Giovanni Dosi

Understanding corporate coherence: Theory and evidence

Abstract Multiproduct firms are perceived to be coherent in their scope, yet there is no strong theoretical foundations to explain coherence in modern industrial organization theory. This paper shows that as U.S. manufacturing firms grow more diverse, they maintain a constant level of coherence between neighboring activities. This finding runs counter to the idea that firms with many activities are generally more ‘incoherent’. A framework is then presented which appeals to the nature of enterprise learning, path dependencies, and the nature of the selection environment to explain the ubiquity of coherent diversifiers.

An introduction to evolutionary theories in economics

This paper presents the basic ideas and methodologies of a set of contemporary contributions which are grouped under the general heading of “evolutionary economics”. Some achievements-especially with regard to the analysis of technological change and economic dynamics-are illustrated, some unresolved issues are discussed and a few promising topics of research are flagged.

Innovation, Diversity and Diffusion: A Self-organisation Model

A number of features of innovation diffusion are identified: appropriability, diversity, expectations, selection, learning, and spillover externalities. A dynamic model is formul ated to embed the diffusion question into a more general framework of disequilibrium competition. The model incorporates distinct vintage structures reflecting a change in technological trajectory, learning-by-using, a nd expectations-driven investment rules of thumb. Simulation studies reveal robust quasi-logistic curves, but a complicated pattern of net market share gains and losses. Uncertainty regarding the rationality of early or late adoption, it is argued, ensures that the requisite behavioral variety is present to generate these diffusion patterns. Copyright 1988 by Royal Economic Society.

Learning, market selection and the evolution of industrial structures

Industrial economics is a rich source of ‘puzzles’ for economic theory. One of them — certainly the most discussed — regards the co-existence of firms (and plants) of different sizes, displaying rather invariant skewed distributions. Other ‘puzzles’, however, concern the sectoral specificities in industrial structures, the persistence of asymmetric corporate performances and the dynamics of entry and exit. The paper reports some preliminary results on evolutionary modeling of the links between the microeconomics of innovation, the patterns of industrial change and some observable invariances in industrial structures.First, the paper reviews a few of these empirical regularities in structures and in the patterns of change. Second, the paper discusses the achievements and limits of interpretations of the evidence based on equilibrium theories. Finally, it presents a model where these regularities are explained as emergent properties deriving from non equilibrium interactions among technologically heterogeneous firms. Moreover, simulation exercises show that also the intersectoral variety in the observed industrial structures and dynamics can be interpreted on the grounds of underlying specificities in the processes of technological learning — which is called ‘technological regimes’ — and of the processes of market interactions — i.e. ‘market regimes’.

Substantive and Procedural Uncertainty: An Exploration of Economic Behaviours in Changing Environments

Different sources of uncertainty are analysed and a representation of decision-making in principle consistent with behavioural evidence is proposed. The endogenous emergence of “innovations”, in the forms of unexpected events and novel behaviours is also examined.

Technical Change and Industrial Dynamics as Evolutionary Processes

This chapter reviews and integrates much of what has been learned on the processes of technological evolution, their main features, and their effects on the evolution of industries.

Technological paradigms, patterns of learning and development: an introductory roadmap

This paper presents an evolutionary microeconomic theory of innovation and production and discusses its implications for development theory. Using the notions of technological paradigm and trajectory, it develops an alternative view of firm behavior and learning. It is shown then how these are embedded in broader national systems of innovation which account for persistent differences in technological cappacities between countries. Finally, this “bottom-up” evolutionary analysis is linked with an institutional “top-down” approach, and the potential fruitfulness of this dialogue is demonstrated.

The Dynamics of International Competitiveness

The Dynamics of International Competitiveness. — This paper focuses on the determinants of international competitiveness over the seventies and eighties. The theoretical framework adopted here is based on a “technology-gap” account of trade flows. The econometric analysis relies on a dynamic model estimated by pooling time-series across countries. The short- and long-term impacts of both technical change and labour costs on trade performance are investigated. It is found that technological variables (patents and investments) play a major role in shaping dynamics of exportshares, while labour costs asymmetries among countries appear to affect trade performance only in the short term.ZusammenfassungZur Dynamik der internationalen Wettbewerbsfähigkeit. — Dieser Aufsatz befaβt sich mit den Bestimmungsgründen der internationalen Wettbewerbsfähigkeit von Ländern in den 70er und 80er Jahren. Der theoretische Rahmen, der dabei benutzt wird, basiert auf dem Ansatz der “technologischen Lücke”. Die ökonometrische Analyse stützt sich auf ein dynamisches Modell, das mit einer Kombination von Querschnitts- und Zeitreihendaten geschätzt wird. Die kurz- und langfristigen Wirkungen sowohl des technischen Wandels als auch der Lohnkosten auf die Handelsleistung werden untersucht. Dabei stellt sich heraus, daβ technologische Variable (Patente und Investitionen) eine bedeutende Rolle dabei spielen, die Dynamik der Exportanteile zu gestalten, während Asymmetrien in den Lohnkosten zwischen den Ländern die Handelsleistungen nur auf kurze Sicht beeinflussen.

Statistical Regularities in the Evolution of Industries. A guide through some evidence and challenges for the theory

Fundamental drivers of the evolution of contemporary economies are the activities of search, discovery and economic exploitation of new products, new production processes, new organizational arrangements within and amongst business firms. What are their marks in terms of statistical properties that such processes display? Three basic questions in particular are addressed in this work. First, are there distinct characteristics of the microentities (in primis, business firms) and their distributions which systematically persist over time? Second, how do such characteristics within the population of competing firms affect their relative evolutionary success over time? And in particular what are the ultimate outcomes in terms of growth and profitability performances? Third, amongst the foregoing statistical properties and relations between them, which ones are invariant across industries, and, conversely, which ones depend on the technological and market characteristics of particular sectors? In order to address these questions we proceed in a sort of “inductive” manner. I start by examining some basic features of the distributions of firms sizes, growth rates and profitability. Next, I consider some evidence on the underlying inter-firm heterogeneity - particularly with regard to technological innovativeness and productivity - and their relationships with corporate performances. Finally, the work recalls the basic elements of an evolutionary interpretation of the evidence. Together with important points of corroboration of such a view - including those regarding a profound heterogeneity of firms at all levels of observation -, one also facing standing challenges - in primis, concerning the purported role of markets as effective selection devices -.

Finance, innovation and industrial change

Abstract This paper investigates the impact financial structures upon industrial dynamics whenever the system is permanently characterized by unexploited opportunities for innovation, (highly) ‘bounded’ rationality and trial-and-error search processes. In these circumstances, it is argued, specific financial set-ups - such as ‘market-based’ vs. ‘credit-based’ mechanisms of allocation, control and ownership transfer - are likely to exert different influences on the rates and modes of industrial innovation. Relatedly, one suggests some hypotheses on the links between financial systems and features of industrial evolution, and some tentative taxonomies.