This paper explores the dynamics of allocation under increasing returns in a context where increasing returns arise naturally: agents choosing between technologies competing for adoption. Modern, complex technologies often display increasing returns to adoption in that the more they are adopted, the more experience is gained with them, and the more they are improved.1 When two or more increasing-return technologies 'compete' then, for a 'market' of potential adopters, insignificant events may by chance give one of them an initial advantage in adoptions. This technology may then improve more than the others, so it may appeal to a wider proportion of potential adopters. It may therefore become further adopted and further improved. Thus a technology that by chance gains an early lead in adoption may eventually 'corner the market' of potential adopters, with the other technologies becoming locked out. Of course, under different 'insignificant events' - unexpected successes in the performance of prototypes, whims of early developers, political circumstances - a different technology might achieve sufficient adoption and improvement to come to dominate. Competitions between technologies may have, multiple potential outcomes. It is well known that allocation problems with increasing returns tend to exhibit multiple equilibria, and so it is not surprising that multiple outcomes should appear here. Static analysis can typically locate these multiple equilibria, but usually it cannot tell us which one will be 'selected'. A dynamic approach might be able to say more. By allowing the possibility of 'random events' occurring during adoption, it might examine how these influence ' selection' of the outcome - how some sets of random 'historical events' might cumulate to drive the process towards one market-share outcome, others to drive it towards another. It might also reveal how the two familiar increasingreturns properties of non-predictability and potential inefficiency come about: how increasing returns act to magnify chance events as adoptions take place, so that

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Competing technologies, increasing returns, and lock-in by historical events*

The literature on product development continues to grow. This research is varied and vibrant, yet large and fragmented. In this article we first organize the burgeoning product-development literature into three streams of research: product development as rational plan, communication web, and disciplined problem solving. Second, we synthesize research findings into a model of factors affecting the success of product development. This model highlights the distinction between process performance and product effectiveness and the importance of agents, including team members, project leaders, senior management, customers, and suppliers, whose behavior affects these outcomes. Third, we indicate potential paths for future research based on the concepts and links that are missing or not well defined in the model.

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Product development: past research, present findings, and future directions

We examine how firms search, or solve problems, to create new products. According to organizational learning research, firms position themselves in a unidimensional search space that spans a spectrum from local to distant search. Our findings in the global robotics industry suggest that firms' search efforts actually vary across two distinct dimensions: search depth, or how frequently the firm reuses its existing knowledge, and search scope, or how widely the firm explores new knowledge.

http://web.stanford.edu/~rkatila/new/pdf/KatilaSomethingold.pdf

Something Old, Something New: A Longitudinal Study of Search Behavior and New Product Introduction

Now organizations are always vulnerable to the liabilities of newness, but such pressures are especially severe when an industry is in its formative years. We focus on one set of constraints facing entrepreneurs in emerging industries-their relative lack of cognitive and sociopolitical legitimacy. We examine the strategies that founders can pursue, suggesting how their successful pursuit of legitimacy may evolve from innovative ventures to broader contexts, collectively reshaping industry and institutional environments.

https://www.jstor.org/stable/pdf/258740.pdf

Fools Rush in? The Institutional Context of Industry Creation

Why do firms form strategic alliances? The traditional theoretical answer has been transaction cost explanations. Yet, these explanations which center on transaction characteristics, static efficiency, and routine situations do not capture the strategic and social factors which propel many firms into alliance formation. In this study, however, we combine these alternative social and strategic explanations for alliance formation. Consistent with these explanations, we find that alliances form when firms are in vulnerable strategic positions either because they are competing in emergent or highly competitive industries or because they are attempting pioneering technical strategies. We also find that alliances form when firms are in strong social positions such that they are led by large, experienced, and well-connected top management teams. The underlying logic of alliance formation is, thus, strategic needs and social opportunities. We develop these findings by extending the resource-based view of the firm...

https://www.jstor.org/stable/pdfplus/2634977.pdf

Resource-based View of Strategic Alliance Formation: Strategic and Social Effects in Entrepreneurial Firms

Fabio Arcangeli, Paul David, Frank Engelman, Christopher Freeman, Massimo Moggi, Richard Nelson, Luigi Orsenigo, Nathan Rosenberg, Michele Salvati, G. N. von Tunzelman, two anonymous referees, and the participants at the meeting of the Committee on Distribution, Growth, and Technical Progress of the Italian National Research Council (CNR), Rome, November 16, 1985, have helped with various redraftings. A particularly grateful acknowledgment is for the insightful and patient help of Moses Abramovitz. This work has been undertaken at the Science Policy Research Unit (SPRU), University of Sussex, as part of the research program of the Designated Research Centre, sponsored by the Economic and Social Research Council (ESRC). Earlier support to the research that led to this paper by the Italian National Research Council (CNR) is also gratefully acknowledged. The statistical research has been undertaken with the assistance of Stephano Brioschi, Ilaria Fornari, and Giovannu Prennushi.

https://www.jstor.org/stable/info/2726526

Sources, Procedures, and Microeconomic Effects of Innovation

Patterns of diffusion of electronics technologies: An international comparison with special reference to the Italian case☆

Abstract This paper explores the development of Artificial Intelligence (AI) and its impact on business models, organization and work. First, we provide a stylized history of AI highlighting the technological, organizational and market-related factors fostering its diffusion and transformative potential. We show how AI evolved from being a scientific field to a mostly corporate-dominated field characterized by strong concentration of technological and economic power. Second, we analyze the consequences of AI adoption for business models, organization and work. Our discussion contributes to show how the development and diffusion of this technological domain gives new strength to the lean-production paradigm - in both manufacturing and service sectors - by contributing to the establishment of the new ‘digital Taylorism’. 

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Massimo Moggi

Papers

Sources, Procedures, and Microeconomic Effects of Innovation

Patterns of diffusion of electronics technologies: An international comparison with special reference to the Italian case☆

From Heron of Alexandria to Amazon’s Alexa: a stylized history of AI and its impact on business models, organization and work