S.C. Gilfillan in
1935 introduced modified models of
endogenous innovation to allow the possibility of innovation activity could lead
to an increase variety of different solution of similar problem. An increased
variety of technologies (in terms of their number and function) will increase
the number of utility of an average consumer. If however, continued improvement
in this variety of technologies requires increased research input, a rise in
the scale of market could enhance the equilibrium quantity of R&D without
increasing economy growth rate. Also, the increased product variety brought by
increased market size might reduce the returns to improved product quality
paradoxically reducing economy growth rate while increasing total resources to
R&D.

When the pre-existing technology is been accelerated
with unique innovation and creativity we can observe the effectiveness of the
technology with respect to the time, this leads to the threat to established
technology which  usually triggers
existing companies to improve it. This notion comes from an observation by S.C.
Gilfillan who noted that the best sailing ships were produced when steam ships
had already displaced them.

Overview of various
approaches of Sailing Ship-Effect:

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Common to all
definitions is the element that emerges after a new, typically potentially more powerful technology
innovations in the old technology. Almost all of these definitions remain
together that a strategic impetus on the part of providers of old    technologies. The furthest in this
regard are probably Adner and Snow discussing in detail the various
sub-alternatives of reaction scrutinize for new technologies. 18 others
describe it rather the phenomenon from a macro perspective and do not really go
up the strategic decision to compete old vs. new technology on. 19 Another
observation considering the existing literature the definition of sailing-ship
behavior is the often negative connotation this behavior. This connotation
also finds its approval in the broad

Most of the
innovation literature that implicitly “prefers” the new technology
and adhering to the old as the long term often makes little sense – without
actually substantiating this in individual cases. Based on the definition
approaches shown, the following procedure should be followed The following
summarized definition applies: The Sailing Ship Effect describes the phenomenon
that providers of
established technology after thawing
new technology threatening established
technology with over- standard
innovation efforts in
the key performance dimensions .

Thus, the proposed
definition includes both a strategic one component that reacts to the sailing
ship effect as a selectable strategy understand new and threatening technologies,
as well as the aspect that is “regular” innovation in the normal
industry competition is not sufficient which is characteristic of the sailing
ship effect. The last point presents by emphasizing relevant and possibly
new performance Dimensions depend on the sailing-ship effect specific to the
new one Technology must be targeted. Furthermore, supernormal innovation efforts
that are not limited to, for example, normal competition.

 

Empirical Approaches

The investigation
of the Sailing Ship Effect focuses in particular on narrative approaches in
which various technological changes have been written. In the following
overview, the central contents the existing case studies on technological
change with special focus on the innovative response of the old technology are
presented:

 

·      Propeller versus Jet:

In the civil
aviation industry after the Second World War for USA and UK, the jet Engine
technology introduced. Especially the first jet planes kept to the classic
design sign and were therefore at high speeds and unstable. Only the
Boeing 707 reached high stability due to new design. The old technology
first responds to the offer cheaper machines and gave way to segments with high
stability requirements which is designed for play military transport machines

·     
Gas lamp versus
light bulb:

With the
appearance of Edison’s light bulb, the suppliers of gas lamps called the
so-called “Welsbach Mantle”, which improves the efficiency of gas
lamps lead to increase by a factor of about five. As a result, the displacement
could be light bulbs are still delayed for some time become.

·     
Electric tubes versus transistor:

Suppliers of traditional electric tube Technology tried to threaten transistors
by a much improved price performance ratio in the market to counter. So were
the most reliable and smallest electric tubes after the introduction
of the transistors offered.

·      Digital
versus analog cameras

The first CCD sensor for
digital display became Kodak in the 1960s developed. This first diffused
in a lot special areas (for example, optical Quality control, and space
flight). For the Consumer market formed in the 1990s Alternatives in old
technology (for example APS format), which is an enforcement of new technology
delayed even longer.

 

·     
2G versus 3G mobile

With the emergence
of technological innovations of UMTS technology (3G) was the former standard 2G
by packet data once again significantly accelerated. With this innovation
(EDGE technology) took the old technology after the emergence of the new
technology once again has a clear performance jump.

In some cases, these studies also focus on individual
quantitative data sources, such as comparisons of performance counters or cost
statements, resorted to. A systematic quantitative analysis search of the
technology-competitive conditions recently. Furthermore, the research
examples shown above are very different often not whether the innovation in the
old technology as a reaction or whether it is a “normal” innovation
behavior, which even without the perception of a new competitive te chnology
took place.

Microeconomic Approaches:

In addition to the
narrative approaches, another branch has been explored of the Sailing
Ship-Effect as part of formal analysis. Here recent examples are in
particular the work of De Liso and Filatrel. They go in their first
micro-economically sound approach from a monopolist A with old technology and
an entrant B with new technology. Furthermore, technologically determined
upper limit for the respective performance of the technologies, the old one
technology has lower maximum performance than the new one technology. Both
technologies can be up to this maximum by improved research and development (R
& D) input from companies based on decreasing marginal utility lies. The
dynamic model world thus formulated allows the determination of profit-optimal
R & D budgets on the part of the supplier of the old technology as a reaction
strategy to the new technology. This results in the profit of the supplier
of the old technology A (similar applies to the Entrant B) from the formula:

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