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Production in the Innovation Economy

Production in the Innovation Economy

Richard M. Locke
Rachel L. Wellhausen
Copyright Date: 2014
Published by: MIT Press
Pages: 288
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  • Book Info
    Production in the Innovation Economy
    Book Description:

    Production in the Innovation Economyemerges from several years of interdisciplinary research at MIT on the links between manufacturing and innovation in the United States and the world economy. (This ambitious research project is described inMaking in America: From Innovation to Market, also published in 2013 by the MIT Press.) Authors from political science, economics, business, employment and operations research, aeronautics and astronautics, mechanical engineering, and nuclear engineering come together to explore the extent to which manufacturing is key to an innovative and vibrant economy. Chapters include survey research on gaps in worker skill development and training; discussions of coproduction with Chinese firms and participation in complex manufacturing projects in China; analyses of constraints facing American start-up firms involved in manufacturing; proposals for a future of distributed manufacturing and a focus on product variety as a marker of innovation; and forecasts of powerful advanced manufacturing technologies on the horizon. The chapters show that although the global distribution of manufacturing is not an automatic loss for the United States, gains from the colocation of manufacturing and innovation have not disappeared. The book emphasizes public policy that encourages colocation through, for example, training programs, supplements to private capital, and interfirm cooperation in industry consortia. Such approaches can help the United States not only to maintain manufacturing capacity but also, crucially, to maximize its innovative potential.ContributorsJoyce Lawrence, Richard K. Lester, Richard M. Locke, Florian Metzler, Jonas Nahm, Paul Osterman, Elisabeth B. Reynolds, Donald B. Rosenfeld, Hiram M. Samel, Sanjay E. Sarma, Edward S. Steinfeld, Andrew Weaver, Rachel L. Wellhausen, Olivier de Weck

    eISBN: 978-0-262-31912-6
    Subjects: Political Science, Management & Organizational Behavior

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-x)
  3. Acknowledgments
    (pp. xi-xii)
  4. 1 Introduction
    (pp. 1-16)
    Richard M. Locke and Rachel L. Wellhausen

    ʺTo live well, a nation must produce well.ʺ This statement, which opened the MITMade in Americastudy in 1989, is as true today as it was when the book was originally published (Dertouzos, Solow, and Lester 1989). In the late 1980s, whenMade in Americawas being written, the key challenge facing U.S. manufacturers was a decline in international competitiveness due to comparatively low levels of productivity and quality. More than twenty years later, American manufacturers appear to be as efficient and quality focused as any of their foreign rivals. Yet once again, U.S. companies are suffering a crisis...

  5. 2 Skills and Skill Gaps in Manufacturing
    (pp. 17-50)
    Paul Osterman and Andrew Weaver

    Production workers are at the core of the manufacturing work force, just as they have always been. In 2011 blue collar jobs accounted for over 40 percent of all manufacturing employment. Without these employees products would simply not get out the door. But the importance of these jobs extends beyond this obvious point. A great deal of research, not to mention the experience of leading firms, demonstrates that the skills, ideas, and commitment of blue collar workers are central to obtaining the levels of quality and productivity needed to succeed in todayʹs hypercompetitive economy. Furthermore, these production jobs have long...

  6. 3 The New Skill Production System: Policy Challenges and Solutions in Manufacturing Labor Markets
    (pp. 51-80)
    Andrew Weaver and Paul Osterman

    In chapter 2 we reviewed a wide range of issues touching on the nature of work in manufacturing and the challenges that firms face in obtaining the workforce that they need. That chapter drew on a nationally representative survey we conducted of manufacturers, a survey that focused heavily on skill and hiring issues as well as the human resource practices of establishments. Even if there were no problems, it is important to understand the skills that employees will need in the future so that educational and training institutions can better prepare young people and adults looking to obtain manufacturing employment....

  7. 4 Learning by Building: Complementary Assets and the Migration of Capabilities in U.S. Innovative Firms
    (pp. 81-108)
    Elisabeth B. Reynolds, Hiram M. Samel and Joyce Lawrence

    As policymakers in the United States debate how the economy can regain its vitality following the Great Recession, many see innovation as the key to prosperity. The United States excels in product, service, and business model innovation, particularly when this innovation leverages technological advances. The United States is also one of the leading countries for venture capital financing, which supports the creation of many innovative start-up companies every year.¹ Although innovation by young firms is common today, it represents a relatively new economic model. Large vertically integrated firms with centralized R&D were once the primary drivers of innovation in the...

  8. 5 Energy Innovation
    (pp. 109-138)
    Richard K. Lester

    The gap between how we imagine innovation occurs and what we expect from it may be widest in the case of energy. Innovators and their dilemmas are fodder for countless blogs, tweets, and media messages. Innovation, in the popular image, is driven by scientific breakthroughs in the lab, start-ups hatched in the garage, and audacious entrepreneurs disrupting old markets and creating new ones almost overnight. The archetypal innovator succeeds by meeting consumer needs today that no one could have imagined yesterday.

    But in energy what we need from innovation has long been well understood, if not universally accepted. To forestall...

  9. 6 The Role of Innovative Manufacturing in High-Tech Product Development: Evidence from Chinaʹs Renewable Energy Sector
    (pp. 139-174)
    Jonas Nahm and Edward S. Steinfeld

    China has been growing steadily since the late 1970s, but it is only since the new millennium that the country has surged forth as a global center for high-tech manufacturing. In the year 2000, China still accounted for only 5.7 percent of global manufacturing output (by value), about a quarter of the share held by the United States or Japan at the time. By 2011, China had vaulted to the top position, achieving an unparalleled 19.8 percent share, just ahead of the United Statesʹ previously world-leading 19.4 percent (Marsh 2011; UNIDO 2011). Gains for China have certainly come in mature...

  10. 7 Sustaining Global Competitiveness in the Provision of Complex Product Systems: The Case of Civilian Nuclear Power Technology
    (pp. 175-210)
    Florian Metzler and Edward S. Steinfeld

    Much of the concern about Americaʹs decline in manufacturing focuses on mass-produced goods. This is understandable given that in the high-tech domain, such products cover everything from laptop computers and automobiles, to semiconductors and smartphones. But for all their diversity, these products share a common characteristic—they are produced in standardized fashion in high volumes. This chapter focuses on a very different type of good, one that a number of scholars have termedcomplex product systems(CoPS) ( Hobday 1998; Davies 2003; Prencipe 2003). Examples include large-scale thermal or nuclear power plants, high-speed railway rolling stock, offshore oil and gas...

  11. 8 Innovation and Onshoring: The Case for Product Variety
    (pp. 211-234)
    Donald B. Rosenfield

    Offshoring and onshoring are major strategic questions for firms as well as major public policy issues. The questions are critical ones for almost any firm. Offshoring often reduces some costs in the short term but might create some competitive challenges in the long term as overseas competitors gain market share. Offshoring part of a portfolio in the belief that the firm can then focus on higher-value items, or the more lucrative parts of the product and service value chain, can lead to erosion of market position in these other parts of the business. However, continuing to produce in a high-labor-cost...

  12. 9 Trends in Advanced Manufacturing Technology Innovation
    (pp. 235-262)
    Olivier L. de Weck and Darci Reed

    The overall goal of this chapter is to explore how innovation in manufacturing process technologies and associated product design affects the prospects for manufacturing in the early twenty-first century. One of the significant interfaces between innovation and production is the invention and improvement of advanced manufacturing technologies. Innovation involves important feed-forward and feedback mechanisms with the real economy. The invention of new products and processes, as well as the improvement of existing processes, leads to higher productivity and expansion of product portfolios and associated service offerings. In turn, the experience and insights gained from manufacturing activities at scale often triggers...

  13. Index
    (pp. 263-274)