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Worldwide Competition 365

Larger U.S. and foreign companies will still be synergistic with start-ups to adopt their inventions. The large firms that control over 90 percent of the engineering and scientific talent will continue to evolve slowly and to reinvent, instead of channeling creative energy into innovation by making the changes that would be required to do a given product or technology in a new but evolutionary way in order to make it dominate a market.

But the bulk of innovation will come from outside the United States, because the Japanese, for example, are not as plagued by the "not invented here" syndrome, which is endemic among most American and many European engineers, who tend to reinvent technology and products, often with poorer results than the original design.

With the economic unification of Europe in 1992, a broader, easier-to-access market may emerge. On the other hand, European suppliers might become more competitive in a world market. At the very least, Europe may take a more aggressive role as a global funder of start-ups. In the 1980s, Europe became effective at managing research and advanced development across national borders and between industry and academe. However, given the laws supporting lifetime employment in Europe, it is difficult to see how start-ups will form very easily there. Thus, the larger companies will most likely continue to count on slow evolution and invention coming from research. These advances will probably be small, as in the past. The only way large European firms will acquire big inventions will be to buy products from small companies or buy the companies themselves.

China and India-which have the world's largest supply of highly trained talent with mathematical, engineering, and scientific skills-are beginning to develop soft-ware for worldwide consumption. Since the development of much software requires minimal capital investment (often, only a PC), any country can become a significant software supplier because of the inherently "low barrier to market entry."

Japan will continue to excel in innovation and to become the dominant supplier in every market it enters. Japan will take the plethora of hardware and software inventions generated by the rest of the world and, by innovation, improve their quality, functionality, and performance, to substantially increase the size of the markets. In 1972, IBM invented the 8-inch floppy and used it to hold diagnostic programs for its large disk controllers. By the late 1970s, Shugart Associates started up and began the floppy industry, which evolved to the 5.25-inch-diameter floppy with more start-ups. In 1982, Apple adopted Sony's highly innovative and more durable 3.5-inch floppy, which has become the standard of interchange since 1985, with evolving increases in density, because the Sony floppy provided so much more than the first, simple invention and its evolution.

Because nearly all software products are developed by a method that is subject to process control and quality standards, the Japanese appear to generate software that is

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