1. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Por: Carlos Chambel Miguel Leocádio João Meyer SECTORAL PATTERNS OF TECHNICAL CHANGE

2. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Summary Summary: 1. Sectoral Patterns of Innovation 2. Towards a Taxonomy and a Theory 3. Some Analytical Implications 4. Future Perspectives

3. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Purpose: The similarities and diferences amongst sectors in the sources, nature and impact of innovations, defined by the sources of knowledge imputs, by the size and principal lines of activity of inovating firms, and by the sectors of Innovations’ production and main use. The Data Base: Data collected by Townsend et al. on the characteristics of about 2000 significant innovations, and of innovating Firms, in Britain from 1945 to 1979.

4. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Sectoral patterns of innovation Analysis of the data (1)The sector of production of the innovation (2)The sector of use of the innovation (3)The sector of the innovating firm´s principal activity

5. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Sectoral patterns of innovation Category 1: sectors of production, use, and principal firm activity are all the same. Category 2: sectors of production and principal firm activity are the same, but different from sector of use. Category 3: sectors of principal firm activity and use of the innovation are the same, but different from the sector of production of the innovation. Category 4: sectors of production and use of innovation are the same, but different from that of the firm´s principal activity. Category 5: sectors of production of the innovation, of its use, and of the firm´s principal activity are all different.

6. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Sectoral patterns of innovation Institutional sources of main knowledge inputs 7% from the public technological infrastructure (higher education, government laboratories, and research associations) 59% from within the innovating firms themselves 34% from other firms Number of observations: 3013 Analysis Number of sources appointed ~ 1,5 Underestimate the contribution made by public technology infrastructure Industrial R & D total expenditures: ¾ on D Innovation vs. Development: the costs of transfer can be high

7. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Sectoral patterns of innovation Sectoral patterns of production and use of innovations Product innovations: those innovations that are used outside their sector of production Process innovations: those innovations that are used inside their sector of production Product innovations ~ 70% Ratio of production to use of technology: 5.3 to 1 for manufacturing as a whole 0.1 to 1 for outside manufacturing

8. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Sectoral patterns of innovation Sectoral patterns of production and use of innovations Instruments, Mechanical Engineering, Chemicals, Building Materials (mainly glass and cement and electrical and electronical engineering Innovations produced in the sector: Innovations used in the sector: Product InnovationsProcess Innovations Leather and footwear, textiles, vehicles, metal manufacture, shipbuilding and food and drink All sectors of manufacturing except textiles Textiles Main Sectors

9. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Sectoral patterns of innovation Sectoral patterns of production and use of innovations Building materials, metal manufacture and food and drink (Caracterized by assembly operations) Shipbuilding and vehicles Production > Use Production  Use Production < Use Instruments, mechanical engineering, chemicals and electrical and electronical engineering (Caracterized by continuous process technology) (Mainly process industries) Innovations Note

10. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Sectoral patterns of innovation Caracteristics of innovating firms: Size and technological diversification Big contribution of small firms (1 - 999 employees) in mechanical and instrument engineering, textiles, and leather and footwear. Big contribution of large firms (10,000 and more employees) in other sectors. According to the sector of the innovations: According to the principal sector of the innovating firms´ activity: In sectors where large firms predominate, the two size distributions are very similar. In mechanical and instrument engineering, and in textiles, both the number of innovations and the relative contribution of large firms are bigger when classified by sector of innovation, than when classified by the principal sector of activity of the innovating firm. A relatively large number of innovations are produced in these sectors by relatively large firms with their principal activities in other sectors. Continuous process and assembly industries

11. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management The ingredients Knowledge applied by firms is not general purpose and easily transmitted and reproduced  Technical change is a cumulative process to firms  what they can try to do in future is strongly conditioned by what they have been able to do in the past Variety – sectors vary in the relative importance of product and process innovations, in sources of process technology, in size of technological diversification of innovating firms Appropriate for specific applications and appropriated for specific firms Technical change comes mainly from suppliers of equipment Firms and assembly and continuous process industries tend to concentrate their innovative resourses on process innovations Some regularities begin to change Try to categorise and explain the caracteristics: to propose a taxonomy and a teory

12. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Supplier dominated firms Traditional sectors of manufacturing, agriculture, wood & paper, housebuilding, many financial and commercial services They are generally small and their in-house R&D and engineering capabilities are weak Make a minor contribution to their process or product technology  high proportion of proccess innovation produced by other sectors Most innovations come from suppliers of eqp and materials Uma grande parte dos processos inovadores usados é originada em outros sectores

13. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Production intensive firms Large scale fabrication & assembly production Improved transportation, simplification of production tasks Unit capacity costs can (potentially) decreased 1% by every 3% in plant capacity Fabrication & assembly machines take progressively more complex and more demanding tasks Continuous processes increased scale & high temperatures have resulted from improvements in materials, control instrumentation and power sources Complex and interdependent production systems with external costs of failure in any part very considerable  trouble-shooting and process engineering have been established  bottlenecks corrected  improvements in productivity Departamentos de engenharia de produção constituem uma grande fonte de inovação nas empresas de produção intensiva

14. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Science based firms Found in chemical and electronic / electrical sectors Main sources of technology are R&D activities in the sectors Products depended on prior development of basic science (ex:synthetic chemistry, biochemistry, electromagnetism, radio waves, solid state physics, etc) It has been difficult for firms outside the sectors to enter them Firms appropriate their innovating leads through a mix of methods (patents, secrecy, natural technical lags, firm specific skills) Whose trade is not to do anything, but to observe everything As Science based firms têm uma grande contribuição para a inovação: na indústria química encontram-se valores de 40% na electrónica/produtos eléctricos há uma contribuição de cerca de 50% na engenharia mecânica os valores baixam para 20%

15. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Specialised equipment suppliers Science based firms Scale intensive firms Supplier dominated firms Technological linkages and changing trajectories Power tools, transport equipment Consumer electronics, plastics Plastics & electronics for car industry

16. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Demand Pull with stronger influence on innovative activity Strong association between volume of innovative activity (patents) and investment activity in user industries, rather than in the output of the supplier industries. Schmookler: (66) Investment both in Supplier Dominated and Production Intensive firms stimulate innovative activityNo surprise! Planning of investment and co-ordination with production Pavitt: (84) Implications of proposed theory Science and Technology push vs Demand Pull

17. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Implications of Proposed Theory Product vs Process innovation High proportion of Science-based firms (Also important in other sectors, like specialized suppliers: mechanical and instrument engineering ) Important Product Innovation: -Positively associated with Patent intensity and R&D -Negatively associated with scale and complexity of process technology Product Innovation Production intensive sectors is expected both high proportion of resources in process innovation and high capital intensities, size of plant and industrial concentration Process Innovation

18. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Supplier-dominated sectors: firms and production plant small in size; innovations coming from suppliers Production intensive firms: large in size; process technology generated in-house Positive relation: proportion of a sector’s process technology generated in-house and size of plant or firm in sector Upstream equipment suppliers become important source of process innovation with increasing size of market for production process equipment Reflects greater division of labor in production Implications of Proposed Theory The locus of process innovation

19. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Production intensive firms: diversify less in production than in technology. Textiles on the other hand diversify more in production than in technology Non technical complementarities with other sectors Supplier-dominated sectors: Upstream technological diversification into sectors supplying equipment : -Negatively associated with R&D intensity -Positively associated with scale and complexity of production technology (innovation activities on production techniques and upstream equipment) The proposed model, identifies technological trajectories of firms as a function of their principal activitiesPrediction of possible paths of technological diversification Uncertain results of research are likely to give better results in a diversified firm Implications of Proposed Theory Diversification

20. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Implications of Proposed Theory Firm size and industrial structure Supplier-dominated sectors: increase in size is usually not attributed to innovation, although might enable more efficient process technology Production intensive firms: innovation associated with large and increasing size Uncertain results of research creates tendencies for concentration of both production and innovative activities

21. SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY SECTORAL PATTERNS OF TECHNICAL CHANGE: TOWARDS A TAXONOMY AND A THEORY M. Sc. Engineering Policy and Technology ManagementInnovation and Knowledge Management Future Perspectives Proposed taxonomy needs to be tested On the basis of complete sectoral coverage Accumulated case studies Data of innovative activity becoming available (patents offices) Proposed taxonomy needs to be modified and extended Exploitation of natural resources included in production intensive... May be used in future by policy makers and analists Relative contribution of small and large firms to innovation Technical change; the directions of innovative activities Conceptualization : most generalizations are likely to be wrong