Complexity and the Economy
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Complexity and the Economy

Implications for Economic Policy

Edited by John Finch and Magali Orillard

The authors examine the causes and consequences of complexity among the broadly economic phenomena of firms, industries and socio-economic policy. The book makes a valuable contribution to the increasingly prominent subject of complexity, especially for those whose interests include evolutionary, behavioural, political and social approaches to understanding economics and economic phenomena.
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Chapter 10: Complexity and Industry Evolution: New Insights from an Old Industry

Virginia Acha and Stefano Brusoni

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10. Complexity and industry evolution. New insights from an old industry Virginia Acha and Stefano Brusoni 1. INTRODUCTION The recent surge of interest in the complexity debate has usefully stressed the necessity to look at the activities carried out by individuals and organizations not in isolation, but within dense networks of relationships. Building upon the complexity literature economists and social scientists alike are breeding new life into the study of evolving patterns of division of labour. This chapter joins this debate by providing an empirical exploration of the knowledge bases of a mature industry, namely tyres. It’s aim is twofold. First, we argue that the traditional distinction between ‘mature’ and ‘emerging’ industries, usually based upon indicators of R&D intensity or patent statistics, fail to recognize the major impact that steady improvements embodied in very traditional products may have. In a way, the powerful rhetoric of the industry life cycle model, which highlights the transition from product to process innovation as the industry matures, has unintendedly driven many researchers to ignore dramatic changes occurring in very mature industries. Our first aim is then to describe the evolution of a rather mature industry, which exhibits very low R&D intensity, whose final product has been revolutionized in all but the shape at least twice in the past three decades. Our second aim is developing a research methodology capable of capturing the dynamics of the knowledge bases underlying innovation and processes of industrial evolution. The starting point of our analysis is the...

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