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Organisations, Innovation and Complexity: New Perspectives on the Knowledge Economy

9^th-10^th September 2004
University of Manchester, Manchester,
England, UK.

The growth of knowledge and complexity in an evolving network model of technological innovation

Saurabh Arora & Robin Cowan

UNU-INTECH and MERIT,
University of Maastricht, The Netherlands

Abstract

In recent papers, Stan Metcalfe (2000a; 2000b) has highlighted the restless nature of capitalist economies largely spurred by a decentralised process of knowledge production. This cumulative growth of knowledge takes place in an auto-catalytic fashion where one novel idea generally leads to another. In addition, the well-known concept of technological ‘paradigm shifts’ suggests that this cumulative process of knowledge growth is disrupted from time to time. The resulting discontinuity ushers in an era of knowledge growth constrained by a new technological paradigm. Finally, historians of technology have demonstrated the importance of complementary technologies and institutional structures in stimulating and stabilising specific innovations.

We develop a simulation model to address the above stylised facts and theoretical constructs about technological innovation using a complex systems approach, in particular, the concept of auto-catalytic networks. The model is based upon an evolving networks model by Jain and Krishna (2001). We demonstrate how a small cluster of core innovations, emerging as an auto-catalytic set in a stochastic model, evolves to become a complex and structured network of interrelated innovations. This network is graphically represented using a directed graph with positive weighted links between its nodes. The network eventually self-organises to a stable state with high connectivity and strong links. Subsequently, a discontinuity or ‘paradigm shift’ appears by chance when one of the core innovations is replaced, leading to the collapse of the existing network. We present results for a number of simply-parameterised institutional scenarios, such as the proprietary or open nature of standards affecting the evolution of the network of interdependent technologies.

References

Jain S. and Krishna S. (2001), “A model for the emergence of cooperation, interdependence and structure in evolving networks,” Proc. Natl. Acad. Sci. USA, Vol. 98, No. 2, pp. 543-547.

Metcalfe J.S. (2000a), “Co-evolution of systems of innovation,” presented at the Volkswagen Foundation Conference "Prospects and Challenges for Research on Innovation", Berlin, 8th - 9th June.

Metcalfe J.S. (2000b), “Restless capitalism: increasing returns and growth in enterprise economies,” ESRC Centre for Research on Innovation and Competition.

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