Luigi Orsenigo

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.

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.

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.

Technological Change and Network Dynamics: Lessons from the Pharmaceutical Industry

In this paper, we investigate how underlying relevant technological conditions induce distinguishable patterns of change in industry structure and evolution. A mapping is detected between the specific nature of problem decompositions and research techniques at the micro level of knowledge bases, and patterns of structural evolution at the macro level of the industry network. The graph-theoretic techniques we introduce map major technological discontinuities on changes observed at the level of dominant organization forms. They might have applications in other domains, whenever the identification of structural breaks and homological relationships between technological and industrial spaces are important issues.

The Persistence of Innovative Activities. A Cross-Countries and Cross-Sectors Comparative Analysis

Abstract This paper examines the persistence of innovative activities at the firm level in a comparative perspective. A new data set is used composed of six panel data, one for each of the following countries: France, Germany, Italy, UK, Japan and the USA. For each country, we use data on patent applications to the European Patent Office in the period 1978–1993 by 1200–1400 manufacturing firms. Using a transition probability matrix (TPM) approach, we find evidence for the existence of persistence in innovative activities, although, it is not very high in the aggregate and it declines as time goes by. However, both great innovators and non-innovators have a high probability to remain in their state and persistent innovators originate a disproportionate share of innovative activities. In this sense, persistence in innovative activities is quite strong. These tendencies apply to all countries considered here, although, clear country-specific properties are observed. Moreover, there is heterogeneity also across industrial and size classification. Intersectoral differences are invariant across countries, suggesting that persistence is (at least partly) a technology-specific variable. Persistence tends to increase with firm size, but the relationship between firms’ size and persistence is strongly-country-specific and it is not a simple one.

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’.

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.

The (Failed) Development of a Biotechnology Cluster: The Case of Lombardy

This paper discusses the development of the biotechnology industry in an Italian region, Lombardy. It asks why significant innovative activities in biotechnology did not emerge in what might have been considered at the outset a promising area for the growth of this industry and why in very recent years some timid symptoms of dynamism seem to be appearing. After an overview of the patterns of the development of biotechnology in Italy, the specific case of Lombardy, is described. Then, the paper discusses what kind of factors might explain the lagging behind of the Italian (and more generally, European) biotechnology industry vis-à-vis the United States.

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.

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.