Three characteristics of technology competition by IoT-driven digitization

Abstract

The purpose of this paper is to understand changes in the technological competitiveness of countries induced by Internet of Things (IoT)-driven digitization. Patent analysis, as one of the best ways to measure technological competitiveness, exhibits three characteristics of IoT-driven digitization, namely, agile innovation, stagnation across Asian countries, and the resurgence of the U.S., in turn taking advantage of network effects. The agile innovation of IoT-driven digitization suggests that digitization relies less on existing technologies and enables the leveraging of opportunities that arise from new order emergence. Some Asian countries took advantage of agile innovation as a window of opportunity in the previous age of digitization. These countries now lag less behind the U.S. as a result. Nevertheless, as these countries experience difficulties in taking advantage of agile innovation in the current age of digitization, they lag further behind the U.S. in terms of IoT-driven digitization. The structure of joint patent applications reveals that the U.S. has become a hub between the two European communities, the Chinese community and individual pro-American countries, implying that the network effect of IoT-driven digitization could have a significant impact on the technological competitiveness of countries.