Franco Malerba

Sectoral systems of innovation and production

The concept sectoral system of innovation and production provides a multidimensional, integrated and dynamic view of sectors. It is proposed that a sectoral system is a set of products and the set of agents carrying out market and non-market interactions for the creation, production and sale of those products. A sectoral systems has a specific knowledge base, technologies, inputs and demand. Agents are individuals and organizations at various levels of aggregation. They interact through processes of communication, exchange, co-operation, competition and command, and these interactions are shaped by institutions. A sectoral system undergoes change and transformation through the co-evolution of its various elements.

Technological Regimes and Schumpeterian Patterns of Innovation

This paper proposes that the specific pattern of innovative activities in an industry can be explained as the outcome of different technological (learning) regimes. A technological regime is defined by the particular combination of technological opportunities, appropriability of innovations, cumulativeness of technical advances and properties of the knowledge base. Building upon the distinction between Schumpeter Mark I and Schumpeter Mark II industries, this paper provides empirical estimates of the relationships between indicators of the Schumpeterian patterns of innovation (concentration of innovative activities, stability in the hierarchy of innovators and importance of new innovators) and indicators of the variables defining technological regimes.

Knowledge-relatedness in firm technological diversification

Abstract This paper claims that knowledge-relatedness is a key factor in affecting firms’ technological diversification. The hypothesis is tested that firms extend the range of their innovative activities in a non-random way. Specifically, we test the extent to which firms diversify their innovative activities across related technological fields, i.e. fields that share a common knowledge base and rely upon common heuristics and scientific principles. The paper proposes an original measure of knowledge-relatedness, using co-classification codes contained in patent documents, and examines the patterns of technological diversification of the whole population of firms from the United States, Italy, France, UK, Germany, and Japan patenting to the European Patent Office from 1982 to 1993. Robust evidence is found that knowledge-relatedness is a major feature of firms’ innovative activities.

Schumpeterian patterns of innovation are technology-specific

This paper examines the patterns of innovative activities at the technological and country levels, using patent data for 49 technological classes in six countries (USA, Japan, Germany, France, United Kingdom and Italy). It is shown that the patterns of innovative activities differ systematically across technological classes, but are remarkably similar across countries for each technological class. In particular, two groups of technological classes are identified: ‘Schumpeter Mark I’ and ‘Schumpeter Mark II’. In these two groups innovative activities are structured and organized in different ways. The first represents a widening pattern: concentration of innovative activities is low, innovators are of small economic size, stability in the ranking of innovators is low and entry of new innovators is high. The second represents a deepening pattern: concentration of innovative activities is higher than in the first group, innovators are of larger economic size, stability in the ranking of innovators is greater, and entry is lower. The former group comprises mechanical technologies and traditional sectors, while the latter includes chemicals and electronics. This result suggests that technology-related factors (such as technological regimes, defined in terms of conditions of opportunity, appropriability, cumulativeness and properties of the knowledge base) play a major role in determining the specific pattern of innovative activities of a technological class across countries. Within these constraints, country-specific factors introduce differences across countries in the pattern of innovative activities for a specific technological class. Finally, the relationships between the specific features of the patterns of innovative activities and international technological specialization are examined. Technological advantages appear in general to be linked to higher degrees of asymmetries among innovators, higher stability of the ranking of innovators, smaller economic size of the innovating firms and lower entry rates of new innovators. These relationships, however, are different in the two groups of technological classes. In Schumpeter Mark I (widening) technological classes, international technological specialization is associated with relatively higher degrees of asymmetries among innovators and entry of new innovators (as well as smaller firm size) while in Schumpeter II (deepening) technological classes, international technological specialization is linked to the existence of a stable but competitive core of persistent innovators.

Innovation and the evolution of industries

The analysis of innovation and the evolution of industries has witnessed major progress in several areas. In the last years, several contributions at the empirical, appreciative, econometric and modelling levels have greatly advanced our understanding of innovation, industrial dynamics and the evolution of industries. This paper reviews these contributions. A discussion follows on four key challenges that are required for a better understanding of the relationship between innovation and the evolution of industries: the analyses of demand, knowledge, networks and coevolution.

Sectoral systems of innovation: a framework for linking innovation to the knowledge base, structure and dynamics of sectors

This paper proposes a framework for examining factors that affect innovation in sectors: sectoral systems. Sectoral systems are based on three building blocks: knowledge and technologies, actors and networks, and institutions. In the first part of this paper, the concept and the definition of a sectoral systems of innovation are presented. In the second part of the paper, the role of knowledge, actors and networks, and institutions in five major sectoral systems is examined. Then the main focus moves to the analysis of the dynamics and transformation of sectoral systems. Finally, some general conclusions and directions for future research end the paper.

Persistence of innovative activities, sectoral patterns of innovation and international technological specialization☆

Abstract In this paper, we focus on the role of persistence and heterogeneity of innovative activities at the level of the firm in determining the patterns of technological change in different industries and countries. We ask: are persistence and heterogeneity associated with higher degrees of concentration in innovative activities, stability in the ranking of innovators, and lower degrees of entry and exit in the population of innovators? Or, do the patterns of innovation depend on other variables like firm size and industrial concentration? Moreover, what are the relationships between the patterns of innovative activities, their determinants, and the technological specialization of countries? We compute indicators of persistence and heterogeneity using the OTAF-SPRU patent database at the firm level for five European countries over the period 1969–1986 for 33 technological classes. Then, we estimate the relationships between our indicators of the sectoral patterns of innovative activities and international technological specialization on the one hand, and our indicators of persistence, heterogeneity and market structure on the other. Results show that persistence and asymmetries are important (and strongly related) phenomena that affect the patterns of innovative activities across countries and sectors, while the role of market structure variables is less clear. Finally, international technological specialization is associated to a competitive core of persistent innovators.

Competition and industrial policies in a `history friendly` model of the evolution of the computer industry

Abstract In this paper, we explore some problems that industrial policy faces in industries characterized by dynamic increasing returns on the basis of a ‘history friendly model’ of the evolution of the computer industry. How does policy affect industry structure over the course of industry evolution? Is the timing of the intervention important? Do policy interventions have indirect and perhaps unintended consequences on different markets at different times? We focus on two sets of policies: antitrust and interventions aiming at supporting the entry of new forms in the industry. The results of our simulations show that, if strong dynamic increasing returns are operative, both through technological capabilities and through customer tendency to stick with a brand, there is little that antitrust and entry policy could have done to avert the rise of a dominant firm in mainframes. On the other hand, if the customer lock in effect had been smaller, either by chance or through policies that discouraged efforts of firms to lock in their customers, the situation might have been somewhat different. In the first place, even in the absence of antitrust or entry encouraging policies, market concentration would have been lower, albeit a dominant firm would emerge anyhow. Second, antitrust and entry encouraging policies would have been more effective in assuring that concentration would decrease. The leading firm would continue to dominate the market, but its relative power would be reduced.

Organization and Strategy in the Evolution of the Enterprise

This book examines the role of competence, organization and strategies of firms in industrial dynamics linking economic, management and historical perspectives. In the first part of the book, a series of economic and managerial contributions discuss the concepts, dimensions and effects of routines, competence, adaptation, learning, organizational structure and strategies in the evolution of industrial enterprises at the theoretical and empirical levels. In the second part of the book, a series of historical papers examine these issues in a longterm perspective for the United States, Japan and several European countries.

Choice and Action

In this essay, we argue that rational choice (RC) provides an inadequate foundation for a theory of economic action. After defining RC sufficiently broadly to encompass much of the bounded rationality literature as well as neoclassical optimization theory, we present three principal arguments against RC. The first is cognitive: economic actors are experts at what they do, and the cognitive processes that underlie experitise are not consistent with RC, descriptively, prescriptively or positively. The second argument begins with the observation that economic action takes place in and through relationships between agents, and these relationships may generate actions that connot be localized to individual agents. We argue that these generative relationships are essential to understanding such fundamental economic phenomena as innovation, and the actions that result from them are not amenable to analysis from a RC perspective. Finally, we argue that most economic agents lack the judgement and execution coherence required by RC. In a companion paper, we propose an alternative foundation for a theory of economic action that builds on the critique of RC presented in this paper.