Innovation Dynamics and Industry Structure Under Different Technological Spaces

The paper presents an Agent-Based model to analyze the reciprocal influence between industry structure and industry innovation patterns. This topic was originally investigated through the seminal models of Schumpeterian competition developed by Nelson and Winter (Am Econ Rev 67:271–276, 1977, An Evolutionary Theory of Economic Change. Harvard University Press, Cambridge, 1982), Winter (J Econ Behav Organ 5:287–320, 1984), and Nelson (National innovation systems. A comparative analysis. Oxford University Press, Oxford, 1993). However, the knowledge accumulation process depicted in these models was extremely simplified. In particular, they did not provide any insight about the direction of firms’ technological advancement, within the range of possible alternative technological paths. This aspect is instead of topical importance for the generation of sectoral spillovers affecting the diffusion of innovations and the evolution of the industry structure. Our model aims at filling this gap by amending the framework proposed in Nelson and Winter (An Evolutionary Theory of Economic Change. Harvard University Press, Cambridge, 1982) so to to account for different characterizations of the ‘technology structure’ of the industry, and their possible influence on the process of Schumpeterian selection. More precisely, technology is represented as a directed network where each node constitutes a batch of technological skills to be learned by firms. The model shows that firms’ ability to imitate competitors generates spillover effects whose relevance depends upon the topological structure of Technology Network and firms’ specialization trajectories. In turn, by influencing the process of Schumpeterian competition, these spillovers exert a fundamental impact on both the industry innovative performance and the evolution of the industry structure.