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Diffusion of technologies and social behavior
Book reviews
263
where performance measured by profit rates led to diversification into unrelated industries, using bookkeeping methods to increase stock values, absorption of other firms, and using financial controls to allocate capital internally. In other words, management by numbers and the inherent shortterm views of business prevalent on Wall Street in the 1980’s. Fligstein provides impressive evidence in the form of case studies, narrative, and quantitative analysis and this book is an interesting read for either the broad story told or for the copious detail on anti-monopoly legislation. While ambitious Fligstein’s book overlooks other areas of corporate innovation. For instance, little attention is paid to attempts by business to control the political arena in ways similar to their attempt to control markets. Yet, this ‘flaw’ is minor and would have drawn attention away from the thrust of the book.
University
of Maryland,
College
Alan Neustadtl Park, MD, USA
N. Nakicenovic and A. Griibler (Eds), Diffusion of Technologies and Social Behavior (Springer Verlag and International Institute for Applied Systems Analysis, Berlin and New York, 1991) pp. 605, no index, $140.00 (cloth). Thirty years ago it was reasonable to complain that economists were ignoring both the empirical and theoretical aspects of the diffusion of innovations. Rogers could find only one empirical study of diffusions of innovation by an economist during the 1950s whilst there were many by sociologists and geographers. This volume is one of several which demonstrate that this situation has changed fundamentally. Whilst it contains contributions from natural scientists as well as from other social science disciplines, about half of the 24 chapters are by economists. The range is wide. The spatial epidemic model is represented in a paper on AIDS in Ohio by Casetti and Cindy Fan; there is a bold paper on democratisation which concludes that contrary to the Aristotelian cyclical view of political systems the spread of democratic institutions can be regarded as a long-term diffusion phenomenon; but the majority of the papers could be loosely grouped under the heading of ‘neo-Schumpeterian’ analysis. About half of these deal with theories and models and about half with empirical case studies. The international scope is also fairly wide although none of the papers deal with diffusion in the Third World or Japan. Most of the papers are by West Europeans and Americans but there is a particularly welcome contribution of two chapters by Russian economists. Sergei Glaziev, who is the author of one and co-author (with Kaniovski) of another is one of the new young generation who are now contributing
264
Book
reviews
actively to policy formation and implementation as well as to economic theory. Both the joint paper on modelling diffusion under conditions of uncertainty and his own paper on ‘General Regularities of Techno-Economic Evolution’ suggest that the contribution will be highly original but pragmatic too. The Russian papers and several others confirm not only that diffusion is no longer neglected by economists but also that it is of growing interest to policy-makers. At an earlier Conference on Diffusion in Venice in 1986, Paul David described diffusion policies as the ‘Cinderella’ of technology policy. As with Schumpeter himself, the main focus of policy-makers as of theorists was on major innovations and not on their diffusion. Several of the papers at this later Conference (1990) suggest that this too has changed; they refer with approval to those national policies which are already diffusionoriented and their reviews of new theoretical developments reflect this new emphasis. This volume is particularly welcome for several reasons but especially, because at the time of writing (May 1992) the long-heralded 3-Volume Report of the more ambitious Venice Conference on Diffusion has still not appeared. When it does appear, like other products which are late to market its diffusion is likely to be severely handicapped by the availability of this more up-to-date product. This is a pity because the Venice Conference was more comprehensive and included papers from a wider range of economic theorists. Nevertheless, the 24 papers in this IIASA Conference Report do together provide a good overview of the current state of the art in diffusion theory. It is clearly not possible to review all of these 24 papers, but among the most interesting are those by the two editors: Griibler’s paper on long-term patterns of diffusion and discontinuities and the paper by Nakicenovic on ‘Diffusion of Pervasive Systems’ - the case of transport infrastructures. Griibler also has a joint paper with Dominique Foray on the diffusion of ferrous casting technology in France and Germany and on morphological analysis of this case. These are the papers which best come to grips with the integration of the new findings of empirical research into new theory. The earlier generation of diffusion models were subjected in the 1970s and 1980s to some rather fundamental criticisms: they tended to ignore changes in the product and the external environment during diffusion; and they frequently failed to take into account the systemic features of innovation diffusion, i.e. the technical and economic inter-relatedness of clusters of innovations and the social context. The papers by Griibler and Nakicenovic cannot be criticised on these groups: they deal specifically with clustering phenomena, with the systemic features of technical change, with hierarchies of diffusion processes and with the substitution of one technological system by another in a changing
265
Book reviews
international environment. They succeed in presenting a convincing and original account of successive generations of transport systems. Their work is insufficiently reflected in those other papers which attempt an overview of the field. Nevertheless, there is a good introductory survey of the whole Conference by Ausubel with the vivid title ‘Rat Race Dynamics and Crazy Companies’ and there is an extremely thorough review by Mahajan et al. of ‘New Product Diffusion Models in Marketing’. Finally, the two chapters by Dosi and by Silverberg respectively go beyond their earlier work in the field and represent a major advance by the evolutionary economists in their theoretical analysis of the economies of technical change. This is a book which is well above the average standard of compilations of conference papers in the quality of its contents, in the technical presentation of the publication, and in the speed of its appearance. University Sytse Douma and Hein Schreuder, Economic (Prentice Hall, UK, 1992) pp. x+ 185, paper.
of Sussex,
Approaches
Chris Freeman Brighton, UK
to Organizations
Casual observation suggests that the field of Economics of Organization has recently recorded impressive gains in popularity. This popularity is no doubt due to the questions the field asks. In asking ‘why organization? one forces must inquire into ‘why not markets ? The existence of organizations economists to confront long held assumptions about the workings and costs of markets. It is impossible to learn about organizations without simultaneously learning about how markets really work. Other questions involve the boundaries of the firm (degree of integration), the distribution of decisionmaking rights over production activities, and how organizations interact with one another in the market place. So far, several different approaches have emerged, each aiming to answer some or all of these questions and/or a few of their own. Douma and Schreuder’s objective is to summarize and organize some of the themes of the more prominent theories in the Economics of Organization. The first four chapters introduces the reader to some basic concepts of both economics and organization. The first chapter sets the conceptual framework by focusing on how markets and organizations might coordinate economic activity and use information differently. The second chapter is an introductory lesson in microeconomics. The third chapter tries to categorize organizations according to their primary coordinating mechanism. For instance, an entrepreneurial organization uses direct supervision, whereas a diversified organization might standardize its output to coordinate production activities. Chapter four concludes this part of the book with a discussion of information. Here the authors introduce uncertainty, unobservability and
263
where performance measured by profit rates led to diversification into unrelated industries, using bookkeeping methods to increase stock values, absorption of other firms, and using financial controls to allocate capital internally. In other words, management by numbers and the inherent shortterm views of business prevalent on Wall Street in the 1980’s. Fligstein provides impressive evidence in the form of case studies, narrative, and quantitative analysis and this book is an interesting read for either the broad story told or for the copious detail on anti-monopoly legislation. While ambitious Fligstein’s book overlooks other areas of corporate innovation. For instance, little attention is paid to attempts by business to control the political arena in ways similar to their attempt to control markets. Yet, this ‘flaw’ is minor and would have drawn attention away from the thrust of the book.
University
of Maryland,
College
Alan Neustadtl Park, MD, USA
N. Nakicenovic and A. Griibler (Eds), Diffusion of Technologies and Social Behavior (Springer Verlag and International Institute for Applied Systems Analysis, Berlin and New York, 1991) pp. 605, no index, $140.00 (cloth). Thirty years ago it was reasonable to complain that economists were ignoring both the empirical and theoretical aspects of the diffusion of innovations. Rogers could find only one empirical study of diffusions of innovation by an economist during the 1950s whilst there were many by sociologists and geographers. This volume is one of several which demonstrate that this situation has changed fundamentally. Whilst it contains contributions from natural scientists as well as from other social science disciplines, about half of the 24 chapters are by economists. The range is wide. The spatial epidemic model is represented in a paper on AIDS in Ohio by Casetti and Cindy Fan; there is a bold paper on democratisation which concludes that contrary to the Aristotelian cyclical view of political systems the spread of democratic institutions can be regarded as a long-term diffusion phenomenon; but the majority of the papers could be loosely grouped under the heading of ‘neo-Schumpeterian’ analysis. About half of these deal with theories and models and about half with empirical case studies. The international scope is also fairly wide although none of the papers deal with diffusion in the Third World or Japan. Most of the papers are by West Europeans and Americans but there is a particularly welcome contribution of two chapters by Russian economists. Sergei Glaziev, who is the author of one and co-author (with Kaniovski) of another is one of the new young generation who are now contributing
264
Book
reviews
actively to policy formation and implementation as well as to economic theory. Both the joint paper on modelling diffusion under conditions of uncertainty and his own paper on ‘General Regularities of Techno-Economic Evolution’ suggest that the contribution will be highly original but pragmatic too. The Russian papers and several others confirm not only that diffusion is no longer neglected by economists but also that it is of growing interest to policy-makers. At an earlier Conference on Diffusion in Venice in 1986, Paul David described diffusion policies as the ‘Cinderella’ of technology policy. As with Schumpeter himself, the main focus of policy-makers as of theorists was on major innovations and not on their diffusion. Several of the papers at this later Conference (1990) suggest that this too has changed; they refer with approval to those national policies which are already diffusionoriented and their reviews of new theoretical developments reflect this new emphasis. This volume is particularly welcome for several reasons but especially, because at the time of writing (May 1992) the long-heralded 3-Volume Report of the more ambitious Venice Conference on Diffusion has still not appeared. When it does appear, like other products which are late to market its diffusion is likely to be severely handicapped by the availability of this more up-to-date product. This is a pity because the Venice Conference was more comprehensive and included papers from a wider range of economic theorists. Nevertheless, the 24 papers in this IIASA Conference Report do together provide a good overview of the current state of the art in diffusion theory. It is clearly not possible to review all of these 24 papers, but among the most interesting are those by the two editors: Griibler’s paper on long-term patterns of diffusion and discontinuities and the paper by Nakicenovic on ‘Diffusion of Pervasive Systems’ - the case of transport infrastructures. Griibler also has a joint paper with Dominique Foray on the diffusion of ferrous casting technology in France and Germany and on morphological analysis of this case. These are the papers which best come to grips with the integration of the new findings of empirical research into new theory. The earlier generation of diffusion models were subjected in the 1970s and 1980s to some rather fundamental criticisms: they tended to ignore changes in the product and the external environment during diffusion; and they frequently failed to take into account the systemic features of innovation diffusion, i.e. the technical and economic inter-relatedness of clusters of innovations and the social context. The papers by Griibler and Nakicenovic cannot be criticised on these groups: they deal specifically with clustering phenomena, with the systemic features of technical change, with hierarchies of diffusion processes and with the substitution of one technological system by another in a changing
265
Book reviews
international environment. They succeed in presenting a convincing and original account of successive generations of transport systems. Their work is insufficiently reflected in those other papers which attempt an overview of the field. Nevertheless, there is a good introductory survey of the whole Conference by Ausubel with the vivid title ‘Rat Race Dynamics and Crazy Companies’ and there is an extremely thorough review by Mahajan et al. of ‘New Product Diffusion Models in Marketing’. Finally, the two chapters by Dosi and by Silverberg respectively go beyond their earlier work in the field and represent a major advance by the evolutionary economists in their theoretical analysis of the economies of technical change. This is a book which is well above the average standard of compilations of conference papers in the quality of its contents, in the technical presentation of the publication, and in the speed of its appearance. University Sytse Douma and Hein Schreuder, Economic (Prentice Hall, UK, 1992) pp. x+ 185, paper.
of Sussex,
Approaches
Chris Freeman Brighton, UK
to Organizations
Casual observation suggests that the field of Economics of Organization has recently recorded impressive gains in popularity. This popularity is no doubt due to the questions the field asks. In asking ‘why organization? one forces must inquire into ‘why not markets ? The existence of organizations economists to confront long held assumptions about the workings and costs of markets. It is impossible to learn about organizations without simultaneously learning about how markets really work. Other questions involve the boundaries of the firm (degree of integration), the distribution of decisionmaking rights over production activities, and how organizations interact with one another in the market place. So far, several different approaches have emerged, each aiming to answer some or all of these questions and/or a few of their own. Douma and Schreuder’s objective is to summarize and organize some of the themes of the more prominent theories in the Economics of Organization. The first four chapters introduces the reader to some basic concepts of both economics and organization. The first chapter sets the conceptual framework by focusing on how markets and organizations might coordinate economic activity and use information differently. The second chapter is an introductory lesson in microeconomics. The third chapter tries to categorize organizations according to their primary coordinating mechanism. For instance, an entrepreneurial organization uses direct supervision, whereas a diversified organization might standardize its output to coordinate production activities. Chapter four concludes this part of the book with a discussion of information. Here the authors introduce uncertainty, unobservability and