Industrial Dynamics: A Review of the Literature 1990–2009

Abstract

This paper reviews the literature in the field of industrial dynamics (ID) as it has emerged since I first introduced the term in 1985. Nearly 8,000 articles in 12 major journals have been reviewed and classified under five broad themes that constitute the basic questions in ID: (1) the causes of industrial development and economic growth, including the dynamics and evolution of industries and the role of entrepreneurship; (2) the nature of economic activity in the firm and the dynamics of supply, particularly the role of knowledge; (3) how the boundaries and interdependence of firms change over time and contribute to economic transformation; (4) technological change and its institutional framework, especially systems of innovation; (5) the role of public policy in facilitating adjustment of the economy to changing circumstances at both micro- and macro-levels. Under each theme, the main findings and their implications for theory and policy are summarized. The paper concludes with a summary of the contribution of industrial dynamics to a better understanding of industrial transformation and economic growth and reflections on challenges for future research.

Keywords:

• Industrial dynamics
• literature review
• knowledge
• technological change
• institutions
• growth

Acknowledgments

Able research assistance by Sei-Myung Chang, Iman Seoudi, Tae-Kyung Sung, and Xiaoling Yu on earlier versions of this paper is gratefully acknowledged. Rongjia (Sarah) Zhang provided valuable assistance preparing the database for the present version. Constructive comments from the editor and two referees and from Gunnar Eliasson and Staffan Jacobsson are gratefully acknowledged.

Notes

This paper is a follow-up on “Defining Industrial Dynamics and Its Research Agenda” by Bengt-Åke Lundvall, presented at the DRUID winter seminar 1998 in Middelfart, and a joint paper by Carlsson and Lundvall (1998), “Industrial Dynamics Revisited: What Have We Learned?”presented at Bornholm June, 1998. Earlier versions of this paper was presented at the 25th DRUID conference, Copenhagen, 17–20 June 2008, at the Economic History Department, Lund University, 13 November 2013, at the International Joseph A. Schumpeter Conference, Jena, Germany, 27–30 July 2014, and at CIRCLE, Lund University, 23 September 2015.

¹ The focus on journals only may result in a certain bias against lengthier, more comprehensive works and may therefore also not reflect the true extent of work on certain themes. For example, I am aware from previous surveys on innovation systems (Carlsson 2006, 2007) that more than half of the publications in that area have appeared as books or book chapters.

² During the period of data collection, some journals did not provide abstracts for all articles, and there was limited availability to abstracts online, especially for the early years (SBE and JIS). In some cases (ICC), abstracts were constructed based on the full articles and typed into the database. As a result, data are not available for the early years for all publications.

³ In addition to those listed, we also collected abstracts from the Journal of Economic Behavior and Organization (1990–1999, 750 articles), the Journal of Economics and Management Strategy (1992–1999, 210 articles), and Technovation (1990–1999, 138 articles). These abstracts have not yet been coded and are not included in the analysis reported here.

⁴ There are several biases built into the methodology. In order to manage the massive body of research, it was necessary to limit the review to certain journals, not books. This means that some broad topics may not be captured well in the analysis, although I have tried to compensate by referring to seminal works published outside the journals covered here. In particular, there are clearly influential works published prior to the time period (1990–2009) reviewed. Also, in some themes, there are more topics than I could summarize within reasonable limits in the text. In addition, articles with broad topics may not be captured well in the classification system, even if they are classified in several categories; only “main topics” are summarized in each category. Further, the analysis is limited to abstracts, not full texts. This may have resulted in misclassification of articles, particularly those whose abstracts do not accurately represent the content and contribution of the articles. In the course of the analysis, I sometimes found it necessary to reclassify articles under different themes than in the original classification.

⁵ As mentioned earlier, another 1390 abstracts were also collected for three additional journals (Technovation, Journal of Economic Behavior and Organization, and Journal of Economics and Management Strategy), but these have not yet been classified and analyzed. Abstracts have also been collected (but not yet analyzed) for 1,483 articles in Regional Studies from 1990 to 2009.

⁶ Since numerous articles were classified in more than one category, the column sums in Table 3 exceed the total number of ID articles.

⁷ Other journals were the Journal of Business Venturing (founded in 1985), Family Business Review (1988), Entrepreneurship and Regional Development (1989), and Small Business Strategy (1990).

⁸ The distribution by theme is sensitive not only to the classification criteria used but also to the journals included in the analysis. For example, the inclusion of two economic geography journals increased the coverage of geographic dimensions of the literature. And if journals such as Technovation, the Journal of Economic Behavior and Organization, the Journal of Economics and Management Strategy, Management Science, and other management-oriented journals such as the Academy of Management journals and Administrative Science Quarterly had been included, the distribution by theme would surely be different.

⁹ “Institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction. In consequence they structure incentives in human exchange, whether political, social, or economic. Institutional change shapes the way societies evolve through time and hence is the key to understanding historical change.” (North 1990, 3)

¹⁰ It is interesting to note that of the 750 articles on innovation systems up to 2003, about 300 (40%) were published in journals and the other 60% in books or edited volumes (Carlsson 2007).

¹¹ A complex system is defined as “consisting of many diverse and autonomous but interrelated and interdependent components or parts linked through many (dense) interconnections. Complex systems cannot be described by a single rule and their characteristics are not reducible to one level of description. They exhibit properties that emerge from the interaction of their parts and which cannot be predicted from the properties of the parts” (www.BusinessDictionary.com).

¹² For a discussion, see Carlsson (2013).

¹³ The size distribution of firms is an important outcome in IO but is viewed as part of industrial transformation in ID.

¹⁴ Other examples are Carlsson (1979) and Dahmén and Eliasson (1980).

¹⁵ The literature on innovation systems has been reviewed previously—see Carlsson (2006), (2007)

¹⁶ The technological system concept was originally applied at both the technology and the sector levels (Carlsson 1995).

¹⁷ Some important contributions, such as Eliasson (1985, 1987, 1991), have not been published in the journals reviewed here.

¹⁸ i.e. not industry- or product-oriented.

¹⁹ Even though work on the Swedish micro-to-macro model was begun in1974.