Course Description   Syllabus    Project Sign-up   Assignment Template   Project    In Class Project

Engineering 298A.2 (CC# 28188)/Business Administration 290C  * This is a core course in the Management of Technology Program (MOT). Thursdays 2:00-4:00pm C110 Cheit Hall, Haas School of Business  Spring Semester, 2002 INSTRUCTOR: Michael Borrus, Adjunct Professor, Engineering Managing Director Office: The Petkevich Group, LLC  501 Second St. #710  San Francisco, CA 94107  415-489-2300 mborrus@socrates.berkeley.edu BRIE 2234 Piedmont Avenue, Berkeley, CA  94720-2322 642-3067 Office hours: Thursday, 4:15pm-5:15pm or by appointment

DESCRIPTION: The frenzied commercialization of the Internet over the past few years followed by the dot.bomb hangover and the telecom implosion, have obscured broader changes in technology markets, production organization, and business models. Once-dominant competitive strategies and long-established business practices are no longer reliable guides to competitive success as the market dynamics change. Much more-so than the Internet revolution itself, these broader changes suggest that the industrial economy we have known is being fundamentally transformed as innovations in technology and business practice broadly diffuse across the advanced economies.

This course explores those broader changes, examining who is winning, who is losing and why in global high-tech markets, and exploring the implications for management of technology.. In this broader context, we will seek to make sense of, inter alia, recent developments in early stage capital markets, in new technologies that are just now being significantly commercialized like bioinformatics and nanotechnology, in Asia and Europe. From time to time we will be joined by a venture capitalist, corporate executive or technologist engaged in global high-tech competition. We will use an eclectic mix of theoretical, historical and practical perspectives throughout the course (though no special familiarity with any of them will be presumed).

REQUIREMENTS: Enrollment is limited and requires the consent of the instructor. Students will be expected to undertake one substantial research project, either individually or in teams, requiring both traditional and on-line research skills. Each team will present briefly to the class as a whole. 

GRADE: The grade will consist of the in-class presentation grade, the final research output and general in-class participation that is encouraged and will be rewarded.

READINGS: All students should purchase the Class Reader, Reader at University Copy Service, 2425 Channing Way, phone, 549-2335, if it can be afforded. Readings will also be on reserve at the Engineering School and Haas School libraries. All required readings are either in the Class Reader or available on-line.

This class will feature an interactive (in the pre-computer sense of the term) overview of the entire course, using international competition in consumer electronics as a case in point. We will explore what the U.S. did wrong and Japanese industry did right over the past several decades in an industry that at least through the early 1980s usually lagged the leading edge of high technology. All administrative details will also be taken care of at this time. The following readings will help provide a context for this class. They need not be read for today’s class.

• Consumer Electronics Sector Working Group, MIT Commission on Industrial Productivity, "The Decline of U.S. Consumer Electronics Manufacturing: History, Hypotheses, Remedies," December, 1988
• Stephen Jay Gould, "The Persistently Flat Earth," Natural History, (March, 1994), p.12-19.

We will wrap-up the Consumer Electronics discussion and segue into a newer sector, semiconductors. Here we will apply the concepts/themes developed last week to see how well they account for the changes occurring in international competition in semiconductors. Several new concepts will also be introduced and we will focus on how firm strategies can be systematically shaped by national origins.

• Vernon W. Ruttan, "The Computer and Semiconductor Industries," in Technology, Growth and Development: An Induced Innovation Perspective (New York: Oxford, 2001): 316-367.

This is the first of several weeks that begin to generalize from the initial case studies. We suggest that, at least up until recently, international competition in high technology industries must be understood at least partly as a competition between very different national economic systems. This week we consider Japan and Japanese producers, both their extraordinary post-World War II economic performance and their most recent economic problems. Will the high-tech success of Japanese firms continue? Is the domestic economic system undergoing substantial change? How are Japanese firms adjusting?

• Yasusuke Murakami "Unclassical Theory of Political Economics (an unauthorized summary)" prepared for the First Meeting of the Working Group on Innovation and Technology Policy (OECD: Paris, November 22-23, 1993).
• Steven K. Vogel, "Can Japan Disengage? Winners and Losers in Japan’s Political Economy, and the Ties that Bind Them" BRIE Working Paper 111 (Berkeley: BRIE, 1997). http://brie.berkeley.edu/~briewww/pubs/wp/wp111.html

To get a better feel for the relative competitive performance of US and Japanese electronics producers, we use the case of the evolution of enterprise computing from the mainframe era to the emergence of TCP-IP networking. Along the way we also touch on such issues as: What accounts for the original fall from grace of the once-dominant IBM and its now apparent resurgence? How did Microsoft and Intel emerge as the dominant producers of the PC era? Should Microsoft have been prosecuted for monopoly?

• First half of: Michael Borrus, "The Resurgence of US Electronics: Asian Production Networks and the Rise of Wintelism," Chapter 2 in Borrus, et.al., eds., Regional Production Networks in Asia: Riches or Rivalry, (2000).
• Benjamin Klein, "The Microsoft Case: What Can a Dominant Firm Do to Defend Its Market Position?" Journal of Economic Perspectives Vol. 15, No. 2, Spring 2001, p.45-62

Up until this week we have examined international competition in high technology industries as primarily a game among the advanced industrial economies. Self-evidently, that has changed dramatically in the last decade. Producers throughout developing Asia have suddenly emerged as powerful, and sometimes dominant players in segments of high-tech markets. How successful and enduring is the market entry of producers from East Asia, and how are they changing the dynamic of competition in global high-tech markets? To begin to answer that question we look at the international competitive recovery of the US electronics industry from its mid-1980s low point when it looked as if Japanese competitors would repeat in digital electronics what they had accomplished in consumer electronics and chips.

• The World Bank, "Overview: The Making of a Miracle," introductory Chapter to The East Asian Miracle, (1993).
• Second half of: Michael Borrus, "The Resurgence of US Electronics: Asian Production Networks and the Rise of Wintelism," Chapter 2 in Borrus, et.al., eds., Regional Production Networks in Asia: Riches or Rivalry, (2000).
• Two page problem statement due for class projects

February 28. Competing Capitalisms IV: Asia Crisis and the Rise of China

This week we place global technology competition in the broader strategic context of the Asia Crisis and China’s rise as a world-class economic power. Why did Asia falter in its rise to technological prominence just as the commercialization of the Internet took off? How will China’s size, resources and technological capability change the dynamic of competition in global markets? Can China’s vastly different national political-economy be effectively absorbed into global trade and investment? Where does China fit in the global architecture of high-tech?

• Barry Naughton, "China’s Emergence and Prospects as a Trading Nation," Brookings Papers on Economic Activity, 1997.

March 7. Global Competition in a Digital World Economy I: Early Stage Capital Markets and the Commercialization of a New Economy.

The Explosive commercialization of the Internet signaled a new phase in high tech competition, one in which early stage capital markets in the US played a predominant role in shaping the evolution of global competition. In examining these issues this week we also confront the question of whether we are really seeing the emergence of a New Economy, one characterized by fundamentally different competitive principles.

• Dale W. Jorgenson, "US Economic Growth in the Information Age," in Issues in Science and Technology, Fall 2001.
  http://www.nap.edu/issues/18.1/p_jorgenson.html
• Brad De Long, "How New Is Today’s Economy?" available at http://econ161.berkeley.edu/Comments/How_New.html

This week we dig into why consumer-focused internet business models largely failed and look at some models that are (apparently) succeeding. Our guest lecturers are both immersed in the changing digital media scene: Audible is the leading supplier of secure, copyright-protected, downloadable, digital spoken-word audio content; ON24 is a leading web-based financial news network.

• Reading TBD

Larger by almost any measure of value than the dot-com bust is the implosion of the domestic telecommunications sector where hundreds of billions of dollars of investment and debt has been lost. When will this critical infrastructure sector, whose deregulation, together with computing, drove the emergence of the digital networking that underpins the "new economy, " rebound? Has the dynamic of competition in the industry permanently changed, and if so, how? We are joined by a partner at investment banking firm Lazard, Freres, who is deeply involved in working out the current problems of this troubled sector, numbering among his clients some of the most high profile current telecom/datanetworking/datacenter bankruptcies.

• Big telecoms in big trouble: "When big is no longer beautiful", The Economist, Dec. 14th, 2000
• G.J. Mulgan, Communication and Control, The Guilford Press, 1991. Chap11: "Transnational Corporate Networks" pp 220-242.

Work on your class projects!

Having laid the groundwork before spring break, we are now in a position to examine a range of emerging technology industries as a means of inquiring how technology competition is likely to change over the next decade. We start by focusing on bioinformatics and genomics, which are transforming drug design and development and the diagnosis and treatment of disease. This weeks guest lecturer is currently immersed in building a new de novo start-up using clinical genomics to target central nervous system diseases. His last start-up, Earthweb, which he took public in 1998, is one of the survivors of the dot-com bust, is profitable and booked over $60 million in revenues in 2001.

• Greenstone, et.al., "Genomics and Proteomics" Thomas Weisel Partners, May 2, 2001

This first opportunity for in-class presentation will enable a few early-birds to get their in-class presentations out of the way. In the second hour, we will focus on competition in the emerging wireless data sector. Wireless communications has been largely led outside the US by European and some Asian producers/providers. It represents the rare information technology sector not dominated by US-owned companies. Does the emergence of wireless data permit US-owned companies to reassert global leadership? Or it will it further entrench European, Japanese and other Asian-based competitors?

IN CLASS PRESENTATIONS

The Economist, "A survey of the mobile Internet: The Internet, untethered" (October 13, 2001) 

April 18. The Future of Technology Competition III: VC Tech Investment, where is it headed? with Jon Fieber, Managing Partner, Mohr Davidow Ventures (confirmed)

What are considered to be the next new new things by Silicon Valley’s venture community? As the venture industry emerges from the major wounds self-inflicted during the Bubble, where are early stage investors focusing? Are the terms of competition yet visible in these new sectors and what do they tell us about the future of technology competition? This week’s guest, managing partner of one of Silicon Valley’s first-tier early-stage venture funds, has experienced several technology cycles and brings a special focus on the evolution of networking and computing.

• Red Herring, Briefing on "Distributed Computing," December 18, 2000, p.166-194

Despite the bursting of the tech bubble, the Internet (in a variety of possible incarnations) remains central to essentially all visions of the competitive evolution of the information technology industries. As Internet and Web technologies become more pervasive and functional, they are quietly beginning to fulfill some of the promise of profound economic transformation heralded but almost never delivered during the Bubble. What value is being created going forward? Where will change be most profound and what does it portend for technology competition? Few guests are better positioned to address these questions than the CEO of Google, one of Silicon Valley’s best-known start-ups now headed by one of the Valley’s highest-profile CEOs.

• Reading TBD

This week will be devoted to in-class project presentations.

IN CLASS PRESENTATIONS

This last class finishes the in-class presentations and then draws conclusions for the course as a whole. Among other issues, we debate whether globalization, networked economic and industrial structures, and foreseeable new technologies are supplanting the role of nation states and the centuries old historical identity of economic actors with their national points of origin.

IN CLASS PRESENTATIONS

• "Electronic Cash and the End of National Markets," Stephen J. Kobrin, Foreign Policy, Summer, 1997.