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for Research on Innovation and CompetitionCentre
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It is one of the most persistent legacies of Schumpeter's influence that the study of innovation is still approached almost uniformly from a supply side perspective. As Harvey et al (2000) describe it this constitutes a fundamental inadequacy of the innovation studies literature with respect to explanations of demand and consumption. Even those approaches which do consider users - social shaping of technology, new product development - contribute little to the analysis of the consumption of products, particularly final consumption. Consequently, a major factor determining market demand for new products, the use that potential purchasers might have for them, is seriously under-analysed. Ignoring the practical context of use obscures the interconnection between producers and consumers.
Some of CRIC's theoretical work has therefore been centred on developing a theoretical framework for understanding the elaborate links between production and consumption, in significant part by trying better to integrate the insights of the burgeoning sociology of consumption into explanations of innovation.
Our work here falls under two general themes.
Theme1. Social Practices, Needs and Demand
The key to the analysis of the relationship between production and consumption is a revision and reapplication of the distinction between use and exchange value. By reiterating that the focus of firm behaviour is to achieve sufficient return on their investments by selling goods and services, which entails ever more sophisticated procedures for estimating and creating demand for both new and old products, we can understand the strategic concern of firms with customers. In a strong sense, entrepreneurial firms continually seek to make, or at least re-define, markets and have a series of techniques at their disposal - market research, advertising, branding, user trials and so forth. Yet they are not particularly effective at anticipating whether there will be sufficient demand for new products, that sufficient purchases will be forthcoming. From their point of view consumers are unpredictable and volatile - but also necessary!
Anticipating future demand, a profoundly difficult task, requires insight into the development and logic of social practices. More attention must be paid to the social practices which generate needs and wants, that is, by considering in greater depth the utilisation of goods and services. Collective practices, reproduced and improvised upon by the agents conducting them, lie at the centre of our approach to consumption. Many things can only be meaningfully consumed within the boundaries of practices, which are social, cumulative and governed by convention. Outside of social practices, much consumer behaviour does not make sense. The collective development of a practice is a source of innovation in demand. As Swann (2000) notes, Alfred Marshall conceived of the expansion of demand as a process whereby activities generated wants, rather than vice versa. Progressively, practices generate new wants which, often, come to be satisfied through commercial channels. Practices, by definition inventive, result in objects developing uses and meanings that were never intended by their designers and manufacturers. Further adaptation brings forth yet more new products, sometimes commercially sourced, sometimes the outcome of private and communal endeavour.
One insight gained from focusing other than upon exercises of individual decision-making in the market place, is that much consumption is surreptitious, highly constrained and unremarkable (Gronow & Warde, 2000). Everyone's consumption is characterised, among other things, by acquiescence to external pressures, routinisation, normalised expectations, vicarious acquisition, personalised appropriation, the dictates of convention and framing by public provision. These are processes which cannot be grasped, and indeed would normally be considered irrelevant, in economists' accounts of demand. For while demand concerns selection, in accordance with preferences, among commodities, consumption addresses in addition the appropriation, through multiple and social uses, of goods and services emanating from non-market as well as market sources.
We have coined concepts of ordinary, conventional and inconspicuous consumption to highlight many neglected aspects of behaviour. We have thus been able to raise issues of environmental sustainability, to emphasize the way in which demand for particular items depend on both technical and social infrastructures, to register the central importance of habitual, repetitive and routine behaviour and to restore a focus on the use-value of consumption.
Much consumption is situationally-entailed, where convention requires a particular course of action. Demand will often be generated indirectly, as when new tools require complementary products for their effective adoption. Modern domestic appliances imply an infrastructure of water and electricity supply, fast cars beg for motorways, electronic retailing requires an extensive network of reception equipment. Subsidiary consumption also escalates general demand. Demand increases as the social rules governing subsidiary consumption change; for instance when different forms of sport and exercise each require special clothing, participation entails new types and levels of purchasing of garments. Another source of increasing demand is the insertion of old or established products into practices which previously had no place for them. The installation of radios, cassette players and CDs into automobiles incorporated cultural consumption into the practice of motoring. This is part of the intensification of simultaneous consumption, an inescapably normal process because people typically engage in several consumption practices at the same time, but one which helps explain the vast expansion of the items conventionally defined as necessary for anyone to live a normal life.
Considering the nature of everyday practices which involve a moment of consumption, reveals the relayed effects of practice on the chain of activities which links together production, distribution, retail and demand. More ever, the focus on everyday practice makes it much more likely that the impact on consumption behaviour of social trends, changes in social structure and institutions, and the differential distribution of income and cultural capital, can be properly accounted for.
Theme 2. Consumption and Time
In the orthodox economic analysis of the relation between prices, incomes and demand it is taken to be the case that individuals optimise their choices within the limits of their real income. It is also assumed, implicitly, that consumption takes no time. This strand of work has sort to develop an alternative approach to demand theory in three dimensions:
- Boundedly rational and routine-based consumption behaviour derived from recent advances in behavioural psychology, the so-called 'amelioration' hypothesis;
- The role of the consumer as an active innovator in relation, in particular, to the uses to which new commodities are put;
- The constraints placed on consumer behaviour by the fact that consumption requires the use of time as well as the disposition of income.
These three themes are integrated in Metcalfe (forthcoming2001) in which the combination of time and income constraints is matched with the melioration hypothesis to produce an analysis of demand that answers all the normal 'economic' questions in a distinctively different way. The regularities in behaviour that follow reflect the deep role of routines and their social contingency. As far as is known this is one of the only evolutionary accounts of consumer behaviour in the existing literature.
In relation to theme 1, the inspiration for CRIC's theoretical reformulations have been partly from considering service provision, particularly those involving face-to-face or otherwise interactive delivery which have a different logic to manufactured goods (Miles, 1999), but especially from the study of the food chain. Reflection on the role of supermarkets makes particularly clear the significance of the interdependencies between different episodes in the circuit of production and consumption.
One of the central features of an analysis which places demand within a changing, macro-social configuration of production-distribution-retailing-consumption is that the structure and role of retail outlets is a key market institution facing both ways - towards the consumer, and towards distribution and production. Different product markets (houses, cars, clothes, food) each have distinctive structures to retailing, and these also vary considerably from one country or region to another.
If we take demand and consumption for food as an example, the unique rise in power and influence of UK supermarkets has changed the relationship between supply and demand, and both patterns and objects of consumption.
Thus a change in the nature of retail outlets is constituted in a number of interrelated changes in the retail-consumer relationship and in the retail-producer/supplier relationship. New demand structures, distinctively economic, are related to new consumption practices, how people are organised around the consumption of food, and how food as an object of consumption is also transformed.
Significance of Results and Outcomes
In relation to the work under theme 1, the example of the food chain can also be used to point to another key tenet of CRIC's position. Consumption (though by definition not demand) occurs and is provided for through several other modes besides the market. Many items provided through other institutional channels - the state, the community, the household. The social relations surrounding consumption practices vary by the mode of their provision. An identical object will often have a different meaning for its owner if it was received as a gift. Obligations of reciprocity and symbols of affect attached to gifts cement social relationships in particular ways. But the process is complex, partly because several modes may be called upon simultaneously. For example, Christmas festivities involve both the exchange of presents, which are a mixture of commodities and home-made goods, and the delivery of domestic services of hospitality and entertainment.
Public debate about the replacement of state provision by markets has concentrated on how the price and quality of services is affected. A matter still of relevance politically, it is perhaps even more important theoretically for, generally, too little attention is paid to the consequences for social relations of substitution of one mode of provision for another. Substitution, viewed as historical process, might additionally serve as a useful frame for analysing the connections between consumption and social change. Study of the comparative development of consumer societies is in its infancy (though see Therborn, 1995: 139-46). Processes of commodification and de-commodification, of bureaucratisation and informalisation, of centralisation and de-centralisation in the realms of consumption together lie behind the dynamics of innovation in modern societies.
Our work under theme two, has developed an alternative to optimal theories of consumer choice. The deeper significance of this is to open up fruitful avenues for treating innovation in the pattern of consumption for which we have gathered some compelling historical evidence. Although this work is very provisional in scope it points to the fruitfulness of giving the consumer a far more active role in the innovation process. It is a bonus that this can be achieved without dispensing with a formal theory of the demand side of the economy. One important aspect this opens for further study is the time economising aspects of new consumer goods and services, a point particularly relevant to many new media technologies.
Harvey, M., Beynon, H., and Quilley, S. (2001) The Human Tomato. Rivers Oram Press
Harvey M, McMeekin A, Randles, S, Rutter J, Southerton D, Tether B & Warde A (2000) 'Demand, Consumption and Innovation: An Emerging Agenda', CRIC Discussion Paper No. 40
McMeekin, A., Green, K., Tomlinson, M. and Walsh, V. (2001) Innovation by Demand: Interdisciplinary Approaches to the Study of Demand and its Role in Innovation, Manchester University Press.
Metcalfe, J.S., (2001), 'Consumption, Preferences and the Evolutionary Agenda', Journal of Evolutionary Economics.
Miles, I., (1999) 'Services and Foresight', Service Industries Journal, vol 19 no 2 pp 1-27
Gronow J & Warde A (eds.) (2000) Ordinary Consumption
[Back to projects]
CRIC has combined with PREST to form the Manchester Institute of Innovation Research (MIoIR).
New book: Trust in Food, A Comparative and Institutional Analysis by Unni Kjaernes, Mark Harvey & Alan Warde.
CRIC Final Report to ESRC:"Main Report" and "CRIC Performance Indicators 1997-2006".
'Instituted Or Embedded? Legal, Fiscal and Economic Institutionalisation of Markets' by Mark Harvey
'Beyond Efficiency and Market Shares: Competition within the Finnish Games Industry' by Mirva Peltoniemi
'Accounting for Economic Evolution: Fitness and the Population Method' by Stan Metcalfe
'Innovation and Final Consumption: Social Practices, Instituted Modes of Provision and Intermediation' by Andrew McMeekin & Dale Southerton
'Alfred Marshall’s Mecca: Reconciling the Theories of Value and Development' by Stan Metcalfe