Abstract
What is the relation between the average level of complexity that characterizes a product's technology, and the degree of diversity of that technology across rival firms? Evolutionary theories of innovation and technical advance are consistent with either a direct or an inverse relation. The issue thus becomes an empirical one. This paper uses a unique database containing detailed quantitative data on the specifications of 12 high-tech product groups for the U.S., Japan and selected European countries, for 1982, for both products and processes. It is found that the more complex the technology, the less diverse is the technology of rival firms that produce the product. This is consistent with the following evolutionary process: Economies of scale and scope inherent in high-level technologies require firms who adopt them to dispose entirely of older technologies, in order to remain competitive; at the same time, older, simpler technologies continue to exist and permit wide diversities among firms who pursue “niche” market strategies.
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Maital, S., Grupp, H., Frenkel, A. et al. The relation between the average complexity of high-tech products and their diversity: An empirical test of evolutionary models. J Evol Econ 4, 273–288 (1994). https://doi.org/10.1007/BF01236407
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DOI: https://doi.org/10.1007/BF01236407