The discussion will aim to identify (a) the main characteristics of the innovative process (b) the factors that are conducive to or hinder the development of new processes of production and new products, and (c) the processes that determine the selection of particular innovations and their effects on industrial structure.
... however, in addition to formalized rnd, and in many ways complementary to it, a significant amount of innovation and improvements is originated through design improvements, "learning by doing," and "learning by using"(see ...). Such informal effort is generally embodied in people and organizations (primarily firms) ([references]...), and its cost is hard to trace.
... even in these rather science-based activities and, more so, in other technologies, public knowledge is complementary to more specific and tacit forms of knowledge generated within the innovating units (for evidence ...). for example, in mechanical engineering (e.g., machine tools) an important part ofthe knowledge base consists of tacit knowledge about the performance of previous generations of machines, their typical conditions of use, the productive requirements of users, and so on.
Technology: Freely Available Information or Specific Knowledge
In each technology there are elements of tacit and specific knowledge that are not and cannot be written down in a "blueprint" form, and cannot, therefore, be entirely diffused either in the form of public or proprietary information
It has been found that information about what other firms are doing spreads quite quickly (Edwin Mansfield 1985); however, the ability to produce or replicate innovative results is much more sticky.
Section IV:
The levels and changes in demand (market size and growth, income elasticities of the various products), and the levels and changes in relative prices, in particular the price of labor to the price of machines and also to the price of energy and other influential factors.
Various devices for appropriability:
In an extreme synthesis, Levin et al. (1984) find that for most industries, "lead times and learning curveadvantages, combined with complementary marketing efforts, appear to be teh principle mechanisms of appropriating returns for product innovations" (p. 33). Learning curves, secrecy and lead times are also major appropriation mechanisms for process innovations. Patenting often appears to be a complementary mechanism which however does not seem to be the central one, with some exceptions (e.g. chemicals and pharmaceuticals). Moreover, by comparing the protection of processes and products, one tends to observe that lead times and learning curves are relatively more effective eays of protecting process innovations, while patents are a relatively better protection for product innovations.
.... it must be noticed that the partly tacit nature of innovative knowledge and its characteristics of partial private appropriability makes imitation, as well as innovation, a creative process .... and which is economically expensive - sometimes even more expensive than the original innovation (...[cites] ...) This applies to both patented and non-patented innovations.
technological progress in aircraft technology has followed two quite precise trajectories (one civilian and one military) characterized by log-linear improvements in the trade-offs between horsepower, gross takeoff weight, cruise speed, wing loading, and cruise range ....
Of course, there is no a priori economic reason why one should observe limited clusters of technological characteristics at any one time and ordered trajectories over time. Indeed, given consumers with different preferences and equipment users with different technical requirements, if technology had the malleable attributes of information and if the innovative search were a purely random process, one would tend to observe sorts of "technological indifference curves" at any one time, and over time, random search all the n-dimension characteristics space. Of course, "how different" are consumers and users of goods ....is an empirical question. However relatively wide differences .... cannot be ruled out by either casual empiricism or theoretical arguments. .... Were technologies simply pieces of information (or "recipes") that could be added, convexly combined, etc., one would also tend to observe an increasingly dispersed variety of technical and performance combinations in actual products and production inputs. Over time this would lead toward the exploration of the entire characteristics space .... It is precisely the paradigmatic cumulative nature of technological knowledge that accounts for the relatively ordered nature of the observed patterns of technological change.
Internalization and routinization in the face of the uncertainty and complexity of the innovative process also point to the importance of particular organizational arrangements for the success or failur of individual innovative attempts.