Professor Giovanni Dosi, Part XVI
With this post we have completed the review of Professor Giovanni Dosi’s 1988 paper “Sources, Procedures and Microeconomic Effects of Innovation”. After this post I will have some closing comments and a review of the papers highlights in future posts.
Characteristics of Innovation and Patterns of Industrial Change.
Professor Dosi states that the rate of change and observed dynamics of industrial performance can be attributed to the following components:
Innovative learning by single firms augmented by universities and government agencies.
People, Ideas & Objects asks: what would be the effect of increasing the exposure from a single firm, to a collaboration between several firms through the Joint Operating Committee? Would this facilitate a marked increase in Joint Operating Committee knowledge? And would this knowledge therefore facilitate an increased rate of collaborations leading to an increased level of understanding and pace of innovativeness and scientific knowledge? Or as Dosi notes:
The diffusion of innovation, the knowledge of innovative products and processes.
Professor Dosi states that his general interpretative conjectures are: (And these are an important consideration in determining the capability and capacity to innovate.)
First, the empirical variety in the patterns of industrial change is explained by different combinations of selection, learning, and diffusion and different learning mechanisms. (p. 1159)
Second the nature of each technological paradigm, with its innovative opportunities, appropriability conditions and so on help to explain the observed inter-sectoral differences in the importance of the above three processes. (p. 1159)
Each successful innovation creates an asymmetry effect, or an overall increase in competitive position of the entire industry. However, that does not necessarily increase the competitiveness of all the participants of the industry. The ability of laggard companies to improve their competitive position helps to form new positions within their industries. These laggard companies generally are able to move further and quicker through their imitation of leading companies. However, the primary differentiating component of competition based on innovation in process and product is attributable to the innovative capability of the firm. ie. a laggard will remain a laggard without the direct and active development of innovative appropriability conditions.
Professor Dosi finds these points difficult to quantify and prove, but states these may be tacitly understood. People, Ideas & Objects asserts that that was the case in 1988 at the time this article was written, however, the laggards ability to “keep up” or even “catch up” may have progressively diminished through the application of information technology during the 2000’s.
There is a determining paradox for the ability to innovate based on imitation or strict Research and Development. Companies can copy others innovations in industries with minimal asymmetry, (where they are all the same). Whereas industries that are asymmetric (like oil and gas) or have large variances in their capabilities are best served by differentiating themselves by pursuit of Research and Development.
One can see with the difficulty of this discussion; how and where innovation and research & development are done in oil and gas. The discussion to this point is ripe with conflict and contradictions, the raw material for solutions. In the Draft Specification’s eleven modules their are two specific modules that deal with these problems. One module is the Research & Capabilities Module which is the Firm based module, the other a Joint Operating Committee module called the Knowledge & Learning Module. Please review those as to how this division of labor is determined in the People, Ideas & Objects Draft Specification.
It is now time for producers to act. Review of our Revenue Model will inform producers how they can participate in the development of People, Ideas & Objects Preliminary Specification. Producers can contact me here for further information, or to begin the process of their participation.