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  • Comment:Extending the Demand-Side Turn Productively
  • Naomi R. Lamoreaux (bio)

JoAnne Yates is calling upon scholars interested in the history of business and technology to take a 'demand-side turn'—to investigate the role played by firms that purchase goods from other firms in the development of new technologies. She recognizes that some historians have already done good work in this area but points out that most studies of the role of consumers in technological change have focused on individuals and have been written by scholars whose central purpose has been to document the socially constructed character of technology. Yates' goal is to make the role of purchasing firms a more important part of the research agenda.

There is no question that her call should be heeded. If one sorts commodities into the two basic categories of final and intermediate goods, then the value of this research agenda becomes immediately apparent. The individual consumers upon whom the literature has focused are purchasers of final goods. Firms, of course, also purchase final goods, but they are mainly consumers of intermediate goods, including capital equipment. Because intermediate goods are inputs into the production process, any technological change generated in response to the needs of a particular firm or set of firms potentially has much broader impact on the economy. Most obviously, it directly affects the productivity of other firms that use the same intermediate good and hence can alter their innovation paths as well. [End Page 462]

For Yates' agenda to bear significant fruit, however, it will have to avoid the pitfall that has limited the usefulness of the literature on the social construction of technology (SCOT). As David Hounshell succinctly characterized the problem, "the social constructivists have . . . slain the dragon of technological determinism," but they have also "rendered the field incapable of saying much more than 'all technology is socially constructed.'"1 To avoid falling into the same trap—to have more to say in the end than simply that purchasing firms influence the direction of technological change—historians pursuing this research agenda must take care to approach their topics systematically with an eye toward linking their findings to questions of broader significance.

The first step historians should take to make this literature more rigorous is to think about how the firms and industries they are studying might fit relative to the general universe of such cases. Take Yates' own research on life insurance firms and computer technology as an example. Insurance companies clearly are not representative of firms in general. But this lack of representativeness is not a problem, so long as one takes pains to understand the ways in which the firms are different and makes interpretative use of this information. Two attributes of insurance companies immediately stand out: first, although they vary in size, they tend to be large bureaucratic enterprises; and second, although some had in-house computer expertise, their core businesses required very different types of knowledge from that required to innovate in the area of computers.

Once one isolates such distinguishing features, one can begin to generate (and explore the merits of) hypotheses about how these characteristics might have affected firms' role in technological change. For example, one might hypothesize that the size of the purchasing firm might affect its willingness to adopt cutting-edge technologies. On the one hand, one might expect large firms to be resistant to change or at least have considerable inertia to overcome.2 On the other hand, one might expect size to be in some ways an advantage. The early Univac computer cost about $1.3 million to buy and install, and insurance executives estimated that they needed to have at least $1 billion worth of policies in force to justify the expenditure. A number of medium-size companies did have a volume of business that exceeded this threshold, but in order for the [End Page 463] new technology to be cost-effective for them, it had to be applied to a wider range of functions and hence was more likely to disrupt the firms' internal operations than was the case for larger enterprises.3 That only two mid-sized firms were early adopters of the technology suggests...

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