CMGT 515: Innovation and the Information Economy
Fall 2016 (rev 20160916)
1
Instructor:
Lian Jian
Office:
ANN 414A
Class meets: Th 6:00-8:50 pm @ ANN 210
Office hours: by appointment
Email:
[email protected]
Course Description and Aims
Innovation is the fundamental driving force of economic growth and has profound impacts
in our economy, society, and daily lives. This course will explore the microeconomic and
sociological foundation of innovation, the role of institutions in fostering and marketing
innovation, the adoption and diffusion of innovation and the impact of government policies.
In particular, we will explore answers to the following questions:
1.
2.
3.
4.
5.
What’s innovation and how to foster and protect it?
How to market innovation?
What’s the role of information technology in innovation?
How can firms use intellectual property rights as business strategy devices?
How does innovation fuel economic growth?
Grading Scheme
A
AB+
B
BC+
C
CD
F
93.0% or higher
90.0%-92.9%
87.0%-89.9%
83.0%-86.9%
80.0%-82.9%
77.0%-79.9%
73.0%-76.9%
70.0%-72.9% (C- or lower is a failing grade)
60.0%-69.9%
59.9% or lower
CMGT 515: Innovation and the Information Economy
Fall 2016 (rev 20160916)
2
Components of the Grade
06% Project: Part 1 Choice of topic(s) in innovation (most likely a firm, or some kind of start up);
compilation of materials (articles, cases, books)
12% Project: Part 2a Descriptions of the history of the industry, technology, and the market
environment; descriptions of relevant concepts that explained the
innovation’s success and/or failure
24% Project: Part 2b Revision of Part 2a
24% Project: Part 3 Description of the current state and environment of the innovation;
application of relevant concepts to diagnose weaknesses and explore
possibilities
15% Project: Part 4a Presentation
06% Project: Part 4b Response to peers’ project presentation
06% Project: Part 5 Peer evaluation
07% Participation in general class discussion
It is essential that you participate actively in the class discussion. Each
student must contribute to the learning in this class. Ask questions, voice
out opinions, and argue respectfully. In order to do so, you must read the
assigned materials before class, and pay attention to arguments made by
others. Staying silent is poor behavior and will result in low participation
grade (e.g., 1 or 2). Active and constructive participants will receive the full
score. Simply attending classes and only speak occasionally will result in
a mediocre score (e.g., 3). If you are absent, disengaged or disrespectful,
you will earn zero. Judgment of participation is based on the instructors’
aggregate impressions gained throughout the semester
CMGT 515: Innovation and the Information Economy
Fall 2016 (rev 20160916)
3
Attendance and Punctuality
This class is designed to be small and discussion-based. So every student’s attendance
and participation is important. You are allowed one absence without penalty. Thereafter,
each first unexcused absence costs 2% of the total grade (being late counts as half an
absence). Being absent from more than three classes opens the possibility for more
stringent penalties (e.g., the highest grade to be earned is a C). Excused absences have to
be documented (e.g., doctor’s note) and approved by the instructor.
Attention and Mobile Screens in Class
I know, I am obsessed with my smart phone too. However, the screens (phones, ipads,
laptops etc.) have become a major distraction in classrooms. And for instructors, competing
with the screens for your attention is hard. So, in order to maintain a healthy environment
for learning, to build respect for each other, the instructors will ask that all screens be put
down or closed, and attention focus on the topic or speaker in the front. When such a call is
made, please heed. If not heeded, the behavior – continuing to be distracted by the screens
- will be considered disruptive, and will be reflected in the participation portion of the grade,
and penalties to the final grade.
CMGT 515: Innovation and the Information Economy
Fall 2016 (rev 20160916)
4
Academic Conduct
Plagiarism – presenting someone else’s ideas as your own, either verbatim or recast
in your own words – is a serious academic offense with serious
consequences. Please familiarize yourself with the discussion of plagiarism in
SCampus in Section 11, Behavior Violating University Standards
https://scampus.usc.edu/1100-behavior-violating-university-standards-and-appropri
ate-sanctions/. Other forms of academic dishonesty are equally
unacceptable. See additional information in SCampus and university policies on
scientific misconduct, http://policy.usc.edu/scientific-misconduct/.
Note: Any draft submitted to the instructors is a formal document, subject to the University’s
policies regarding plagiarism. Plagiarism is not excused for drafts.
Discrimination, sexual assault, and harassment are not tolerated by the
university. You are encouraged to report any incidents to the Office of Equity and
Diversity http://equity.usc.edu/ or to the Department of Public Safety
http://capsnet.usc.edu/department/department-public-safety/online-forms/contact-us
.
This is important for the safety whole USC community. Another member of the
university community – such as a friend, classmate, advisor, or faculty member –
can help initiate the report, or can initiate the report on behalf of another
person. The Center for Women and Men http://www.usc.edu/student-affairs/cwm/
provides 24/7 confidential support, and the sexual assault resource center webpage
[email protected] describes reporting options and other resources.
Support Systems
A number of USC’s schools provide support for students who need help with
scholarly writing. Check with your advisor or program staff to find out more.
Students whose primary language is not English should check with the American
Language Institute http://dornsife.usc.edu/ali, which sponsors courses and
workshops specifically for international graduate students. The Office of Disability
Services and Programs
http://sait.usc.edu/academicsupport/centerprograms/dsp/home_index.html provides
certification for students with disabilities and helps arrange the relevant
accommodations. If an officially declared emergency makes travel to campus
infeasible, USC Emergency Information http://emergency.usc.edu/will provide safety
and other updates, including ways in which instruction will be continued by means of
blackboard, teleconferencing, and other technology.
CMGT 515: Innovation and the Information Economy
Fall 2016 (rev 20160916)
5
Readings and Viewing Materials
The following books are required:

You will need to use this link to purchase the course pack on Harvard Business
Review: http://cb.hbsp.harvard.edu/cbmp/access/52439737 During the semester
new cases might be added and for each case there is a $4.25 fee. In total you
should expect the cost to be somewhere between $25 ~ $35.

Shapiro, C. and Varian, H. R. (1999) Information Rules: A Strategic Guide to the
Network Economy. Boston, Massachusetts: Harvard Business School Press.
Free download at:
http://www.uib.cat/depart/deeweb/pdi/acm/arxius/premsa/information-rules%20V
ARIAN%20SHAPIRO.pdf

Other readings will be specified in the week-by-week agenda below. Many will be
provided on Blackboard, the course management system.

For your major course project, you should be prepared to spend some funds
(about $50) to acquire additional materials.
Weekly Topics:
Week 1 (Aug 25): Introduction: What is Innovation?
Varian, H. R. (2004). Review of Mokyr’s Gifts of Athena.” Journal of Economic
Literature, 42(3), 805–810.
Salter, A., & Alexy, O. (2014). The Nature of Innovation. In M. Dodgson, D. M. Gann,
& N. Phillips (Eds.), The Oxford Handbook of Innovation Management (pp. 26–49).
Oxford University Press.
Watch this Ted talk: The Art of Innovation
https://www.youtube.com/watch?v=Mtjatz9r-Vc
Hand-out: Schumpeter: P. 6 in The Oxford Handbook of Innovation.
Optional:
Mokyr, J. 1992. “Technological Inertia in Economic History,” Journal of Economic
History, Vol. 52, No. 2, pp. 325-338.
Part I: The Nature of Innovation
CMGT 515: Innovation and the Information Economy
Fall 2016 (rev 20160916)
6
Week 2 (Sep 1): Product, Process, and Organizational Innovation
Hendricks, D. (2016) 3D printing is already changing health care, Harvard Business
Review.
Jovanovic, B., & Rousseau, P. L. (2005). General purpose technologies. Handbook
of economic growth, 1, 1181-1224.
Economist.com (2016) March of the Machines: A Special Report on Artificial
Intelligence, June.
RollingStone (May 23, 2016): Will Virtual Reality Change Your Life?
HBR Case: McCue (2015) 3D printing is changing the way we think
Optional:
Economist, (2012), A third industrial revolution, Apr 21.
Nelson, R. R. (1962). The Link Between Science and Invention: The Case of the
Transistor (pp. 549–583). Princeton University Press.
Week 3 (Sep 8): Financing Innovation
Project Part 1 due at 6pm on Blackboard
HBR case: Note on the venture capital industry
Zider, Bob (1998) How Venture Capital Works? HBR
Economist.com (2015) Venture Capital: Disrupters Disrupted, Mar 16 th.
Economist.com (2015) Silicon Valley: To fly, to fall, to fly again, Jul 25 th.
Sahlman (1997) How to write a great business plan
HBR case: Dyer and Furr (2015) Tesla Motors: Disrupting the Auto Industry?
Optional:
HBR case: A note on valuation in private equity
Hall, B. H., & Lerner, J. (2010). The financing of R&D and innovation. Handbook of
the Economics of Innovation, 1, 609-639.
CMGT 515: Innovation and the Information Economy
Fall 2016 (rev 20160916)
7
Week 4 (Sep 15): Open Innovation
What Tesla Stands To Gain From Sharing Its Patents, Forbes, Jun 16, 2014.
Chp 2 “Development of Products by Lead Users” and Chp 6 “Why Users Often
Freely Reveal Their Innovations” in von Hippel, Eric A., Democratizing Innovation.
Democratizing Innovation, MIT Press, Cambridge, MA, April 2005. Available at
SSRN: http://ssrn.com/abstract=712763
HBR case: Lakhani, Hutter, Pokrywa, and Fuller (2013) Open Innovation at Siemens
Optional:
Alexy, Oliver and Dahlander, Linus (2014) Managing open innovation, in the Oxford
Handbook of Innovation Management. Oxford University Press.
Part II: Innovation in the Age of Information
Week 5 (Sep 22): Price discrimination and Market segmentation
Project Part 2a due at 6pm on Blackboard
Machlup, F. (1955) Characteristics and types of price discrimination
(Eds) Stigler, G. J., Business Concentration and Price Policy, Princeton University
Press.
Cravens, D. W., and Piercy, N (2006). Strategic marketing. Vol. 7. New York:
McGraw-Hill.
Week 6 (Sep 29): Locking-in and Network effects
Shapiro, C. and Varian, H. R. (1999) Information Rules: A Strategic Guide to the
Network Economy. Boston, Massachusetts: Harvard Business School Press.
Chapter 5, 6, and 7.
Optional:
Scotchmer, S. (2004) Innovation and Incentives. Cambridge, MA: MIT Press.
Chapter 10 Networks and Network Effects
Week 7 (Oct 6):
Business Model Innovation
Economist.com (2015) Schumpeter: Shredding the rules. May 2 nd.
CMGT 515: Innovation and the Information Economy
Fall 2016 (rev 20160916)
8
Girotra, Karan and Netessine, Serguei (2014) Four paths to business model
innovation, Harvard Business Review, July-August Issue.
HBR case: Johnson, M W., Christensen, C. M., Kagermann, H. (2008) Reinventing
Your Business Model
HBR case: Zhu and Acocella (2016) Fasten: challenging UBER and LYFT with a
new business model
Optional:
Massa, L., & Tucci, C. L. (2013). Business model innovation. The Oxford Handbook
of Innovafion Management, 420-441.
Stephens, M. (2016) History of Newspapers
Week 8 (Oct 13): Sharing Economy
Project Part 2b due at 6pm on Blackboard
Chapter 1, 2, and 3 in Sundararajan (2016) The Sharing Economy
Malhotra, A., & Van Alstyne, M. (2014). The dark side of the sharing economy… and
how to lighten it. Communications of the ACM, 57(11), 24-27.
HBR case: Hoffman (2016) Uber and the Sharing Economy: Global Market
Expansion and Reception
Optional:
Guttentag, D. (2015) Airbnb: disruptive innovation and the rise of an informal tourism
accommodation sector. Current Issues in Tourism, 18(12), 1192-1217
Week 9 (Oct 20): Growing a Platform
Eisenmann, T., Parker, G., and Van Alstyne, M. (2006). "Strategies for Two-Sided
Markets.” Harvard Business Review
Brown, M. (2016). Airbnb: The Growth Story You Didn't Know. Growthhackers, 1–42.
Brown, M. (2016). [Ideas Inside] The Story of Etsy's Crafty Growth to IPO and a $2
Billion Valuation. Growthhackers, 1–46.
Brown, M. (2016). Uber — What“s Fueling Uber”s Growth Engine? Growthhackers,
1–18.
HBR case: Teixeira and Brown (2016) Airbnb, Etsy, Uber: Growing from One
CMGT 515: Innovation and the Information Economy
Fall 2016 (rev 20160916)
9
Thousand to One Million Customers
Week 10 (Oct 27): Teamwork Time
You should use this as an opportunity to work together on your project
Week 11 (Nov 3): Cultural Effects, Diversity, Geographic Stickiness of Innovation
Readings to be added
Week 12 (Nov 10): Teamwork Time
You should use this as an opportunity to work together on your project, and prepare
for your presentation.
Week 13 (Nov 17): Project Presentations (Project part 4a)
Week 14 (Nov 24): No Class --- Have a Great Thanksgiving Break!
Week 15 (Dec 1): Guest speaker
Week 16 (Dec 8): Project Part 3, 4b and5 due at 9pm on Blackboard