Identification of technological threats and opportunities by firms

A number of models and approaches are being developed in attempts to anticipate the nature and direction of technological change and its impact on the firm. Under what conditions might we expect firms to use one or more of these models in an organized way and under what conditions might we expect the resulting information to be used in the firm's planning process? The basic hypothesis of this paper is that effective use by firms of models for anticipating technological change can be explained based upon: the nature and extent of uncertainty in the firm's environment,the firm's strategy for growth, and the degree of definition of communication networks (both formal and informal) within the firm and between the firm and its environment. Technology planners and managers of 29 firms in a variety of industries have been interviewed concerning the ways in which technological threats and opportunities are identified and analyzed and the ways in which this information is integrated into the firm's normal planning cycle. A follow-up questionnaire is being designed to be sent to a larger number of respondents.     

Quantifying embodied technological change

We estimate the rate of embodied technological change directly from plant-level manufacturing data on current output and input choices along with histories on their vintages of equipment investment. Our estimates range between 8 and 17 percent for the typical US manufacturing plant during the years 1972–1996. Any number in this range is substantially larger than is conventionally accepted with some important implications. First, the role of investment-specific technological change as an engine of growth is even larger than previously estimated. Second, existing producer durable price indices do not adequately account for quality change. As a result, measured capital stock growth is biased. Third, if accurate, the Hulten and Wykoff (1981, Depreciation Inflation, and the Taxation of Income From Capital; Urban, Washington, DC, pp. 81–125) economic depreciation rates may primarily reflect obsolescence.     

Technological learning,technological substitution,and technological change

From a simple dynamic model of competition between product lines it is shown that the shape of learning curves has a powerful influence on the dynamics of technological substitution. Learning of both production efficiency and marketing efficiency is considered. It is asserted that both types of learning are important and that the two are complementary. It is further speculated that production learning is probably more important for commodities and in situations of low per capita income, whereas market learning gains ascendancy in cases of high income and specialized and diversified product lines. In closing, it is noted that simple competitive models are misleading, first because complementarities and coevolutionary processes are probably as important in the overall development of technology as are competitive processes, and second because optimization of the technological system's parts does not guarantee improvement of the performance of the system as a whole.     

A healthy hybrid: The technological dynamism of minority-state-owned firms in China

Since its economic reform began in 1979 China's economy has grown rapidly but its dynamism has not been shared by the state-owned enterprises (SOEs) at its core. Although some progress has been made, a large proportion of SOEs remain inefficient and uncompetitive, failing to exploit their advantages in scale, experience and resources. In contrast there has been rapid growth first of the collective and township enterprises, and then of the private sector, now the largest ownership type. However, private businesses continue to be handicapped by poor access to finance and other resources. These have however been made freely available to firms with only a minority state shareholding and otherwise owned by private shareholders and employees. This paper, focussing on the telecoms manufacturing sector, compares minority-state-owned hybrids favourably with other ownership types and argues that in the Chinese setting they can and should play a key role in future development.     

Endogenous growth through investment-specific technological change

This paper examines a model in which growth takes place through investment-specific technological change, which in turn is determined endogenously through research spending. In particular, the role of the degree of substitutability between research spending and new capital construction is explored. It is shown that the effect of a change in the capital tax rate on the growth rate can depend on the degree of substitutability between research spending and new capital construction. Research subsidies tend to have a larger impact on the growth rate than would an investment tax credit of the same magnitude. Increases in the capital tax rate can increase the growth rate of the economy, even in the absence of externalities. In contrast to the existing literature, the welfare cost of capital taxation in this model can be negligible. There may be multiple tax rates on capital that achieve the same growth rate. It is demonstrated that in the presence of certain types of positive externalities, the optimal growth rate can be attained through the use of capital taxes—rather than subsidies.     

Strategic experimentation and disruptive technological change

This paper studies the diffusion of a new technology that is brought to market while its potential is still uncertain. We consider a dynamic game in which an incumbent and a startup firm improve both a new and a rival old technology while learning about the relative potential of both technologies. The main findings are that (i) risk considerations make incumbents with higher market shares more likely to adopt the new technology and (ii) changes in market power are often preceded by a subpar performance of the new technology. We also show that introducing a better new technology or confronting a worse old technology may hurt the startup firm as its new technology is then adopted earlier by incumbents.     

Endogenous technological change with leisure-dependent utility

Summary. This paper investigates the effect of introducing leisure-dependent utility into two models of endogenous technological change. Due to the flexibility in the labour supply the dynamics of the models change significantly. It is shown that if agents attach enough value to leisure in comparison to consumption two balanced growth paths may exist. This implies that economies with the same preferences and the same technology may experience different long-run growth rates. Received: October 17, 1997; revised version: January 6, 1999     

Determinants of technological change in the service industries

The Service Industries provide numerous examples of how technological change may be impeded. Either the economic state of the industry or the state of scientific and engineering knowledge can limit inventive activity and productivity advance. Consumer ignorance, lack of producer incentives, complex production interdependencies, and market fragmentation are only a few factors limiting the role of demand in stimulating the discovery and diffusion of new services and production techniques. On the cost side, technical uncertainty, time horizons, and discount rates affect decisions to engage in R & D. In addition, strategic market considerations, such as potential entry, reaction speeds of rivals, and numbers of competitors affect the benefits from early introduction of new technologies. These institutional and economic considerations need to be taken into account for technological forecasting related to the Service Industries.     

Indigenous technological capabilities,emerging market firms and the aerospace industry

While emerging market economies have developed significant technological capabilities and increased their share of global value-added in aerospace, they have done so largely through utilising foreign direct investment (FDI) and offset arrangements to enter supply chains that remain dominated by European and American firms. The paper examines whether emerging markets are developing indigenous technological capability in aerospace technologies. Drawing on patent data from the Thomson Innovation database, the study seeks to understand whether anchor tenant capability is indeed forming in emerging markets. A tech-mining method is applied. The study suggests that China, in particular, has dramatically increased its innovative capacity in the area. However, the data also demonstrate the significant advantages enjoyed by incumbent firms from Europe and the USA, suggesting that the complexity of aircraft R&D remains a formidable barrier that can only be surmounted by determined government policies and anchor firms equipped with substantial innovation capabilities.     

Green technological diversification of European ICT firms: a patent-based analysis

ABSTRACT

This paper investigates whether and how diversified firms in the Information and Communication Technology (ICT) sector innovate in green technologies and assess the potential impact of these innovations on firm performance. The analysis relies on a balanced panel dataset of European ICT firms in the period 2009–2013. The results suggest an inverted u-shaped relationship between the extent of technological diversification and the likelihood to develop green technologies. Technological diversification generally increases the likelihood of green innovations, but too high a dispersion of resources across a large variety of different technologies decreases the intensity of green innovations. The results show also that the development of green technologies is positively associated with firm performance: ICT firms involved in green patenting activity perform better than ICT firms with no green patents.     

Relatedness and coherence in technological and product diversification of the world's largest firms

The present paper investigates relatedness and coherence with reference to both product and technological diversification. In particular, it is argued that: (i) relatedness can be disentangled into three dimensions: industry-, technology- and firm-specific; and that (ii) coherence refers to both product and technological diversification. We provide empirical support of our premises with a study of a large cross-firm panel of technological and economic activity for 248 large firms over the period 1977–1995. The results support the view that large firms’ diversification processes are characterised by product-based coherence at the beginning of the period considered, and by technology-based coherence more recently.     

Measuring technological change: Aircraft turbine engines

Recent Rand research indicates that improved estimates of costs and schedules might be obtainable for the development and procurement phases of the system acquisition cycle if techniques were available to assess the technological advance being sought. This report describes the development and testing of such a technique using the technology of aircraft turbine engines as an example. The measure of technological advance developed in this study is intended to capture mainstream trends. It is not able to identify fine differences among turbine engines or to distinguish small differences in contractor proposals. It is intended to provide a broader understanding of the technological advance being sought in an engine development program and to provide information for use in making decisions concerning development policy. Multiple regression analysis is used to estimate a multidimensional tradeoff surface of the parameters characterizing engine technology and to trace out the movement of the tradeoff surface over time. The equation with the best statistical properties contained parameters thought to be important in turbine engine development and had coefficients consistent with a priori notions of technological change.The data base included the first model of a given turbine engine to pass the Model Qualification Test required of all American production engine types of the past 30 years. Examination of the history of turbine engine progress suggests very strongly that single parameter analysis cannot capture the richness of the development process. The data were divided into a number of subsamples covering various time periods to test whether the shape of the tradeoff surface changed over time. When divided into equal halves, the subsamples were indistinguishable. Divided by thirds, the most recent period showed a slight increase in the rate of technological advance, but the increase was barely significant statistically. In nine out of ten cases, the rate of increase of technology of growth versions of engines was less than the average trend of technology for new engines. This result indicates that when design features are frozen in hardware, technology growth cannot take full advantage of newly developed techniques.     

A new method for measuring technological change

This paper presents a new method for testing for technological change. The innovation here is the introduction of a production function which is sufficiently flexible to detect the change. The production function is assumed to be a function not only of the relevant inputs but also of technology-changing parameters.     

Creativity-enhancing technological change in the production of scientific knowledge

ABSTRACT

We view scientific publications as a measure of technical knowledge. Using the Solow method of functional decomposition and scientific publication data from the National Institute of Standards and Technology, we find that 79% of the increase in scientific publications per unit of scientific personnel is explained by an increase in federal R&D capital per unit of scientific personnel. We describe the unexplained or residual 21% as a measure of creativity-enhancing technological change, a phenomenon that offers a way to reverse the perceived slowing of the productivity of science. The explained 79% offers a possible metric for federal laboratories’ mandated reporting of a ROI to federal R&D. Understanding the drivers of the residual 21% could enable public policy to mitigate the resource constraints caused by the breakdown of exponential growth of the resources devoted to science.     

Measuring the influences of supplier selection and supply chain tasks on firm performance among manufacturing firms in India

The primary objective of this research is to empirically probe the various aspects and variables that have been already addressed in the previous literature related to supplier selection criterion, supply effort management and firm performance. Further, this research aims to develop a measurement framework and pragmatically prove the framework through a measurement model. First, a factor structure for various constructs is made and the initial validity is determined from practicing managers and academicians. This research employs survey method and the data is collected from 358 supply chain professionals working in manufacturing firms in India. A measurement model is developed and proved with various tests of reliability and validity. Finally, three major latent constructs were formulated, namely, criterion of supplier selection, supply effort management and firm performance. The factor scores of these latent variables were used for further analysis. A six-stage approach was followed in the analysis of data. Firm performance was regressed against supplier selection criterion and supply effort management. The results indicate that the predictive variable has positive and significant effect on firm performance and they do not have any interaction and multicollinearity effects.     

Using precursors as leading indicators of technological change

Technological forecasters frequently utilize the procedure of “monitoring for precursors” in an attempt to anticipate technological changes. In a recent study on patterns of innovation, it was found that the data provided examples of precursors which could be used to illustrate the monitoring technique. In addition, it proved possible to extend the monitoring technique through the generation of probability distributions. The examples, and the extension, are reported here.     

Endogenous technological change: a note on stability

Summary. This paper demonstrates that the steady-state solution of the optimal-growth problem in Romer's (1990) model of endogenous technological change is globally saddle-point stable. Surprisingly, the proof of this result is trivial. Interest in the optimal growth path is justified by the fact that there is a (unique) combination of production and R&D subsidies by means of which the optimal growth path is attained as a market equilibrium. Received: October 6, 1998; revised version: April 19, 1999     

Evolution,complex systems and technological change 1

A particularly weak area of mainstream economics is its theoretical capacity to handle structural economic change. And yet the advent of major new technologies, combined with the growing integration of the international economic system, has placed structural change high on the policy agenda. This paper suggests an alternative theoretical approach. By portraying economic systems as complex open systems it is possible to view their long-term evolution in a more realistic way. However, in order to do this it is also necessary to borrow from other disciplines such as biology, physics and computer science where research of a similar genre has been carried out. The paper explores what this means for our understanding of many of the underlying concepts associated with technological change and ends with a programmatic plea to broaden the disciplinary bounds of economics.