A NEW CONCEPT OF R&D IN NEO OPEN INNOVATION - TRANSFORMATION OF R&D TRIGGERED BY AMAZON

Abstract

Amazon was the world's top R&D firm in 2017. Its R&D investment was double that of 2015, quintuple that of 2012, and tenfold that of 2011. It deploys a unique R&D model as conducting "routine or periodic alterations" and "significant improvement" simultaneously. Since traditionally the former is classified as non-R&D, Amazon's rapid and notable increase has raised the question of a new R&D definition in the digital economy. By means of an empirical analysis of the Amazon's R&D model, this paper attempted to provide a convincing answer to this question. Amazon has invested considerable resources in extremely innovative business areas, which has developed its assimilation capacity. In parallel with such forefront innovation, Amazon is endeavoring to absorb soft innovation resources from external markets and assimilate them into its business model. This then transforms "routine or periodic alterations" into "significant improvement", leading to the company becoming the world's top R&D firm. Such an endeavor has triggered a new concept of R&D in neo open innovation and revealed the significance of a transformation of the R&D concept in the digital economy.

A SOLUTION TO THE DILEMMA BETWEEN R&D EXPANSION AND THE PRODUCTIVITY DECLINE: LESSONS FROM THE R&D MODELS IN AMAZON AND FINLAND

“…This R&D-driven accomplishment may provide a constructive suggestion to the solution to the dilemma between R&D expansion and productive decline [8]. Finland, one of the world ICT leader, has also accomplished a balanced advancement not only of welfare but also economic growth by means of a notable resurgence [9].…”

“…They demonstrated that effective utilization of these resources depends largely on the assimilation capacity that assimilates these resources from the marketplace and assimilate into own business. This capacity depends on a rapid and notable increase in R&D as Amazon has demonstrated [8]. This scheme is illustrated in Fig.…”

“…As reviewed in the preceding section, the disruptive business model initiated by global ICT leaders can be traced by two contribution routes as summarized in Table 3. Both global ICT leaders, Amazon and Finland have demonstrated conspicuous contributions to respective route [9], [8].…”

“…Amazon has jumped up to the world's top R&D firm in 2017 by complementing significant improvement endeavors and routine or periodic alterations endeavors based on its unique R&D model. The latter endeavors have been transformed into the former by absorbing SIRs in the marketplace and assimilating them to its business [8].…”

“…This success can be attributed to its business model that has enabled Amazon to absorb external resources extensively through the Amazon empire chain, big data collection system and architecture for participation, and assimilate them into its business [8].…”