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1704380319 6.Dominique Foray defines codification as “expressed in a particular language and recorded on a particular medium” (Foray, Economics of Knowledge,p.74).Foray reviews the literature on codification.Language puts knowledge in a standardized firm that can be more readily understood by someone who reads that language.But standardized knowledge is not necessarily codified; a tacit skill can be limited to apply to a certain range of conditions, thus becoming standardized to a degree.For instance, surgeons are certified in certain standard techniques that are tacit knowledge learned through experience.Codification is often most beneficial when it is combined with other sorts of standardization.Thus, although chemical experiments were all documented (codified) before Mendeleev, the experimental knowledge became much easier to learn when essential findings were simplified in the firm of the periodic table.Such simplification can make the knowledge easier to acquire.Although it’s not necessary, codification facilitates the ease with which knowledge can be standardized, and it magnifies the ease of communicating standardized knowledge.

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1704380321 7.The notion of dominant designs is developed in Utterback and Abernathy, “Dynamic Model”; Utterback, Mastering the Dynamics; and Suárez and Utterback, “Dominant Designs.” On QWERTY, see David, “Clio.”

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1704380323 8.Nelson and Winter, Evolutionary Theory.

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1704380325 9.See a review of this literature in Besen and Farrell, “Choosing How to Compete.”

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1704380327 10.Raymond Vernon first developed evidence that firms do not export a technology until it has matured and is relatively standardized.See Vernon, “International Investment.” A significant body of subsequent research finds supporting evidence.The cost of transferring technologies overseas decreases with their age.David Teece, “Technology Transfer,” documents that the cost of transferring mechanical technologies overseas by multinational firms decreases substantially with the age of the technology.For chemical and petroleum refining plants, he finds that the age relationship is weaker, but the cost decreases with the novelty of the technology.Also, early-stage industries and patenting activity with new technologies tend to be geographically localized.Conversely, older industries and technologies tend to be more geographically dispersed.Using patent citations as a proxy for knowledge spill overs, Ja.e, Trajtenberg, and Henderson, “Geographic Localization,” find that the localization of knowledge decreases with the age of a technology.Audretsch and Feldman, “R&D Spillovers,” find that early-stage industries tend to be more highly localized, and Desmet and Rossi-Hansberg, “Spatial Growth,” find that older manufacturing technologies are less localized.And Petra Moser, “Do Patents Weaken…?,” finds greater geographical dispersion of patenting after the periodic table.Note, however, that these differences are a matter of the degree of standardization.AnnaLee Saxenian, New Argonauts, finds that the export of semiconductor manufacturing processes to Taiwan also involved the export of experienced engineers who brought with them much knowledge that was not standardized.

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1704380329 11.John Marko., “Battles Loom for Control of TV’s Portal to Cable,” New York Times, April 3, 1993.

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1704380331 12.Christensen, The Innovator’s Dilemma.

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1704380333 13.Edmund L.Andrews, “Technology; Time Warner’s Ordinary People Plug Interactive TV,” New York Times, December 18, 1994.

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1704380335 14.“A Talk with Miss Margaret Kelly, Director of the U.S.Mint,” New York Times, August 6, 1911.

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1704380337 15.Almost all female stenographers were also typists.See Fine, Souls of the Skyscraper.

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1704380339 16.Ker, G.K.Chesterton, p.392.

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1704380341 17.Costa, “From Mill Town to Board Room.”

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1704380343 18.Rockwell, Shorthand Instruction and Practice.

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1704380345 19.National Stenographer, “The New Hammond,” p..319.

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1704380347 20.David, “Clio.”

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1704380349 21.Data are from Kwolek-Folland, Engendering Business.

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1704380351 22.Some manufacturers continued to produce alternative keyboard layouts into the 1920s.See the Hammond Multiplex in The Virtual Typewriter Museum, http://www.typewritermuseum.org/index.html.During the 1930s, the Dvorak Simplified Keyboard was introduced, claiming superior performance.

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1704380353 23.Suárez and Utterback, “Dominant Designs.”

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1704380355 24.See Temin, Iron and Steel.This standard was developed largely by Alexander Holley.The plant design included, among other things, an arrangement where pairs of Bessemer converters were situated next to each other (they were on each side of a pit in the original Bessemer plants), and the converters were elevated so that molten metal could be poured at ground level rather than in a pit.Holley also devised a method for quickly replacing the refractory bottom of the converter, returning the equipment to production much faster.Almost all of the Bessemer plants in the United States in 1880 used Holley’s design.His refractory bottom was developed in 1869–1870 and patented in 1872.

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1704380357 25.Formally,there is an option value to waiting.See, for example, Bessen, “Waiting for Technology.”

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1704380359 26.Employers might be willing to train their employees to use a typewriter with a specific keyboard layout, but they would have to recoup the benefits of that training while the typist remained employed.High employee turnover, not unusual in a newly emerging occupation, would impair the ability of the employer to recoup the investment.This situation could also limit the adoption of a new standard and hence the adoption of the technology itself.

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1704380361 27.Besen and Farrell,“Choosing How to Compete”; Farrell and Saloner, “Standardization, Compatibility, and Innovation.” As the literature notes, this situation typically involves a network externality: when I adopt one keyboard layout, other typists and employers using that layout receive an indirect benefit.

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1704380363 28.Dosi, “Technological Paradigms”; Nelson and Winter, “In Search of Useful Theory.”

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1704380365 29.Michael Gort and Steven Klepper studied fortysix major new technologies and found several empirical regularities: the number of innovations tends to be highest during the early phases, when many new firms enter the market; industry output tends to grow rapidly at first, then slows as the products mature; prices decline, initially faster than later; typically industry revenues (the product of price and output) grows rapidly at first, but slows and often declines as the technology matures.

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1704380367 Some of these changes are related to standardization.Steven Klepper explains them with a model in which standardization plays a prominent role.During the early phases, products have relatively few standard features.Consequently firms have opportunities to enter the industry competitively based on feature innovations.However, competitors can imitate successful innovations, making them part of the standard product offering.That is, product knowledge becomes more standardized.When this happens, established producers who can produce the standard product more efficiently have an advantage over many new entrants.This drives less efficient entrants out of the market, causing a shakeout and eventually a stable mature phase.Thus the degree to which product knowledge is standardized affects the relative roles of entrants and established firms.

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