Learning and path-dependence in the diffusion of innovations: comparative evidence on numerically controlled machine tools

Abstract

Before the decline of the U.S. machine tool industry and the rise of the Japanese one over the course of the 1980s, the development and diffusion of numerically controlled (NC) machine tools in the two countries occurred along different trajectories. While the closed-loop design had emerged as the dominant product configuration in the U.S. market since the invention of NC in 1952, advances in component technologies led to the development and commercialization of the simpler open-loop systems in the mid-1960s. Their diffusion in Japan was much greater than in the U.S. and essential to the creation of a market for low-cost NC machine tool. The paper argues that the differences in the diffusion of the two designs resulted from the path-dependence engendered by the learning processes according to which the two markets evolved. In U.S., the development of the technology and the emergent industry structure fostered a trajectory of producers' and users' learning that emphasized the machining precision of NC. In Japan, the development of the technology focused on its benefits for manufacturing flexibility. This paper analyzes how the different perceptions of the technology influenced the strategies of firms in the industry, the adoption behavior of users, and thus the market outcome of the diffusion processes.