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1977, 1982; Dosi 1988; Malerba and Orsenigo 1993, 1995, 1996; Dosi et al.
1995; Marsili 2001). In the words of Nelson and Winter, 'industries differ
significantly in the extent to which they can exploit the prevailing general
natural trajectories, and these differences influence the rise and fall of dif-
ferent industries and technologies' (1982, pp.59‒60). The same concept
of technological paradigm also implies that there is a close link between
technical progress, organization and also socio-economic institutions. By
definition, any radical innovation to some extent brings about transfor-
mations in the organization of markets, production and communities.
Therefore, organizational and institutional changes are inextricably asso-
ciated with technological change and these interrelationships characterize
the evolutionary development of socio-economic systems (Freeman and
Perez 1988; Foray and Freeman 1993).
The two archetypical types of technological regimes can be traced
back to the different interpretations of innovative processes given by
Schumpeter (Freeman 1982a). The first type of technological regime,
which is labelled as
Schumpeter Mark I
(
SMI
), is that of 'creative destruc-
tion' and this is first discussed in the
Theory of Economic Development
(Schumpeter 1934). This is also known also as the science-based regime
(Nelson and Winter 1982; Kamien and Schwartz 1982), in which the
evolutionary dynamics are driven by entrepreneurs who launch new firms
that embody new business conceptions and ideas and consequently chal-
lenge the incumbent firms, thereby continuously disrupting the established
procedures of production, organization and distribution. In contrast,
the second type of technological regime, labelled as
Schumpeter Mark II
(
SMII
), is that of 'creative accumulation', the nature of which was first
discussed in
Capitalism, Socialism and Democracy
(Schumpeter 1942).
This technological regime is also known as the cumulative technology
regime (Nelson and Winter 1982), in which learning is highly cumulative
in established large firms which rely on large in-house stocks of knowl-
edge, strong institutionalized R&D capacity, tightly controlled produc-
tion and distribution facilities, and sophisticated managerial and financial
resources, in order to create high barriers to entry into the industry.
These two profoundly different insights have been investigated by dif-
ferent strands of empirical research. By adopting an industry life cycle
approach, some scholars have pointed out the regularities which exist
regarding how firm entry and exit, market structure and technological
change all vary from the birth of technologically progressive industries
through to maturity (e.g., Utterback and Abernathy, 1975; Klepper,
1996). In the early stages of an industry, when technology and demand
are not established, industries are typically associated with a high degree
of uncertainty and barriers to entry which are generally very low and the
