High Technology and the Economics of Standardization

Robin Cowan

1/01/2005
(Original Publish Date: 2000)

When we observe an economy in the midst of an extended period of rapid and far-reaching technical change, we can usually identify episodes of disruption and episodes of stabilization. The technological system is disrupted as new technologies and techniques appear, and common ways of performing tasks are no longer acceptable or profitable. Users perceive the system losing its coherence as new techniques, demanding new skills and organizational structures, exist side by side with old, familiar ones. Social structures are strained and disrupted as the adoption of new technologies forces changes in labour patterns and practices, and introduces new incompatibilities and bottlenecks. By contrast, episodes of stabilization build coherence into the technological system-coherence both among the new technologies, and between new and old technologies. As the system matures, particular technologies evolve less rapidly. Users of these technologies are then able to adapt other parts of the system to overcome the bottlenecks and incompatibilities created by these technical changes. An integral part of this stabilizing process is technical standardization, which takes place either through an entire market adopting a single technology, or through modification and adaptation of existing technologies. As bottlenecks are alleviated, and standardization occurs, the strains on the economic and social systems in which the technologies are embedded are reduced, and they too become more stable.