Over 20% of the Annual Gross Domestic Product in the United States is the Result of Innovation GMAT Reading Comprehension

Reading Passage Question

Question: It has estimated that over 20% of the annual gross domestic product in the United States is the result of innovation backed at some point by venture capital investors. But what is innovation? One traditional view of innovation is that it is a systematic business process occurring within an organization required to secure ongoing financial growth. But much of the most acclaimed and influential innovation has started with an individual's idea and only somewhat later followed with an organization to execute on that idea, so the organizational definition is of limited relevance.

A more practical definition of innovation is that it is the creation of anything new intended to be commercialized. Under such a definition, the efforts of a lone individual developing a radical idea and those of a department within a large company to explore a new adjacent market are both examples of innovation. This somewhat loose definition, however, fails to address explicitly what makes an innovation truly new, successful, or authentic, although it may imply that all innovation is equally valid in a sense. Otherwise, the oft-repeated challenge to uses of the term innovation may put too little emphasis on the activity and too much on its results. Quite possibly, 80% of the value of innovation has been contributed by 20% of the activity, but whether that 20% of activity could have manifested itself without a culture and economy to support the whole is less clear. In this regard, policy- and strategy-oriented attempts to refine this loose definition of innovation further are without merit.

“It has been estimated that over 20% of the annual gross domestic product in the United States is the result of innovation backed at some point by venture capital investors GMAT Reading Comprehension.”- is a GMAT reading comprehension passage with answers. Candidates need a strong knowledge of English GMAT reading comprehension.

This GMAT Reading Comprehension consists of 5 comprehension questions. The GMAT Reading Comprehension questions are designed for the purpose of testing candidates’ abilities in understanding, analyzing, and applying information or concepts. Candidates can actively prepare with the help of GMAT Reading Comprehension Practice Questions.

Solution and Explanation

1. The author of the passage is primarily concerned with

1. discussing data supporting some definitions
2. arguing for the use of a particular definition
3. discussing some definitions of a concept
4. discrediting a common definition of a concept
5. clarifying some ambiguous definitions

2. The author suggests that the traditional definition of innovation, of the two definitions discussed, is

1. more pragmatic
2. less useful
3. less ambiguous
4. more widely used
5. less rigorous

3. The passage suggests which of the following is about innovation?

1. Most important innovation occurs outside of the scope of established companies.
2. Quite possibly, 80% of annual gross domestic product is the result of 20% of innovation.
3. Most innovation activity does not ultimately contribute economic value, by either definition given.
4. Less obviously successful acts of innovation may have important results that are not commonly recognized.
5. Most innovations occur in a context that falls outside the scope of the traditional definition of innovation.

4. The author of the passage mentions which of the following as one disadvantage of the "more practical" definition of innovation, as mentioned in the highlighted text?

1. It is too broad to serve as a basis for decisions about innovation policy and strategy.
2. It is narrower in scope than any other definition presented in the passage.
3. It is based on the result of the activity performed rather than on the type of activity performed.
4. It does not provide a basis on which to judge the quality of innovations.
5. It includes widely different activities, such as both developing a radical idea and exploring an adjacent market.

5. The author refers to the "culture and economy" (see highlighted text) that support innovation primarily in order to point out

1. the diversity of factors that contribute to successful innovation
2. considerations not addressed by the more practical definition of innovation
3. the link between innovation according to the more practical definition and the contribution of innovation to the annual gross domestic product
4. a type of innovation that should be defined in terms of its ultimate result rather than in terms of the nature of the activity itself
5. a type of innovation not included in the more practical definition of innovation

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