Unfolding the Industry Dynamics

Empirical research has made progress in developing indicators for the measurement of technological competences. A so far unmet challenge, however, is to trace the patterns of relationships among key variables at the firm level as they unfold in the context of the industry dynamics. The aim of the present paper is therefore to develop the methodology required to search for patterns of relationships among such key variables (R&D investments, technology and performance), to trace these patterns over time and thereby unfold the underlying industry dynamics. We are here referring to the possibility of using statistical methods such as Multidimensional Scaling (MDS) to trace similarities and dissimilarities among a set of variables - as opposed to testing simple linear and non-linear causal relations. We extend the previous use of MDS to further include what is known as "external unfolding." Using this proposed methodology, we derive an "industry space" that allows identification of the tendency to form groups, and to infer the stability of such groups of firms sharing similar conditions.