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

Abstract

As a consequence of the two-faced nature of information and communication technology (ICT), a majority of ICT leaders have been confronting the critical problem of a dilemma between R&D expansion and productivity decline in the digital economy. However, Amazon has been able to accomplish a skyrocketing increase in R&D and market capitalization. Finland has also accomplished balanced advancement not only of welfare but also economic resurgence. This paper attempted to elucidate the miracle of two ICT leaders. By means of a comparative empirical analysis of respective development trajectories, the sources of their success were analyzed thereby the comparative advantage and disadvantage of each respective trajectories supportive to find a practical solution to the critical problem of a dilemma were identified. The sources of both successes can be attributed to harnessing the vigor of soft innovation resources from the marketplace. However, contrary to Amazon’s complementary use, Finland has depended on substitutionary use. While this approach contributes to easy resurgence, it casts a shadow to the innovative growth in the future. An insightful suggestion regarding balanced sustainable growth by cross learning was thus provided.