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Nayomi Ekanayake

Among member countries of the Organization for Economic Cooperation and Development, the majority of
R&D funds come from
a. government
b. industry
c. universities
d. private non-profit organizations

Which of the following statements about being a successful innovator is most likely to
be true?
a. to innovate successfully you should start out with only a vague idea

b. your thinking should not be structured so ideas can pop into your head

c. you need clearly defined strategies and processes

d. you should have a completely open mind about how to proceed and "go with the flow"

Which of the following is NOT an effect on society of innovation?

a. a wider range of goods and services are available

b. production of food has become more efficient

c. communications have slowed down due to their complexity

d. improved medical treatments

e. easier to travel throughout the world

The relationship between speed of innovation and product obsolescence is

a. direct (as innovation speed increases, products become obsolete more quickly).

b. inverse (as one innovation speed increases, products become obsolete more slowly).

c. indirect (there is an effect, but it cannot be directly determined).

d. nonexistent (there is no relationship at all).

While rapid innovation often benefits society, it often makes success for companies
a. more complicated as they strive to keep up with the latest innovations.

b. profitable if they do not innovate themselves, but rather use innovations of others to their
c. easier since innovation always makes things simpler.

d. less likely because customers will not be willing to pay as much for goods and services.

If a firm rushes into new product development without clear strategies or processes
for choosing and managing products it may
a. have difficulty in supporting new projects.

b. choose projects that are a poor fit with the firm's resources and objectives.

c. suffer long development cycles and high project failure rates.

d. all of the above.

Technology's effects on society are

a. always positive.

b. always negative.

c. could be positive or negative.

d. neutral.

One reason that knowledge tends to be localized is that knowledge is largely held by
________________ and thus is not always readily mobile.
a. people

b. computers

c. databases

d. government entities

The president of Mountain Home University has been asked by her board of trustees
to set up a mechanism for the commercialization of technology developed at the
university. Such a mechanism is typically called a

a. business department.

b. commercialization office.

c. technology transfer office.

d. royalty department.

When Peter Debye was approached by Bell Labs to join the company working with
polymers he said, "I' don't know anything about polymers. I never thought about
them." R.R. Williams of Bell Labs replied, "That is why we want you." This scenario

points out that

a. companies prefer employees they can train themselves.

b. Williams understood that they might need someone who would bring a fresh perspective to
the company.
c. Bell Labs needed a stronger sense of purpose that it currently had.

d. Bell Labs was planning on dropping its polymers research.

he demand-pull approach to research and development refers to

a. research and development that focuses on developing products that are expected to
increase demand in a particular market segment
b. research and development that begins by examining the outputs of the firm's basic
research, and considering what potential commercial applications may be constructed from
those outputs.
c. research and development that greatly overextends the development budget of the firm.

d. research and development that originates as a response to the specific problems or

suggestions of customers

According to research described in the text, which person is most likely to produce
more creative solutions?

a. one with limited knowledge of a field

b. one with a moderate degree of knowledge of a field

c. one with extensive knowledge of a field

d. one who has a low tolerance for ambiguity.

Which of the following is the correct sequence of steps for the demand-pull approach
to research and development?
a. customers express an unmet need, R&D develops the product to meet that need, the
product is produced, marketing promotes the product
b. scientific discovery leads to an invention, engineering designs the product, it is
manufactured and then marketing promotes it
c. marketing does research to discover a need, R&D comes up with the product concept
which is refined by engineering. Manufacturing produces it and marketing sells it
d. manufacturing sees a way to improve a product, R&D takes the suggestions and expands
on it, engineering redesigns it, manufacturing implements the change, marketing promotes it

When companies form a technology cluster it often results in

a. greater security among the companies to prevent industrial spying from competitors who

are now located close by.

b. less new startups because people who have interest in this industry would prefer to work
for an established company.
c. a shrinking supply of trained labor due to the competition for the skills needed by the
industry among the companies in the area.
d. The attraction of other firms to the area.

The chamber of commerce of a city opened a suite of offices in a building. It offers

new small businesses the chance to locate their office there. They will share in the
cost of utilities and staff. They will also receive consulting from retired executives and
other chamber volunteers. This arrangement is called a(n)
a. government alliance.

b. research collaboration area (RCA).

c. incubator

d. science park

Which of the following is true about technology trajectories?

a. a technology is always replaced by a new technology after its trajectory has flattened (i.e., it has
reached its performance limits)
b. most technology s-curves last about twenty years

c. some technologies have steeper s-curves than others

d. a technology's progress along the s-curve cannot be sped up or slowed down

When gutter shields were developed they replaced gutter cleaning services for
homeowners wishing to keep leaves and debris out of their gutters. In other words,
the same need was met by an entirely new technology. This is an example of __________
a. complementary

b. logical extension

c. discontinuous

d. incremental

When handheld calculators replaced slide rules

a. the specific phase had been reached.

b. a technological discontinuity had occurred

c. technological continuity existed.

d. there were legal repercussions.

Ron can be described as highly skeptical about new ideas and products. He has not
yet bought a satellite dish for his home because he is still unsure that it really works
at times when he wants it to. Ron is also very worried about the expense of
purchasing the satellite dish. According to this description, Ron is most likely a(n)

a. member of the early majority.

b. innovator

c. laggard.

d. early adoptor.

Bill discovered that when hardware and software first came out to make it possible to
set up a wireless computer network in his home, that it was very confusing to him. He
heard conflicting claims about which hardware to buy and which software system to
use. When he finally bought something it did not work very well. This probably
illustrates which stage of the technology evolution model as described by Utterback
and Abernathy?
a. fluid phase

b. dominant design phase

c. specific phase

d. incremental phase

Julie is somewhat skeptical about new innovations and is likely only to adopt
something new after getting some pressure from her peers. However, she is not so
risk averse that she will wait until all uncertainty of a new technology has been
resolved; she's willing to accept a little uncertainty if her peers already use the
product. Julie is most likely a(n)
a. early adopter.

b. early majority person.

c. late majority person.

d. laggard

The CEO of an automobile manufacturer directed her R&D department to come up

with a radical innovation. Which of the following ideas best fits the bill?
a. a door that is unlocked by recognizing the fingerprints of the owner

b. seats that vibrate to massage the backs of passengers

c. a windshield that tints in sunlight and lightens in darkness automatically

d. a car that drives itself to the nearest exit if the driver is incapacitated by a medical

The Acme Mattress Company discovered that it could more cheaply use polyurethane
foam for its mattress than traditional stuffing materials. This is an example of _________
a. architectural

b. radical

c. component

d. competence destroying

After Acme company developed its first few R&D projects it found that it began to get
better at subsequent development projects, even if they were not based on the same
technologies. This is probably due to the principle or effect called
a. repetitive motion.

b. intelligence magnification.

c. programming simplification.

d. absorptive capacity.

Because there are so many gas stations and highways in the U.S., the _____________ is
likely to be larger and continue to grow.
a. competitive means of transportation

b. installed base of automobiles

c. government

d. repetitive motion

When both Nintendo and Sega claimed to have over 60 percent market share of the
video game console market, both were trying to influence
a. users' perceptions and expectations about the installed base.

b. perceived technical utility.

c. pre-order demand.

d. technology bias.

If the technology of a company becomes the dominant design, it

a. is costly to the company to keep up this leadership role.

b. usually gains huge financial rewards.

c. only benefits immediately, but cannot influence the evolution of the market.

d. will suffer due to near-monopoly rents it must pay.

During the 1990s more and more people started using cell phones. As a result the cell
a. began to deteriorate in quality because the industry could not keep up with production.

b. became more expensive in response to increased demand.

c. became better in quality.

d. stabilized in quality.

Even though MCI had more cell phone subscribers at the time that AT&T decided to
enter the cell phone market, customers were willing to sign up for AT&T's service.
This is most likely due to
a. the poor service of MCI.

b. the much lower prices of Sprint.

c. lack of sophistication of consumers.

d. the expectation of consumers that the installed base of AT&T will eventually be larger.

When you buy a product on eBay you can pay for it using an online payment system
called PayPal (which accepts credit cards or electronic funds transfers). PayPal is
offering a technology that offers value during the __________ stage of buyer experience

according to the Kim and Mauborgne model.

a. purchase

b. delivery

c. use

d. maintenance

Disetronic dominates the insulin pump market for diabetics. The disadvantages to
consumers of it being practically a monopoly probably include(s)
a. Disetronic may charge a very high price for its pump.

b. there may not be a lot of different styles of pumps available.

c. other types of insulin delivery systems may not be developed.

d. all of the above.

Microsoft disabled the DVD playback on its Xbox unless consumers purchased an addon DVD playback kit because
a. of legal threats by movie producers.

b. pressures from Sony's PlayStation2 who had done the same thing.

c. so consumers would have to pay extra if they bought the Xbox just as a DVD player and
not to buy games that provided the real profit.
d. that was the only way to correct a technical malfunction

When McDonalds first moved into Russia it had to teach farmers how to grow better
potatoes and cattle, and bakers how to make hamburger buns. This is an example of
a. communism's failures.

b. an undeveloped supply channel.

c. greedy capitalism.

d. late-mover manipulation.

Acme products was late to enter the desk height adjuster market. However, Acme has
vast financial resources compared to the 2 other small companies in this new market.
Acme chances for success
a. look pretty slim because it is late entering the market.

b. are excellent because it can outspend the other companies in further development and
marketing of the product.
c. cannot be determined because consumers will make this decision.

d. are exactly equal to those of the other companies.

Stripes has observed the success of Atlanta Technology for a new product entry and
has decided to come out with its own version of the new product. It will enjoy the
advantages of
a. a first mover.

b. a second mover.

c. both a first mover and second mover.

d. late mover.

Which of the following were obstacles in the early development and

commercialization of personal digital assistants (PDAs)?
a. customer requirements were highly uncertain

b. modem technology was immature, preventing small PDAs from having wireless
c. battery technology was immature, preventing small and lightweight PDAs that had

significant battery life.

d. all of the above were challenges.

Sympathetic Technologies has come out with a superior DVD Player that requires the
use of a High Definition Television set (HDTV) to work. So far sales have been
sluggish. This is due to the fact that
a. everyone hates HDTV.

b. No one has heard of HDTV.

c. HDTV is still in the development stages.

d. Not enough people own HDTV television sets.

Hydrogen as an energy source has the disadvantage of

a. creating more environmental pollutants than fossil fuels

b. being a very scarce commodity.

c. requiring a new refueling infrastructure to support it.

d. capturing less of the energy potential than fossil fuelbeing less efficient.

If you enter the market too late, the risk is that

a. the technology will be too common place.

b. competitors control the market and make success practically impossible.

c. you will face legal challenges of violating patent laws.

d. no one will understand your technology.

After Yahoo! was introduced as an easy way to search the World Wide Web, it was
followed by other search engines, some of which had improved or faster ways to
search the web. This is an example of how one innovative idea can
a. ruin the business of someone else.

b. slow down obsolescence.

c. stimulate more innovations and create a new market.

d. never be truly copied.

The Solow Residual refers to

a. the increased amount of output achievable from a given quantity of labor and capital due
to technological innovation.
b. the less developed nations of the world being left behind due to their slower development
of technology.
c. obsolete products left on the market due to the accelerated product life cycle.

d. the reduction in the amount of inventory needed by manufacturing firms due to

technological improvements in inventory management.
e. the extra leisure time consumers now enjoy as a result of technological innovation.

The time it takes a company to develop a new product from initial concept to market
a. varies with the innovativeness of the project.

b. has increased dramatically in the last five years.

c. is still a mystery.

d. is determined by the government.

As a result of the rapid pace of innovation the time between a product's introduction
and its withdrawal from the market
a. has become shorter.

b. has become more predictable.

c. has become longer.

d. has not changed at all.

Flexible manufacturing technology allows a company to

a. change from producing one product model to another smoothly and quickly.

b. produce larger quantities of standardized products to lower costs.

c. eliminate carrying inventory.

d. none of the above.

Out of all the innovative ideas that come forth, how many become successful

a. very few

b. most

c. about half

d. seventy-five percent

If you were the director of R&D at a large pharmaceutical company, how might you
apply the concept of "the innovation funnel?"
a. hire more people because most of them will turn out to be worthless

b. encourage more new ideas because it takes thousands of new ideas to come up with one
successful new product
c. discourage more new ideas because most of them end up being useless and waste time
and energy
d. the innovation funnel concept could not be used by a person in this position

"Agglomeration economies" refers to

a. less developed countries that rely heavily on R&D spending by government.

b. the benefits firms reap by being located in close proximity to each other.

c. savings firms accrue in production processes by spending more money on basic research.

d. the subsidies governments offer to help new businesses get started.

The difference between Honda's employee-driven idea system (EDIS) and a traditional
suggestion box is that Honda's system
a. does not pay employees for ideas.

b. screens ideas for practicality before paying employees.

c. requires those who submit ideas to follow through with the suggestion.

d. only ends up accepting about 10 percent of the suggestions submitted.

Which of the following would affect geographic clustering of an industry?

a. the nature of the technology.

b. the degree to which communication and frequent interaction is required for knowledge
c. population density of labor.

d. all of the above

Which of the following is the correct sequence of steps for the science-push approach
to research and development?
a. customers express an unmet need, R&D develops the product to meet that need, the
product is produced, marketing promotes the product
b. scientific discovery leads to an invention, engineering designs the product, it is
manufactured and then marketing promotes it
c. marketing does research to discover a need, R&D comes up with the product concept
which is refined by engineering. Manufacturing produces it and marketing sells it
d. manufacturing sees a way to improve a product, R&D takes the suggestions and expands
on it, engineering redesigns it, manufacturing implements the change, marketing sells it

Which of the following would typically be considered a downside to geographical

a. Firms may have to lower prices on their products because there are many local
competitors serving the same market.
b. Firms have to spend more on transportation costs for their inputs because suppliers are
located far away

c. Firms in a region have lower net income because the tax rate in that region is very high

d. Firms may benefit by improvements in local infrastructure such as roads and utilities.

The Smith brothers were trying to come up with a new cough drop but Alvin Smith
kept saying to his brother, Frank, "I really would like to understand more about what
makes a person cough in the first place." Frank kept saying, "We need to quit
worrying about theoretical stuff and just focus on how to stop the coughing." Which of
the brothers is most likely to be a successful inventor?
a. Alvin

b. Frank

c. they are equally likely to be successful inventors

d. Neither is very likely to be a successful inventor

Absorptive capacity refers to the ability of a firm to

a. assimilate and use new knowledge.

b. merge with other companies.

c. tolerate new and often strange ideas.

d. embrace diversity and therefore fresh ideas among its employees.

Julie is somewhat skeptical about new innovations and is likely only to adopt
something new after getting some pressure from her peers. However, she is not so
risk averse that she will wait until all uncertainty of a new technology has been
resolved; she's willing to accept a little uncertainty if her peers already use the
product. Julie is most likely a(n)
a. early adopter.

b. early majority person.

c. late majority person.

d. laggard

Susan, a highly skilled office worker, came home with a personal computer she had
just purchased. Her husband Bill soon discovered that Susan did not know how to use
half the features of the computer or its software. This is most likely due to the fact
a. Susan is just too stupid to own a computer.

b. the company has added features faster than customer requirements.

c. those features do not really work.

d. Susan bought the wrong kind of computer.

When the first personal computers came out, Bill started using a spreadsheet
program to balance his checkbook. Bill discovered that this new method was much
slower for him and that if he typed in the wrong data, he also made more mistakes.
This illustrates how a(n) ____________ technology may initially have lower performance
than the ___________ technology.
a. incumbent, discontinuous

b. logical extension, discontinuous

c. discontinuous, incumbent

d. discontinuous, modular

Handheld calculators replaced slide rules. This is an example of ______________ innovation.

a. logical extension
b. incremental
c. component
d. discontinuous

The Ajax Computer Company is spending heavily on R&D to develop new designs for

wireless networks instead of trying to refine how well they make their current
wireless network hardware components. Ajax is probably in the
a. state of denial.

b. era of incremental change.

c. era of ferment.

d. specific phase.

A pizza chain is able to develop a pizza oven to bake pizzas in 10 minutes rather than the standard 20
minutes during the late 1980s. This was most likely a(n) ______________________
a. competence enhancing
b. competence destroying
c. architectural
d. radical

Which of the following describes the most typical evolution of technology's

performance if it is plotted against effort and investment?
a. slow initial improvement, accelerated improvement, diminishing improvement

b. rapid initial improvement, slowed improvement, rapid improvement

c. slow initial improvement, diminishing improvement, accelerated improvement

d. rapid initial improvement, even faster improvement, diminishing improvement

If a company that comes up with a new technology can get information about its
advantages out to potential customers within 2 years, the market saturation should

a. 2 years.

b. 4 years.

c. 1 year.

d. one cannot really determine the adoption rate without more information.

WordPerfect Corporation noticed during the 1980s that the more of its word processing software
packages it sold, the more customers complained or suggested improvements. As a result of this the
word processing software program could be
a. steadily improved.
b. taken from the market so all the bugs could be removed.
c. replaced by a completely new program.
d. none of the above.

TeddyBear Systems announced it had a cell phone that could take pictures at the
same time that its main competitor came out with such a cell phone. Actually,
TeddyBear systems didn't even have such a phone in development. This is known as
a. fake technology.

b. vaporware.

c. illegal puffery.

d. techno-ware.

Simon has plotted the network externality benefits curve and the monopoly costs
curve for his industry and discovered that the lines cross when the dominant
technology has an 80% market share (i.e., the monopoly cost curve is above the
network externality benefits curve at all points to the right of 80%). If Simon's
calculations are correct, which of the following are true?
a. Consumers will prefer a single firm to have a complete monopoly in the market.

b. Consumers will benefit most by government regulation that prevents any technology from
gaining greater than a 50% share of the market.
c. Simon's industry does not exhibit strong network externality effects.

d. Consumers are better off if one technology has a 79% market share than if no technology
has more than a 10% share of the market.

When Disetronic, who dominates the insulin pump market for diabetics, made the
decision to not charge the highest price the market would bear, it was
a. increasing the monopoly cost curve.

b. flattening the monopoly cost curve.

c. making the monopoly cost curve intersect the network externalities curve sooner.

d. not affecting the s-curve or monopoly curve at all.