Innovation Dynamics And Endogenous Adjustment In The Telecommunications Industry

Patterned innovation dynamics - investment-mix shifts and inter-organizational alliances -are examined for their roles in facilitating accelelating technical advance in the telecom industry since the mid-1970s. While internal investment shifts favoring R&D and declining rates of capital recovery were ubiquitous across the period, this was especially so for telecom equipment suppliers. Comparative analyses suggest that such innovation investment strategies have been of less benefit to telecom firms than to producers in nearly any other major manufacturing sector. Trends in organizational innovation in the form of alliance fonnation are also reported. The challenges these innovation dynamics pose for neoclassical models are discussed.