Posted Content•
Economic Performance Through Time
TL;DR: A theory of economic dynamics comparable in precision to general equilibrium theory would be the ideal tool of analysis as discussed by the authors, but it is difficult to find such a theory in the literature, and it is also difficult to understand the way economies evolve through time.
Abstract: Economic history is about the performance of economies through time. The objective of research in the field is not only to shed new light on the economic past but also to contribute to economic theory by providing an analytical framework that will enable us to understand economic change. A theory of economic dynamics comparable in precision to general equilibrium theory would be the ideal tool of analysis. In the absence of such a theory we can describe the characteristics of past economies, examine the performance of economies at various times, and engage in comparative static analysis; but missing is an analytical understanding of the way economies evolve through time.
Citations
More filters
TL;DR: In this paper, the authors estimate the respective contributions of institutions, geography, and trade in determining income levels around the world, using recently developed instrumental variables for institutions and trade, and conclude that the quality of institutions "trumps" everything else.
Abstract: We estimate the respective contributions of institutions, geography, and trade in determining income levels around the world, using recently developed instrumental variables for institutions and trade. Our results indicate that the quality of institutions “trumps” everything else. Once institutions are controlled for, conventional measures of geography have at best weak direct effects on incomes, although they have a strong indirect effect by influencing the quality of institutions. Similarly, once institutions are controlled for, trade is almost always insignificant, and often enters the income equation with the “wrong” (i.e., negative) sign. We relate our results to recent literature, and where differences exist, trace their origins to choices on samples, specification, and instrumentation.
3,768 citations
TL;DR: In this paper, the authors propose a knowledge-based economy with limits to learning Regional capabilities, institutions, and localised learning for enhanced knowledge creation in industrial districts, where they focus on industrial districts.
Abstract: Introduction: Towards the knowledge-based economy Knowledge creation Limits to learning Regional capabilities, institutions and localised learning. Enhanced knowledge creation: industrial districts
2,212 citations
TL;DR: In this paper, a functional approach to analyzing innovation system dynamics is proposed for policy makers to identify the key policy issues and set policy goals, based on previous literature and their own experience in developing and applying functional thinking.
1,803 citations
TL;DR: The use of the term institution has become widespread in the social sciences in recent years, reflecting the growth in institutional economics and the use of institution concept in several other disciplines, including philosophy, sociology, politics, and geography as discussed by the authors.
Abstract: The use of the term institution has become widespread in the social sciences in recent years, reflecting the growth in institutional economics and the use of the institution concept in several other disciplines, including philosophy, sociology, politics, and geography. The term has a long history of usage in the social sciences, dating back at least to Giambattista Vico in his Scienza Nuova of 1725. However, even today, there is no unanimity in the definition of this concept. Furthermore, endless disputes over the definitions of key terms such as institution and organization have led some writers to give up matters of definition and to propose getting down somehow to practical matters instead. But it is not possible to carry out any empirical or theoretical analysis of how institutions or organizations work without having some adequate conception of what an institution or an organization is. This paper proposes that those that give up are acting in haste; potentially consensual definitions of these terms are possible, once we overcome a few obstacles and difficulties in the way. It is also important to avoid some biases in the study of institutions, where institutions and characteristics of a particular type are overgeneralized to the set of institutions as a whole. This paper outlines some dangers with regard to an excessive relative stress on self-organization and agent-insensitive institutions. This paper draws on insights from several academic disciplines and is organized in six sections. The first three sections are devoted to the definition and understanding of institutions in general terms. The first section explores the meaning of key terms such as institution, convention, and rule. The second discusses some general issues concerning how institutions function and how they interact with individual agents, their habits,
1,615 citations
TL;DR: A broadened view of service innovation is offered--one grounded in service-dominant logic--that transcends the tangible--intangible and producer--consumer divides that have plagued extant research in this area.
Abstract: In this article, we offer a broadened view of service innovation--one grounded in service-dominant logic--that transcends the tangible--intangible and producer--consumer divides that have plagued extant research in this area. Such a broadened conceptualization of service innovation emphasizes (1) innovation as a collaborative process occurring in an actor-to-actor (A2A) network, (2) service as the application of specialized competences for the benefit of another actor or the self and as the basis of all exchange, (3) the generativity unleashed by increasing resource liquefaction and resource density, and (4) resource integration as the fundamental way to innovate. Building on these core themes, we offer a tripartite framework of service innovation: (1) service ecosystems, as emergent A2A structures actors create and recreate through their effectual actions and which offer an organizing logic for the actors to exchange service and cocreate value; (2) service platforms, which enhance the efficiency and effectiveness of service exchange by liquefying resources and increasing resource density (facilitating easy access to appropriate resource bundles) and thereby serve as the venue for innovation; and (3) value cocreation, which views value as cocreated by the service offer(er) and the service beneficiary (e.g., customer) through resource integration and indicate the need for mechanisms to support the underlying roles and processes. In discussing these components, we consider the role of information technology--both as an operand resource and as an operant resource--and then examine the implications for research and practice in digitally enabled service innovation.
1,447 citations
References
More filters
Posted Content•
TL;DR: In this article, the authors examine the role that institutions, defined as the humanly devised constraints that shape human interaction, play in economic performance and how those institutions change and how a model of dynamic institutions explains the differential performance of economies through time.
Abstract: Examines the role that institutions, defined as the humanly devised constraints that shape human interaction, play in economic performance and how those institutions change and how a model of dynamic institutions explains the differential performance of economies through time. Institutions are separate from organizations, which are assemblages of people directed to strategically operating within institutional constraints. Institutions affect the economy by influencing, together with technology, transaction and production costs. They do this by reducing uncertainty in human interaction, albeit not always efficiently. Entrepreneurs accomplish incremental changes in institutions by perceiving opportunities to do better through altering the institutional framework of political and economic organizations. Importantly, the ability to perceive these opportunities depends on both the completeness of information and the mental constructs used to process that information. Thus, institutions and entrepreneurs stand in a symbiotic relationship where each gives feedback to the other. Neoclassical economics suggests that inefficient institutions ought to be rapidly replaced. This symbiotic relationship helps explain why this theoretical consequence is often not observed: while this relationship allows growth, it also allows inefficient institutions to persist. The author identifies changes in relative prices and prevailing ideas as the source of institutional alterations. Transaction costs, however, may keep relative price changes from being fully exploited. Transaction costs are influenced by institutions and institutional development is accordingly path-dependent. (CAR)
26,011 citations
Posted Content•
TL;DR: In this paper, the authors developed an evolutionary theory of the capabilities and behavior of business firms operating in a market environment, including both general discussion and the manipulation of specific simulation models consistent with that theory.
Abstract: This study develops an evolutionary theory of the capabilities and behavior of business firms operating in a market environment. It includes both general discussion and the manipulation of specific simulation models consistent with that theory. The analysis outlines the differences between an evolutionary theory of organizational and industrial change and a neoclassical microeconomic theory. The antecedents to the former are studies by economists like Schumpeter (1934) and Alchian (1950). It is contrasted with the orthodox theory in the following aspects: while the evolutionary theory views firms as motivated by profit, their actions are not assumed to be profit maximizing, as in orthodox theory; the evolutionary theory stresses the tendency of most profitable firms to drive other firms out of business, but, in contrast to orthodox theory, does not concentrate on the state of industry equilibrium; and evolutionary theory is related to behavioral theory: it views firms, at any given time, as having certain capabilities and decision rules, as well as engaging in various ‘search' operations, which determines their behavior; while orthodox theory views firm behavior as relying on the use of the usual calculus maximization techniques. The theory is then made operational by the use of simulation methods. These models use Markov processes and analyze selection equilibrium, responses to changing factor prices, economic growth with endogenous technical change, Schumpeterian competition, and Schumpeterian tradeoff between static Pareto-efficiency and innovation. The study's discussion of search behavior complicates the evolutionary theory. With search, the decision making process in a firm relies as much on past experience as on innovative alternatives to past behavior. This view combines Darwinian and Lamarkian views on evolution; firms are seen as both passive with regard to their environment, and actively seeking alternatives that affect their environment. The simulation techniques used to model Schumpeterian competition reveal that there are usually winners and losers in industries, and that the high productivity and profitability of winners confer advantages that make further success more likely, while decline breeds further decline. This process creates a tendency for concentration to develop even in an industry initially composed of many equal-sized firms. However, the experiments conducted reveal that the growth of concentration is not inevitable; for example, it tends to be smaller when firms focus their searches on imitating rather than innovating. At the same time, industries with rapid technological change tend to grow more concentrated than those with slower progress. The abstract model of Schumpeterian competition presented in the study also allows to see more clearly the public policy issues concerning the relationship between technical progress and market structure. The analysis addresses the pervasive question of whether industry concentration, with its associated monopoly profits and reduced social welfare, is a necessary cost if societies are to obtain the benefits of technological innovation. (AT)
22,566 citations
Book•
10 Oct 2016
TL;DR: In this paper, it is argued that the suggested courses of action are inappropriate, in that they lead to results which are not necessarily, or even usually, desirable, and therefore, it is recommended to exclude the factory from residential districts (and presumably from other areas in which the emission of smoke would have harmful effects on others).
Abstract: This paper is concerned with those actions of business firms which have harmful effects on others. The standard example is that of a factory the smoke from which has harmful effects on those occupying neighbouring properties. The economic analysis of such a situation has usually proceeded in terms of a divergence between the private and social product of the factory, in which economists have largely followed the treatment of Pigou in The Economics of Welfare. The conclusions to which this kind of analysis seems to have led most economists is that it would be desirable to make the owner of the factory liable for the damage caused to those injured by the smoke, or alternatively, to place a tax on the factory owner varying with the amount of smoke produced and equivalent in money terms to the damage it would cause, or finally, to exclude the factory from residential districts (and presumably from other areas in which the emission of smoke would have harmful effects on others). It is my contention that the suggested courses of action are inappropriate, in that they lead to results which are not necessarily, or even usually, desirable.
11,448 citations
Book•
01 Jan 1982TL;DR: In this paper, the authors present an Evolutionary Model of Economic Growth as a Pure Selection Process and a Schumpeterian Competition for economic growth in the United States, with a focus on the evolution of public policies and the role of analysis.
Abstract: I. OVERVIEW AND MOTIVATION 1. Introduction 2. The Need for an Evolutionary Theory II. ORGANIZATION-THEORETIC FOUNDATIONS OF ECONOMIC EVOLUTIONARY THEORY 3. The Foundations of Contemporary Orthodoxy 4. Skills 5. Organizational Capabilities and Behavior III. TEXTBOOK ECONOMICS REVISITED 6. Static Selection Equilibrium 7. Firm and Industry Response to Changed Market Conditions IV. GROWTH THEORY 8. Neoclassical Growth Theory: A Critique 9. An Evolutionary Model of Economic Growth 10. Economic Growth as a Pure Selection Process 11. Further Analysis of Search and Selection V. SCHUMPETERIAN COMPETITION 12. Dynamic Competition and Technical Progress 13. Forces Generating and Limiting Concentration under Schumpeterian Competition 14. The Schumpeterian Tradeoff Revisited VI. ECONOMIC WELFARE AND POLICY 15. Normative Economics from an Evolutionary Perspective 16. The Evolution of Public Policies and the Role of Analysis VII. CONCLUSION 17. Retrospect and Prospect References Index
6,823 citations
Posted Content•
5,651 citations