Title: Riding the economic long wave: why are the open innovation index and the performance of leading manufacturing industries intervened?

Authors: Olli-Pekka Hilmola, Marko Torkkeli, Sari Viskari

Addresses: Lappeenranta University of Technology, Kouvola Research Unit, Prikaatintie 9, FIN-45100 Kouvola, Finland. ' Technology and Business Innovations, Lappeenranta University of Technology, Kouvola Research Unit, Prikaatintie 9, FIN-45100 Kouvola, Finland. ' Technology Management, Lappeenranta University of Technology, Kouvola Research Unit, Prikaatintie 9, FIN-45100 Kouvola, Finland

Abstract: We examine, using correlation tables, whether the stock market index of leading open innovation companies in the USA could be used to predict capacity addition and utilisation of the leading fifth Kondratieff wave manufacturing of this country or vice versa. Our research results indicate that the two data sets are related, and therefore we argue that capacity addition and the open innovation index develop in the same direction and share a high level of correlation. However, capacity utilisation seems to hinder some interesting dynamics; when the open innovation index starts to increase, capacity utilisation will decrease for a number of years. Thus, some evidence exists that capacity addition leads to an open innovation index increase with a one- to three-year delay. Based on these observations we propose a soft system dynamics framework. With the use of this model we are able to shed more light on why capacity enlargement has occurred on a large scale in the sectors of computer and semiconductor manufacturing, and we also estimate how long the downturn in these investments will most probably last.

Keywords: stock markets; innovation cycles; leading industries; capacity utilisation; capacity investments; open innovation index; manufacturing performance; USA; United States; soft system dynamics; computer manufacturing; semiconductor manufacturing; investment downturn.

DOI: 10.1504/IJTIP.2007.015650

International Journal of Technology Intelligence and Planning, 2007 Vol.3 No.2, pp.174 - 192

Published online: 06 Nov 2007 *

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