The Role of Science and Multinationals
Edited by Grazia D. Santangelo
Chapter 1: The Economics of Localized Technological Change: The Role of Creative Adoption
Cristiano Antonelli 1. INTRODUCTION The study of technological change has made a great deal of progress by means of artiﬁcial disjunctions between aspects that are diﬃcult to separate.2 The traditional divide between innovation, adoption and imitation can be reconciled in the context of the economics of localized technological change. Adoption is the result of a complex process of decisionmaking. Firms are induced to change their technology when product and factor market conditions do not meet their expectations and irreversible choices make adjustments expensive. Technological change consists of both the introduction of original, ‘never-before-seen’ technologies and the adoption of technologies that have already been put in place elsewhere. Indeed, adoption requires a number of highly speciﬁc and idiosyncratic problems of adaptation and integration to be solved. Moreover, it requires that several preliminary activities are carried out, such as search, selection, identiﬁcation, adaptation and integration into the production process and the ﬁrm at large. Technological change, for each ﬁrm, is the result of both research and imitation activities. Both command resources and engender speciﬁc revenues. Localized technological change consists of creative adoption where external knowledge and embodied technologies are implemented with internal competence and idiosyncratic knowledge acquired by means of learning processes. The identiﬁcation of the net proﬁtability of adoption as deﬁned by the gross proﬁtability of adoption minus adoption costs constitutes the economics of creative adoption. The rest of the chapter is structured as follows. Section 2 recalls the basic features of...
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