The dynamics of technological discontinuities : a patent citation network analysis of telecommunication switches

This work focuses on the long-term structural evolution of the telecommunication switching industry, analyzing both the technology and the firm level. The first contribution of this work is in the empirical representation of technological change. Following the growing field of research about the use of patent citation networks for mapping technological trajectories, this methodology is applied to the telecommunications switching industry. Furthermore, given the paucity of analytical tools for the analysis of patent citation networks from a technology dynamics perspective, a completely new method is developed. Loosely based on the notion of "inheritance of genes", some indicators of cumulativeness of knowledge are developed and used for detecting the emergence of new technologies within a patent citation network. The second contribution is in the tradition of evolutionary economics, that is to provide an in depth case study of industry evolution. In particular, following the Sectoral System of Innovation approach, a chapter of this work is devoted to the analysis of the structural evolution of the telecommunication switching industry. This corresponds to considering the industry long-term development and focusing on several aspects, such as the emergence of new technologies, changes in firms competences and skills, firms’ diversification and integration strategies, and the role of public authorities and institutions. The analysis of the structural evolution intends to enrich the bulk of appreciative theorizing about the co-evolution of technology and industry in an oligopolistic and regulated sector. This thesis includes both qualitative and quantitative research methods. The former mainly consist of the use of secondary sources and empirical data for reconstructing technology, industry, and firm evolution. The latter is carried out analyzing a patent citation network built using patents related to telecommunication switching granted between 1963 and 2001. Part I (chapter 2) introduces the reader to some theoretical issues covered in the thesis and provides the underpinning of what we could call the "general assumptions" of the thesis. These are: the theoretical support of an industry level study, the link between technology and industrial dynamics, and a cognitive approach to technical change. Finally, this chapter ends with the explicit stating of the research questions. Part II (chapters 3 and 4) represents a piece of qualitative research that focuses on the technological development and the industry structural evolution. In particular, chapter 3 provides a detailed account of technology evolution in telecommunication switches, whose aim is to highlight the technological history of telecommunication switches and which technological bottlenecks materialized. This chapter argues that technological progress in the industry follows a "challenge-and-response" pattern where the main driver appears to be the solution of emerging technical bottlenecks. Furthermore, this chapter also underlines the issue of performance measurement (i.e. service characteristics) stressing the "not-off-the-shelf" nature of telecommunication switches and the interoperability to other network infrastructures. Chapter 4 is an account of the structural evolution of the telecommunication switching industry from its infancy until recent years. As this means to consider several aspects both at firm and industry level, the chapter is divided in two parts. In the first part the industry is considered as a whole and for each period five dimensions are systematically discussed. These are: (i) market structure, (ii) barriers to entry, (iii) demand, (iv) relevant actors end their relations, and (v) source of knowledge and technology. In the second part firms are considered individually with special attention to their (common) genealogy, their national context, their technological competences, and their patterns of diversification and specialization. Part III (chapters 5 and 6) centers on the analysis of technology dynamics through the use of patent citation networks. In particular, the analysis tries to couple qualitative and quantitative research, moving beyond just considering patents as a "count unit" and considering also their descriptive contents. The analysis focuses on two aspects: (i) mapping the main flow of knowledge within a directed network using the established method proposed by Hummon and Doreian (1989) and (ii) the analysis of the newly introduced concept of knowledge persistence. We could consider these two chapters as an empirical counterpart of chapter 3, as they provide an empirical representation of the technological evolution and of the exploration of the available technological space. The first step of this type of analysis is the re-framing of the history of technology (chapter 3) in the technological paradigms and trajectories framework. This analysis examines the technological advance through the lenses of engineering heuristics and pinpoints what search strategies engineers used over time. In this setting, paradigms can be distinguished by looking at the stability of such heuristics, the need for new technological competences, and the emergence of new technical bottleneck. The second aspect of technology dynamics is knowledge persistence and the long term knowledge flows in the network. A patent citation network represents a system of knowledge generation and transmission (through citations), and this makes possible to identify the most successful patents in spreading their knowledge to later patents. This corresponds to study each patent citation structure from a global network perspective. In chapter 6 this is operationalized by using genetic concepts such as the Mendelian law of genes inheritance. Finally, in Part V, chapter 7 provides a summary of the main findings of this thesis, discusses their implications, and suggests future lines of research. As regarding industry evolution we can conclude that despite several waves of radical technological change this industry displays a "slow dynamics". This is rooted in a slow innovation process and adoption through long-term procurement contracts. Furthermore, looking at the major players reveals a large degree of heterogeneity in term of firms internationalization and telecommunication specialization. As regarding the empirical investigation of technology dynamics we can conclude that the proposed method is successful in clustering patents according to different technological paradigms. Furthermore, it emerges that the adaptation of a new radical technology (i.e. packet switching) to the telephony network took place through the intense exploration of a limited part of the available technological space.