Self-organization of R&D search in complex technology spaces

The Original Article was published on 21 September 2006

Abstract

We extend an earlier model of innovation dynamics based on percolation by adding endogenous R&D search by economically motivated firms. The {0, 1} seeding of the technology lattice is now replaced by draws from a lognormal distribution for technology ‘difficulty’. Firms are rewarded for successful innovations by increases in their R&D budget. We compare two regimes. In the first, firms are fixed in a region of technology space. In the second, they can change their location by myopically comparing progress in their local neighborhoods and probabilistically moving to the region with the highest recent progress. We call this the moving or self-organizational regime (SO). The SO regime always outperforms the fixed one, but its performance is a complex function of the ‘rationality’ of firm search (in terms of search radius and speed of movement). The clustering of firms in the SO regime grows rapidly and then fluctuates in a complex way around a high value that increases with the search radius. We also investigate the size distributions of the innovations generated in each regime. In the fixed one, the distribution is approximately lognormal and certainly not fat tailed. In the SO regime, the distributions are radically different. They are much more highly right skewed and show scaling over at least 2 decades with a slope around one, for a wide range of parameter settings. Thus we argue that firm self-organization leads to self-organized criticality.

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Correspondence to Gerald Silverberg.

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The online version of the original article can be found under doi:10.1007/s11403-006-0008-5.

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Silverberg, G., Verspagen, B. Self-organization of R&D search in complex technology spaces. J Econ Interac Coord 2, 195–210 (2007). https://doi.org/10.1007/s11403-007-0023-1

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Keywords

  • Innovation
  • Percolation
  • Search
  • Technological change
  • R&D
  • Clustering
  • Self-organized criticality

JEL Classification

  • C15
  • C63
  • D83
  • O31