Working Paper
Technological Paradigms, Patterns of Learning
And Development
An Introductory Roadmap
Mario Cimoli Giovanni Dosi
WP-94-83 September 1994
Q!llASA
International Institute for Applied Systems Analysis A-2361 Laxenburg Austria BL AM..
BD. Telephone: +43 2236 71521 Telex: 079 137 iiasa a Telefax: +43 2236 71313
Technological Paradigms, Pat terns of Learning
And Development
An Introductory Roadmap
Mario Cimoli Giovanni Dosi
WP-94-83 September 1994
We thank the discussants and participants at the workshop on Technology and Competitiveness in Developing Countries, Venice, November
26,
1993, for their useful comments. Re- search leading to this work has benefited at various stages from the support of the Italian NationalResearch Coun- cil (CNR, Progetto Strategic0 "Cambiamento Tecnologico e Crescita Economica")
and of the International Institute of Applied Systems Analysis.Working Papers are interim reports on work of the International Institute for Applied Systems Analysis and have received only limited review. Views or opinions expressed herein do not necessarily represent those of the Institute or of its National Member Organizations.
EBIIASA
International Institute for Applied Systems Analysis A-2361 Laxenburg o Austriakd:
Telephone: +43 2236 71521 o Telex: 079 137 iiasa a n Telefax: +43 2236 71313Preface
T h e research project on Systems Analysis of Technological and Economic Dynamics a t IIASA is concerned with modeling technological and organisational change; the broader economic devel- opments t h a t are associated with technological change, both as cause and effect; the processes by which economic agents - first of all, business firms - acquire and develop t h e capabilities t o generate, imitate and adopt technological and organisational innovations; and t h e aggregate dynamics - a t t h e levels of single industries and whole economies - engendered by t h e interac- tions among agents which are heterogeneous in their innovative abilities, behavioural rules and expectations. T h e central purpose is t o develop stronger theory and better modeling techniques.
However, the basic philosophy is t h a t such theoretical and modeling work is most fruitful when attention is paid t o t h e known empirical details of the phenomena the work aims t o address:
therefore, a considerable effort is put into a better understanding of t h e 'stylized facts' concern- ing corporate organisation routines and strategy; industrial evolution and the 'demography' of firms; patterns of macroeconomic growth and trade.
From a modeling perspective, over the last decade considerable progress has been made on various techniques of dynamic modeling. Some of this work has employed ordinary differential and difference equations, and some of it stochastic equations. A number of efforts have taken advantage of the growing power of simulation techniques. Others have employed more traditional mathematics. As a result of this theoretical work, the toolkit for modeling technological and economic dynamics is significantly richer than i t was a decade ago.
During t h e same period, there have been major advances in the empirical understanding.
There are now many more detailed technological histories available. Much more is known about t h e similarities and differences of technical advance in different fields and industries and there is some understanding of the key variables t h a t lie behind those differences. A number of studies have provided rich information about how industry structure co-evolves with technology. In addition t o empirical work a t the technology or sector level, the last decade has also seen a great deal of empirical research on productivity growth and measured technical advance a t t h e level of whole economies. A considerable body of empirical research now exists on t h e facts t h a t seem associated with different rates of productivity growth across the range of nations, with the dynamics of convergence and divergence in the levels and rates of growth of income, with the diverse national institutional arrangements in which technological change is embedded.
As a result of this recent empirical work, the questions t h a t successful theory and useful modeling techniques ought t o address now are much more clearly defined. T h e theoretical work has often been undertaken in appreciation of certain stylized facts t h a t needed t o be explained.
T h e list of these 'facts' is indeed very long, ranging from the microeconomic evidence concerning for example dynamic increasing returns in learning activities or the persistence of particular sets of problem-solving routines within business firms; the industry-level evidence on entry, exit and size-distributions - approximately log-normal - all the way t o the evidence regarding t h e time- series properties of major economic aggregates. However, the connection between the theoretical work and the empirical phenomena has so far not been very close. The philosophy of this project is t h a t the chances of developing powerful new theory and useful new analytical techniques can be greatly enhanced by performing the work in an environment where scholars who understand the empirical phenomena provide questions and challenges for the theorists and their work.
In particular, the project is meant t o pursue an 'evolutionary' interpretation of technological and economic dynamics modeling, first, the processes by which individual agents and organisa- tions learn, search, adapt; second, t h e economic analogues of 'natural selection' by which inter-
active environments - often markets - winnow out a population whose members have different attributes and behavioural traits; and, third, the collective emergence of statistical patterns, regularities and higher-level structures as the aggregate outcomes of the two former processes.
Together with a group of researchers located permanently a t IIASA, the project coordinates multiple research efforts undertaken in several institutions around the world, organises workshops and provides a venue of scientific discussion among scholars working on evolutionary modeling, computer simulation and non-linear dynamical systems.
T h e research focuses upon the following three major areas:
1. Learning Processes and Organisational Competence.
2. Technological and Industrial Dynamics 3. Innovation, Competition and Macrodynamics
1 - I n t r o d u c t i o n
Deep relationships of some s o r t s between technical change and economic development a r e now generally acknowledged in both economic history and economic theory. Still, t h e i r n a t u r e i s m a t t e r of d e b a t e concerning t h e precise causal links. For example, i t i s quite intuitive t h a t improvements in t h e efficiency of techniques of production o r in product performances may be a determinant o r a t l e a s t a binding precondition of g r o w t h in per c a p i t a incomes and consumption. But, i n t r i c a t e d e b a t e s concern "what ultimately determines what..
.":
e.g. i s i t resource accumulation t h a t primarily f o s t e r s t h e exploration of novel innovative opportunities, o r , conversely, does innovation drive capital accumulation?; do new technological opportunities emerge mainly f r o m a n extra-economic domain ("pure science") o r a r e they primarily driven by economic incentives?; should one assume t h a t t h e institutions supporting technical change a r e sufficiently adaptive t o a d j u s t t o whatever underlying economic dynamics emerges f r o m market interactions; o r , conversely, a r e they inertial enough t o shape t h e r a t e s and directions of innovation and diffusion?Clearly, t h e s e and a f e w o t h e r , r e l a t e d , questions a r e a t t h e c o r e of many controversies regarding growth p a t t e r n s : f o r example, i s convergence t h e dominant tendency? How does one t h e n i n t e r p r e t observed phenomena of forging ahead o r falling behind? I s i t legitimate t o exclude f r o m t h e analysis a t l e a s t in a f i r s t approximation t h e specificities of institutions and c o r p o r a t e organizations? Even m o r e so, a l l t h e s e questions and controversies underlie t h e political economy of development.
Obviously, one would not do justice t o t h e s e i n t r i c a t e questions in a single paper even if one had achieved thorough a n s w e r s ( t h a t indeed one i s f a r f r o m having). However, t h e r e has been over a t l e a s t t h e l a s t t w o decades a flourishing of s t u d i e s on t h e sources, mechanisms and p a t t e r n s of technological innovation. And, t h e opening of t h e technological blackbox h a s o f t e n gone together with important insights into innovation-driven market competition. Business h i s t o r i a n s have finally achieved some cross-fertilization with (some b r e e d s o f ) economic theorizing. And t h e institutional understanding of t h e socio-economic f a b r i c s of contemporary societies starts showing f r u i t f u l complementaries with o t h e r analyses stemming f r o m t h e economists q u a r t e r s .
Quite a f e w of t h e s e contributions have been proposed by s c h o l a r s
who would call themselves evolutionists o r institutionalists. Many, o t h e r s have come within d i f f e r e n t theoretical perspectives. Still, t h e r e i s a sense t h a t t h e s e diverse s t r e a m s of r e s e a r c h show a f e w common t h r e a d s , highlighting -to p a r a p h r a s e Richard Nelson- t h e CO-evolution o f . technologies, c o r p o r a t e organizations and institutions.
These t h r e a d s -linking evolutionary analyses of t h e microeconomics of innovation all t h e way t o (daring) generalizations on some invariant f e a t u r e s of t h e process of development- a r e t h e s u b j e c t of t h i s paper.
F a r f r o m being a comprehensive survey, i t i s r a t h e r a s o r t of "roadmap"
with a n inevitable degree of idiosyncrasy.
We start by discussing t h e theoretical implications of w h a t we know about t h e o f t e n p a t t e r n e d dynamics of innovative activities at a micro level. The notions of technological paradigms, t r a j e c t o r i e s (and largely overlapping ones such as dominant designs) entail a r e p r e s e n t a t i o n of technologies centered on t h e cognitive and problem-solving procedures which they involve.
Another m a j o r implication of t h i s view i s in t e r m s of t h e o r y of production. I t i s r a t h e r s t r a i g h t f o r w a r d t o derive some s o r t of non-substitution properties, in t h e short-term, and, a l s o in t h e long-term, technological asymmetries o r g a p s a s permanent f e a t u r e s a c r o s s f i r m s and, even more a s , a c r o s s countries.
Do t h e s e micro technological properties b e a r consequences at b r o a d e r levels of observation, i.e. whole industrial s e c t o r s and whole countries?
Or, p u t t i n g i t a n o t h e r way, can one identify invariances and p a t t e r n s a t s e c t o r a l o r national level which can be i n t e r p r e t e d in t e r m s of some underlying specificities in t h e processes of collective learning, m a r k e t selection and institutional governance of both?
This i s t h e s u b j e c t of t h e second p a r t of t h e paper, and i t i s a l s o where t h e roadmap inevitably b i f u r c a t e s into d i f f e r e n t discourses. Some will be persued in reasonable detail and while o t h e r s will only be sketched out, j u s t flagging t h e elements of consistency w i t h t h e r e s t of t h e argument. For example, t h e r e a r e sound theoretical reasons and a growing empirical evidence t h a t t h e observed p a t t e r n s of evolution of industrial s t r u c t u r e s a r e t h e outcome of specific modes of access t o innovative opportunities and market selection mechanisms. However, we shall not dwell h e r e on t h i s a s p e c t of t h e co-evolution between technologies and production s t r u c t u r e s . Rather, more a t t e n t i o n shall be devoted t o t h e links between micro learning and economy-wide accumulation of technological capabilities and, in p a r t i c u l a r , t o t h e existence of
specific national system of production and innovation. The a r g u m e n t needs t o be built through several steps. F i r s t , i t follows f r o m t h e microeconomics of innovation t h a t f i r m s a r e c e n t r a l , a l b e i t by no means unique, repositories of technological knowledge. Hence, a l s o t h e i r specific organizational and behavioral f e a t u r e s a f f e c t t h e r a t e s and direction of learning. Second, f i r m s c h a r a c t e r i s t i c s a r e not randonly distributed a c r o s s s e c t o r s and a c r o s s countries. On t h e c o n t r a r y , p a r t i c u l a r t r a i t s tend t o be reinforced through t h e i r i n t e r a c t i o n s with t h e environment in which they a r e imbedded. Third, broad institutional mechanisms of governance of interactions f u r t h e r enhance t h e possibility of collective lock-in into p a r t i c u l a r modes of learning. Somewhat in analogy w i t h t h e e a r l i e r microeconomic analysis we shall call t h e s e p a t t e r n s as national t r a j e c t o r i e s .
F a r f r o m reviewing a n immense historical evidence on t h e s e issues, we shall only d r a w f r o m selected examples f r o m developed countries and, in p a r t i c u l a r , f r o m a somewhat archetypical comparison between t h e experiences of Latin America and t h e Asian F a r East.
Along t h i s
tour &
f o r c e f r o m micro technological s t u d i e s t o t h e political economy of development, w e shall on purpose r a i s e many more questions t h a n w e shall a b l e t o answer. The m a j o r t a s k h e r e i s t o show t h a t they c a n be consistently linked together in a broadly defined evolutionary interpretation.2 - T h e f u n d a m e n t a l p r o p e r t i e s o f technology
T e c h n o l o g i c a l p a r a d i g m s a n d t r a j e c t o r i e s
A v a r i e t y of concepts have recently been put f o r w a r d t o define t h e n a t u r e of innovative activities: technological regimes, paradigms, tra iectories. salients, guideposts, dominants designs and s o on.The names are not s o important (although some s t a n d a r d i z a t i o n could make t h e diffusion of ideas easier!). More crucially, t h e s e concepts are highly overlapping in t h a t they t r y t o c a p t u r e a f e w common f e a t u r e s of t h e procedures and direction of technical change ( f o r a discussion and references, s e e Dosi (1988)). Let u s consider some of them 1
.
1 In t h e following, we shall' stick t o t h e categories of p a r a d i g m s and t r a j e c t o r i e s , but t h e r e a d e r who i s fond of o t h e r names should s t i l l recognize f a m i l i a r ideas.
The notion of technological paradigms is based on a view of technology grounded on t h e following t h r e e fundamental ideas.
F i r s t , i t suggests t h a t any s a t i s f a c t o r y description of "what i s technology" and how i t changes must a l s o embody t h e representation of t h e specific f o r m s of knowledge on which a p a r t i c u l a r activity i s based.
Putting i t more emphatically, technology cannot be reduced t o t h e s t a n d a r d view of a s e t of well-defined blueprints. Rather, i t primarily concerns problem-solving activities involving - t o varying degrees- a l s o t a c i t f o r m s of knowledge embodied in individuals and organizational procedures.
Second, paradigms entail specific heuristic and visions on "how t o do things" and how t o improve them, o f t e n shared by t h e community of p r a c t i t i o n e r s in each p a r t i c u l a r activity (engineers, f i r m s , technical societies, e t c ) , i.e. they entail a collectively s h a r e d cognitive f r a m e s (Constant (1985)).
Third, paradigms generally also define basic models of a r t i f a c t s and systems, which over t i m e a r e progressively modified and improved. These basic a r t i f a c t s can a l s o be described in t e r m s of some fundamental technological and economic characteristics. For example, in t h e c a s e of a n airplane, t h e s e basic a t t r i b u t e s a r e described not only and obviously in t e r m s of inputs and t h e production costs, but a l s o on t h e b a s i s of some s a l i e n t technological f e a t u r e s such a s wing-load, take-off weight, speed, distance i t c a n cover, etc. What i s interesting i s t h a t technical p r o g r e s s seems t o display p a t t e r n s and invariances in t e r m s of t h e s e product c h a r a c t e r i s t i c s . Similar examples of technological invariances c a n be found e.g. in semiconductors, a g r i c u l t u r a l equipment, automobiles and a f e w o t h e r micro technological studies.
The concept of technoloaical t r a j e c t o r i e s i s associated t o t h e progressive realization of t h e innovative opportunities associated w i t h each paradigm, which can in principle be measured i n t e r m s of t h e changes in t h e fundamental techno-economic c h a r a c t e r i s t i c s of a r t i f a c t s and t h e production process. The c o r e ideas involved i n t h i s notion of t r a j e c t o r i e s a r e t h e following 2
.
This i n t e r p r e t a t i o n of technical change and a number of historical examples c a n be found in pioneering works on economics of technical change such as those by Chris Freeman, Nathan Rosenberg, Richard Nelson, Sidney Winter, Thomas Hughes, Paul David, Joel Mokyr, Paolo Saviotti and others; s e e f o r a p a r t i a l survey Dosi (1988).
F i r s t , each p a r t i c u l a r body of knowledge (i.e. each paradigm) shapes and c o n s t r a i n s t h e r a t e s and direction of technological change irrespectively of market inducements. Second, as a consequence, one should be able t o observe regularities and invariances in t h e p a t t e r n of technical change which hold under d i f f e r e n t market conditions (e.g. under d i f f e r e n t relative prices) and whose disruption i s c o r r e l a t e d w i t h radical changes in knowledge-bases (in paradigms). Third, technical change i s p a r t l y driven by repeated a t t e m p t s t o cope with technological imbalances which i t itself c r e a t e s 3
.
A general property, by now widely acknowledged in t h e innovation l i t e r a t u r e , i s t h a t learning i s local and cumulative. Local means t h a t t h e exploration and development of new techniques i s likely t o o c c u r in t h e neighborhood of t h e techniques already in use. Cumulative means t h a t c u r r e n t technological development - a t l e a s t at t h e level of individual business units- o f t e n builds upon p a s t experiences of production and innovation, and i t proceeds via sequences of specific problem-solving junctures (Vincenti (1992)). Clearly, t h i s goes very well t o g e t h e r with t h e ideas of paradigmatic knowledge and t h e ensuing t r a j e c t o r i e s . A crucial implication, however, i s t h a t at any point in t i m e t h e a g e n t s involved in a p a r t i c u l a r production activity will f a c e l i t t l e scope f o r substitution among techniques, if by t h a t we mean t h e easy availability of blueprints d i f f e r e n t f r o m those actually in use, which could be p u t efficiently into operation according t o relative input prices.
Technological dominance, micro heterogeneity and non-substitution The notion of paradigms contains elements of both a t h e o r y of production and theory of innovation. In s h o r t , we shall call i t henceforth a n evolutionary theory. Loosely speaking, we should consider such a t h e o r y at t h e same level of a b s t r a c t i o n a s , say, a Cobb-Douglas production function o r a production possibility set. T h a t is, a l l of them a r e t h e o r i e s of w h a t a r e deemed t o be some stylized b u t fundamental f e a t u r e s of technology and, relatedly, of production process 4
.
This i s akin t o t h e notion of r e v e r s e s a l i e n t s Hughes (1992) and technological bottlenecks Rosenberg (1976): t o i l l u s t r a t e , think of increasing t h e speed of a machine tool, which in t u r n demands changes in c u t t i n g materials, which leads t o changes in o t h e r p a r t s of t h e machine..
.
Few believe t h a t a production possibility s e t literally exists. Many would however probably maintain t h a t such a notion enhances t h e
In f a c t , one f i n d s a f e w remarkable assumptions underlying conventional production theories. A s already mentioned, technologies - a t l e a s t in a f i r s t approximation- a r e seen as a s e t of blueprints describing a l t e r n a t i v e input combinations. Moreover, at any one t i m e t h e r e must be many of them, in o r d e r t o be able t o i n t e r p r e t empirical observations as t h e outcome of a microeconomic process of optimal a d j u s t m e n t t o relative prices. Information about t h e s e blueprints i s generally assumed t o be f r e e l y avaiable (except t h o s e circumstances whereby they a r e privately appropriated via t h e p a t e n t system). Finally, one assumes t o be able t o s e p a r a t e t h e activities leading t o t h e e f f i c i e n t exploitation of existing blueprints f r o m t h o s e leading t o t h e development of new ones (exogeneity of technical p r o g r e s s i s i t s e x t r e m e version). Of course, t h i s i s only a trivialized account of a family of models t h a t can be made much more sophisticated, by e.g. adding d e t a i l s on how blueprints a r e ordered with r e s p e c t t o each o t h e r (more technically, issues like continuity and convexity come under t h i s heading). However, i t s t i l l seems f a i r t o say t h a t t h e basic vision of production -also c a r r i e d over in aggregate growth and development models- focuses on questions of choice among well defined techniques, generally available t o all producers, who a l s o know perfectly well w h a t t o do w i t h a l l t h e recipes when they s e e them.
Well, t o put i t very strongly, t h e t h e o r y of production based on paradigms develops on nearly opposite theoretical bulding blocks. And indeed many of t h e l a t t e r yield empirically t e s t a b l e hypotheses.
Here, w e shall a r g u e t h a t a paradigm-based theory of technology may p e r f o r m t h e same i n t e r p r e t i v e t a s k s , at t h e same level of generality, and do i t b e t t e r , in t h e sense t h a t i t i s more in t u n e w i t h microeconomic evidence and a l s o directly links with theories of innovation. Our theory would predict t h e following.
a ) In general, t h e r e i s at any point in t i m e one o r very f e w best p r a c t i c e techniques which dominate t h e o t h e r s irrespectively of relative prices.
b ) D i f f e r e n t a g e n t s a r e characterized by persistently diverse ( b e t t e r and w o r s e ) techniques.
c) Over time t h e observed a g g r e g a t e dynamics of technical
understanding of t h e observed technical coefficients in t h e economy and also how they change over time. We claim t h e s a m e f o r t h e evolutionary theory.
coefficients in each p a r t i c u l a r activity i s t h e joint outcome of t h e process of imitation/diffusion of existing best-practice techniques, of t h e s e a r c h f o r new ones, and of market selection amongst heterogeneous agents.
d ) Changes over t i m e of t h e best practice techniques themselves highlight r a t h e r r e g u l a r p a t h s (i.e. t r a j e c t o r i e s ) both in t h e s p a c e of input coefficients and a l s o in t h e space of t h e c o r e technical c h a r a c t e r i s t i c s of o u t p u t s (see t h e e a r l i e r example on a i r c r a f t s ) .
A representation o f production and techno1 ogical activities
L e t us f u r t h e r i l l u s t r a t e t h e previous points with a graphical example.
S t a r t f r o m t h e notion t h a t each technical coefficient observed at t h e microlevel i s t h e outcome of codified information (something resembling blueprints), b u t also of more t a c i t and f i r m specific f o r m s of knowledge. Suppose t h a t , f o r t h e sake of simplicity, we a r e considering h e r e t h e production of a n homogeneous good under c o n s t a n t r e t u r n s t o s c a l e w i t h t w o variable inputs only, x l and x 2 5
.
A paradigm-based theory of production predicts t h a t , in genera1,in t h e space of unit inputs, micro coefficients a r e distributed somewhat as depicted in Figure 1. Suppose t h a t at time t t h e c o e f f i c i e n t s a r e cl.. .cn; where 1.. .n a r e t h e various techniques/firms labelled in o r d e r of decreasing efficiency at time t. I t i s s t r a i g h t f o r w a r d t h a t technique/firm cl i s unequivocally superior t o t h e o t h e r ones no m a t t e r w h a t relative prices a r e : i t can produce t h e same unit output with l e s s inputs of both x l and x2. The same applies t o t h e comparison between c3 and cn, etc.
..
Let u s call t h i s property t e c h n o l o ~ i c a l dominance, and call some measure of t h e distribution of t h e coefficients a c r o s s heterogeneous f i r m s as t h e degree
of
asymmetry of t h a t industry ( f o r example, t h e s t a n d a r d deviation around t h e mean value C).The f i r s t question i s why doesn't f i r m n adopt technique cl? To simplify a more a r t i c u l a t e d argument (see Freeman (19821, Nelson and Winter (19821, Dosi (1988) and Dosi, Pavitt and Soete (19901, Winter (198211, t h e a n s w e r i s "because i t does not know how t o do i t
..."
. T h a tNote t h a t f i x e d inputs, vintage e f f e c t s and economies of s c a l e would j u s t s t r e n g t h e n t h e argument.
is, even if i t i s informed about t h e existence of c l , i t might not have t h e capabilities of developing o r using it. Remarkably, t h i s might have l i t t l e t o do w i t h t h e possibility f o r c l t o be legally covered by a patent. The arguinent i s much more general: precisely because technological knowledge i s p a r t l y t a c i t , a l s o embodied in complex organizational practices, etc., technological lags and lead may well be persistent even without legal appropriation. The opposite a l s o holds: if t h e t w o f i r m s have similar technological capabilities, imitation might occur very quickly, p a t e n t protection notwithstanding, by means of
"inventing around" a p a t e n t , reverse engineering, etc..
W e a r e prepared t o push t h e argument f u r t h e r and suggest t h a t even if f i r m n w e r e given all t h e blueprints of technique c l ( o r , in a more general case, a l s o all t h e pieces of capital equipment associated with i t ) , performances and t h u s revealed input coefficients might s t i l l widely d i f f e r . Following R. Nelson, i t i s easy t o i l l u s t r a t e t h i s by means of a gastronomical metaphor: despite readily available cooking blueprints and, indeed, a l s o codified r u l e s on technical procedures, unavailable in most economic r e p r e s e n t a t i o n s of production ("...first h e a t t h e oven, then a f t e r around t e n minutes introduce some specified m i x t u r e of f l o u r and b u t t e r , .
. .
e t c " 1, one obtains systematically asymmetric outcomes in t e r m s of widely s h a r e d s t a n d a r d s of food quality. This applies t o comparisons among individual a g e n t s and a l s o t o institutionally d i f f e r e n t i a t e d groups of them: f o r example, we a r e ready t o b e t t h a t most e a t e r s randomly e x t r a c t e d f r o m t h e world population would systematically rank samples ofX 2
I'
\
1 /
\
I\
\
'
/ c' c'\ /
l o 3
L
-
- / / / /\
\
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X Flg.1 Klcroheteogenelty a n d technoloqlcal trajectories 1 An lllustratlon
English cooks t o be "worse" than French, Chinese, Italian, Indian,
...
ones, even when performing on identical recipes!!. If one a c c e p t s t h e metaphor, t h i s should apply, much more so, t o circumstances whereby performances r e s u l t f r o m highly complex and opaque organizational routines (Incidentally, Leibenstein's X-efficiency r e s t a l s o upon t h i s widespread phenomenon).
Suppose now t h a t at some subsequent t i m e t' w e observe t h e distribution of microcoeff icients 12'3..
.
.c'm. How do we i n t e r p r e t such a change?The paradigm-based s t o r y would roughly be t h e following. At t i m e t , a l l below-best-practice f i r m s t r y with varying success t o i m i t a t e technological leader(s). Moreover, f i r m s change t h e i r market s h a r e s , some may die and o t h e r may enter: all t h i s obviously changes t h e weights (i.e.
t h e relative frequencies) by which techniques/firms appear. Finally, at l e a s t some of t h e f i r m s t r y t o discover new techniques, prompted by t h e perception of innovative opportunities, irrespectively of whether relative prices change o r not ( f o r t h e s a k e of illustration, in f i g u r e 1, f i r m - 3 succeeds in leapfrogging and becomes t h e technological leader while firm-m now embodies t h e marginal technique).
How do relative p r i c e s f i t into t h i s picture?
In a f i r s t approximation, no price-related substitution among firm-known blueprints occurs at all. Rather, changes in relative p r i c e s primarily a f f e c t both t h e direction of imitation and t h e innovative s e a r c h by bounded-rational agents. However, t h e paradigm-based s t o r y would maintain t h a t , even if relative prices change significantly, t h e direction of innovative s e a r c h and t h e resulting t r a j e c t o r i e s would remain bounded within some relatively n a r r o w p a t h s determined by t h e n a t u r e of t h e underlying knowledge base, t h e physical and chemical principles i t exploits, t h e technological systems in which a p a r t i c u l a r activity i s embodied. S t i l l more importantly, p e r s i s t e n t shocks on relative prices, o r , f o r t h a t m a t t e r , on demand conditions, a r e likely t o e x e r t irreversible e f f e c t s on t h e choice and relative diffusion of a l t e r n a t i v e technological paradigms, whenever such a n a l t e r n a t i v e e x i s t s , and, in t h e long t e r m , focus t h e s e a r c h f o r new ones.
In a e x t r e m e synthesis, a paradigm-based production t h e o r y s u g g e s t s as t h e general c a s e
,
in t h e s h o r t t e r m , fixed-coefficient (Leontieff-type) techniques, with respect t o both individual f i r m s and industries, t h e l a t t e r showing r a t h e r inertial a v e r a g e s over heterogeneous f i r m s . In t h e longer t e r m , we should observe q u i t epatterned changes, o f t e n only loosely correlated w i t h t h e dynamics of relative prices.
In f a c t , t h e available evidence -admittedly s c a t t e r e d , due a l s o t o t h e economists propensity t o avoid disturbing questions- i s consistent with t h e s e conjectures: t h e r e appear t o be wide and p e r s i s t e n t asymmetries in efficiency among f i r m s within t h e s a m e industry (cf. f o r a survey and discussion Nelson (1981). This applies t o developed c o u n t r i e s and, more so, t o developing ones. Moreover, p e r s i s t e n t asymmetries a p p e a r also in prof itability (Geroski and Jaquemin (1988). Muller (1990).
Finally, several industrial c a s e studies highlight technology-specific r e g u l a r i t i e s in t h e p a t t e r n s of technical change hardly i n t e r p r e t a b l e as d i r e c t responses t o changes in relative prices and demand conditions: in t h i s respect, t h e c a s e of t h e semiconductors (Dosi (1984)) i s only a n e x t r e m e example of a more general phenomenon.
Let u s now expand t h e space over which technologies a r e described and include, in addition t o input requirements, a l s o t h e core c h a r a c t e r i s t i c s of process and a r t i f a c t s , hinted earlier: e.g. wing-load, t a k e off weight etc. in airplanes; circuit density, processing speed in semiconductors; acceleration, f u e l consumption in automobiles; etc. The c o n j e c t u r e i s t h a t a l s o in t h i s higher-dimension space, t r a j e c t o r i e s a p p e a r and t h a t discontinuities a r e associated with changes in knowledge bases and s e a r c h heuristics. Indeed, t h e evidence put f o r w a r d by e.g.
Devandra Sahal and, more recently, by Paolo Saviotti at Manchester University show remarkable regularities in t h e p a t t e r n s of change within t h e space of c o r e product characteristics: f o r example, in commercial a i r c r a f t s , one c a n observe a well defined t r a j e c t o r y leading f r o m t h e DC-3 t o contemporary models. (Interestingly, models which t u r n o u t t o be technological o r commercial f a i l u r e s often happen t o be f a r f r o m t h e t r a j e c t o r y itself 1.
These findings b e a r implications also f o r t h e economic analysis of t h e relationship between supply and demand dynamics. S t a r t f r o m a Lancasterian view of f i n a l demand (i.e. consumers demand c h a r a c t e r i s t i c s which s a t i s f y t h e i r "needs"). With rising incomes and heterogeneous preferences, one might have expected product variety t o g r o w and be distributed over t h e whole space of c h a r a c t e r i s t i c s . In f a c t , one obviously observe a n enormous product variety. However, at a closer look, i t a p p e a r s t h a t product innovation explore only a minor sub-set of such a space. P u t t i n g i t differently, t h e n a t u r e of each paradigm a p p e a r s t o be a powerful f a c t o r binding t h e variety in t h e technical f e a t u r e s and
performances of observed products.
Technical change, international asymmetries and development
Naturally, t h e r e i s a n alternative i n t e r p r e t a t i o n of a l l t h e evidence discussed s o f a r drawing on s t a n d a r d production theory. Let US
consider once more Figure 1. Take f o r example t h e average technical coefficient C at time t by reading i t f r o m published industrial s t a t i s t i c s . Assume by definition t h a t C i s t h e equilibrium technique (whereby average and best practice techniques nearly coincide).
Relatedly, d r a w some generic
and
unobservable downward-sloped curve through C (say, in Fig.1 t h e I1 curve) and also t h e observed relative price ratio. Do t h e same with point C' corresponding t o t h e average values at t ' , and again with t h e subsequent average observations. Next assume a p a r t i c u l a r functional f o r m t o t h e unobserved curve postuled t o pass through C, C', C"...,
etc. and call i t t h e isoquant of a corresponding production function. (The same method can be applied, of course, over t i m e o r cross-sectionally). Then, r u n some econometric e s t i m a t e s based on such postulated function, using d a t a derived f r o m t h e time-series of r e l a t i v e prices and C, C',...
Finally, i n t e r p r e t t h e relationship between t h e values of t h e estimated coefficients in t e r m s of elasticities of substitution (i.e. some notional movement along t h e I1 curve, as equilibrium responses t o relative price changes), and a t t r i b u t e t h e residual variance t o a d r i f t in t h e technological opportunity s e t , as represented by t h e movement f r o m I1 t o I'I', etc..For t h e purpose of t h i s argument, one can neglect whether such a d r i f t i s meant t o be a n exogenous time-dependent dynamics -as in Solow-type growth models-, o r i s in t u r n t h e outcome of some higher level production function of blueprints -as in many new g r o w t h models. In any case, if - f o r whatever reasons- relative prices p r e s e n t some intertemporal r e g u l a r i t y and s o do p a t t e r n s of technological s e a r c h ( f o r example because they follow paradigm-driven t r a j e c t o r i e s ) , t h e n one i s likely t o f i n d a good s t a t i s t i c a l f i t t o t h e postulated model, even when no causal link actually e x i s t s between distributive s h a r e s and f a c t o r intensities. This i s a well established point, convincingly argued in d i f f e r e n t perspectives by F. Fischer, R. Nelson, L. P a s i n e t t i , A. Shaikh, H. Simon. Even if t h e evolutionary microdinamics described above w e r e t h e t r u e one, one could s t i l l successfully undertake t h e s t a n d a r d s t a t i s t i c a l exercise of f i t t i n g some production function. But t h e exercise would in f a c t obscure r a t h e r t h a n illuminate t h e underlying links between
technical change and output growth.
Take t h e illustration of Fig 1 and suppose t h a t t h e evidence does not r e f e r t o t w o distributions of micro-technical coefficients over t i m e within t h e same country, but instead t o two countries at t h e s a m e time:
a f t e r all, paraphrasing Robert Lucas, we only need informed t o u r i s t s t o recognize t h a t most countries can be ranked in t e r m s of unequivocal average technological gaps. With some additional assumptions on t h e n a t u r e of production function, one can s t i l l claim t h a t C, C', etc.
remain equilibrium realizations of country-specific allocation processes.
Conversely, in t h e context of a n evolutionary approach, one would suggest -as w e do- t h a t optimizing choice among technical a l t e r n a t i v e s commonly shared by a l l a g e n t s in t h e two countries have l i t t l e t o do w i t h a l l this, and t h a t one should r a t h e r look f o r a n explanation of such inter-national differences within t h e process of accumulation of technological competence and also within t h e institution governing m a r k e t
interaction and collective learning. The c o n t r a s t between ( i m p e r f e c t ) learning optimal allocation
of
resources as t h e fundamental engine of development h a s indeed been repeatedly emphasized among o t h e r s by Kaldor, Pasinetti and e a r l i e r by Schumpeter,
b u t t o o u r knowledge, no-one h a s y e t fully explored i t s consequences f o r t h e theory and policy of development. Needless t o say, we a r e dramatizing t h e differences. A f t e r all, learning i s intertwined with t h e process of resource allocation.Still, i t i s useful t o distinguish between w h a t i s assumed as having f i r s t o r d e r o r second o r d e r e f f e c t s .
All t h i s h a s a l s o a n empirical counterpart: indeed, t h e economic discipline h a s undertaken f a r too f e w exercises at t h e highest available disaggregation on international comparisons among s e c t o r a l technical coefficients. Our conjecture i s t h a t , at t h i s level, one could observe a good deal of evidence conflicting with t h e s t a n d a r d theory of production:
less developed countries may well show higher utilization of a l l o r most inputs p e r unit of output and perhaps even higher relative intensity of those inputs t h a t t h e theory would consider more s c a r c e ( t h a t i s , some loose equivalent of w h a t euphemistically t h e economic profession c a l l s in international t r a d e t h e Leontieff paradox). Conversely, a n evolutionary i n t e r p r e t a t i o n i s s t r a i g h t f o r w a r d : unequivocal technological g a p s account f o r generalized differences in input efficiencies. Moreover, if technical p r o g r e s s happens t o involve a l s o high r a t e s of saving in physical capital and skilled-labour inputs, one may also observe less developed countries which do not only use more capital p e r unit of output but a l s o more
capital p e r unit of labour input a s compared t o technological leaders (Figure 1 i l l u s t r a t e s a similar case: compare f o r example, techniques c ' 3 and cn).
Some important implications emerge f r o m t h i s approach.
F i r s t , t h e theory would predict persistent asymmetries among countries in t h e production processes which they a r e able t o m a s t e r ( t h i s of course also shows up in t e r m s of d i f f e r e n t inputs efficiencies: s e e Dosi, Pavitt and Soete (1990)). Thus, a t any point in time, one c a n d r a w t w o m a j o r t e s t a b l e conjectures: ( i ) d i f f e r e n t countries might well be unequivocally ranked according t o t h e efficiencies of t h e i r average techniques of production and, in t h e product space, of t h e (price-weighted) performance c h a r a c t e r i s t i c s of t h e i r outputs, irrespectively of relative prices, and ( i i ) t h e absence of any significant relationship between t h e s e g a p s and international d i f f e r e n c e s in t h e capital/output ratios. Wide differences apply also t o t h e capabilities of developing new products and t o d i f f e r e n t t i m e l a g s in producing them a f t e r they have been introduced into t h e world economy.
Indeed, t h e international distribution of innovative capabilities regarding new products i s a t l e a s t a s uneven a s t h a t regarding production processes. For example if one t a k e s international p a t e n t s o r t h e number d i s c r e t e innovation a s a proxy f o r innovativeness, t h e evidence suggest t h a t t h e club of t h e innovators h a s been r e s t r i c t e d over t h e whole p a s t century t o a dozen developed countries with only one m a j o r new e n t r y , Japan ( m o r e on t h e evidence in Dosi, Pavitt and Soete (1990)).
Second, t h e process of development and industrialization a r e s t r i c t l y linked t o t h e inter- and intra-national diffusion of "superior"
techniques. Relatedly, as already mentioned, a t any point in t i m e , t h e r e i s likely t o be only one o r , at most, very f e w "best practice" techniques of production which correspond t o t h e technological f r o n t i e r . In t h e c a s e of developing economies, t h e process of industrialization i s t h u s closely linked with t h e borrowing, imitation, adaptation of established technologies f r o m more advanced economies. These process of adoption and adaptation of technologies, in t u r n , are influenced by t h e specific capabilities of each economy 6
.
In t h i s context, we suggest t h a t evolutionary micro-theories a r e
Abramovitz notion of differentiated "social capabilities" i s quite consistent with t h i s view, Abramovitz (1989).
well a p t t o account f o r t h e processes by which technological g a p s and national institutional diversities can jointly reproduce themselves over r a t h e r long spans of time. Conversely, in o t h e r circumstances, i t might be precisely t h i s institutional and technological diversity among countries which may f o s t e r catching-up (and, r a r e l y leapfrogging) in innovative capabilities and t h e p e r c a p i t a incomes. Rigorous demonstrations of t h e s e propositions would indeed r e q u i r e many intermediate s t e p s , linking t h e externalities and positive feedback mechanisms based on technological learning w i t h t h e institutional context in which microeconomic a g e n t s a r e embedded, and also t h e economic signals they f a c e . We shall briefly come back t o t h i s issue l a t e r on. Here l e t u s j u s t emphasize t h a t systematically d i f f e r e n t r a t e s of learning may have very l i t t l e t o do with "how well markets work". Rather, t h e incentives and opportunities which agents perceive in a p a r t i c u l a r context a r e themselves t h e r e s u l t of p a r t i c u l a r histories of technologies and institutions.
The importance of t h e institutional dimension f o r evolutionary t h e o r i e s of production and innovation should come as no s u r p r i s e , supported by a growing evidence f r o m both micro and macro p a t t e r n s of technological change. A f t e r all, a t t h e micro level, technologies a r e t o a f a i r e x t e n t incorporated in p a r t i c u l a r institutions, t h e f i r m s , whose c h a r a c t e r i s t i c s , decision rules, capabilities, and behaviors a r e fundamental in shaping t h e r a t e s and directions of technological advance.
In t u r n , f i r m s a r e embedded in rich networks of r e l a t i o n s w i t h each o t h e r and with o t h e r institutional a c t o r s -ranging f r o m government agencies t o universities etc. 7
.
But how did p a r t i c u l a r technologies come into e x i s t existence in t h e f i r s t place? Let u s t u r n t o t h i s question.
In t h i s co-evolutionary perspective on technologies, c o r p o r a t e organizations and institutions (Nelson (199411, i t i s s t r a i g h t f o r w a r d t o acknowledge a l s o a bi-directional relation between market s t r u c t u r e s (as proxied by measures on t h e distribution of d i f f e r e n t c h a r a c t e r i s t i c s such as f i r m sizes, innovative competences, ownership, p e r s i s t e n t behavioral t r a i t s , e t c ) and p a t t e r n s of technological learning. D i f f e r e n t r a t e s of learning influence t h e ability of f i r m s t o survive and expand and t h u s a f f e c t industrial s t r u c t u r e s . Conversely any p a r t i c u l a r s t r u c t u r e -with i t s associated distribution of corporate f e a t u r e s - influences and constrains w h a t and how f a s t f i r m s a r e able and willing t o learn. Formal applications of t h i s general idea a r e in Nelson and Winter (19821, Winter (19841, Dosi, Marsili, Orsenigo and Salvatore (1993).
Economic and social factors in the emergence o f new paradigms I t i s useful t o s e p a r a t e t h e genesis of new paradigms f r o m t h e processes leading t o t h e dominance of some of them. L e t u s f i r s t consider t h e emergence of new potential paradigms; t h a t is, t h e generation of notional opportunities of radical innovation involving new knowledge bases, new s e a r c h heuristics, new dominant designs.
In t h e l i t e r a t u r e one find quite d i f f e r e n t i n t e r p r e t a t i v e archetypes. A f i r s t c l a s s of models entails a lot of "techno- scientific determinism": advancements in pure science determine advancements in technological opportunities which in t u r n determine realized technological achievements. In f a c t , in o r d e r t o find t h e most naive l i t e r a t u r e along t h e s e lines one should mostly s e a r c h in t h e archives of defunct socialist countries. There, one i s likely t o find plenty of examples of Engels-type vulgata on t h e simplest linear models f r o m science t o technology t o production.
The i n t e r p r e t a t i o n t h a t s t u d e n t s of economics find in textbook production i s more sophisticated although basically of t h e s a m e type. I t maintains t h e basic linear sequence f r o m science t o technological opportunities t o production but i t claims t h a t science only g e n e r a t e s t h o s e notional blueprints discussed e a r l i e r , while some optimizing microeconomic algorithm s e l e c t s among them. Proper economic analysis begins indeed by s t a t i n g some daring assumptions on t h e n a t u r e of such blueprints which maintain in principle a n empirical n a t u r e albeit l i t t l e empirical micro support (e.g. on continuity, convexity, etc.). From then onward, production theory i s generally presented as a n application of methods of constrained maximization which intends t o c a p t u r e t h e purposed behavior of t h e homo economicus facing a l t e r n a t i v e allocative choices, and most o f t e n , also t h e aggregate p r o p e r t i e s of industries o r whole economies.
Yet more sophisticated recent modelling on new-growth, new-trade theories, while attempting t o endogenize t h e generation of blueprints themselves, push f u r t h e r upstream t h a t same notional process of optimizing allocation involving some s o r t of production function f o r t h e blueprints themselves. This i s not t h e place t o discuss t h e ( r a t h e r i m p o r t a n t ) achievements and t h e (equally important) limitations of such theories. What we simply want t o emphasize i s t h e persistence a c r o s s ample s t r e a m s of micro and macro l i t e r a t u r e of t w o basic ideas: f i r s t , t h e linear representation of t h e innovative process, running f r o m science t o technology t o production; and second, t h e f o c u s upon a n explicit
deliberation, equivalent in every respect t o a n allocative choice, by supposedly rational agents.
However, as Chris Freeman, Nathan Rosenberg, and o t h e r s have convincing shown, historical evidence r u l e s out t h e general applicability of linear models of innovation. One can find plenty of counterexamples.
F i r s t , t h e l a g between scientific advancements and t h e i r technological application can vary between a f e w months ( a s in t h e c a s e of t h e t r a n s i s t o r ) t o centuries. Second, technological innovation may actually precede t h e scientific discovery of the general principle on which those very technologies work (as in t h e case of e l e c t r i c lamps). Third, scientific advancements may actually be based on t h e invention of new machinery and n o t t h e o t h e r way round (think of t h e importance of t h e electronic microscopes f o r t h e subsequent scientific discoveries in biology) 8
.
A s r e g a r d s t h e behavioral foundations of innovative decisions, we a r e q u i t e skeptical about t h e i r reduction t o deliberate allocative choices. A s emphasized not only by evolutionary economists by a l s o by rational choice t h e o r i s t s like K. Arrow, almost by definition innovation concerns t h e generation of something new and at l e a s t p a r t l y unexpected.
Relatedly, t h e genesis of exploratory ventures into novel paradigms i s more t h e domain of institutional and organizational inquiries on t h e conditions f a s t e r i n g entrepreneurial activities r a t h e r t h a n r a t i o n a l choice models 9
.
Indeed, t h e r e a r e good reasons t o believe t h a t one will not be able t o find anything like a general theory of t h e emergence of new technological paradigms. However, what might be possible i s a ) a n analysis of t h e necessary condition f o r such emergence; b ) historical
S e e Rosenberg (1991).
Of course t h i s i s not t o say t h a t t h e economic variables governing t h e incentives and penalties t o entrepreneurial endeavours a r e irrelevant. The point i s t h a t t h e f o r m e r tend t o s e t only some lose incentive-compatibility constraints. Given t h e s e c o n s t r a i n t , explanations of willingness of incumbent f i r m s t o explore new paradigms, of t h e r a t e of t h e birth of new s t a r t - u p f i r m s , etc.
r e q u i r e s a much more detailed understanding of specific c o r p o r a t e and institutional histories. Working backward f r o m observed outcomes t o some r a t i o n a l expectation model does not do t h e trick: on t h e c o n t r a r y , t h e r e i s even evidence t h a t in many new industries, had e n t r a n t s r a t i o n a l expectations of t h e i r f u t u r e p r o f i t s t r e a m s , e n t r y would not have occurred at all! ( t h i s seems t o emerge a l s o f r o m a r e s e a r c h , in progress, by Don Lovallo and Giovanni Dosi).
taxonomies and a l s o appreciative models of t h e processes by which i t occurs; and c ) taxonomies and models of t h e processes of competition amongst d i f f e r e n t paradigms and t h e i r diffusion.
Regarding t h e f i r s t heading, one is like t o find t h a t t h e existence of some unexploited technological opportunities, t o g e t h e r with t h e relevant knowledge base and some minimum appropriability conditions, define only t h e boundaries of t h e s e t of potential new paradigms: t h o s e which a r e actually explored within t h i s s e t might crucially depend on p a r t i c u l a r organizational and social dynamics. So f o r example, t h e r e i s good evidence t h a t t h e micro electronics paradigm as we know i t (silicon-based. e t c ) w a s shaped in i t s early s t a g e s by military requirements (Dosi (1984). Misa (1985)). David Noble a r g u e s t h a t t h e NC machine-tool paradigm -although he does not use t h a t expression- h a s been influenced by power considerations regarding labour management (Noble (1984)). In t h e history of technology one f i n d s several examples of t h i s kind. The general point i s t h a t various institutions (ranging f r o m incumbent f i r m s t o government agencies), social groups and a l s o individual a g e n t s (including, of course, individual innovators and e n t r e p r e n e u r s ) p e r f o r m as
ex ante
selectors of t h e avenues of r e s e a r c h t h a t a r e pursued, t h e techno-economic dimensions upon which r e s e a r c h ought t o focus, t h e knowledge base one calls upon. Thus, they ultimately s e l e c t t h e new paradigms t h a t a r e actually explored.T h e r e i s a much more general theoretical s t o r y r e g a r d i n g t h e development, diffusion and competition among those (possible a l t e r n a t i v e ) paradigms t h a t a r e actually explored. I t can be told via explicit evolutionary models (as in Nelson and Winter (1982) o r in Silverberg, Dosi and Orsenigo (1988)). via path-dependent stochastic models (as in Arthur (1988). Arthur, Ermoliev and Kaniovski (1987). Dosi and Kaniovski (1994) and David (1989)). and also via sociological models of network development (as in Callon (1991)). The basic ingredients of t h e s t o r y a r e i ) some f o r m s of dynamics increasing r e t u r n s ( f o r example in learning);
ii) positive e x t e r n a l i t i e s in t h e production o r t h e use of t h e technology; iii) endogenous expectation formation; iv) some m a r k e t dynamics which s e l e c t s
ex
post amongst products, and indirectly amongst technologies and f i r m s ; v) t h e progressive development of s t a n d a r d s and relatively inertial institutions which embody and reproduce p a r t i c u l a r f o r m s of knowledge and also t h e behavioral norms and t h e incentives t o doSO.
3 L e a r n i n g a n d t r a j e c t o r i e s in t h e p r o c e s s of d e v e l o p m e n t
Techno-economic p a r a d i g m s o r regimes: f r o m m i c r o t e c h n o l o g i e s t o n a t i o n a l s y s t e m s of innovation
S o f a r , we have discussed paradigms, t r a j e c t o r i e s o r equivalent concepts at a micro-technological level. A paradigm-based theory of innovation and production -we have argued- seems t o be highly consistent with t h e evidence on t h e patterned and cumulative n a t u r e of technical change and a l s o with t h e evidence on microeconomic heterogeneity and technological gaps. Moreover, i t directly links w i t h t h o s e t h e o r i e s of production which allow f o r dynamic increasing r e t u r n s f r o m A. Young and Kaldor t o t h e r e c e n t and more rigorous formalizations of path-dependent models of innovation diffusion, whereby t h e interaction between micro decisions and some f o r m of learning o r some e x t e r n a l i t i e s produces irreversible technological p a t h s and lock-in e f f e c t s with r e s p e c t t o technologies which may well be inferior, on any w e l f a r e measure, t o o t h e r notional ones, b u t s t i l l happen t o be dominant -loosely speaking- because of t h e weight of t h e i r history (cf. t h e models by B. Arthur and P.
David). However, paradigms a r e generally embodied in l a r g e r technological systems and in even bigger economic-wide s y s t e m s of production and innovation.
The s t e p s leading f r o m a microeconomic t h e o r y of innovation and production t o more a g g r e g a t e analyses a r e clearly numerous and complex. A f i r s t obvious question concern t h e possibility of identifying relative coherence and s t r u c t u r e s a l s o at t h e s e broader levels of observation.
Indeed, h i s t o r i a n s of technology -T. Hughes, B. Gilles and P. David, among others- highlight t h e importance of technological systems, t h a t i s in t h e terminology of t h i s paper, s t r u c t u r e d combinations of micro technological paradigms ( s e e f o r example, t h e f a s c i n a t i n g reconstructions of t h e emerging system of electrification and electrical s t a n d a r d s in David (1992))
A t a n even higher level of generality, Freeman and P e r e z (1988) have suggested t h e notion of techno-economic paradigms as a synthetic definition of macro-level systems of production, innovation, governance of social relations. So, f o r example, they identify broad phases of modern industrial development p a r t l y isomorphic t o t h e notion of "regimes of socio-economic Regulation" suggested by t h e mainly French macro institutionalists l i t e r a t u r e (see Aglietta (19761, Boyer (1988a and b)).
In a n e x t r e m e synthesis, both prospectives hold, f i r s t , t h a t one c a n
identify r a t h e r long periods of capitalist development distinguished according t o t h e i r specific engines of technological dynamism and t h e i r modes of governance of t h e relationships amongst t h e m a j o r social a c t o r s (e.g. f i r m s , workers, banks, collective political a u t h o r i t i e s e t c ) , and, second, t h a t t h e p a t t e r n s of technological advancement and those of institutional change a r e bound t o be coupled in such ways a s t o yield recognizable invariances f o r quite long times in most economic and political s t r u c t u r e s . J u s t t o provide an example, one might roughly identify, over t h e t h r e e decades a f t e r WW 11, a c r o s s most developed economies, some "Fordist/Keynesian" regime of socio-economic
"Regulation", driven by major innovative opportunities of technological innovation in electromechanic technologies, synthetic chemistry and relatively cheap exploitation of energy sources, and reproduced by some specific f o r m s of institutional governance of industrial conflict, income distribution and aggregate demand management. Analogously, e a r l i e r in industrial history, one should be able t o detect some s o r t of archetype of a "classical/Victorian Regime" driven in i t s growth by t h e full exploitation of t e x t i l e manufacturing and light engineering mechanization, relatively competitive labour markets, politically driven e f f o r t s t o expand privileged market outlets, etc..
These general conjectures on historical phases o r regimes a r e grounded on t h e importance in growth and development of specific combinations among technological systems and f o r m s of socio-economic governance. The approach can be applied also t o t h e analysis of t h e differences and similarities of development p a t t e r n s in t h e late-industrializing countries. One has focused f o r example on t h e interplay between t h e modes of governance of t h e labour market and t h e p a t t e r n of technical accumulation, showing how t h e specificities in labour market institutions originate virtuous o r vicious circles of development in d i f f e r e n t historical periods 10
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As a n intermediate s t e p toward t h e identification of national socio-economic r e g i m e s let u s consider t h e anatomy and development of p a r t i c u l a r systems of innovation and production at national level, embodying distinctive mechanisms and directions of learning, and grounded in t h e micro theory of production and innovation sketched above.
lo See, Aboites (1988). Boyer (1993). Cetrangolo (1988a). (1988b). Cimoli (1988). (1990). Coriat and Saboia (1987).
Even if micro paradigms present considerable invariances a c r o s s countries, t h e ways various paradigms a r e combined in broader technological systems and, more so, in national s y s t e m s of production and innovation highlight -we suggest- a considerable variety, shaped by country-specific institutions, policies and social f a c t o r s . The hypothesis h e r e i s t h a t evolutionary microfundations a r e a f r u i t f u l s t a r t i n g point f o r a theory showing how technological g a p s and national institutional diversities can jointly reproduce themselves over r a t h e r long s p a n s of t i m e in ways t h a t a r e easily compatible with t h e p a t t e r n s of incentives and opportunities facing individual a g e n t s , even when they t u r n o u t t o be profoundly suboptimal f r o m a collective point of view.
In o r d e r t o detail t h i s hypothesis, however, one r e q u i r e s t o analysis of t h e composing elements and p r o p e r t i e s of t h e s e nationa!
systems which in t h e r e c e n t l i t e r a t u r e have been r e f e r r e d t o with a variety of largely overlapping concepts, such as global technological capability of each country, national innovation systems, national technological capabilities and national systems of production 11
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In our view, t h e m a j o r building blocks in a n evolutionary account of t h e specificities of national systems of production and innovation a r e following.
F i r s t , t h e r e i s t h e idea t h a t f i r m s a r e a crucial (although not exclusive) repositories of knowledge., t o a large e x t e n t embodied in t h e i r operational routines, and modified through t i m e by t h e i r higher level r u l e s of behaviors and s t r a t e g i e s (such as t h e i r s e a r c h behaviors and t h e i r decisions concerning vertical integration and horizontal diversification, etc.
1.
Second, f i r m s themselves a r e nested in networks of linkages with o t h e r f i r m s and also with o t h e r non-profit organizations (such as public agencies etc.1. These networks, o r lack of them, enhance o r limit t h e opportunities f a c i n g each f i r m t o improve t h e i r problem-solving capabilities.
Third, national systems entail a l s o a broader notion of embeddedness of microeconomic behaviors into a s e t of social relationships, r u l e s and political c o n s t r a i n t s (Granovetter (198511. Even at a properly micro level, t h e momentum associated w i t h single
l1 See, Cimoli and Dosi (19881, (19901, Chesnais (19931, E r n e s t and O'Connor (19891, La11 (19841, (19871, (19921, Lundvall (19921, Nelson (19931, Zysman (19941.
