the least transmission loss changed from short wavelengths of the 800-nm range to longer wavelength of 1300-nm and 1550-nm ranges. Therefore, more focus was given to R&D to develop laser diodes that would make high-speed, high-capacity optical communication possible at those longer wavelengths. To that end, scientists and engineers at telecommunications R&D facilities developed longer-wavelength laser diodes. Simultaneously, however, scientists and engineers began to develop shorter-wavelength laser diodes for optical information recording and processing, as more information could be processed with shorter-wavelength laser diodes.
Hiroshi Shimizu

Part III

Frontmatter

Chapter 12. Patterns of Spin-Outs and Innovation

Abstract
Up until Part II, this study has been exploring the history of technological evolution in laser diode, mainly in U.S. and Japan. Let us now focus on the pattern of spin-out and innovation. This chapter first examines the pattern of innovation in technology in the U.S. and Japan. Then, it analyzes how spin-outs affected their respective patterns of innovation.
Hiroshi Shimizu

Chapter 13. Conclusion

Abstract
Longitudinally scrutinizing the technological development of laser diodes, this study has examined how highly versatile technologies are developed and accumulated and how they are used in various arenas. The previous chapter showed that the cumulative features of technological development gradually disappeared due to the surge in entrepreneurial spin-outs in the industry in the U.S. Subsequent technological development plays an important role when a technology is still in a nascent stage. Thus, R&D competition in cumulative technological development contributes to technological development until the technology fully matures. According to the technological trajectory perspective, entrepreneurial spin-outs can hinder technological development when the technology is at a nascent stage, because the cumulative effects of incremental innovations on the technological trajectory could disappear if the R&D personnel are thinned out to target different sub-markets. This chapter extends this discussion to two further points: social construction of technological trajectory, and social continuity of technology. First, we consider the dilemma between “thick-trunked technology” and “abundance of fruits,” as well as the strategies that firms can take on this premise. Finally, we discuss the continuity of knowledge in U.S. and Japan.
Hiroshi Shimizu

Backmatter

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