Abstract
The case-study material in the previous chapter is indicative of the complexity of factors at work shaping the post-innovation development of a technology. Nonetheless, certain general themes can be identified and the purpose of this chapter is to provide a brief outline of the mechanisms at work, to relate them in a systematic way and to provide a guide through the complexities of the innovation process. It is perforce an outline in which detail is sacrificed for perspective and within its bounds weare concerned with two questions: the mechanisms by which new technology is absorbed into the prevailing economic structure and the effects of absorption upon the trajectory of technical development. We shall present the development of a technological regime and its economic application as interdependent processes in which three mechanisms interact: the diffusion mechanism, the selection mechanism and the inducement mechanism, It is the interaction of these mechanisms which determines the environment for technical development and the position of different firms as institutions for promoting trajectories of technical advance.
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References
Cf. B. Gold, ‘On the Adoption of Technological Innovations in Industry: Superficial Models and Complex Decision Processes’, Omega, vol. 8, 1980.
W. G. Hoffman, ‘The Growth of Industrial Production in Great Britain’, Economic History Review, vol. 4, 1949.
A. Alchian, ‘Uncertainty, Evolution and Economic Theory’, Journal of Political Economy, vol. 58, 1950. The leading sociologist of diffusion phenomena defines the diffusion effect ‘as the cumulatively increasing degree of influence upon an individual to adopt or reject an innovation, resulting from the activation of peer networks about the innovation in the social system’. E. M. Rogers, The Diffusion of Innovations, Free Press, 1983 (3rd edn).
Rogers, The Diffusion of Innovations, is replete with references as is P. B. Allen, ‘A Stochastic Interactive Model for the Diffusion of Information’, Journal of Mathematical Sociology, vol. 8, 1982, pp. 265–81. N. Bailey, The Mathematical Theory of Epidemics(Griffin, 1957), and D. J. Bartholomew, Stochastic Models for Social Processes(Wiley, 1973) chaps 9 and 10 are also relevant references.
E. Mansfield, ‘Technical Change and the Rate of Imitation’, Econometrica, vol. 29, 1961, pp. 741–66. E. Mansfield et al., The Production and Application of New Industrial Technology(Norton, 1977) chaps 6 and 7. A. Romeo, 1977, The Rate of Imitation of a Capital Embodied Process Innovation’, Economica,vol. 44, pp. 63–70. In the same tradition but with a rather more eclectic approach is L. Nabseth and G. Ray, The Diffusion of New Industrial Processes(Cambridge, 1974). Excellent surveys may be found in S. Davies, The Diffusion of Process Innovations(Cambridge University Press, 1979) and P. Stoneman, The Economic Analysis of Technological Change(Oxford University Press, 1983) Part II. A. D. Bain, The Growth of Television Ownership in the United Kingdom(Cambridge University Press, 1967) is a study of consumer-based diffusion.
G. Ray, The Diffusion of Mature Technologies(Cambridge University Press, 1984) pp. 86–7 in particular.
M. Frankel, ‘Obsolescence and Technological Change in a Maturing Economy’, American Economic Review, vol. 45, 1955, pp. 296–319.
An important exception is G. Rossegar, ‘Diffusion and Technological Specificity’, Journal of Industrial Economics, vol. 28, 1979.
Cf. R. Nelson, M. Peck and E. Kalachek, Technology, Economic Growth and Public Policy(Brookings, 1967) chap. 5, for a pioneering statement of these issues. Also N. Rosenberg, ‘Factors Affecting the Diffusion of Technology’ in his Perspectives on Technology(Cambridge, 1978).
The details are contained in J. S. Metcalfe, ‘Impulse and Diffusion in the Study of Technical Change’ in C. Freeman (ed.) Long Waves in the World Economy(Butterworth, 1983).
Schumpeter, Theory of Economic Development(Galaxy Book, 1934) p. 194.
Cf. A. F. Burns, Production Trends in the United States Since 1870(NBER, 1934); and S. Kuznets, Secular Movements in Prices and Production(Houghton Mifflin, 1929). See also J. F. Gaston, Growth Patterns in Industry: A Re-examination(NBER, 1961).
Cf. R. Nelson, ‘Research on Productivity Growth and Productivity Differences: Dead Ends and New Departures’, Journal of Economic Literature,vol. 19, 1981.
H. Leibenstein, ‘Allocative Efficiency vsX-Efficicncy’ American Economic Review, vol. 56, 1966, pp. 392–415.
The classic analyses of this process are J. Steindl, Maturity and Stagnation in American Capitalism(Blackwell, 1952) and J. Downie, The Competitive Process(Duckworth, 1955). Within Downie’s much-neglected work our selection mechanism is labelled the transfer mechanism. Nelson and Winter, An Evolutionary Theory of Economic Changealso make selection a central feature of their modelling of technical change. See also B. R. Williams, Types of Competition and the Theory of Employment’, Oxford Economic Papers, vol. 1, 1949, for an analysis of competition as a spur to progress, and of a view that ‘the special mark of the fully dynamic problem is the difference between different individuals’.
The rate of decline of average-practice unit-cost can be shown to be proportional to the variance of unit-cost among the surviving firms. This mirrors a fundamental law of natural selection in genetics, cf., Nelson and Winter An Evolutionary Theory, p. 243, for further discussion.
On this hidden characteristics approach, sec D. Usher, The Measurement of Economic Growth(Blackwell, 1980), chap. 8.
Cf. Nelson and Winter, An Evolutionary Theory, pp. 240–5 for an analysis of input price changes and the dynamics of selection.
N. Rosenberg’s paper, ‘Lcarning by Using’, in his Inside the Black Box(Cambridge University Press, 1982) is a particularly important account of the way in which the characteristics contained in products are only revealed through experience.
Many complex issues lie behind this statement. For a quite penetrating introduction to the complexity of selection processes see S. G. Winter, ‘Economic Natural Selection and the Theory of the Firm’, Yale Economic Essays, vol. 4, 1964.
C. F. Carter, ‘Reasons for Not Innovating’ in C. F. Carter (ed.) Industrial Policy and Innovation(Heinemann, 1981) provides an interesting discussion. The enormity of the problem facing innovation researchers is indicated by L. Uhlmann, The Typology of Innovative Research’ in M. Baker, Industrial Innovation(Macmillan, 1979), which studies 218 innovations in 126 firms in West Germany, Sweden and the UK. Twenty classes of relevant variable are identified, each with several dimensions, and classed into eleven different clusters or types of innovation.
Cf. Schumpeter’s emphasis on the importance of new men who operate where the boundaries of routine stop, (Theory of Economic Development,p. 80). For a modern example in the context of micro-electronics see E. Braun and S. MacDonald, Revolution in Miniature(Cambridge University Press, 1978) chap. 6.
The case of technologically dynamic small firms, absorbed into financially replete large firms is so frequent as not to require documentation.
After a shaky start in economic theory this proposition now has firm foundations. See, in particular, S. Ahmad, ‘On the Theory of Induced Innovation’ Economic Journal,vol. 76, 1966, and H. Binswanger, ‘A Micro-economic Approach to Induced Innovation’, Economic Journal, vol. 84, 1974.
After the development of the clipper ship (a design configuration within the sailing-ship regime) in response to the threat of steamships with high pressure compound engines (a design configuration in the steamship regime). The details of the co-evolution of these respective design configurations over a fifty-year period is recounted in S. G. Gilfillan, Inventing the Ship(Follet, 1935) and in G. S. Graham, The Ascendancy of the Sailing Ship’, Economic History Review, vol. 9, 1956.
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© 1986 Luke Georghiou, J. Stanley Metcalfe, Michael Gibbons, Tim Ray and Janet Evans
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Georghiou, L., Metcalfe, J.S., Gibbons, M., Ray, T., Evans, J. (1986). Diffusion, Selection and Inducement in the Evolution of a Technological Regime. In: Post-Innovation Performance. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-07455-6_5
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DOI: https://doi.org/10.1007/978-1-349-07455-6_5
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