The innovation dynamics and technology cycles in the computer industry

This paper presents certain novel composite measures of technology. There are several important uses of the proposed measures in R & D management: to gauge the rate of innovation within any given field, to determine the relative contribution of chosen variables to technical progress, to isolate critical factors in the innovative activity, and to predict whether a technology is ahead or behind its time. This is illustrated here by means of a case study of technical progress in the computer industry. The theoretical framework of the case study is based on the earlier works of the author pointing to the existence of what may be called technology cycles that transcend both product life cycle and organization product cycle and have the same significance to innovative activity as have business cycles to economic activity. The results of our investigation reveal a 'butterfly pattern' of interaction between product and process innovations: The loss in the relevance of process innovations is almost exactly compensated by the gain in the relevance of product innovations to technical progress over the course of time. The results also indicate that although the pace of technical progress in the computer industry has been exceptionally rapid in the past, it shows signs of slowing down in the future. The policy implications of these findings are discussed.