Complex Dynamic Processes in the Evolution of Early Information and Communication Technologies

Abstract

The creation of novelty and its subsequent retention or elimination by evolutionary mechanisms is a central theme in complexity studies. By examining the evolution of three information and communication technologies, this paper explores linkages between variety generation, selection and propagation. Tensions are identified between the benefits of variety to meet diverse user needs and the value of standardization to facilitate exchange. In ICT industries, the usefulness of a product or service increases with numbers of users. The benefits of interoperability, the facilitation of complementary technologies around a standard and user switching costs are among network externalities. These contribute to the emergence of dominant designs and standard protocols, which reduce the variety of enabling or platform technologies but increase complementary product and process innovations. The linkages between evolutionary selection and propagation in ICT have accelerated the pace of innovation, but could in principle have the reverse effect, unless the effects of asymmetries of market power and proprietary standards are offset. Long term support for science and technology and entrepreneurial activity provide exogenous sources of variety that can renew innovation.

Keywords: Complex dynamic processes, industry evolution, technological evolution, evolutionary processes, variety generation, selection processes, diversity, innovation, ICT

JEL Classification: L23, L63, O31, O33