history friendly models of industry evolution the computer industry the model presented in this paper is the first of a new generation of evolutionary economic models history friendly models history friendly models are formal models that aim to capture in stylized form qualitative and appreciative theories about the mechanisms and factors affecting industry evolution technological advance and institutional change put forth by empirical scholars of industrial economics technological change business organization and strategy and other social scientists in this paper we have analyzed the long term evolution of the computer industry in particular we have examined the emergence of a dominant firm in mainframes the introduction of a major innovation microprocessor the opening up of a new market segment personal computers ad the competition there between newcomers and diversified old established firms we have taken a body of verbal appreciative theorizing developed a formal representation of that theory and found that the formal version of that theory is consistent and capable of generating the stylized facts the appreciative theory purports to explain going through this analytic exercise has significantly sharpened our theoretical understanding of the key factors behind salient aspects of the evolution of the computer industry copyright 1999 by oxford university press

modularity in technology and organization this paper is an attempt to raid both the literature on modular design and the literature on property rights to create the outlines of a modularity theory of the firm such a theory will look at firms and other organizations in terms of the partitioning of rights understood as protected spheres of authority among cooperating parties and it will assert that organizations reflect nonmodular structures that is structures in which decision rights rights of alienation and residual claims to income do not all reside in the same hands 2002 elsevier science b v all rights reserved

the agenda for growth theory a different point of view it is argued here that the basic assumptions of neoclassical growth theory inherently limit the ability of models within that theory to cast light on economic growth as we have experienced it this holds for the new growth theory as well as the older growth theory of the 1950s and 190js it is proposed that to make real headway with understanding economic growth a growth theory needs the following elements 1 the ability to treat technological advance as an essentially disequilibrium process 2 to incorporate a theory of the firm in which firm capabilities and differences across firms are central elements and 3 to incorporate into the theory a richer body of institutions than currently are treated in standard growth theory including at the least universities copyright 1998 by oxford university press

criteria for useful targeting money versus the base and other variables the problem of targeting variables numerically by means of monetary policy has acquired general interest as it has become increasingly clear that an all too flexible conduct of policy has led to very undesirable results in general such flexibility is apt to accommodate inflationary price expectations in order to avoid the temporary depressive effects of nonaccommodation and once the markets figure this out the inflationary price expectations and cost trends tend to steepen in the event of continuous accommodation of the resultant steepening the process would soon get out of hand on the other hand occasional temporary discontinuation of full accommodation produces an environment of substantial uncertainty and inefficiency there has therefore developed growing awareness of the fact that price expectations and cost trends need to be anchored to a consistent course of demand policy in specifiable aspects of its behavior such a policy should

the determinants of technology adoption the case of the banking firm using data on the adoption of automatic teller machines by firms in the banking industry this study examines the relationship between the decision to adopt new technology and its determinants since banking firms differ considerably in terms of the competitive environments in which they operate focusing on this one innovation in this industry allows a stronger test of the relationship between market structure and the adoption of new technology than has been previously conducted using a failure time estimation procedure we find that larger banks and banks operating in more concentrated local banking markets register a higher conditional probability of adopting this new technology all else equal we also find that other results are consistent with the underlying model and that the bank s regulatory environment shapes its adoption decision in plausible ways

the dynamics of technological change in uk retail banking services an evolutionary perspective abstract the purpose of this paper is to elaborate an evolutionary perspective on the process of structural change that has characterized the banking industry in the united kingdom uk for this purpose the evolution of retail financial services is contrasted against the backdrop of the implementation and development of information and communication technologies icts the paper delves into the sources and the effects of technological change in banking over a long term perspective 1840s 1990s to point out the significance of the opportunities and the constraints that have shaped the growth and development of this industry this is interpreted as a three stage evolutionary process driven by intertemporal coordination across several complementary domains including activities of production business organization consumption and the underlying regulatory setting it is concluded that the evolution of uk retail banking displays the characteristics of a distributed process of innovation in which developers of technologies service suppliers and customers contribute to the process of structural change of the industry

technological transformations in history how the computer regime grew out of existing computing regimes abstract in the article we describe how the digital computer regime grew out of existing computing regimes through a process of transformation this transformation is conceptualised as a regime shift a change in the rule set that underpins technical change guiding innovative activity and output into particular directions examples of such rules are technical standards product standards user requirements design rules and organisational rules of how to produce what to produce the paper describes how the new digital computer regime had to start from structures of the old regimes and only later on developed its own distinctive elements it describes how specific changes in the existing computing regimes particularly the increasing division of labour the growing schematisation of computing activities and the development of more sophisticated punch card machinery contributed to the design and programming methods of the digital computer how the old programming methods constrained the development of the new regime is also discussed the article does not go into the actual processes of diffusion of digital computers into specific domains it does however discuss the role of market demand dynamics for the evolution of digital technology which too often is portrayed as a technology science push phenomenon

innovation in investment banking the dynamics of control systems within the chandlerian firm this paper extends the technological aspects of chandler s scale and scope framework from 19th century manufacturing firms that processed physical materials to a modern service firm that processes information the intangible nature of information intensive service provision means that scale and scope economies in investment banking are constrained more by regulations on risk exposure than developments in production technologies profitability and corporate dynamics are therefore dependent on innovation in risk control systems drawing on a case study the paper shows that risk control systems undergo qualitative changes as they increase in size and complexity

the choice among monetary aggregates as targets and guides for monetary policy difficulties in meeting its monetary targets led the federal reserve in october 1979 to adopt a new operating procedure to achieve firmer control over monetary aggregates yet the inflationary environment has fostered financial developments that affect the behavior of the traditional monetary aggregates and that raise questions whether different aggregates may not be better this paper compares the various monetary aggregates for their usefulness as guides for monetary policy in the light of recent financial developments the criterion of usefulness is the ability to influence and predict gnp growth this ability is tested in two ways first by the stability of the velocities of the monetary aggregates and second by the advance information they provide of gnp growth it is presumed that the aggregates with the most stable velocities make the best targets for monetray policy and that those containing the most advance information make the best guides for policy the paper has three main sections the first discusses the criteria for using monetary aggregates as targets and guides the second two sections describe and report tests of the various monetary aggregates as targets and guides a summary of findings is presented as a final section

are reserve requirements relevant for economic stabilization abstract the level of the required reserve ratio and the payment of interest on required reserves are irrelevant for economic stability 1 when the central bank appropriately adjusts its interest elasticity of supply of reserves or currency to offset changes in the required reserve ratio or in the interest rate paid on required reserves or 2 when economic agents form their price level expectations rationally conditional on the current interest rate

interdependences in the intrafirm diffusion of technological innovations confronting the rational and social accounts of diffusion this article investigates the intrafirm diffusion of technological innovations and the interdependences that exist among rival firms in this process previous research has offered two potential explanations for these interdependences social accounts in which they result from institutional pressures and rational accounts in which firms are interdependent as a result of how adoption by rivals affects expectations about the profitability of the technology the article offers two contributions first we propose a competitive interaction mechanism that is consistent with the fundamentals of rational accounts of diffusion second the empirical analysis shows the dominance of the proposed rational mechanism over social accounts of innovation diffusion in the generation of interdependences in the process of intrafirm diffusion

the effect of minimum wage laws on the distribution of employment theory and evidence abstract recent research casts doubt on the view that minimum wage laws reduce employment we show that in a simple model of bilateral search with heterogeneous workers a minimum wage law increases employment however the increased competition from higher productivity workers makes lower productivity workers worse off without making higher productivity workers better off we provide evidence that minimum wage laws shift employment from adults to teenagers and students this raises concerns about the distributional consequences of minimum wages even when they increase employment

technical change organizational form and the structure of bank production of those technological characteristics related to the nature of competition among firms in an industry or market scale economies and technical change are especially important economies of scale are said to exist when an equiproportional increase in all inputs results in a greater than proportional increase in output or equivalently when an increase in output at constant input prices leads to a less than proportional increase in total costs thus average costs decline as output expands depending upon the extent to which costs decline as output increases regulation of the firms in the industry may be necessary l the literature analyzing scale economies in commercial banking is voluminous the early studies on scale economies in banking include those by benston 1965 1972 greenbaum 1967 murphy 1972 and bell and murphy 1968 more recent studies include those by benston hanweck and humphrey 1982 and clark 1984 2 this literature has established that mild scale economies exist in bank

technological regimes and innovation in services the case of the italian banking industry abstract in this paper we propose a conceptual model to analyse innovations originating from the diffusion of information technologies in the banking sector we argue that technical change in this industry exhibits a revolutionary character a distinction is made between the mass automation regime focusing mainly on the mechanization of back office procedures in the 1960s and 1970s and the smart automation regime originating from the introduction of distributed data processing and network technologies and centered around the supply of electronic banking services a theoretical model is developed which emphasizes the crucial role played by demand pull variables in stimulating innovative behaviour under the smart automation regime in contrast limited importance is attributed to cumulative and learning by doing effects relating to back office automation at least for banks endowed with sufficient absorptive capacity the theoretical hypotheses are tested through an econometric analysis of the determinants of the innovative behaviour in electronic payment systems of a sample of italian commercial banks

technological convergence and scope of organizational innovation abstract many industries are faced with increasingly merging and overlapping technologies with multiple technological strands converging it is incumbent upon firms to stay on the top of these developments a firm will succeed to the extent that it can cover a wider range of innovative activities whether alone or in partnership with other firms this paper examines a firm s innovation in information technology such innovations vary widely in their scope with some involving a very limited range of skills rendering them more incremental given a firm s inclination toward specialization the adoption of broad innovations is more feasible if it has developed interfirm arrangements which provide access to distant technology in a study of commercial banks it was found that the scope of new information technologies is contingent upon a firm having developed linkages particularly with firms whose industries provide complementary knowledge

sources of imitation improving bank process capabilities abstract this paper argues that imitators are more likely than innovators to use a wider variety of channels for improving their process capabilities and that the sources of imitation are more informal or non market mediated than formal yet the search for know how is a variegated process even within the same industry these variations stem from factors other than industry specific technical requirements regulatory intervention has important implications for firm history skill bases size and competitive focus taken together these background elements guide firms from the same industry towards somewhat different sources of know how the case under study is banking a service industry rarely considered in the literature on technical change

analysing distributed processes of provision and innovation the vast majority of products i e goods and services are provided to the consumer through several co ordinated and contributing agents acting together this paper is concerned with improving our understanding of processes of provision and innovation that involve several contributing and co ordinated agents firms or organizations the distributedness of provision and innovation varies in scale and takes a variety of dynamic forms or modes and their analysis brings to the fore the significance of dependency and asymmetric power relations between classes of economic agent the approach thereby opens up considerations on distributed innovation beyond those addressed by the systems of innovation perspectives

intrafirm diffusion of new technologies an empirical application research on the diffusion of new technologies has centred on the study of the interfirm rate of diffusion paying much less attention to intrafirm aspects this paper attempts to overcome this gap in the literature by analysing the factors that influence the speed with which a new technology the atm is fully adopted the data over which the hypotheses are tested belongs to the spanish savings banks market the results show that the rate of intrafirm diffusion is explained by innovation firm and market characteristics in testing our hypotheses we make use of both traditional methods and survival analysis techniques

assets aggregates and optimal monetary control abstract this paper develops optimal monetary stabilization rules employing information pertaining to an arbitrary number of financial assets together with the interest rate the rules are expressed in terms of an optimal weighted aggregate to be stabilized with the optimal weights depending upon the variances and covariances of the underlying stochastic disturbances a generalized poole type combination policy is also derived properties of the optimal rules are discussed analytically in specific cases this is supplemented by numerical simulation methods using parameter values based on a disaggregation of the u s financial sector into 14 components