Paul L. Robertson

Networks and Innovation in a Modular System : Lessons from the Microcomputer and Stereo Component Industries

In this paper we examine theoretically and through case studies the phenomenon of the modular system, which we distinguish from a product conceived of as a prepackaged entity or appliance. We argue that such systems offer benefits on both the demand side and the supply side. Supply-side benefits include the potential for autonomous innovation, which is driven by the division of labor and provides the opportunity for rapid trial-and-error learning. Demand-side benefits include the ability to fine-tune the product to consumer needs and therefore blanket the product space more completely. Both of our case studies suggest that innovation in a modular system can lead to vertical and horizontal disintegration, as firms can often best appropriate the rents of innovation by opening their technology to an outside network of competing and cooperating firms. We conclude by speculating on the increased importance of modular systems in the future, since flexible manufacturing and rising incomes are likely to increase the driving requisites of modular systems: low economies of scale in assembly and sophisticated consumer tastes.

Firms, Markets and Economic Change : A dynamic Theory of Business Institutions

Traditonal western forms of corporate organization have been called into question by the success of Japanese keiretsu. Firms, Markets and Economic Change draws on industrial economics, business strategy, and economic history to develop an evolutionary model to show when innovation is best undertaken. The authors argue that innovation is a complex process that defies neat categorization and government policy should be to facilitate change rather than to direct it.

Innovation, networks, and vertical integration☆

A central debate in industrial policy today is that between proponents of large vertically integrated firms on the one hand and advocates of networks of small specialized producers on the other. This paper argues that neither institutional structure is the universal panacea its enthusiasts claim. The menu of institutional alternatives is in fact quite large, and both firms and networks -- of which there is more than one kind -- can be successful, growth- promoting adaptations to the competitive environment. Industrial structures vary in their ability to coordinate information flows necessary for innovation and to overcome power relationships adverse to innovation. The relative desirability of the various structures, then, will depend on the nature and scope of technological change in the industry and on the effects of various product life-cycle patterns. The principal policy conclusion of this analysis is that the governments role ought to be facilitating rather than narrow and

Explaining Vertical Integration: Lessons from the American Automobile Industry

The early history of the American automobile industry provides fertile hunting grounds for theorists seeking corroboration of various, conflicting theories of vertical integration. An examination of the whole history suggests that no single theory always fits the facts perfectly. A complete explanation must combine specific theories in a way that is attentive to such factors as industry life-cycle, demand, economies of scale, and appropriability. If there is any “general†theory, it lies in the set of “dynamic†transaction-cost approaches rather than in the asset-specificity approach now dominant.

'Low-tech' Industries: Innovativeness and Development Perspectives—A Summary of a European Research Project

Abstract This paper introduces the findings of a European research project on the innovativeness of industrial ‘low‐tech’ sectors. This research was carried out in the context of the ongoing discussion about the emerging knowledge society. We argue that innovation depends not only on industries with frontline technological knowledge but also on low‐tech industries. Our starting point is an examination of widely held views on the strengths of high‐technology, followed by a discussion of the project’s objectives and methodology. Thirdly, we present the basic findings of the project. They include: statistical data stressing the importance of the low‐tech sector; an elaboration of the main dimensions, resources and practices of low‐tech innovativeness; and the interrelationships of low‐tech with high‐tech sectors. Fourthly, we discuss policy issues derived from the findings. One key policy recommendation is to support activities raising awareness of low‐tech industries and their specific needs and conditions. A fundamental precondition for this is the development of a new, broader understanding of innovation that does not equate innovative ability with excellence in R&D alone. Finally, we emphasise that, in spite of globalisation and growing competition, prospects for a substantial range of low‐tech and medium low‐tech (LMT) sectors and companies are bright in the high‐tech countries of the European Union.

Distributed Knowledge Bases in Low- and Medium-Technology Industries

It is a general understanding that the advanced economies are currently undergoing a fundamental transformation into knowledge-based societies. There is a firm belief that this is based on the development of high-tech industries. Correspondingly, in this scenario low-tech sectors appear to be less important. A critique of this widely held belief is the starting point of this book. It is often overlooked that many of the current innovation activities are linked to developments inside the realm of low-tech. Thus the general objective of the book is to contribute to a discussion concerning the relevance of low-tech industries for industrial innovativeness in the emerging knowledge economy.

The Role of Training and Skilled Labour in the Success of SMEs in Developing Economies

The ability of small and medium‐sized enterprises in developing nations to evolve technologically is frequently constrained by a variety of environmental factors that are beyond their control. In many cases, it is necessary for the strategy of SMEs to be aligned with the international supply chain strategies of multinational firms, who can provide the expertise needed for technological upgrading by SMEs, and with the development strategies of their own nations. If SMEs are to attract business as original equipment manufacturers or component suppliers for MNCs, they generally need to possess access to skills before they can get contracts. As SMEs often lack the knowledge and resources to engage in training programs, however, their success in upgrading themselves technologically may depend crucially on subsidised educational and training infrastructure provided by their governments.

Classification of Industries by Level of Technology: An Appraisal and some Implications

Modern growth theory acknowledges that a countrys economic prosperity depends in large part on its capacity for technological innovation. Empirical evidence, however, supports the view that not all sectors are equally innovative. As a result, it seems desirable from a public policy perspective to identify and promote sectors displaying both a high innovation rate and, in an increasingly competitive international economy, a high degree of international competitiveness. It is frequently argued that the high-tech industry sectors, in contrast to low-tech sectors, satisfy both conditions, with the clear implication that public policy should be directed to enhancing the performance of high-tech sectors. This approach raises at least two important issues. The first is whether such classifications can be meaningfully constructed given both the intractability of the concepts involved and the difficulties in data collection. A second issue is the basic assumption that policy emphasis should be placed on technology-intensive industries because they have a greater impact on growth. In this paper, we argue that while it may be possible to construct indices of technological intensity that are useful for some purposes, the ones that are currently proposed do not, in fact, address questions of economic growth and firm performance very well. In part, this is a reflection of the technicalities involved in formulating and operationalising the indices, but it also reflects problems in the underlying premise, namely technology-intensive sectors are more growth-inducing than low-tech sectors. We call, therefore, for the adoption of a more sophisticated and detailed approach that would provide a sensible classification of industries and new policy insights.

The Maintenance of Professional Authority: The Case of Physicians and Hospitals in the United States

Professions are a mode of organization in which work is highly uncertain and contingent, requiring professional practitioners to rely heavily on their individual skill and judgment within the norms of accepted practice for their particular professions. But professionals must often draw on resources that are concentrated in institutions that they do not control. While these organizations may be intended specifically to assist professionals in the independent use of their judgment and skill, they nevertheless pose problems because they are most often not owned by these professionals and their administration is not entirely under professional control. This creates the potential for conflicts between independent practitioners, who seek to preserve their authority and autonomy, and the administrators of complementary institutions, who have responsibilities of their own. In this article, we examine the growing tension between the monitoring of the use of hospital-based resources and the maintenance of profession authority and autonomy in the medical profession in the United States since 1918. We begin by describing the connection between individual and collective autonomy and authority within professions as network organizations, and then trace the development of monitoring procedures and discuss their impact on the ability of physicians to use their individual judgment in treating patients. We show that, from the end of the First World War, the professional behavior of physicians was monitored on the Joint Commission Model in which boards composed of local medical practitioners sought to maintain professional standards and allocate local resources but did not inquire into cost factors at the system level. More recently, however, privately-sponsored health-care reforms as well as various government programs have led to significant changes. Now, the use of physical resources by physicians is also monitored in ways that may impinge on their authority and autonomy.

Innovation Processes and Industrial Districts

In this survey, we examine the operations of innovation processes within industrial districts by exploring the ways in which differentiation, specialization, and integration affect the generation, diffusion, and use of new knowledge in such districts. We begin with an analysis of the importance of the division of labor and then investigate the effects of social embeddedness on innovation. We also consider the effect of forms of organization within industrial districts at various stages of product and process life, and we examine the negative aspects of embeddedness for innovation. We conclude with a discussion of the possible consequences of new information and communications technologies on innovation in industrial districts.