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ANSWERS TO DISCUSSION QUESTIONS
1. Why is innovation so important for firms to compete in many industries?
Innovation enables firms to:
-introduce more product and service variations, enabling better market segmentation and
penetration;
Increasing globalization has both expanded the potential markets for many firms while
simultaneously exposing them to greater competition; this has resulted in firms putting more
2. What are some of the advantages of technological innovation? Disadvantages?
Technological innovation increases knowledge, and makes more options available. On the whole,
evidence suggests that technological innovation has increased GDP and standards of living
worldwide. Technological innovation also, however, poses some risk of negative externalities,
3. Why do you think so many innovation projects fail to generate an economic return?
Innovation is an inherently risky undertaking. Most innovation projects are characterized by both
technical uncertainty (will the project result in a technically feasible product or service?) and
