Mastering a New Role Shaping Technology Policy for National Economic Performance (1993) / Chapter Skim
Currently Skimming:
Strengths and Weaknesses of the U.S. Technology Enterprise
Strengths and Weaknesses of the U.S. Technology Enterprise
Pages 61-90
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From page 61... ...
economy's recent legacy of large fiscal and trade deficits, slow productivity growth, and the slow growth of U.S. living standards, these trends demand that economic development become a priority objective of U.S.
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From page 62... ...
Although the committee firmly believes these strengths should be sustained and built upon, it is now clear that these strengths alone will not enable the United States to meet successfully the technology-related challenges of a global economy. The committee also notes that most of these strengths, when pushed too exclusively, may, in fact, create deficiencies in other parts of the nation's technology enterprise.
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From page 63... ...
industry to develop, assimilate, and manage technology effectively for economic advantage. The preoccupation with technical originality throughout academic science and engineering and the preoccupation with phenomenological research and development of tools for analysis within engineering have led to an underemphasis on holistic design experience, manufacturing, and technology management in the curricula and re
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From page 64... ...
U.S.-based , Japan / 25% Other 16% United States 36% \ France ~5% I \/ United Kingdom / 8% West Germany 10% FIGURE 3.2 Home market share of world consumption of high-tech products: 1988. NOTE: Total high-tech consumption by the 25 member countries of the Organization for Economic Cooperation and Development are used as a proxy for world consumption.
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From page 65... ...
market.7 Import penetration of the U.S. economy was minimal during most of the postwar period, and the challenge of foreign competition was perceived as minor compared with that of other domestic firms.8 As a result, until recently there have been few strong incentives for the vast majority of U.S.-based companies to adapt their products to different requirements of foreign markets, or look abroad for new product or process technology.
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From page 66... ...
system of allocating investment capital, despite its unrivaled capacity for spawning new companies, does not do as good a job as it should at making available to technology-oriented businesses the patient capital they need to commercialize their technologies, to grow, or to modernize (National Academy of Engineering, 1992; Porter, 1992~. Whether the product of poor management, the inaccessibility of patient capital, or other factors, the end result has been that market leadership has migrated abroad in many highgrowth, high value-added industries or products that were pioneered by U.S.
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From page 67... ...
lIigh-Tech Industries 67 The continuing competitive strength and global reach of many U.S.owned companies in high-tech industries, such as aerospace, pharmaceuticals, chemicals, oil refining, computers, and software, contribute greatly to the strength of the nation's technology enterprise. These firms, which continue to excel in the "high end" of their respective global product markets, cultivate organizational competence and human technical resources worldwide.
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productivity growth rates (for both labor and total factor productivity) relative to a number of its major industrial competitors (Organization for Economic Cooperation and Development, 1992a)
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From page 69... ...
Within this framework the many constituent functions in the product realization process R&D, design, industrial engineering, production, and marketing have often been treated as discrete activities linked in sequence to reduce the need for interfunctional communication and to lower intrafirm transaction costs. Innovation within this organizational framework has also been treated as a sequential process; the development of new product or process technologies has been regarded as the preserve of a relatively insulated R&D department, or, as in the case of many manufacturing and service companies, an activity performed by outside vendors and suppliers but not in-house (Gomory, 1989; Kline, 1990; Lee, 19921.
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From page 70... ...
For the vast majority of the industrial work force, functional specialization has led to increasingly narrow job classifications, a generally low expectation of what a nonsupervisory worker can contribute, and a failure to take advantage of the firsthand experience and ideas of frontline workers. Within this context, much of American corporate management has come to regard investments in technology as a way to substitute for rather than upgrade the skills and performance of the work force.
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From page 71... ...
industry is having difficulty developing and using technology to sustained competitive effect. Companies will not achieve the fundamentals of competitive performance in this new environment continuous improvement of product quality, shorter product development cycles, higher rates of productivity growth, continuous product and process innovation, and rapid response to changing markets unless they radically change the way they organize and manage the product realization process in its entirety, particularly their most valuable assets, human resources (Dertouzos et al., 1989; Helm and Compton, 1992; Kline, 1991; Quinn, 1992; Womack et al., 19901.
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work force, underline major weaknesses in the scope and quality of the nation's efforts in job-related training and continuing education. The United States has one of the largest, most diversified, though poorly coordinated training enterprises in the world.
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From page 73... ...
investment in training and continuing education for the nation's nonsupervisory work force (both entry-level and established workers) are further compounded by the excessively narrow, task-specific focus of the relatively limited amount of training this segment of the work force receives.23 Because of its narrow
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From page 74... ...
The results of a comparative international survey of diffusion rates for a number of advanced manufacturing technologies (numerically controlled [NC] machine tools, industrial robots, computer-aided design [CAD1, flexible manufacturing cells and systems)
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counterparts but also relative to small foreign firms (Shapira et al., 1992; Tornatsky and Luria, 1992~.27 The causes of low investment and slow diffusion rates are hotly debated and complex. The most frequently cited explanations are the nation's low savings rate, the comparatively high cost of patient capital, the relative inaccessibility of capital for many small technology-oriented businesses, and the short-term planning and performance criteria of U.S.
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From page 76... ...
Just as private industry bears the principal responsibility for increasing its investment in research and development overall to meet the demands of global competition, so too are private companies chiefly responsible for overhauling their commercial R&D strategies and restructuring their R&D portfolios to this end. But it is clear that U.S.
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From page 77... ...
economy, as well as the competitiveness of U.S.-based industry.28 As argued in Chapter 2, rising technical intensity and complexity in many industries have raised the cost and uncertainty of many technology-related investment opportunities to the point where individual firms are increasingly likely to underinvest in promising areas of industrial technology (Tassey, 1992~. A growing number of private companies have responded to this challenge by engaging in R&D alliances, joint ventures, and consortia to share risks and costs associated with the development of a broad spectrum of generic technologies (Hagedoorn and Schakenraad, 1993; Mowery, 1987; Organization for Economic Cooperation and Development, l991b; Tassey, 1992; Vonortas, 1989~.
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From page 78... ...
Between 5 and 13 percent of their public R&D budgets were dedicated to "industrial development" alone. Despite a growing consensus regarding the need for greater public- and private-sector effort to close the emerging generic technology gaps in the nation's civilian technology base, formidable political as well as analytical impediments to public-sector action remain.
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TECHNOLOGY ENTERPRISE TABLE 3.1 U.S. Competitive Position in Critical Technologies 79 Technologies in which the United States is Strong Technologies in which the United States is Competitive Materials and Associated Processing Technologies Bioactive biocompatible materials Bioprocessing Drug discovery techniques Emissions reduction Genetic engineering Recycling and waste processing Engineering and Production Technologies Computer-aided engineering Systems engineering Electronic Components Magnetic information storage Microprocessors Information Technology Animation and full motion video Applications software Artificial intelligence Computer modeling and simulation Data representation Data retrieval and update Expert systems Graphics hardware and software Handwriting and speech recognition High-level software languages Natural language Neural networks Operating systems Optical character recognition Processor architecture Semantic modeling and interpretation Software engineering Transmitters and receivers Powertrain and Propulsion Air-breathing propulsion .
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From page 80... ...
The need for elected representatives and government officials to demonstrate concrete, short-term results to their constituencies may discourage them from investing much political capital in such initiatives. Moreover, the theoretical and empirical bases and the institutional frameworks for identifying and deciding how much to fund worthy areas of infrastructural or pathbreaking technology are weak and poorly developed.32 Underinvestment in Technical Outreach The growth of technical competence abroad, the revolution in production systems, and the increasing pace, intensity, and multidisciplinary char
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involved in the creation, development, and use of technology.33 Yet, there is evidence to suggest that the vast majority of U.S.-based companies have little interest in technology originating outside their own institutional boundaries, beyond U.S. borders, or outside the normal technological scope of the company.34 During the postwar era of U.S.
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From page 82... ...
Nevertheless, despite these trends there is considerable evidence that many U.S.-based firms are less interested and less effective at harnessing foreign technological capabilities and markets than their major foreign competitors. Despite widely acknowledged foreign competence and leadership in many areas of high technology, the United States continues to lead the world in disembodied technology exports (patents, licenses, etc.)
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The Nonsystem of Technology Policymaking During the past decade, changes in the global economic and technological environment and the continuing relative decline of U.S. economic competitiveness have amplified liabilities associated with the highly decentralized, poorly coordinated nature of U.S.
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As a result, the lessons of successful or failed policy initiatives are poorly disseminated throughout the enterprise as a whole and often quickly forgotten. In addition, the system is poor at identifying and setting priorities among challenges to the technology enterprise with direct consequences for national economic performance, and particularly poor at building constituencies in support of action at the national level.
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From page 85... ...
· Seek out and exploit foreign technology and markets more extensively and effectively. · Develop a strong institutional framework for federal technology policy in support of national economic development, and integrate the planning and implementation of federal technology policy with that of national domestic and foreign economic policy.
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From page 86... ...
For instance, well-developed venture capital markets increase the threat of market entry by new companies by reducing the costs of setting up and dissolving businesses. Ergas also notes that "the effects of potential competition are compounded by the far greater supply in the United States of potential entrants into advanced technology markets." As of the mid-1980s, he notes that "more than 15,000 firms in the United States [had]
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service sector dropped U.S. overall productivity growth to about a third of the average 1.5 percent growth rate for all OECD or advanced industrialized countries as a whole.
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The budget agreement established "fire-walls" between the defense and nondefense budget categories for the purposes of allocating spending cuts to help reduce the federal budget deficit. Given the tight constraints on the nondefense portion of the budget and mounting pressures within Congress for action to redress emerging weaknesses in the nation's civilian technology base, a number of small-scale programs designed to strengthen the nation's industrial technology base were categorized as "dual-use" and written into successive defense authorization and appropriations bills.
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32. The nature of the civilian R&D investments needed to bridge emerging gaps in the nation's technology base poses serious challenges to sound public policy action in this area.
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Intra-industry trade data also underline the anomalous position of Japan among advanced industrialized countries. See Lincoln (1990)
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