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Research Policy 29 Ž2000.

1033–1046
www.elsevier.nlrlocatereconbase

Innovation regimes, R & D and radical innovations in


telecommunications
Helge Godoe )
Norwegian Institute for Studies in Research and Higher Education, HegdehaugsÕeien 31, N-0352 Oslo, Norway
Received 8 April 1998; received in revised form 27 May 1998; accepted 30 July 1999

Abstract

By introducing the concept of innoÕation regimes, the aim of this article is to show how the rapid pace of technological
development in the telecom sector may be explained by the close links between the sector’s own R & D and the creation of
numerous innovations, many of which are radical. In contemporary innovation theory, a theoretical antinomy exists:
Whereas, the creation of incremental innovations is variously explained in terms of «rational» responses to markets,
dynamics of technological regimes, dominant design, etc., radical innovations, in contrast, are explained in terms of
serendipity, chance or haphazard scientific discoveries. Evidence from analysis of innovations in the telecom sector suggests
that innovation regimes have provided a capability of coordination, direction and leadership in the creation of many of the
radical technological innovations that have emerged in the sector. Thus, one may claim that the strong innovation regimes
and high R & D intensity of the telecom sector, at least until recently, have provided a capability of creating innovations on
purpose — for a purpose. The policy implications of this contradict some of the assumptions on which the prevailing
market-oriented R & D governance models and policies are based — and which are supported by contemporary innovation
theories. q 2000 Elsevier Science B.V. All rights reserved.

Keywords: Innovation theory; Innovation regimes; Radical innovations; R & D policy; Telecommunications

1. Introduction: explaining rapid technological vations are variously attributed to haphazard scien-
development in telecommunications tific breakthroughs, chance, serendipity, etc. Con-
trary to this, empirical evidence in telecommunica-
The rapid pace of technological development in tions suggests a systemic relationship between sci-
telecommunications is based on a stream of innova- ence and technology-based R & D and the emergence
tions, many of which are radical. However, explain- of radical innovations, mediated by what may be
ing this in terms of current innovation theory is termed innoÕation regimes. Thus, one may claim
difficult. In current innovation theories, radical inno- that radical innovations may be created on purpose
— for a purpose. If this is accepted as valid, it will
require adjustments of how innovation theory ex-
plains the creation of innovations, in particular, radi-
)
Tel.: q47-22-59-51-72; fax: q47-22-59-51-01; cal innovations. However, in terms of policy implica-
E-mail address: helge.godo@nifu.no tions, this provides support to the rationale of long-

0048-7333r00r$ - see front matter q 2000 Elsevier Science B.V. All rights reserved.
PII: S 0 0 4 8 - 7 3 3 3 Ž 9 9 . 0 0 0 5 1 - 7
1034 H. Godoer Research Policy 29 (2000) 1033–1046

term, basic and strategic R & D, organized in innova- telecommunications which may be compared to other
tion regimes. sectors, the evolution of telecommunications has been
The rapid technological development and innova- rapid and dynamic, in spite of the heavy regulations
tion diffusion processes in telecommunications ap- that dominate many parts of the sector and in spite of
parently contradict numerous conventional assump- the installed base logic. In comparison, other sectors
tions in explaining technological development. Ac- of industry where technological development is
cording to the logic of installed base ŽFarrell and mainly incremental seem to lack or have only weak
Saloner, 1986., this predicts technological conser- equivalents of the innovation regimes found in
vatism Ž «lock-in». as a network expands. However, telecommunications. Thus, for innovation theory and
in witnessing the rapid diffusion and development in analysis, which is the main focus of this article, the
telecommunications, this does not seem to occur, telecommunications sector offers a focal point for
which makes understanding this and the dynamics of further refinement of explanations, in particular of
network externalities more complex and challenging. how and why radical innovations may be created,
Until recently Ž1998., the telecom sector in most and how these contribute to rapid technological de-
OECD countries has been heavily regulated, usually velopment.
by means of national, state-owned PTT monopolies Following Krasner Ž1985, p. 2., an innovation
in telecom service provision and operations. Accord- regime may be defined as principles, norms and
ing to conventional wisdom and market liberalistic ideology, rules and decision-making procedures
ideologies, monopolies are antithetical to rapid tech- forming actors’ expectations and actions in terms of
nological development and general progress because, the future development of a technology, in this case,
lacking competition in markets, these generally fos- technology relevant for the future development of
ter bureaucratic, inefficient and omnipotent status telecommunications. As will be explained further
quo. Proponents of market liberalism claim Žcounter- below ŽSection 3., the innovation regimes of
factually. that the development of the telecommuni- telecommunications were constituted in various in-
cations sector would have been even more dynamic ternational cooperative organizations, mainly in stan-
in the absence of monopolies, because these are dards setting, i.e., technology oriented social net-
insensitive and unresponsive to its customers and works with a substantial participation of researchers
their demands. Although status quo and inefficiency and management from the R & D institutes in the
are salient characteristics of some types of industry. A radical innovation, in contrast to an
monopolies, this does not explain the variety in incremental innovation, may be defined as a novel
quality, degree of innovation and technology diffu- category, species or class of technological deviceŽs.,
sion and dynamism one may observe when compar- system or processrsolution, which represents a dis-
ing the various national telecom sectors. As evident continuity compared to predecessors Žif such exists.,
in OECD statistics ŽOECD, 1999., 1 one may ob- such as what is seen in comparing Samuel Morse’s
serve nations with a high degree of regulation Žuntil telegraphic device from 1835 with the communica-
recently., such as in the Nordic countries, having a tion computers used for today’s e-mail. The term
high rate of telecom penetration at lower costs than «radical innovations» will be discussed further be-
countries with more liberalized markets, such as the low. However, the conceptual framework of innova-
UK and USA, which liberalized their telecom sectors tion regimes allows the explanation of the creation of
for more than a decade ago. Although it is difficult, radical innovations as a rational outcome of strategy
if not impossible, to find satisfactory quantitative goals — at least this may be seen in the telecom
measurements of the rate of change and progress in sector. Understanding this may be important for
R & D policy in general: By fostering a radical R & D
strategy and sustained R & D effort, it is possible
Ži.e., realistic. for a firm, or a sector or nation to
1
Cf. OECD’s Communications Outlook 1999, Figs. 7.4 and 7.5
have radical innovations as a policy goal. In the
Žp. 165. on ‘‘tariff baskets’’ and Table 4.2 Žp. 74., which gives Zeitgeist of the 1980s and 1990s, what may be
scores on ‘‘Telecommunication access paths per 100 inhabitants’’. termed as a market-oriented R & D goÕernance mod-
H. Godoer Research Policy 29 (2000) 1033–1046 1035

els have gained a dominant position in R & D policy tern of a technological trajectory is well understood
— and this is supported by current innovation theo- and comparatively easy to observe. However, ex-
ries, as evident by the paradigmatic status of the plaining how and why new technological paradigms
‘‘chain-linked’’ innovation model Žcf. Kline and based on radical innovations emerge is not so clear
Rosenberg, 1986.. However, markets are inherently in innovation theory. This is not only an unresolved
conservative and reactive as sources of innovations theoretical problem; it also involves conceptual con-
because these usually do not have a rhetoric that is siderations related to the definition of radical innova-
capable of articulating demand for non-existent, radi- tions. Both aspects will be discussed below.
cal innovations. Even if efficient and creative in Dosi Ž1988, p. 1136. attributes new technological
matching supply and demand, markets are usually paradigms to science, claiming a direct dependence
incapable of organizing the risky, long-term and and link between major technological paradigms and
complex R & D processes needed for creating radical scientific breakthroughs. Sahal Ž1985. is more ex-
innovations Žcf. Chesbrough and Teece, 1996, p. 73., plicit: The emergence of what he calls systems inno-
as evident in the notion of market failures ŽMartin et Õations Ži.e., radical innovations. is attributed to
al., 1996.. An implication of explaining radical inno- chance, as opposed to necessity. The latter explains
vations as an outcome of serendipity or chance, or as the logic of a particular developmental pattern, fol-
a process that is so complex that it is difficult to lowing his notion of a technological guidepost.
understand ŽRycroft and Kash, 1994., may be that a However, chance, as the term implies, is different,
policy or strategy aimed at creating radical innova- equating the emergence of radical innovation to a
tions is a contradiction in terms, i.e., a fallacy or an stochastic process, analogous to mutation within
impossibility. However, the structural changes in bio-evolutionary theory. An elaboration of the latter
most industries Žglobalization, international competi- is provided by Mokyr, who employs the term
tion, deregulation, liberalization, etc.. are putting serendipity, claiming that: ‘‘Some cultural, scien-
high demands on increased capabilities for firms and tific, or technological ideas catch on because in some
nations to innovate. Combined with serious social way they suit the needs of society, in much the same
and environmental issues that also require a broad way as some mutations are retained by natural selec-
range of radical solutions or innovations, an inade- tion for perpetuation’’ ŽMokyr, 1991, p. 276.. Be-
quate theoretical understanding of how radical, R & cause of the high R & D intensity of the sector,
D-based innovations may be created is becoming Rosenberg ŽRosenberg, 1994, pp. 216–217., in his
serious. analysis of telecommunications, claims that in spite
of strong path-dependencies and ‘‘systemness’’, the
future course of technological development is unpre-
dictable. Thus, Rosenberg’s explanation contains an
2. The problem of explaining radical innovations element similar to Dosi’s.
In a broader perspective, one may claim that an
Numerous radical technological innovations intro- antinomy occupies explanations of technological in-
duced during the past decade have created new novations in innovation theory; two different and
telecommunications systems, services andror radi- inherently contradictory ‘‘laws’’ are utilized for ex-
cally modernized old ones, such as the telephone plaining innovations: Radical innovations, which are
network. Following current technological innovation explained as a result of chance, serendipity, genius,
theories, radical innovations may inaugurate the science, etc, making the future unpredictable, partic-
emergence of new technological paradigms, initiat- ularly in sectors which have a high R & D-intensity.
ing developmental patterns variously termed as Opposing this, incremental innovations are explained
‘‘technological trajectories’’ ŽDosi, 1988., ‘‘techno- in terms of necessity, making it possible for an
logical guideposts and avenues’’ ŽSahal, 1985. or analyst such as Dosi to claim that within a techno-
‘‘technological regime’’ ŽNelson and Winter, 1982., logical trajectory, innovations are ‘‘ . . . strongly se-
or ‘‘basic design’’ ŽRosenberg, 1982., ‘‘pattern of lectiÕe, finalized in quite precise directions, cumula-
evolution’’ ŽHughes, 1987.. The developmental pat- tiÕe in the acquisition of problem-solving capabili-
1036 H. Godoer Research Policy 29 (2000) 1033–1046

ties’’ ŽDosi, 1988, p. 1128 — emphasis by Dosi.. cro radical». This gives the analyst a more tuned
Furthermore, Dosi claims that developments within a analytical apparatus for categorizing various innova-
trajectory have elements of predictability as evident tions. However, in telecommunications, it is obvious
in technological forecasting. Following this, a radical that introduction of digital switching technology and
innovation which is created without serendipity is a packet switching, digital mobile radio communica-
contradiction in terms, because an innovation which tion, satellite communication, optical fiber networks,
is planned or anticipated, i.e., not created by etc. qualify as radical technological innovations. Prior
serendipity, is not radical. In this, «radical» is equated to their development and diffusion in the 1970s and
with surprise and spontaneousness. However, this 1980s, these technologies were non-existent, as
logic is flawed, because it equates how an innova- equipment and systems. In addition to this, their
tion is created Žserendipity. with what is created, introduction required massive reeducation of operat-
i.e., the content or substance, which in a radical ing personnel Žpast skills and knowledge became
innovation represents a discontinuity compared to irrelevant., new modes of organization, new skills
predecessors, if such exist. As evident in the litera- and perceptions, etc. These new technologies also
ture Žcf. Merton, 1968, pp. 157–162; Roberts, 1989; enabled the development and introduction of a broad
Andel, 1994; Campanario, 1996., serendipity is pri- range of new services and applications — and com-
marily a type of process for creating new knowledge, plementary innovations. Thus, in terms of technol-
thus having status similar to inductive or deductive ogy and internal organization as criteria, one may
methods. This explains why serendipity may be ob- classify these innovations as radical, as done in this
served in a broad range of discoveries and innova- article. However, for the general public outside the
tions — in incremental technological innovations as «black box» of telecommunication technology, this
in many other types of discoveries and innovations. may not be obvious. In their perception, telephony
In terms of the content of an innovation, serendipity has been stable for more than a century; «digital» is
is an epiphenomenon, regardless of the profoundness something mystical or trivial inside the black box.
or triviality of the discovery or innovation created. For them, telefax or Internet may represent some-
Still, the discussion of serendipity as a pre- thing radical because these services represent novel-
requisite of radical innovations is fertile because ties Ž «new to the world». and discontinuities com-
attention is also given to the definition of radical pared to previous media for communication of text
innovation. Earlier, a radical innovation was defined and information. Thus, who undertakes an analysis,
as a novel category, specie or class of technological whether the analyst is inside or outside the black
deviceŽs., system or processrsolution which repre- box, is also a factor in the classification of an
sents a discontinuity compared to predecessors, if innovation. In an analysis of technological innova-
such exist. The critical problem is, of course, to tion, being inside the black box provides an essential
determine what constitutes a discontinuity, i.e., crite- perspective.
ria in analysis — and who undertakes this analysis As will be evident, the analysis of radical innova-
or classification. The abundance of definitions found tions in the telecom sector will show that these to a
in contemporary innovation literature reflects the large extent may be explained in terms of an interac-
somewhat vague, qualitative aspects involved in the tion between R & D and the innovation regimes of
theoretical understanding of what constitutes a radi- the sector, the latter providing planning, will and
cal innovation. Furthermore, although definitions leadership to the creation of innovations, some of
may be analytically distinct Že.g.,: the dichotomy of which became radical. Thus, the antinomy based on
«radical» vs. «incremental»., forcing the complexi- a distinction between radical and incremental innova-
ties of the real world into these categories and tions becomes unsatisfactory. The essential theoreti-
definitions may pose difficulties. Thus, one analyst cal problem is how to explain the emergence of
ŽDurand, 1992. resolves this problem by introducing radical innovations and the simultaneous introduc-
a continuum for categorizing innovations, with the tion of a new technological paradigm. In discussing
value «radical» in one extreme and «incremental» at this as a weakness of the Nelson–Winter–Dosi-
the other, with an intermediary category termed «mi- model, van den Belt and Rip Žvan den Belt and Rip,
H. Godoer Research Policy 29 (2000) 1033–1046 1037

1987. suggest that the problem may be resolved by a component in what others prefer to call «cultural
further extension of Thomas S. Kuhn’s concepts of matrix». The conceptual framework of innovation
an exemplar Ži.e., radical innovation. in combination regimes will attempt to make these factors more
with a cultural matrix: This creates a new technolog- specific.
ical paradigm and subsequent dynamics of a devel-
opmental trajectory. Van den Belt and Rip’s point is
that this ‘‘conceptual reformulation’’ allows the in-
troduction of intentionality and expectation Žhuman
3. The innovation regimes in telecommunications
will. in explaining the creation of a new technologi-
cal paradigm. As an explanatory strategy, it has the
advantage of explaining technological development The concept of innoÕation regime was developed
as distinct from bio-evolutionary development. How- in a study ŽGodoe, 1995. in order to explain the
ever, even though the notion of an ‘‘exemplar’’ may innovations found in analyzing the R & D-based in-
be clear, ‘‘cultural matrix’’ needs to be specified, novations in telecommunications. Based on an ex-
because it retains some of the vagueness in Dosi’s post R & D portfolio analysis of a Norwegian tele-
attribution of novel technological paradigms to ‘‘sci- com R & D organization during a 10-year period
ence’’. A lead to this is provided by Chesbrough and Ž1980–1990., the study identified R & D results which
Teece when they observe that: «Because so many subsequently contributed to the creation of innova-
important innovations are systemic, decentralization tions in terms of telecom systems, services andror
wi.e., marketsx without strategic leverage or coordina- components, equipment and techniques. All these
tion is exactly the wrong organizational strategy. In innovations were created as results of an intimate
most cases, only a large company will have the scale and prolonged interaction with the international net-
and scope to coordinate complementary innovations» works and organizations in the telecommunications
ŽChesbrough and Teece, 1996, p. 73.. Basing this sector. The conceptual framework of innovation
claim on the analysis of innovations in the computer regimes was developed in order to explain this. In
industry — which has increasing similarity and inte- mapping how the innovations evolved, a salient fea-
gration with the telecom industry — this points to ture was how the R & D-activities were undertaken as
organizational and strategic factors, in particular an extensive cooperation, especially within the
leadership, direction and coordination of complexity framework of international standardization bodies,
as salient features in creation of large, radical inno- but also with the telecommunication equipment in-
vations. Somewhat similar, Rycroft and Kash Ž1994, dustry, universities, consultancies, other research in-
p. 623. advocate the need for a conceptual frame- stitutes, etc. However, participation in the activities
work for explaining how complex technologies are of some of the international standardization bodies
developed as an interaction between Ža. technology, was significant for numerous reasons. The study
Žb. the sociotechnical system and networks that de- confirmed what numerous analysts have observed: In
velop technologies Že.g., R & D., and Žc. metaphori- the development of telecommunications, technical
cal «holding companies» Že.g., the «military-in- standardization has a fundamental, strategic role Žcf.
dustry complex». for major areas of technology and Mansell, 1990, 1993; Rosenberg, 1994; Hawkins,
related policy. Even though Rosenberg Ž1994, p. 1996.. Of the standardization bodies, the most im-
205. claims that the future of telecommunications is portant were the following.
unpredictable because of the sector’s high R & D Ø NORDTEL, a formalized institution for coop-
intensity, he points in the same direction by advocat- eration among the Nordic telecommunication net-
ing that one should appreciate the role of govern- work operators. The successful cellular mobile com-
ment policy and systemness in telecommunications, munication system NMT, which was inaugurated in
i.e., the organizational factors. Thus, organizational 1981, was a direct result of the work initiated by
and leadershiprdirection factors in addition to a NORDTEL. The subsequent development of the
strong technological impetus have been given recog- GSM mobile communication system was also sup-
nition by some innovation analysts as being a critical ported by NORDTEL.
1038 H. Godoer Research Policy 29 (2000) 1033–1046

Ø CEPT, 2 together with EBU 3 and ESA 4 each CCITT in the latter part of the 1960s. In 1980, the
had a complex system of technology committees and basic, general standard for ISDN was sanctioned,
working groups aimed at technological standards initiating work on more detailed technical levels.
setting and development of pan-European telecom- ISDN has just recently been introduced as a service.
munication systems and services. Similarly with GSM: The concept emerged gradually
Ø ITU, 5 in particular groups working in ITU’s from 1979r1980, as a scenario of the ‘‘next genera-
sub-organizations CCITT 6 and CCIR 7 were impor- tion’’ of a public, land mobile communication sys-
tant in the creation of many new communication tem. Formally, work with GSM 8 in CEPT began in
systems and related standards. Similar to CEPT and 1982–1983, and the memorandum of understanding,
NORDTEL, these organizations provided mecha- in which most European network operators agreed to
nisms and a framework for R & D collaboration. In construct this system, was signed in 1986. After this,
addition to ITU, researchers participated in the activ- the detailed engineering and specification of the
ities of COST and ISO. system and related equipment began, based on the
In these bodies, telecommunication researchers general system architecture created earlier.
established contacts with colleagues from sister orga- Thus, the basic Žstylized and simplified. princi-
nizations, which provided a formal framework for ples consist of the following elements: First, a sce-
extensive interaction among people dedicated to a nario or vision based on a technological opportunity
common cause: creation of novel technological solu- or potential is put forward, most probably informally
tions and networks. As meetings in these bodies through the existing channels in the network. Then
often were held on rotation basis among the partici- various elements of this scenario are explored in
pants, researchers had ample opportunities to become R & D projects, in order to establish the realism
well informed of the R & D activities undertaken in andror requirements for further development of the
laboratories at sister organizations within their spe- concept. Then, perhaps in parallel, various drafts of a
cial field of research. Thus, these networks also formal system concept are presented and negotiated
constituted strong professional networks with a global in one of the bodies named above, in order to initiate
extension Žcf. Hawkins, 1996, p. 182; MacLean, a standardization process. If an agreement on this is
1999.. made, further work is carried out, in order to create
However, the most important aspect of this was technical specifications of the standard. Following
their focus of work: Standardization and harmoniza- this, the required technological components, software
tion of future technological solutions, i.e., solutions and equipment are created or searched for, tested,
that initially did not yet exist, but were or became field trails are held, etc. Finally, and gradually, the
‘anticipated’. This may be illustrated: The work on new service and networks or equipment Žmanufac-
the concept which later became ISDN, began within tured by the industry according to specifications. are
launched on the markets. If successful, it becomes an
innovation as it initiates a rapid diffusion and expan-
2
CEPT sCommite´ Europeene des Postes et Telecommunica-
sion process.
tiones. CEPT’s work with telecommunication standardization was The concept of a regime, as defined by Krasner
closed down in 1989, substituted by ETSI ŽEuropean Telecommu- Ž1985., was initially developed to characterize and
nication Standardization Institute., with HQ in Cannes, France. explain salient features and dynamics of international
3
EBUs European Broadcasting Union. alliances, such as formalized in NATO, OPEC, etc.
4
ESA s European Space Agency.
5
ITUs International Telecommunications Union is an UN or-
ganization based in Geneva. During the 1990s, ITU has been
reorganized and its sub-organizations CCITT and CCIR Žcf. next
notes. do not exist any longer. MacLean Ž1999. gives an account
8
of the present, reorganized ITU; Hawkins Ž1996, p. 179. explains «GSM» as an acronym is now euphemistically explained to
how this development evolved. mean «Global System for Mobile communication». Originally,
6
CCITT s International Consultative Committee on Telephony this acronym was an abbreviation of the French name «Groupe
and Telegraphy. Special de Mobilite»´ — a working group established in CEPT for
7
CCIR s International Radio Consultative Committee. this specific task.
H. Godoer Research Policy 29 (2000) 1033–1046 1039

Adopting the concept of regimes for explaining how and subsequent execution and implementation of
innovations in telecommunications are created may these agreements.
be fertile because the international cooperative bod- Even if minuscule, by participating in these sys-
ies, such as CEPT and ITU, provided a mechanism tems, small R & D organizations such as the Norwe-
for making decisions on existing and future Žoften gian could be a full-fledged member of systems that
non-existent. telecommunication systems and tech- were creating innovations as described above. At the
nological solutions. The individual actors in this, same time, its own R & D agenda was shaped by the
although representing national telecom operators, activities in these bodies, making it possible to con-
were homogenous in terms of a number of critical tribute to the process. Needless to say, participation
factors that normally facilitate decision-making and in these activities required political skills, making the
consensus creation, typical of close-knit peer groups term technological diplomacy Žcf. Hawkins, 1996, p.
Žcf. Mansell, 1990, p. 504; MacLean, 1999, p. 151.. 168. apt, because in the creation Žshaping. of stan-
The homogeneity could be observed in factors such dards for future systems such as GSM, based on
as educational background and professional experi- non-existent technologies, creating and designing so-
ence Žengineering, R & D in telecom high tech devel- lutions involved negotiations. However, participation
opment, etc.., high status and influential positions in gave the researchers access to the latest works in
their organizations, R & D interests, social values, their sister institutes and organizations and their part-
norms and ideals regarding the benefit of technologi- ners in the telecom manufacturing industry. This
cal development, and, not the least, even age and kind of reciprocal process was seen in the GSM
gender Žall male.. In a broad sense, no «language mobile communication system development: In this,
barriers» existed among the individual actors, i.e., a the Norwegian R & D organization’s contribution was
high degree of intersubjectivity in technological val- solution to the digital radio communication part of
ues and related ideology Žcf. Hawkins, 1996, p. 182.. the system architecture, based on R & D undertaken
As illustrated in the GSM-case earlier, CEPT pro- in collaboration with another Norwegian R & D insti-
vided the institutional structure and decision making tute. By this, the researchers were able to ‘‘shape’’
mechanism, making it possible for the actors through GSM in a direction believed advantageous to its
negotiation to reach agreement on creating the GSM owner, the Norwegian telecommunications operating
system. The formal commitment for constructing the company Žlarge investments were saved by this solu-
GSM system was made in a MoU signed by the tion compared to competing, rival solutions.. 9
telecom operating companies in 1986, however,
reaching this stage and — more significant — ful-
filling the future obligations of the MoU would not 4. Innovation regimes as a concept
have been possible without credibility and trust from
all the parties. The «glue» in this was created through The initial reason for constructing the term «in-
the interaction and decisions made within the GSM novation regimes» as a conceptual framework was in
working group in CEPT, and after the MoU was order to improve explanation of how innovations in
signed in 1986 — in the GSM consortium which telecom are created, particularly explanation of its
was established in Paris with the object of making radical innovations. An alternative explanatory ap-
detailed design of the GSM. This work was under- proach could be to employ the concepts and explana-
taken by R & D personnel and engineers form the tions provided by the notion of «national systems of
R & D organizations of the signatories of the MoU. innovation» ŽNSI.. The organizational and institu-
Thus, a broad consensus on an agenda combined
with parallel R & D agendas and institutional struc-
9
ture and decision making mechanisms constitute a The story of GSM became complex because the EC Commis-
regime, which becomes an innovation regime be- sion ‘‘discovered’’ that GSM could serve as a leveraged liberal-
ization of the telecommunications monopolies of Europe. This
cause of its intention of creating a future mobile aspect and its impacts on the GSM development after 1987 will
telecommunication system ŽGSM. based on as yet not be analyzed in this article. However, Hawkins Ž1996, p. 176.
non-existent technological system and solutions — provides an explanation of this.
1040 H. Godoer Research Policy 29 (2000) 1033–1046

tional mechanisms involved in technology standards factory for innovations in telecommunications, i.e.,
setting and R & D cooperation in the telecom sector in so far as our earth is divided into nations which
have elements or aspects which are isomorphic to have systems that undertake the actual work in creat-
that of a ‘‘national innovation systems’’ Žcf. Lund- ing innovations Že.g., R & D., this is only a neces-
vall, 1988, 1993; Nelson and Rosenberg, 1993; Niosi sary, not a sufficient element for explaining innova-
et al., 1993.. In Petrella Ž1992., this possibility of a tions in telecommunications.
similarity is explored as the idea of «globalization of Whereas a focus on the nation and its system
technobergs», as an emerging trend that will change level may be inadequate for the analysis of innova-
NSI. However, as evident in the analysis of McK- tions in telecommunications, the approaches offered
elvey Ž1991. analysis, there are no uniform defini- by actor network theory Žcf. Latour, 1987. with its
tions of the concept of NSI; the range of interpreta- particularistic focus may provide interesting insights
tions of what constitutes a NSI is broad. Even if on how an innovation emerges, through its emphasis
most of the proponents of NSI recognize the in- of the details of each stage in a developmental
creased importance of internationalization and glob- process. However, in this focus on the individual
alization as a factor influencing NSI, the main em- actors Žboth human and non-humans., the institu-
phasis and focus of analysis is on the nation and tional «glue» characteristic of an regime may be
individual national characteristics Žcf. McKelvey, difficult to observe and explain. Thus, following the
1991, pp. 118–120; Nelson, 1993, pp. 17–18.. Thus, methodology of actor network theory could render
Niosi et al. Ž1993, p. 212. define NSI as « . . . a interesting accounts of how an innovation evolved,
system of interacting private and public firms, w . . . x which in sum may provide a foundation for explana-
universities, and government agencies aiming at the tions, possibly giving support to the concept of
production of science and technology within national innovation regimes.
borders». They justify this position by stating that The global innovation system which constitute the
« . . . it may be worth remembering that most R & D innovation regimes in telecom may be of a type that
efforts of any industrial country takes place within van den Belt and Rip Žvan den Belt and Rip, 1987.
its national borders, and that multinational corpora- term a ‘‘cultural matrix’’ which creates an ‘‘exem-
tions only make a small share of their R & D activi- plar’’, i.e., new technological paradigms. However,
ties» Žp. 222.. Following a NSI perspective with a its formalized institutional characteristics makes the
focus on the nation, the strategic role and influence term ‘‘innovation regime’’ more apt and precise,
of international cooperation, which was important in because the sector, due to its innovation regimes,
the telecom sector, could be overlooked or underesti- was Žuntil recently. capable of continuously creating
mated. In spite of some structural similarities, an a broad range of innovations, many of these radical
innovation regime is something more and different innovations. Furthermore, these innovations were
from NSI: It is a mechanism which decides what outcomes of intentions: These were made on pur-
kind of communication systems and technology to pose — for a purpose, and not as results of serendip-
develop and create, in adÕance of its existence, ity. Thus, their degree of success, their ability to
based on scenarios of the future. Thus, it may create qualify as innovations, is also a measurement of the
new technological paradigms through a development rationality of the innovation regime. In contrast, the
process. A possible analogue to this for the automo- idea of radical innovations being created by a ran-
bile industry would be if they, within an international dom mutation-like process implied in the analogy to
cooperative mechanism, made an agreement on cre- bio-evolutionary theory is not satisfactory for
ating a radically new transportation system, based on telecommunications. Instead, it is the interactions
novel and still non-existent technological solutions between the R & D communities of the sector and the
which they agreed to create in the future. Thus, Niosi global or regional innovation regimes described
et al.’s assumption that because innovative activities above, which explains how the innovation regimes
are undertaken within national boundaries, creation are constituted. In addition, the recognition of strong
of innovations may be adequately explained in terms network externalities which may be obtained by
of systemic elements within the nation, is not satis- making future systems and services compatible
H. Godoer Research Policy 29 (2000) 1033–1046 1041

Fig. 1. Outline of innovation regimes in telecommunications.


1042 H. Godoer Research Policy 29 (2000) 1033–1046
Ž‘‘open’’ and ‘‘universal’’. also motivates these gain momentum. Consequently, the innovations and
regimes, i.e., the actors are generally interested in rapid technological development in the telecom sec-
finding these kind of solutions. In telecommunica- tor should not occur. Joerges Ž1988. has resolved this
tions, which is fundamentally a technical extension problem by making a distinction between large tech-
of social and cultural interactions and networks, the nological networks ŽLTN. and large technological
creation of compatibility has been perceived as programs ŽLTP., the latter defined as ‘‘ . . . prein-
mandatory: The more nodes a network or system frastructural systems oriented towards some quasi-
may access, the more valuable each single node will experimental set of technical, economic or political
become. However, this factor favours technological goals’’ ŽJoerges, 1988, p. 28.. LTP was coined to
stability. Thus, the challenge of telecom’s innovation distinguish the uniqueness of large scale efforts such
regimes has been to create new technologies which as the Aswan dam, the Chunnel and EU’s RACE-
are symbiotic or complementary to the old ones, program in telecommunications R & D. The fertility
which in turn explains why the innovations often of the concept of LTP is that it is possible to
appear as innocuous and smooth, incremental transi- elaborate the innovation regimes of telecommunica-
tions from the old, as illustrated by the introduction tions as extending over both LTP and LTN of
of digital technology in existing telephone networks. telecommunications: Whereas the LTN is properly
This point will be explored further below, in the explained in terms of diffusion related innovation
discussion of innovations in large technological sys- dynamics Ži.e., predominantly incremental innova-
tems. tions typical of large technological systems., the
According to Sahal Ž1985., the different rate and dynamics of LTP are dominated by R & D and tech-
degree of innovations observed in various sectors nology drive. If successful, a LTP will gradually
may be explained in terms of its topology of innoÕa- evolve into a LTN. The uniqueness of the telecom-
tion, 10 more so than any demand-pullrtechnology- munication sector apparently is its ability to initiate
push dichotomy. Extending this to telecommunica- and create new LTPs and develop these into LTNs,
tions, one could claim that the sector had a topology which in turn explains why the technological devel-
of innovation which was favourable to innovations, opment in the sector is rapid, in spite of being the
with its unique innovation regimes providing a dy- world’s ‘‘largest machine’’. This is conceptually il-
namic. However, by employing the conceptual lustrated below, in Fig. 1.
framework of innovation regimes, a plausible expla-
nation may be given as to why some sectors have a
particular topography. 5. Present day (late 1990s) innovation regimes
Generically, telecommunications is a large tech-
nological system Ž‘‘the world’s largest machine’’.,
with the inherent characteristics described by Hughes Due to liberalization and deregulation, many of
Ž1987.. Hughes developed his explanations based on the cooperative mechanisms that were active in the
an empirical material from the early stage of electri- 1970s and 1980s have either been restructured, as
fication. According to Hughes, radical innovations in with ITU and CEPT, or deteriorated. The latter is
large technological systems are antithetical, violating evident in the Nordic countries, where the PTT-
the conservatism inherent in these as they grow and owned telecom operators until early 1990s cooper-
ated extensively in the development of mobile com-
munications, cf. the development of NMT and GSM.
Since then, the cooperation has been abandoned, due
10
In Sahal’s explanation, some sectors or industries, for various to the introduction of competition and fear of anti-
reasons, are more dynamic than others in terms of technological trust legislation, which would now classify this kind
progress. Thus, if depicted as a ball rolling down a sloping of cooperation as collusion. Because of the general
landscape, the pace and direction of technological progress will importance of compatibility in communications, the
depend on the pattern on the ground, thus the term «topology of
innovation». According to Sahal, some industries Žlandscapes,
role and status of standard-setting bodies remains
topologies. may be characterized as having steep valleys, in which important. However, now these interests are main-
the ball Žtechnological progress. rolls fast, etc. tained largely by governmental regulatory bodies
H. Godoer Research Policy 29 (2000) 1033–1046 1043

outside the operational and R & D environment of the clients in business units in telecom operating compa-
telecom companies. Thus, the direct coupling which nies hesitate to give priority and support to activities
linked the innovation regimes to the actors of the involving cooperation in international organizations
sector which was salient in the past has become and networks. As this may imply close ties with
weaker. Still, one may observe processes and net- competing operators, clients express doubts if this is
works, often organized as international, industrial a viable strategy for securing future, proprietary
consortia Žcf. Hawkins, 1999., which may qualify as advantage, which is the main reason why they want
innovation regimes in the «classic» sense, as evident to pay for R & D. Thus, one may predict that in the
in the activities of the Internet Society 11 or the future, the impetus for innovation will originate less
TINA-C ŽTelecommunications Information Network- often in the sector itself than in the past, creating —
ing Architecture Consortium., both having extensive almost by default — what may seem as a «lock-in»,
international participation, however, with loci in which is typical of technological evolution in most
USA. The perspectives of these activities are ori- industries.
ented to the future creation of novel communication
systems, such as the future Internet II. Typically, as
6. Implications for innovation theory
the origin of Internet itself, this as an innovation
regime has a foundation outside the mainstream The theoretical antinomy in contemporary innova-
telecommunications operators environment with close tion theory, in which radical innovations and the
ties to computer science at universities, which may introduction of novel technological paradigms are
explain why it still exists. In TINA-C, many of the explained by various forms of serendipity and chance,
participants are computer equipment and system may be an important reason why current innovation
manufacturers, in addition to representatives from models only have restricted validity in explaining
R & D communities of telecom operating companies, innovations in the telecommunications sector. As
under the leadership of Belcore, one of the largest seen, many of these were radical innovations that
R & D organizations in the world, with close ties to emerged from the unique innovation regimes which
the US Bell system. Still, the loci of innovation governed technological development in telecommu-
regimes have shifted as the classic ones have become nications.
diluted or deteriorated, due to structural changes and Furthermore, instead of serendipity, the telecom-
changes in the regulatory environment in the sector munications sector’s innovation regimes create radi-
as a whole. cal innovations and associated novel technological
This process is reinforced by internal structural paradigms as the result of intention: Radical innova-
changes in the R & D communities that formerly tions were created on purpose — for a purpose.
were active in the innovation regimes: As market- Thus, radical innovations are rational outcomes of
oriented R & D governance models are introduced, the innovation regime. However, this does not ex-
clude risks and uncertainties, as evident by failures
in telecommunications, such as teletex and videotex
11
In the development of the Internet, the system of «RFC» Žoutside France.. Nor does it exclude inertia or the
Žrequest for comments. became institutionalized as the procedure power of ‘‘old’’ technological paradigms in the cre-
by which all the participants working with developing the Internet ation of new, as evident in the dominant position of
were able to agree upon various technical aspects of the standards circuit switching technology, in spite of new, more
and solutions, as these evolved. According to Hafner and Lyon
Ž1996, p. 145., the RFC no. 1 was sent out to the participants in efficient technologies emerging. Within and between
April 1969. By April 1999, RFC no. 2583 had been submitted. innovation regimes, there may also be considerable
Publication of a RFC usually marks the conclusion of a task or rivalry and competition between various technologi-
project undertaken in a technical committee within the Internet cal solutions. This was seen during the 1980s, as
system. Thus, a RFC in terms of work represents the tip of an microwave radio link technology tried to ‘‘beat’’ the
iceberg. A RFC has status similar to ITUs «recommendations»,
i.e., a semi-legal technical code. Cf. http:rrwww.cis.ohio-
influx of optical fibers, or the initial resistance and
state.edurhtbinrrfcrINDEX for a list of all the RFCs related to scepticism of many telecom operating companies to
Internet. the Internet — and more generally to packet switch-
1044 H. Godoer Research Policy 29 (2000) 1033–1046

ing. Finally, appreciation should be made of the 7. Policy implications


extreme size, complexity and political–economic in-
terests involved in the telecommunication sector. As shown by Mansfield Ž1991. and Pavitt Ž1991.,
Thus, the conceptual framework of an innovation the complexity and temporal dimension makes the
regime would need more research in order to estab- relationship between fundamental research and inno-
lish the validity of the claim that it is possible to vations difficult to understand, possibly contributing
create radical innovations on purpose — for a pur- to misconceptions and stereotypical ideas of the
pose. As such, it may be considered an ad hoc ‘‘ivory tower’’ of R & D. Thus, the lack of theoreti-
explanation having validity for explaining innova- cal understanding reflected in current innovation the-
tions in telecommunications during a short period of ories that attribute radical innovations to various
time, as this is observed through the peephole pre- form of serendipity aggravates the information prob-
sented in this article. The magnitude of making this lem which confronts policy-making: If radical inno-
claim generally valid is clearly beyond the scope of vations are outcomes of unpredictable ‘‘mutations’’,
this article, however, some points in this direction it is difficult to justify allocations to these purposes.
could be made. However, by understanding the role of a strong
Following the claims of this article, one logical innovation regime, this may possibly serve as a
hypothesis would be that in the absence of innova- model for making R & D and technology policy more
tion regimes, one may predict a low rate of innova- rational and meaningful.
tion. As a research project, work with this could be In telecommunications, as in many other sectors
simplified by analysis of a few sectors that — dependent on technology, R & D policy is increas-
similar to telecommunications — have a high R & D ingly being directed at short-term objectives, to-
intensity, such as in pharmaceutical and biotechno- wards incremental improvements and the adjustment
logical industries. By tracing the sources of innova- of existing services and products. Liberalization of
tions in these sectors — and the relationship be- the telecom markets and regulations favouring in-
tween these and the R & D efforts undertaken by the creased competition explains this. Simultaneously,
industries, a strong correlation and interdependence what may be termed a market-oriented R & D gover-
would undoubtedly emerge, as evident in many stud- nance model has been introduced for many reasons:
ies ŽSwann, 1988; Taggart, 1993; Bierly and To make R & D more relevant, efficient and sensitive
Chakrabarti, 1996.. However, due to structural fac- to the needs of users and markets Žcf. Fransman,
tors such as high level of market competition and 1992.. Furthermore, some believe that difficult man-
inherent characteristics of the innovations them- agerial information problems are reduced, if one may
selves, the type of cooperation, organization and assume that recipients, who also pay for the R & D,
leadership found in the innovation regimes of the will be the most qualified to judge how much and
telecommunications sector would probably be weak what kind of R & D is needed. In advocating the
or absent in these sectors. Still, one would have to market-oriented R & D governance model, many de-
analyze the significance of large scale cooperative cision-takers and policy-makers express opinions that
efforts such as the Human Genome project, the « war the ‘‘old style’’ way of financing and managing
against AIDS», etc., or the large, global scientific R & D favoured inefficiency and irrelevance, in the
communities and networks active in these industries guise of ‘‘long-term’’ research. Noll Ž1991., al-
in terms of being de facto innovation regimes. Based though sympathetic to R & D, is typical of this atti-
on studies of the computer industry, Chesbrough and tude when he claims that AT & T, through its Bell
Teece Ž1996. have pointed to mechanisms which are Labs, is using too much money on R & D, making
important for creating what they term systemic inno- this a highly risky allocation of corporate resources.
vations. Hawkins Ž1999. has made similar observa- However, he gives credit to Bell Labs’ past creativity
tions with regard to the role of international ICT and innovativeness, advocating the introduction of a
R & D consortia. Thus, an analysis of these could national ‘‘telecommunications R & D tax’’ to keep up
render insights that support the conceptual frame- the kind of work Bell Labs traditionally has under-
work of innovation regimes. taken, as a national, public good.
H. Godoer Research Policy 29 (2000) 1033–1046 1045

Thus, imperatives of the markets are called upon vide R & D strategists and policy-makers with new
to redirect the R & D of telecom. An extreme case of models for understanding the role of knowledge Žcf.
this is seen in British Telecom ŽBT. Žcf. Fransman, Arora and Gambardella, 1994. and the importance of
1992., which now to a great extent relies on buying innovation regimes. The conceptual framework of
its R & D on the market, on a ‘‘when-needed’’ basis. innovation regimes may serve as a model for R & D
BT claims this will help the company to become a policy and strategy — and simultaneously demon-
large, global network operator, because its focus is strate that the creation of radical innovations may be
more oriented to market needs. Other large network a rational process, not a mystery of chance and
operators, such as NTT in Japan and AT & T in USA, serendipity.
are also adjusting their R & D policies in order to
become more competitive, but they are apparently
increasing their in-house R & D. In spite of this Acknowledgements
observed pluralism of R & D strategies, which is
essentially the classic «make or buy» dilemma in
organizing industrial R & D ŽTeece, 1988., the domi- The author would like to thank Egil Kallerud,
nant trend is a belief that market-oriented R & D Keith Smith, Johan Hauknes, Karl-Erik Brofoss and
governance models are preferable. The pervasiveness the anonymous referees for providing helpful com-
of this may also be observed in public R & D, both in ments to various drafts of this article.
national and international arenas, the latter evident in
the EU’s R & D policy, e.g., in the 4th Framework
Programme that ambitiously proclaims that the R & D References
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