Category:Projects -> Comparative Industry Studies
Category:Industry Studies

Table of Contents

• Introductory Remarks
• Preliminary Sketches Framework
• Thoughts on the Process

Introductory Remarks

Evolutionary economists (Nelson & Winter, 1982; Saviotti & Metcalfe, 1991, Dosi 2002) have articulated powerful theories about how industries change. During the last twenty years economists, sociologists, and business school scholars have begun to study empirically how particular industries develop over long periods of time. Steven Klepper (see, for example, 2005) has studied in number of different industries entry and exit patterns of firms. He explicitly tried to make systematic comparisons across industries, asking why some industries experience a shake out while others industries don’t. Many other scholars have studied one particular national industry, focusing on particular aspects of the industry’s evolution.  Because scholars frequently do not analyze the same aspects (variables), it often difficult to compare systematically across industries and figure out what causes lie behind the similarities and differences in patters of industry evolution.  The comparative effort by Mowery and Nelson (1999), which brought together authors of seven industry studies, showed that it would be fruitful to engage different industry studies with one another.

To make it easier in future studies to compare across industries and come up with causal explanations, it seems expedient to formulate an analytical framework, i.e. a common list of characteristics that future studies could trace. The few existing cross-national comparisons (Chesbrough, 1999; Murmann & Homburg, 2001; Murmann, 2003) have highlighted that institutional differences can lead to very different patters of industry evolution. Hence a framework is called for that combines concepts from traditional industrial organization economics, evolutionary economics, innovation studies, and institutional theory broadly defined.  Because industries within different national environments are also typically connected through flows of trade and investment it is also vital to add a cross-national, integrative component that is able to detect cross border interdependencies.  Since the performance of an industry in one country often interacts with the performance the same industry in another country, it is useful to find out, for example, whether these interactions create systematic differences in the timing of shakeouts.

There is yet another compelling reason for formulating such a framework.  Business and economic historians are the custodians of a large empirical literature on how industries and organization within industries have changed over time. When these scholars write up their own studies, they often do not provide all the evidence that an evolutionary economist or like-minded analyst would want to know for their analytical purposes. Articulating common set of features to compare, contrast and provide integrated explanations across industries would have the additional benefit of being able to recruit business and economic historians to write up studies on their particular area of expertise. Right now most of these historians don’t even know such a demand for their expertise exists outside their own field! 

Preliminary Sketches Framework

The framework should be able to address two questions at the same time: Why do patterns of development in the organization of an industry differ? Secondly, why do patterns of development differ for the same industry in different countries? Even more than previous work, the framework should focus on how producers are linked to users, how new users are brought in the market, and how the speed of market growth in their home environment affects the long-term global positions of firms that started in different countries.

Here is the beginning of a list of candidate variables aside from the traditional industrial organization economics variables (size of market, rates of market growths, number of producers, export, import and international investment patterns, market shares in different countries, profit rates, cost structures, entry and exit rates of producers, capital intensity, etc.) that could form the core of the comparative framework:  How big are the economics of scale or scope, and are they increasing or decreasing over time? What is the unit value and value per unit weight of the product? How numerous are the customers of the industry? What are the salient characteristics of users and how do they evolve over time? What is the frequency of product and process innovation in the course of the development of the industry? What is the frequency of innovations in organization and in the institutional and regulatory frameworks shaping the evolution of different industries in different economies? How much of the skills needed by firms in the industry are created inside the firms and how much are they created by external educational institutions? How are skills transferred from one producer to the next? What factors determine export vs., international investment decisions? Does government have many policies tailored to the particular industry? How have policies in different countries shaped the evolution of the industry on a world scale? How did the regulatory pattern in the industry develop? What are the strategies and structures of firms that become the leading producers?

Thoughts on the Process

In formulating a comparative framework it is necessary to balance the desire to develop a comprehensive framework (i.e., identifying all the causal mechanisms) with not having an endlessly long list of variables that would make these comparisons unwieldy. Thus it should focus on some core evolutionary/managerial/policy questions.

It also seems important to articulate what features of industry evolution are readily tracked quantitatively and what aspect call for more qualitative descriptions.  The tabular representation of the framework already takes a step into this direction.

To ensure that the framework will be found useful by many scholars, a small group of scholars should work together in formulating a framework and later circulate it to larger scholarly audience for comments and refinements. 

Once the framework has been formulated, it can subjected to a trial-run on a few industries, ideally where much of the material is accessible relatively quickly through secondary sources. Then one could organize a set of workshops/conferences to introduce historians to the framework and ask them to reanalyze their particular industry through the lens of the framework and come back for a second conference that tries to compare across the industries with the evidence that has been collected in the meantime.  In parallel, work can proceed on analytical frameworks to capture the processes of industry evolution in the international context.

Ideally, all the industries should be traced from their beginning. For some industries this is easily feasible because the data be readily available after a bit of digging.  For other industries only particular periods can be readily documented.  The plan is to publish the framework and provide a website (which is already under development) where different scholars can deposit their findings. Individual scholars may only possess part of the data on a particular industry. But collectively different scholars may be able to bring together all the data called for by the framework.  The hope is that with the help of website and email, the data collection on a particular can be done to some extend by virtual teams from all over the world.

Quantitative Variable for Comparing Industries

Qualitative Variable for Comparing Industries

Download Tables as Word File File:CIS Framework 3 Tables.doc

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