Abstract
Sociologists contend that industries can be importantly characterized as sets of interlocking producer positions. This paper argues that this distinctively relational conception of a market represents a powerful framework for depicting and analyzing the process of technical change. The paper presents a method for using patent citation data to describe the positions of high-technology firms in a market-wide 'technological network.' It focuses on one property of a producer's position in this technological network—'crowding'—which represents the extent to which the firm specializes in areas of technology that are densely populated with other organizations. Four propositions are developed linking technological crowding to two firm-level measures of innovation: (i) the annual level of R&D expenditures, and (ii) the continuous time rate of patenting. The findings demonstrate that the positions innovators occupy in the technological structure of the market strongly affects their level of investment in R&D and rate of innovation.