The Venturesome Economy

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Many warn that the next stage of globalization—the offshoring of research and development to China and India—threatens the foundations of Western prosperity. But in The Venturesome Economy, acclaimed business and economics scholar Amar Bhidé shows how wrong the doomsayers are.

Using extensive field studies on venture-capital-backed businesses to examine how technology really advances in modern economies, Bhidé explains why know-how developed abroad enhances—not diminishes—prosperity at home, and why trying to maintain the U.S. lead by subsidizing more research or training more scientists will do more harm than good.

When breakthrough ideas know no borders, a nation’s capacity to exploit cutting-edge research regardless of where it originates is crucial: our venturesome consumption—the willingness and ability of our businesses and consumers to effectively use products and technologies derived from scientific research—is far more important than our share of such research. In fact, a venturesome economy benefits from an increase in research produced abroad: the success of Apple’s iPod, for instance, owes much to technologies developed in Asia and Europe.

Many players—entrepreneurs, managers, financiers, salesmen, consumers, and not just a few brilliant scientists and engineers—have kept the U.S. at the forefront of the innovation game. As long as their venturesome spirit remains alive and well we need not fear advances abroad. Read The Venturesome Economy and learn why—and see how we can keep it that way.

Preface and Introduction

Book 1. Cautious Voyagers: Why VC-Backed Businesses Still Favor Home

1. VCs in New Ventureland

2. Advancing the Frontier: The Nature of Mid-level Innovation

3. Marketing: Edging into International Arenas

4. Offshoring: The Ins and Outs

5. Founders and Staff: Global at Home

6. On Methods and Models

Book 2: Embrace or Resist?

7. Alarmist Arguments

8. The Reassuring Realities of Modern Cross-Border Flows

9. Valuable Differences

10. Serving the Service Economy

11. Venturesome Consumption

12. Winning by Using

13. Non-Destructive Creation

14. Immigrants: Uppers or Downers

15. The Elusive Underpinnings

16. First Do No Harm

Press Reviews

“…Bhidé provides a fresh and reassuring perspective on America’s technological position in an increasingly global economy. Anyone interested in our economic future and especially our technology policies should read this book.”

– Lawrence Summers, Harvard University, Former Secretary of the US Treasury:

“..Bhidé draws on his unmatched knowledge of the mechanisms of innovation to show the benefits to us of Asia’s advances and the errors in the techno-fetishism that grips Washington officialdom. This book deepens radically our understanding of how the global economy functions.”

– Edmund Phelps, 2006 Nobel Laureate in Economics

– Tom Peters

Austrian Economists (Pete Boettke)
Maria Bartiromo interview
Economist
HBS Working Knowledge
New York Post, book review
New York Times
WSJ op-ed
Yale Global Interview
Barrons (Gene Epstein)
Die Zeitinterview (German)
Financial Times (John Kay)
Inc. Magazine
New York Times (Steve Lohr)
New Yorker
Business Week: Best Innovation books 2008
Economist’s review of antecedent article
Financial Times, book review Nature
New York Times, article on Milan Fashion Show
Sydney Morning Herald

Advance Comments

“If I were asked to recommend to the next president just one book on the trajectory of the U.S economy in the next several years, it would unhesitatingly be Amar Bhide’s The Venturesome Economy. The book is an utterly original interpretation of the nature of the complex process of innovation. Among other things, it makes a mockery of the simplistic, alarmist writings that have become so popular in these troublesome economic times. As a student myself of the lovely, kinky history of real innovation, I almost found myself audibly cheering as I raced through this seminal text.”

–Tom Peters, co-author of In Search of Excellence and numerous other influential books

“Amar Bhidé provides a fresh and reassuring perspective on America’s technological position in an increasingly global economy. Anyone interested in our economic future and especially our technology policies should read this book.”

– Lawrence Summers, Harvard University, Former Secretary of the U.S. Treasury

“The strides made by China and India, notably their unexpected technological advances, have made America anxious, prompting calls to double federal spending on basic research. In The Venturesome Economy, Amar Bhidé draws on his unmatched knowledge of the mechanisms of innovation to show the benefits to us of Asia’s advances and the errors in the techno-fetishism that grips Washington officialdom. This book deepens radically our understanding of how the global economy functions.”

–
Edmund Phelps, 2006 Nobel Laureate in Economics

“In The Venturesome Economy, Amar Bhidé takes on the increasingly noisy chorus of critics worried about the effects of globalization on the national economy. He demonstrates that the application and commercialization of technology is far more important than whether the underlying science originated at home or abroad. The winners will be those countries and businesses that have the insight and energy to apply innovations effectively. This is an optimistic and important message.”

–
Donald J. Gogel, president and CEO of Clayton, Dubilier & Rice
“A book full of solid if unconventional deductions, all based on extensive observations. Amar Bhidé is an author who knows whereof he speaks and to whom one should listen.”

–
William J. Baumol, author of “The Free-Market Innovation Machine”

FAQs

Everything you always wanted to know about The Venturesome Economy, but it might not have occurred to you to ask..):

Q: Another book on globalization and the rise of China and India??

A: A new perspective on how the U.S (and other innovative Western economies) stand to gain:

Shows how innovators in the U.S. harness research produced abroad to improve the productivity of purely domestic activities (such as retailing) which account for well over half of U.S. employment ; in contrast, advocates of globalization often emphasize opportunities for high-tech exports.

Critiques the seemingly benign techno-nationalist prescription (of increasing spending on research and training more scientists and engineers) rather than the protectionist response to globalization. Technological progress, I argue, inevitably requires a broadening of the role of government – cyberspace encourages cyber-crime and requires cyber-cops. But misguided interventions proposed by techno-nationalists can lead to the neglect of the real issues raised by globalization (such as the increase in the world’s consumption of fossil fuels and a mis-regulated financial system).

Q: What’s different about the method?

A: As in a common law trial, I pull together a broad body of evidence, expert testimony and precedent to assess the concrete, current realities:

This is not your grandfather’s – much less Adam Smith’s pre-Industrial Revolution economy.

The new realities can no more be captured in a few sound bites than can how a car works; and, without an appreciation of how the engine, transmission, brakes, suspension, etc. of the modern economy operate, efforts to maintain or improve it can do more harm than good.

My book embraces complexity, incorporating many important features of the modern economy (and what Galbraith might have called its technostructure) that are often abstracted away by economic theorists and media gurus: These features include the:

Many complementary activities necessary to develop and effectively deploy technological innovations. Scientific discoveries made in research labs, context specific know-how developed by users and even the marketing practices used to sell new products are all crucial.

Differences in the cross border mobility of different kinds of innovations. Scientific discoveries travel across national borders much more easily than context specific know-how and marketing practices.

Low share of the value of innovations captured by their developers vis-à-vis their users.

The growth of the domestically produced and consumed services – that at least partially offsets the more intensive trading of tradable goods.

The role of venturesome consumption in the development and effective use of innovations.

How non-destructive creation offsets job-losses due to efficiency improvements (creative destruction) and offshoring and thus sustains increasing employment, especially in the non-traded service sector.