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Notes
Introduction
1 National Science Foundation, “Science & Engineering Indicators, 2016,” http://www.nsf.gov/statistics/2016/nsb20161/#/report/chapter-4/recent-trends-in-u-s-r-d-performance; PwC, “Corporate R&D Spending Hits Record High for Top 1000, Despite Concerns of Economic Protectionism,” press release, October 24, 2017, https://www.pwc.com/us/en/press-releases/2017/corporate-rd-spending-hits-record-highs-for-the-top-1000.html; Industrial Research Institute, “2017 Global R&D Forecast,” supplement, R&D Magazine, 7.
2 KPMG, “2017 Global Venture Capital Investment Hits Decade High of $155 Billion Following a Strong Q4: KPMG Venture Pulse,” press release, January 18, 2018, https://home.kpmg.com/sg/en/home/media/press-releases/2018/01/kpmg-venture-pulse-q4-2017.html.
3 Joseph A. Schumpeter, Capitalism, Socialism and Democracy (1942; London: Routledge, 1994), 82–83.
4 Joseph A. Schumpeter, Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process (New York: McGraw-Hill, 1939).
5 The seminal studies in this literature include William Abernathy and Kim Clark, “Innovation: Mapping the Winds of Creative Destruction,” Research Policy 14 (1985): 3–22; Michael L. Tushman and Philip Anderson, “Technological Discontinuities and Organizational Environments,” Administrative Science Quarterly 31, no. 3 (1986): 439–465; Rebecca M. Henderson and Kim B. Clark, “Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of Established Firms,” Administrative Science Quarterly 35, no. 1 (1990): 9–30; Clayton Christensen, The Innovator’s Dilemma (Boston: Harvard Business School Press, 1997).
6 Andrew Baum, Peter Verdult, C. C. Chugbo, et al., “Pharmaceuticals: Exit Research and Create Value,” Morgan Stanley Research, January 20, 2010.
7 For a comprehensive review of the statistical studies on this topic, see Wesley Cohen, “Fifty Years of Empirical Studies of Innovative Activity and Performance,” in Handbook of the Economics of Innovation, ed. B. H. Hall and N. Rosenberg, 129–213 (Amsterdam: North Holland Elsevier, 2010).
8 For a description of this study, see Gary Pisano, Science Business: The Promise, Reality, and Future of Biotech (Boston: Harvard Business Review Press, 2006).
9 See for instance the seminal work of Tushman and Anderson, “Technological Discontinuities and Organizational Environments”; Abernathy and Clark “Innovation”; and later Christensen, Innovator’s Dilemma.
10 There are many excellent histories of the IBM 360. See, for instance, Carliss Baldwin and Kim Clark, Design Rules: The Power of Modularity—Volume (Boston: MIT Press, 1990). See also IBM Archives, https://www-03.ibm.com/ibm/history/exhibits/mainframe/mainframe_PR360.html.
11 “Fortune 500 Archive, 1964 Full List,” Fortune, http://archive.fortune.com/magazines/fortune/fortune500_archive/full/1964/.
12 “Fortune 500 2007,” Fortune, http://fortune.com/fortune500/2007/.
13 “Fortune 500 Archive, 2004 Full List,” Fortune, http://archive.fortune.com/magazines/fortune/fortune500_archive/full/2004/301.html.
14 “Amazon: Financials,” Yahoo Finance, accessed April 4, 2018, https://finance.yahoo.com/quote/AMZN/financials?p=AMZN.
15 “Alphabet,” Fortune 500, April 6, 2018, http://fortune.com/fortune500/alphabet/.
16 Trefis.com, “Total Revenue of J
ohnson & Johnson Worldwide from 2012 to 2024 (in Billion U.S. Dollars),” accessed March 29, 2018, www.statista.com/statistics/258392/total-revenue-of-johnson-und-johnson-worldwide/.
17 “Top Companies Globally by Revenue,” April 6, 2018, Capital IQ, Inc., a division of Standard & Poor’s; “Johnson & Johnson,” Fortune 500, Fortune, April 2, 2018, http://fortune.com/fortune500/johnson-johnson/; PwC, “Global Top 100 Companies by Market Capitalization,” March 31, 2017, https://www.pwc.com/gx/en/audit-services/assets/pdf/global-top-100-companies-2017-final.pdf.
18 Johnson & Johnson, Form 10-K 2017, p. 1, accessed March 2018, http://files.shareholder.com/downloads/JNJ/6058290261x0xS200406%2D18%2D5/200406/filing.pdf.
19 Johnson & Johnson, Form 10-K 2017, p. 14. Johnson & Johnson’s expenditure on research and development from 2005 to 2017, www.statista.com/statistics/266407/research-and-development-expenditure-of-johnson-and-johnson-since-2006/ (accessed March 29, 2018).
20 Johnson & Johnson, Form 10-K 2017, p. 1.
21 Based on the author’s analysis of 4,012 companies with more than $1 billion in revenues. April 2, 2018, Capital IQ, Inc., a division of Standard & Poor’s. A database called the Global 5000, which tracks the world’s largest companies by revenue, claims 4,455 companies have more than $1 billion in annual revenues. The Global 5000, April 2, 2018, http://theglobal5000.com/about/.
22 Jeff Bezos, letter to the shareholders, 2015, Amazon.com, p. 2.
23 Nitin Noria and Michael Beer, “Cracking the Code of Change,” Harvard Business Review, May/June 2000.
24 James G. March, “Exploration Versus Exploitation in Organizational Learning,” Organization Science 2, no. 1 (February 1991): 71–87.
25 On the dilemma of exploration vs. exploitation in innovation, see the excellent work of Charles O’Reilly and Michael Tushman, Lead and Disrupt: How to Solve the Innovator’s Dilemma (Palo Alto, CA: Stanford Business Books, 2016).
26 For an analysis, see Sara Moeller, Frederick Schlingemann, and Rene Stulz, “Do Shareholders of Acquiring Firms Gain from Acquisitions,” NBER working paper no. 9523; Boston Consulting Group, “A Brave New World of M&A: How to Create Value from Mergers and Acquisitions,” July 2007.
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