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Tuesday, October 2, 2007

Clockspeed and Competition

Innovation is supposed to grant competitive advantage, among other things. So we might expect the rate of innovation in a given sector to be linked to the degree of competition. (Setting aside for a moment the difficulties in measuring either of these objectively.)

In my very first post on this blog, Technology and Competition, I referred to the Marxian notion that technology is linked to a falling rate of profit, in which case it would make sense for monopolies to resist new technology. I found some support for this idea in a commentary about the Microsoft anti-trust case from the Economist magazine.

Even the advocates of accelerating technological change acknowledge the relevance of competitive forces. In his post Is the Pace of Business Really Increasing? Dave Bayless makes this point when discussing Charles Fine's notion of Clockspeed.
"The barriers to entry to the commercial aircraft and computer operating systems businesses, for example, slow industry clockspeed dramatically."
There are two contrary ways of viewing this. One is to describe technological change as primarily a technological phenomenon, which can then be influenced by secondary socioeconomic factors (e.g. increased by competition and decreased by monopoly). The other is to describe technological change as a social construction, where socioeconomic forces can make technologically trivial changes seem economically important.

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