The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World (The Kauffman Foundation Series on Innovation and Entrepreneurship) |  | Author: Amar Bhide
Publisher: Princeton University Press
Category: Book
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Rating:  7 reviews
Sales Rank: 496633
Media: Hardcover
Pages: 520
Number Of Items: 1
Shipping Weight (lbs): 1.8
Dimensions (in): 9.3 x 6.1 x 1.4
ISBN: 0691135177
Dewey Decimal Number: 338.064
EAN: 9780691135175
ASIN: 0691135177
Publication Date: September 15, 2008
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Product Description
Many warn that the next stage of globalization--the offshoring of research and development to China and India--threatens the foundations of Western prosperity. But in The Venturesome Economy, acclaimed business and economics scholar Amar Bhidé shows how wrong the doomsayers are. Using extensive field studies on venture-capital-backed businesses to examine how technology really advances in modern economies, Bhidé explains why know-how developed abroad enhances--not diminishes--prosperity at home, and why trying to maintain the U.S. lead by subsidizing more research or training more scientists will do more harm than good. When breakthrough ideas have no borders, a nation's capacity to exploit cutting-edge research regardless of where it originates is crucial: "venturesome consumption"--the willingness and ability of businesses and consumers to effectively use products and technologies derived from scientific research--is far more important than having a share of such research. In fact, a venturesome economy benefits from an increase in research produced abroad: the success of Apple's iPod, for instance, owes much to technologies developed in Asia and Europe. Many players--entrepreneurs, managers, financiers, salespersons, consumers, and not just a few brilliant scientists and engineers--have kept the United States at the forefront of the innovation game. As long as their venturesome spirit remains alive and well, advances abroad need not be feared. Read The Venturesome Economy and learn why--and see how we can keep it that way.
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Showing reviews 1-5 of 7
 Thoroughly researched, eloquently argued and highly persuasive December 1, 2008
Dr. Vivek P. Kochikar
10 out of 10 found this review helpful
The book is a thoroughly researched, eloquently argued and highly persuasive piece. It's central thesis is that technological innovation is a complex, multiplayer game in which America still leads the world by a long way. American scientific, technological and economic pre-eminence are thus not going away anytime soon. The book goes on to argue that "neo-protectionist" fears are unwarranted, and shows how they will probably undermine America's economic might in the long run.
The book comes with impeccable credentials. It is authored by Amar Bhide, the Lawrence D. Glaubinger Professor of Business at Columbia University. Prof Bhide is also a co-researcher of Edmund Phelps, 2006 Nobel Laureate in Economics who is an authority on, among other things, the relationship between investment in education and research on the one hand, and economic growth on the other.
And Prof Bhide could hardly have chosen a better time to weigh in, as anti-offshoring rhetoric can be expected to rise over the next few months. It must be noted that the primary purport of the book is not to support outsourcing or offshoring,and I am sure nothing could be farther from the author's mind than to be painted as a torchbearer for the outsourcing brigade. Nonetheless, the arguments presented therein can be read as making a substantial case for a more liberal approach toward outsourcing.
The author marshals an astonishing array of evidence in supporting his thesis, stitching together data and information from diverse disciplines. He presents data to show that protectionist fears in the 1980s that the US would soon be overtaken by Germany and Japan, which focused on rigorous planning of their scientific manpower, proved baseless as the US prospered while the ostensible aggressors largely floundered. He says things are no different this time, with China and India.
The book's arguments can broadly be summed up as follows:
* Wealth arises not so much from creating new technological breakthroughs as from the capacity to benefit from those breakthroughs.
* This 'capacity to benefit' is a higher order capacity that includes elements such as the ability to create products based on those technological breakthroughs, the ability to market those products well, the ability to take risk and freedom from over-regulation. In particular, "venturesome consumption" - the propensity of consumers to embrace products based on new technologies - is vital.
* The US has most parts of this diverse puzzle - particularly venturesome consumption - and is hence best positioned to benefit from new technologies. This is true even of new technological innovations produced abroad. As an example, the author avers, the exceptional ability of US companies to use IT has been a strong reason why US productivity has outpaced that in Europe in Japan.
* Hence allowing technological breakthroughs to happen abroad certainly does not hurt, and possibly benefits , the US. The author offers the example of the iPod, much of whose technology originated in Europe and Asia, but which wouldn't have achieved the success it has without venturesome US consumers - who have in turn reaped huge benefits by so consuming the device.
* This higher-order capacity is deeply rooted in various economic, social, cultural and psychological structures and is hence highly sticky, which makes it difficult for the US to lose it - and for other countries to acquire it.
The author also introduces the notion of "nondestructive creation" (innovation that creates new products and services without displacing existing ones) in addition to the familiar Schumpeterian creative destruction. Such nondestructive creation creates new jobs without eliminating existing ones. At least in the nontradable services sector, these new jobs will have to stay in the US and cannot migrate to low cost locations.
Thus, Prof. Bhide assures us, there is unlikely to be a giant sucking sound anytime soon.
One potential objection that occurs to me, that protectionists may raise: relying too strongly on the 'nontradable services' argument may amount to standing on shifting sands at best. Several services thought to be nontradable have turned out to be tradable after all. IT services themselves were thought to be nontradable for long, until Indian IT service companies showed they could cross borders. Even advertising, which is highly culture- and context- specific - has been offshored (Lenovo has headquartered all its marketing activities outside China in Bangalore).
The book also perhaps bypasses one major theme on the subject of 'how innovation sustains prosperity in a connected world' (and this is also my favorite argument in favor of why developed economies including the US should not be chary of allowing high-end work - and high-paying jobs - to flow abroad): a lot of the prosperity that so 'leaks away' from developed economies comes right back in the form of demand for products and services. As an example, Indian IT outsourcing companies are perhaps the largest airline customers in the world, as tens of thousands of workers travel each year between India and the countries where clients are located. These airlines such as United and Lufthansa are mostly headquartered in developed countries. Similarly, the same India-based outsourcers lap up the laptops, PCs, servers and networking equipment made by Dell, Sun and Cisco. They are huge buyers of software produced by Microsoft, IBM, Oracle and SAP. These companies (and their employees) can safely be assumed to have an insatiable appetite for the latest cellular phones and so forth from the likes of Apple, Nokia and RIM. These companies also employ legions of workers at or close to client locations - workers who pay taxes and pump money into local economies. Many of these companies are listed on US and European stock exchanges, allowing people there to participate in their wealth creation. Thus, prosperity 'leaking' abroad contributes to prosperity in the developed economies - not in some nebulous, long-term sense but in a way that is direct and almost immediate.
These are but minor quibbles - the book cuts a wide swathe in making its elaborate argument convincing. Along the way, the author explores the question of why companies buy IT. The notorious 'Productivity paradox', which held that IT has not contributed to productivity gains in business - is firmly laid to rest. He avers that IT has brought new ways of doing business, and also delivered significant benefits to the customers of those businesses that used IT, which are ignored by conventional productivity statistics. Another interesting topic examined is that of why people acquire education (particularly higher education), and how universities perceive the economic value they impart to their graduates.
A Convincing Discussion November 9, 2008
Jonathan Weiner (Stamford, CT USA)
5 out of 5 found this review helpful
I found Bhide's new book excellent on a number of levels. He makes quite convincing overall cases for his leading theses: first, that 'venturesome' actors throughout the US economy --including especially businesses as customers willing to try out new technologies offered them-- have been the key to the US distinctive productivity performance and second, the related and surprising proposition that fundamental research --so long as it gets done somewhere--has not been and won't be the driver of relative growth performance for the US in the future.
Bhide does a good job with the supporting lines of his inquiry. He provides a first-rate description of the whys and hows of venture capital-supported enterprises. He also carries the argument that many, even large-scale investments in new processes and techniques in the services sector and elsewhere that have turned out to be fundamentally important to productivity advances were done, not with a fine economic calculus of costs and benefits, but rather in an entrepreneurial, venturesome spirit in the face of 'Knightian,' unquantifiable uncertainty.
I found the book rich with nuanced and illuminating business examples taken from his research for the book. Nice to have a bold set of propositions built from a real-world, fact- based approach.
using new things December 16, 2008
bruns grayson (boston)
6 out of 7 found this review helpful
I read Bhides' book and later saw a few reviews--some arguing against his positions. One in partucular caught my eye in which the reviewer said that The Venturesome Economy understated the importance of fundmaental research. The writer gave Google as an example of a great company derived from, in essence, an algorithmic research project funded by the Feds.
But Google is an almost perfect example of Bhide's essential point. As search technology Google is thought to be good-not-great and many others are pursuing subtler and more advanced methods. The company's genius lay in its ability to position search itself as the logical gateway into the web and then in creating a quick and easy way to get paid for the traffic that flooded its site. It is much more a marketing success story than anything else and highly supportive of a theme that runs through this book: Americans, both as sellers and buyers, are very willing to accept and tinker with something new and imperfect. They are unusually willing to accept limitations if they figure that they get more than they lose by adoption. And good companies are very aware of their customers tinkering and experimenting with new offerings. It contributes to their evolution.
In some ways Bhide is describing an economy of constant-work-in-progress so far as innovation is concerned. Capital flows towards solutions favored by a giant set of tinkerers in the marketplace and you do well when you take advantage of the adaptive qulaity of the marketplace.
This is not a book that argues against basic research. It's simply skeptical about the predictable payoffs from such research. Too many people--particularly politicians--think about basic research dollars as sort of like investments in builiding so many intellectual Hoover Dams; pile up the dough and you will magically create a huge reservoir of intellectual property. It doesn't work that way and Bhide points out example after example of transformed businesses and sectors that are utterly unrelated to such resaearch but nevertheless indicative of fresh and highly imaginative thinking-- a set of adjectives that describes this writer's mind as well.
An innovative look at innovation November 4, 2008
E. Haas Edersheim (New York, NY)
4 out of 6 found this review helpful
The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World is a phenomenally insightful book that looks at the sources of innovation and the characteristics of innovations that receive venture funding.
The evidence is compelling and surprising. The data suggests that the key to innovation is finding solutions that already exist. Successful innovation is not about inventing new solutions. It is about inventing new applications of existing solutions. This book may be more powerful as we learn to really leverage the Internet in development.
It may modify innovation and R&D at every institution that studies the book.
The nature of innnovation, knowledge work and productivity August 10, 2009
Steven M. Russi (Sacramento, CA)
In The Venturesome Economy Bhide refutes the generally held conviction that R&D results in workable products that sell in the real economy. He knows that 60% of most R&D efforts don't result in workable products in the real market place. Besides that, he understands that patents and product development efforts actually are quite egalitarian. The knowledge is easily available through licensing agreements and royalty situations and fairly cheap as well, considering the available profits that accrue when a successful launch reaps available profits. This has been well known for years though as the Japanese have actually made money using American R&D developments and the sharing of technological developments has occurred throughout the high tech industry. Apple did not develop the computer interface that is so popular right now, Xerox PARC did, and that is why Apple lost its suit against Microsoft--it was not Apple's to begin with. That is a very apt analogy. Bhide understands that it is a company's willingness to do the hard slog work of development, marketing and manufacturing that allows good products to enter the marketplace and the knowledge work itself is useless unless applied to the real world of end users and real applications. Often the companies that do the significant R&D work never reap profits from this. There are the exceptions, Apple being one of them and of course 3M and other great companies. They understand the pipeline to real applications.
Showing reviews 1-5 of 7
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