Abstract
Amazon was the world's top Research and Development (R&D) firm in 2017. Its R&D investment was double that of 2015, five times that of 2012, and ten times that of 2011.Such a rapid and notable increase in R&D investment has raised the question of a new R&D definition and focus in the digital economy, which Amazon insists includes both “routine or periodic alterations” (traditionally classified as non-R&D) and “significant improvement” (classified as R&D).Using an empirical analysis of Amazon's R&D model as a system, this paper attempts to provide a convincing answer to this question.It has been identified that Amazon, which is based on R&D as a culture, has been promoting companywide experimentation to cause customers obsessed with making purchase decisions. This obsession has enabled Amazon to deploy an architecture for participation that makes the most of digital technologies by harnessing the power of users. Such user-driven innovation has accelerated a dramatic advancement of the Internet that, in turn, has accelerated the co-emergence of soft innovation resources in the marketplace. This emergence has activated a self-propagating function that has induced functionality development, leading to supra-functionality beyond an economic value that satisfies a shift in customers’ preferences. While this system depends on the assimilation capacity of soft innovation resources, Amazon has developed a high level of capacity supported by a rapid and notable increase in R&D investment. The above efforts function in a virtuous cycle leading to the transformation of “routine or periodic alterations” into “significant improvement.”These findings give rise to insightful suggestions regarding a new concept of R&D in neo open innovation in the digital economy.
Highlights
There is a crucial dilemma when opting for Research and Development (R&D) expansion as it can lead to productivity decline, caused by the two-faced nature of information and communication technology (ICT) centered on the advancement of the Internet
Similar to other ICT leaders, while Apple has been stressing the significance of continued R&D, licensing and mergers and acquisitions (M&A) for ensuring a continual and timely flow of competitive products, services and technologies to the marketplace, Amazon has been insisting on collective securement and management of costs for broad areas of employees and infrastructure for offering a wide variety of products and services to its customers
In light of a rapid conspicuous increase in Amazon's R&D elevated it to the position of world's top R&D firm in 2017 based on its unique R&D model, and subsequent debate on the new concept of R&D in the digital economy, the transformative direction of R&D was examined
Summary
There is a crucial dilemma when opting for R&D expansion as it can lead to productivity decline, caused by the two-faced nature of information and communication technology (ICT) centered on the advancement of the Internet. As a matter of fact, he has himself confessed that “I have to be very choosy” [20] Under such constraints, analyses of Amazon's unique R&D model from the viewpoint of providing a solution to the dilemma between R& D expansion and productivity decline that the majority of global ICT firms have been confronting in the digital economy [1,2] are limited. The authors, in their preceding studies, demonstrated the significance of the coopetition strategy in the conspicuous performance accomplished by Canon (Japan's leading multinational corporation specializing in the manufacturing of optical products, similar to Amazon) [25,26] Based on this finding, they postulated the significance of neo open innovation in the digital economy as a promising solution to such a dilemma [1,2].
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