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ICT and Innovation: background paper for DGRC study FIRST DRAFT

ICT and Innovation: background paper for DGRC study

Ian Miles, January 2000

Executive Summary

As a generic technology, or set of technologies, ICT poses extremely wide questions to

innovation studies: we are not studying the process of creation or diffusion of a single
product. Rather, there is a “swarming” of innovations, proceeding at different rates,
sometimes offering competing functionalities. The rapid pace of change in ICT products,
services and applications likewise causes new challenges. Many products never seem
to “mature”, but are rather the focus of continuing innovation, with successive
generations following hot on each others’ heels.

The emergence of ICT has been a spur to innovation research, and attracted a huge
number of studies. This means that a large number of familiar models and results that
have been established in this field of work apply cogently to the ICT case. There are
some biases in the research literature, however, e.g. toward manufacturing sector

Despite the usefulness of existing innovation studies, ICT’s wide range of applications,
rapid pace of development, and especially its power to influence the ways we handle
knowledge and indeed undertake innovations, make it necessary to take on board
additional perspectives relating to this complex of technological changes. The paper
reviews these perspectives, addressing particularly the contributions of
“neoSchumpeterian” analyses. It considers the circumstances of innovators and
adopters, and examines both the individual and organisational levels of change. The
study draws attention to the ways in which the network capabilities of new ICT add
particular elements to the processes of launch and uptake of ICT devices and services.
Generational change in ICT means that many of assumptions derived from earlier
experience with the technology may no longer retain their cogency, and the report thus
considers approaches which describe the utilisation of ICT not so much as a steady
rolling-out of a fixed technology, but as a process of moving through “stages” of
implementation, with strategies to match.

ICT and Innovation: background paper for DGRC study FIRST DRAFT

Part A: General Introduction - ICT and Innovation Studies

ICT (or IT) covers a multitude of discrete technologies, and information and
communication technologies have an ancient lineage. What is common about “new” ICT
is that it spans subcomponents, components, devices and systems that utilise the core
revolutionary technologies (especially microelectronics, but also optronics and others).
These have accordingly benefited from the orders of magnitude decreases in the cost,
and increases in the power, of practically all sorts of information processing. In
examining practically any ICT-related innovation, we can expect most of the familiar
results from innovation studies more generally to apply. However, there are a number of
features that make the subject of ICT and innovation special, and which need to be

1 A Generic Technology
First, ICT is a generic or revolutionary technology. One systematic approach to this is
developed in neoSchumpeterian discussions (e.g. Freeman-Perez ***), where reflection
on the “ICT revolution” has led to better-articulated notions of what distinguishes
revolutionary technologies from more mundane innovations. This approach considers
that not all innovations are of equal status, in particular differentiating radical and
revolutionary innovations from more mundane and incremental ones. From such
perspectives, the vast array of products and process applications collectively known as
(new) ICT are based upon major advances in fundamental technical knowledge – most
critically in semiconductors and microelectronics, but also in optronics, software
engineering, and related fields. This knowledge allows for radical change in the costs,
quality, speed, and other aspects of an activity that is at the heart of all social and
economic practices – information processing. (In terms of its range of applications, new
ICT is probably more far-reaching than earlier technological revolutions based around
energy technology, for example.)

This wide range of applications means that ICT has been used so as to trigger new
product cycles, and to transform business processes, in practically all sectors of the
economy. ICT facilitates the development of other dramatic new technologies, such as
biotechnology, advanced materials, and (on the horizon) nanotechnology. And the
“swarming” of ICT innovations typically means that there are a host of different solutions
deriving from slightly different backgrounds, aimed at solving industrial or everyday
problems. Additionally, we see the “convergence” (or collision) of previously disparate
technologies and industrial sectors, especially those concerned with information
handling – computers, telecommunications, broadcasting, audio-visual media,
publishing, and so on. ICT applications have aptly been described as “configurational”.
This means first, that they are frequently (a) combinations of numerous subelements.
Secondly, it means that these subelements are shaped in terms of hardware
configurations (device interconnection, networking, etc – with requirements for hardware
and software interoperability, and the important role of standards and protocols that this
implies). Thirdly, they are shaped even more frequently and thoroughly in terms of
software (control) and dataware (informational content), reflecting the particular
requirements of users. Some social scientists stress the cognitive elements of this

ICT and Innovation: background paper for DGRC study FIRST DRAFT

shaping process. The “requirements of users” mentioned above are actually constructs
which system designers and those who modify the systems have effectively negotiated
in specific social contexts. Furthermore, the shaping process is also determined by the
skills and capabilities of designers, the time and technical resources they have to hand,
and so on – the configuration of technologies is not a purely technical affair.

Thus, innovation in ICT is extraordinarily multifaceted. This reflects its nature as being a
generic technology used across the economy. There is an extensive process of
generating innovations of all sorts that incorporate ICT in their products (e.g. consumer
electronics, cars, household appliances, and toys) and in their processes (e.g. industrial
robotics, CNC machine tools, management information systems, computer-enhanced
business presentations). Users - here meaning non-ICT industries - are often active
innovators in such product and process applications of ICT. They sometimes are also
closely involved with segments of the ICT industry providing stimulus for ICT innovation.

Similarly, ICT itself is extremely multifaceted, encompassing several distinct, though

interrelated, industries and technologies. These include as heartland ICT,
semiconductors and optronics, computers (from mainframes to PCs and PDAs) and
telecommunications (from PTOs to specialised VANS), and software (from systems to
applications and from packages to bespoke). These, like the users of the preceding
paragraph draw on distinctive bases of technological knowledge and technological
trajectories and feature diverse industrial structure. These impact each other, but the
much-touted ‘convergence’ remains elusive. Additionally, a significant role in innovation
is played by various specialised intermediaries, from systems integrators to ICT
consultants. There is a spectrum of services assisting ICT implementation and specific
applications, from Web design services to videogames production companies.

As the last of this list of services makes clear, ICT innovation under at least some
definitions encompasses also innovation in the content industries that provide
“dataware” for new media based on ICT – computer media such as CD-ROMs and
Websites in particular, but arguably a whole range of cultural and creative industries
employing ICTs. Aesthetic and design creativity and innovation thus play a role
alongside technical innovation; and this may be a particularly important role for the UK.

2 A Rapidly Evolving Technology

The discussion above makes it clear that any attempt to provide an overall view of ICT
and innovation faces the problem of the pervasive nature of the technology. This is
more than just the facts that a multitude of innovations are underway across the
economy – and often these impact on one another – and that this generates a great deal
of market uncertainty, critical attention, “hype” and disillusion. A second feature of new
ICT is the pace of technological change, both in diffusion and in technological potential.
There has been remarkably rapid uptake of many ICT innovations, as was noted in
studies of microelectronics diffusion into industry in the 1980s, and is apparent in the
case of many consumer products today. But perhaps more significant is the ongoing
increase in the power of the underlying technologies, most famously encapsulated in
“Moore’s Law”. The result has been drastic decreases in equipment size and increases
in its capabilities year on year, with no visible end in sight (even though there will at

ICT and Innovation: background paper for DGRC study FIRST DRAFT

some point have to be a switch away from current chip designs). User-friendliness has
typically increased too, though new applications have often continued to call for
advanced technical skills. One practical consequence has been the cheapening of
equipment so as to bring it into the price range of many more users than could have
been envisaged until the recent past, and the associated proliferation of applications as
a wider range of users have sought to apply the technology to their own ends. Another
has been the treadmill of new releases of hardware and software, which has meant that
ICT equipment is often written off at a much faster rate than earlier generations of
technology. Less well-explored has been the implications of this for user uncertainty
about the “futureproofing” of products, and a concomitant increased awareness of the
role of standards, etc.

One related issue is the evolution of ICT through successive generations. Definition of
the generations varies according to perspective, but a very broad scheme portrays the
movement from mainframe computers providing access to few and expert users,
through PCs and other generalist computer devices providing processing power to
professionals, through to embedded computers providing ubiquitous ICT available to
practically anyone, anywhere. This last stage is currently emerging (see for example the
views of Weisner ***). One consequence is that ICT capabilities are being embedded in
a huge range of different products – cars, tools, industrial and household appliances,
power systems, clothing, street furniture, and so on – which would not themselves be
immediately seen as ICT products. Arguably, this view is correct: the hardware and
software incorporated into these products constitutes only a small fraction of their overall
costs, and their main functions are not information-processing ones. Nevertheless, the
application of ICT does have the potential to change the functionality of these products,
and to render them parts of much larger networks of intercommunicating devices. The
botto0m line is that it becomes very difficult to generalise about the nature of ICT and its
use, when the forms and applications involved are of ever-expanding scope.

The generational changes in ICT involve qualitative change as well as just the
quantitative increases in ICT power. One consequence of this is that conclusions based
upon analysis at one point in time may well be invalid when it comes to thinking about
the dynamics of change at subsequent points in time. This is particularly evident where
it comes to the “impacts” of ICT – e.g. the employment implications of mainframe
computers are very different from those of, say, corporate networks linked into mobile
palmtop devices. But it is also highly relevant to innovation processes. For these
“impacts” – not to mention features such as market size, user-friendliness of
applications, and so on – are themselves factors that may be built into, or otherwise
influence, innovation dynamics. Beliefs about, for example, the labour-saving or
quality-enhancing potential of ICT have a significant influence on efforts to develop (and
market) particular applications. They may also influence the attitudes and behaviours of
adopters and end-users, shaping the usage trajectories of the innovations. The ICT
innovation process may itself undergo generational change, then.

The emergence of what is variously known as the knowledge-based, the network or the
new economy, is intimately associated with these generational changes. The
(supposed) new paradigms are based upon the perception that near-instantaneous

ICT and Innovation: background paper for DGRC study FIRST DRAFT

acquisition and analysis of data can be performed through global computer networks;
that employees and collaborators can rapidly be informed and activated. Innovation
processes themselves take place within this context: innovations are frequently the
result of collaborations in which relevant inputs are brought together through networking;
innovations can be rapidly prototyped, tested, marketed and diffused through the new

3 A Recursive Technology
A third element is that ICT is both subject of and tool for innovation. As well as
innovations being created in ICT and ICT-using products and processes, new ICT can
be applied in the innovation process itself – to practically all of its information processing
components. Parallel features can be attributed to ICT in respect of many other social
dimensions of the technology. For instance, its routine application may be expected by
some commentators to increase social exclusion (the “information rich and poor” or to
create new training needs (“hybrid staff”) – but the technology can be applied for
inclusiveness (“community networking” or for retraining (“flexible distance education”).
Some specific implications of this point will be explored in the first of the three themes
addressed below.

4 Often a Network and Distributed Technology

ICTs process innovation (IT) and also often communicate data (CT) among themselves
and to end-users. This raises a series of issues of interdependency. Many “stand-
alone” products are dependent upon dataware as well as software supplied externally
rather than embedded in the system or captured by its sensors. This gives rise to
content and software industries, whose innovation trajectories are intimately related to
those of the hardware industries – and gives rise to issues of standards and design
frameworks that are important influences on innovation strategies. Many products are
dependent on telecommunication or broadcast communication networks, too, again
raising questions of industrial coevolution and competition. Cawson (1994) discusses,
for example, how such factors give rise to the critical role of standards in consumer
electronics industries, and as shapers of innovation and competition in these industries.
The particular challenges posed by innovation within the context of large technical
systems – where individual product innovations may be thought of in terms of changes
that are affecting peripherals, or components of much larger systems – have gained
attention within innovation studies, largely in response to the recognition of the
importance of such themes in the ICT context.

A related issue that arises in this context s the important of network externalities and
gaining a substantial user base can be in ICTs. Communications media typically offer
users more value the more users there are, but in many respects the same is true for a
wide variety of ICT products – especially since the new media allow for the exchange of
experience, software codes, templates and so on among user groups. Much of the
analysis of the “new economy” relates to the behaviour of commercial entities in seeking
to establish large user bases by providing some services on a free basis, but there are
also studies examining the role of free exchange on more reciprocal or goodwill gift
bases as significant phenomena among Internet and other communities. (Mulgan ***)

ICT and Innovation: background paper for DGRC study FIRST DRAFT

5 A Social Technology
Innovation studies have criticised the common-sense “objectivist” notion of technology
as hardware, and innovation and diffusion as involving mainly the creation and
dissemination of items of hardware. The “ology” of technology has been stressed, as it
has been recognised that what is critically involved is the accumulation and deployment
of knowledge. The term “technological capabilities” has thus been applied to help
illuminate not only the knowledge and skills required to generate hardware (and
software!), but also those required to effectively utilise the potentials of new products –
to implement them, to maintain them, and to configure them for local and changing
circumstances. (Clark and Staunton, 1989)

ICT brings to the fore, however, continuing limitations of the mainstream innovation
literature, in particular its tendency to focus on formalised firm-based research and
development (R&D) activities as driving technological development. Knowledge bases
other than those generated through such R&D processes may be vital to innovation in
many ICT applications. ICT involves services like software and telematics as part of its
“core”, and ICT applications are predominant among service sectors (who constitute the
bulk of ICT purchasers). While most innovation research and indicators of R&D and
innovation processes have been manufacturing-oriented, the ICT revolution has
coincided with, and in large part underpinned, the growing importance of service
innovation. This involves innovations in service firms, of course, but also in the “service”
functions of organisations in all sectors – white collar, front-office, sales and
transactional work, for example. Such organisations and functions rarely have
formalised R&D sections (Miles et al, 1995). One of the main challenges to
contemporary innovation studies is to integrate services innovation into its field of study
– which means expanding theories and models beyond those developed for tangible
products and manufacturing processes. (Coombs & Miles, 2000).

In software and multimedia there are liable to be many parties to design, and activities
that fall outside the traditional R&D process (cf. Shapiro (1992), Flanagan (1999)). For
example, CD-ROM or Internet multimedia products require technical and creative skills
relating to content asset creation, acquisition and integration as well as conventional
hardware and software skills. Christensen (1995) talks of innovative assets, which may
be scientific, related to process or product development, or a matter of aesthetic design
capabilities. ICT innovation often involves complex configurations of several such
assets, sometimes within a firm and sometimes in a collaboration of one sort or another.
Not surprisingly, Much recent attention to collaboration concerns high-tech industries (in
biotechnology, new materials, or IT), which reportedly account for about 70% of the
strategic alliances made during the 1980s and recorded in the MERIT Co-operative
Agreements and Technology Indicators database (Hagedoorn, 1995).

ICT and Innovation: background paper for DGRC study FIRST DRAFT

Part B: Specific Issues (ESRC Themes)

Theme 1: Innovative people and organisations1

Q1 What does social science tell us about the role of ICT in the UK2 in relation
to the theme?
This theme can not only be addressed at the individual and organisational levels, but
also in terms of ICT producers (almost all of whom will also be users of ICTs produced
by other parties ) and users (some of whom will be sufficiently active in further
development of applications to be considered producers in their own right).

(a) Individual Level

Numerous studies focus on the adoption of ICT in industrial contexts and (to a lesser
degree) consumer settings. One early set of studies concerned “public acceptance of
new technologies”, motivated in part by fears of UK becoming competitively
disadvantaged in the use of ICT because of public resistance. A major conclusion of
these studies was that concerns that workforce and consumer resistance to ICT would
inhibit uptake of the new technologies were largely misplaced.

Certainly reservations as to the uses of the technologies have been widely expressed
(and continue to be in the cases of privacy and data protection, videogame violence and
Internet porn, for example). Likewise there were some branches of industry where
specific parts of the labour force felt their status and autonomy to be threatened by local
ICT applications (often rightly, as in the case of the newspaper industry). But despite
early alarmism about the employment impacts of ICT, there was and is very little
evidence for general resistance to the technology. Indeed, workforce attitudes have
generally been positive, with some of the more substantial retarding influences deriving
from reluctance on the part of managers to undertake widespread “informatisation” of
their businesses, at least in the 1980s and early '90s. This reluctance seems to have
been compounded of self-interest (fears as to impacts on managerial jobs and of ceding
power to technical experts), and uncertainty (lack of knowledge as to the implications of
the technologies for workplace organisation, and, more generally, of how the
technologies operate, where there are associated risks and how these may be
managed, and how to develop appropriate strategies for achieving effective use of the
new technological potentials).

There is less systematic evidence allowing for cross-national comparisons, so as to

indicate whether the UK is distinctive in terms of individual attitudes to innovation and
associated activities. Data suggest that the UK has been ahead of comparable
countries in adoption of some consumer ICTs (e.g. home computers) and lagging in
For each of the three themes, the analyses developed in the answers to the first questions necessarily
develops much of the structure of the answers to subsequent questions, which are thus handled with more
It is often inappropriate to focus specifically on the UK, and likewise to draw solely upon UK research, in
addressing the key issues that arise in the ICT field. There are UK specificities, but there are also many
points which could be made to a greater or lesser extent about any induistrial country.

ICT and Innovation: background paper for DGRC study FIRST DRAFT

others (e.g. mobile phones), and that an early lead in workplace use of ICT, if it did exist,
has largely been eroded. But these data on ICT use have been shaped as much by
local regulatory conditions (e.g. telecommunications competition and pricing) and
investment practices as by individual attitudes. Furthermore, there is considerable
variation within countries, discernible from comparing different regional, age and SES

(b) Organisational Level


There have been numerous studies of the uptake of ICT, especially in industrialised
countries, and typically focusing on specific technologies (such as robotics, PCs, EDI,
Internet access), or on specific industrial sectors (often within manufacturing, but there
are also many surveys with wider reach, covering e.g. such as construction or financial
services). Many recent studies focus on small firms and their problems in particular.
This is partially a response to the conclusion from most studies that large firms are
usually the first and often the most intensive adopters of new ICT (though there do seem
to be some exceptions, e.g., mobile communications has been taken up rapidly by many
smaller firms - and technology-intensive start-ups are by definition small firms). Smaller
firms typically have smaller budgets and limited capacities to invest in learning about
new technologies, let alone purchasing, trialling or piloting them. Often their use of ICT
remains very limited even when they have acquired systems, because of lack of time to
learn about the ways in which they can be applied. They rarely have dedicated or
specialised ICT staff, though sometimes an enthusiast can champion the new
technologies – perhaps ICT is unusual in the way in which teenage children or clerical
staff have often become invaluable resources for smaller firms to launch new ICT
activities (e.g. websites). Such individuals often bring well-developed knowledge of how
the organisation operates, and in that respect have comparative advantages over new
appointments of outside ICT specialists.3

Typically SMEs begin with a lower level of awareness of the new technologies, let alone
experience of them in practice. But this also applies to many service firms, for services
have frequently not historically been technology-intensive, but are now often at the
forefront of ICT use. We consider the learning process in organisational ICT use below:
Suffice to say now that it has often been, and continues to be, a painful one for many

But unless such staff members are highly motivated, and can find time and resources to continue acquiring
new skills, it is likely that at some point they will be overtaken by the pace of ICT and applications

ICT and Innovation: background paper for DGRC study FIRST DRAFT


As pointed out in the preamble to this paper, since innovation intimately involves
information processing, ICTs can be applied to the innovation process. Again this
applies across all sectors, as well as in ICT industries themselves. It applies to
innovators of all sorts (including organisational ones!) and not just to those focusing on
ICT (consider, e.g. genomics and materials science). There has been little systematic
analysis of this spectrum of applications, and where they have been considered it tends
quite reasonably to be within broader appraisals of developments in innovation
management more generally. Thus Rothwell (1994) examines 24 features of the “fifth
generation innovation process”, of which about a third are explicitly related to ICT
developments such as those below:
• Use of ICT for data capture in scientific and technical instruments. Such instruments
are important in basic research and applied R&D, compliance and testing, etc.
Automated gene sequencers and scanning electron microscopes are examples, but
ICT is a more or less central element of a huge range of instruments.
• Typically ICT in the form of computers and software will be used for data processing
and analysis in such cases. But this is also the case for all sorts of observations that
have been ‘captured’ by other means. No doubt there are trends towards greater
ICT – intensity in both of these cases.
• There are ‘softer’ parallels to this, where the data are more sociological. But here
too the results of its capture and analysis can influence technological or
organisational innovation – e.g., aircraft black box and accident data, customer
loyalty cards and data mining in retail.
• Computer-aided design is now routinely used in many applications where little
technological innovation is involved, e.g. in the design of differentiated versions of a
consumer product, of standard buildings, of physical components of mechanical
systems. However, CAD is also employed in sophisticated and innovative
applications, from new microprocessor circuit design to advanced land and air
vehicles, where the scope for incorporating new subcomponents and functionalities
is a critical element of the design process. Expert systems are used to support CAD,
and CAD systems are linked along production chains allowing for more integrated
innovation activities within and between firms (Rothwell, 1994).
• Simulation and modelling are also vital activities in some industries, for example
chemicals, telecommunications networks, and avionics systems. They are becoming
important in a growing span of applications where CAD too is being more like
simulation (e.g. Architecture, where “virtual life” simulators can be used to model the
moments of people in various building designs and under contingencies like fires);
and where VR is involved in innovations. Modelling may constitute a form of virtual
prototyping of innovative products, but flexible manufacturing systems and ICT-
based tools are also being used to make rapid prototyping more effective as an
element of the innovation process. (Hales***)
• Intranets and information systems may be used to merge and monitor innovation
resources within companies and among partners. CSCW and groupware

ICT and Innovation: background paper for DGRC study FIRST DRAFT

technologies allow R&D projects to be distributed over space and time, and for
different projects to be interrelated.
• Intelligence about innovation strategies of competitors and collaborators may be
gleaned from the Web or specialised information services, and analysed by
computers – e.g. the patenting portfolios of competitors, the acquisitions being
undertaken. Similarly, information about IPR, regulations and other innovation-
related circumstances is being assessed online. The Web has become a routine
resource in all sorts of R&D (which was its original application indeed!).
• The Internet is also being used for marketing innovations, searching for sources of
finance, building constituencies behind particular programmes or standards (e.g.
Linux), and so on..
• Finally, ICT tools are used for corporate visioning of various sorts – developing
models of future markets and technological circumstances, examining alternative
corporate strategies, etc.

Q2 What are the key intellectual and policy issues which arise at the interface
of ICT and the theme?

(a) Individual Level

Many of these issues have been succinctly captured in a parallel contribution on
“Knowledge and learning”. The key issues from an innovation perspective are: (a)
establishing and improving tools to foster individual creativity, to allow creative
individuals to locate each other and collaborate effectively – while providing resources to
assess the practicality, user-relevance, and social or commercial issues that will need to
be addressed; and (b) providing individuals with capabilities to utilise such tools, and to
contribute to their development in ways that meet the requirements of specific user
groups (especially those disadvantaged otherwise) more effectively.

(b) Organisational Level

Policies and strategies have increasingly been focused on providing awareness, advice,
and skills, especially in order to address the information deficits and lack of resources of
lagging groups, regions, and smaller firms.4 Innovation studies suggest that an
underlying theme should be promotion of awareness of the need to invest seriously in
learning processes and practices, to place the management of knowledge alongside
technology management, and to recognise that the ICT revolution is still only just
beginning – continual change is to be expected, and efforts must accordingly be
ongoing. All management activities can be transformed through IT, which involves, and
requires awareness of, a multifaceted and open-ended learning process. This implies
training and similar programmes that enable management to adopt business practices
which can effectively exploit the new technologies are required – in other words, going
Innovation studies contain considerable analysis of the specific problems confronting SMEs with respect to

ICT and Innovation: background paper for DGRC study FIRST DRAFT

beyond the supply of specialised engineering and software skills. Novel sorts of
consultancy and business service are likely to be required – for instance to enable small
firms to acquire footholds in e-commerce, without needing themselves to master website
design or log on to a network every few hours.

One other line for initiatives involves supporting the growth of user communities. This
can help overcome the critical mass problems of telematics (e.g., by ensuring that
sufficient suppliers and clients are able to reach each other electronically). There can
also be opportunities to use networking to offset the problems of small firms and more
peripheral service companies in developing countries—e.g., various types of “electronic
trade mission”, like Web pages advertising and providing links to local service suppliers.

To support user communities and uptake of telematics in general, especially in respect

of disadvantaged groups and otherwise lagging firms, particular sorts of arrangement
appear to be required.5 Pre-existing social networks are important, and if a new media
network can enhance and utilise existing communication channels, it is likely to take off
more rapidly than otherwise. Related to this, development workers should have
credibility in the user community and ability to interface with policy makers, and not
imply rely on technical competence (necessary as this is). Development objectives
should aim to improve user community participation, be explicit concerning the extent to
which social objectives are related to economic goals (e.g. training, job creation, the sale
of services), and render the network’s role is explicit and as far as possible measurable.
In order to disseminate good practices rapidly, mechanisms for increasing collaboration
between similar networks in geographical areas (e.g. local forums in which such groups
can participate) should be established. Such points apply both to “social” innovations
(e.g. those aimed at enhancing community use of new media) and more commercial
types of initiative.

In a later section we discuss the infrastructural issues associated with ICT networks.
Here we highlight factors which research suggests as influences on the decisions of
service suppliers and innovators to press ahead with new systems:
• Instability of design paradigms. In the multimedia industries, developers may
need to be prepared to work across a number of alternative platforms - in some
cases they can use readily portable architectures, but really challenging applications
pose more problems. This is less of a problem in PC applications, where
Windows/PC dominance has been secure for some time, but may be more of a
challenge in the future if new models (e.g. Linux) become significant.
• Problems associated with intellectual property. Software and dataware can
easily be copied, which some commentators view as a barrier to innovation.
Certainly one result is considerable interest in new means of protecting IP, and
probably accounts for the reluctance of some traditional publishers to move into
online publishing. Draconian use of copyright law is equally proving a problem for

This is the conclusion of evaluation studies such as those of Ducatel et al, 1991, 1993; and Shenton et al,

ICT and Innovation: background paper for DGRC study FIRST DRAFT

some innovative cultural producers who utilise “sampling”, for example, as means of
production of new content from old.
• Restrictions on cross-media ownership, and conservatism in some established
media industries, have made some initiatives hard to establish. However, equally
challenging will be the assurance of open access to new media, and stimulation of
the participation of public services and non-commercial entrants to the digital TV
world. Competition rules more generally may be significant: in the UK, BT waged
a lengthy campaign against rules prohibiting it from using its national network for
relaying broadcast TV, and arguably this has affected the speed with which the UK
has been provided with high-bandwidth telecommunications.
• Regulatory challenges to service content. A series of moral panics have been
apparent around new media, partly about dubious publications (e.g. video nasties,
Internet porn sites), partly about unfettered exchange of dubious information
(especially where young and vulnerable people are involved). The efforts to
constrain such developments may limit innovation – for instance, restrictions on
audiotex services effectively killed telephone and videotex chatlines in the UK. (In
the latter context, the moral panic was even cited - perhaps disingenuously - as a
reason for there being no UK Minitel-type mass distribution of terminals.)
• Privacy, civil liberties, and data security concerns have long affected utilisation of
computer and network technologies, and anecdotal evidence suggests strong
cultural differences in the extent to which this has played a significant role. Fraud
and related security problems have been rising to the top of the agenda as financial
transactions take electronic form, and regularly appears high in the list of fears
about adoption of ecommerce.

ICT and Innovation: background paper for DGRC study FIRST DRAFT

Q3 What alternative possibilities are there for future evolution of these issues
looking 5 to 10 years ahead? What are the most/least attractive of these
alternatives? 6

(a) Individual Level

Attractive possibilities:
Widespread use of new technologies to discuss and develop (individually or
collaboratively) technological, aesthetic, and social innovations, drawing in many
sections of the population currently absent from this activity.

Undesirable possibilities:
Largely passive population with small elite of creative individuals making high
technologies, and services for mass (even mass customised) consumption (these may
be more interactive then traditional services and entertainment products, but would offer
limited scope for creative engagement). Social exclusion, lack of challenging cultural
and technical inputs to global economy.

(b) Organisational Level

For adopters:
Attractive possibilities:
Enhanced levels of adoption of appropriate ICTs. We need then to understand better
what “appropriateness” signifies in this context, not forgetting that the answer is
contingent upon the next theme (Organisational Change) – since effective technology
implementation may imply organisational reorientation.

Undesirable possibilities:
Most firms remain slow to adopt more advanced potentials of ICTs. UK plays less role in
technology design, standards-setting, and effective use of technologies for social and
economic benefits. Large firms might prosper, but (a) might then deplete job creation
potential of small firms (b) might transnationalise and lose UK roots.

Notes on Q3 (and Q4) here, and those presented in the context of subsequent themes, are highly
compressed and caricature-like. Any concrete future is likely to be a highly qualified micture of several of
these trends, and evaluation of the desirability/undesirability of specicif developments requires much more
variegated analysis. These points are made in order to be illustrative of how scenarios might be developed,
and may be in future revisions of this document. We sahould note that there is an extensive forecasting
literature around ICTs, among which useful recent contributions include the FAIR and IPTS studies (***), as
well as material produced in the course of the UK’s own Foresight programme. For a framework within which
to locate some of the major points of disagreement among such forecasts, see Miles (1988, republished in
Dutton, 1996).

ICT and Innovation: background paper for DGRC study FIRST DRAFT

For innovators:
Attractive possibilities:
Enhanced levels of effective application of ICT in the innovation process. Currently
there is extremely rapid evolution on the part of a vanguard of firms (and academics),
while many others are only using the most elementary tools (e.g. basic Web searches).
Research into this topic could seek to identify:
• the significant trends in the technical tools (models, agents, etc) and associated
practices (knowledge management, R&D management etc);
• how these are being applied, what good practice is, where various segments of UK
industry feature;
• how to improve these tools and make them suitable for a wider user base.

This challenging topic opens a rich research agenda of interest to all Research Councils.

Undesirable possibilities:
UK plays less role in technology design, standards-setting, and effective use of
technologies for social and economic benefits.

Q4 What factors are likely to have the most significant impact on the pattern of
this evolution?
(a) Individual Level
Cheap network access; conditions which foster a proliferation of experimental and
attractive services such that all types of niche community can develop; mechanisms to
prevent exploitation of online intellectual property generated by individuals and small
firms with little experience of IP strategy; fostering of gift and trust relations and ways of
verifying trustworthiness. Educational initiatives promoting creativity and

(b) Organisational Level

Support to small and niche adopters. Initiatives aimed at promoting development and
diffusion of innovation support tools.

ICT and Innovation: background paper for DGRC study FIRST DRAFT

Theme 2: Organisational change

Q1 What does social science tell us about the role of ICT in the UK in relation
to the theme?

Many researchers have elaborated on the view that ICT use—at least in large
organisations—has tended to evolve through distinct stages, reflecting leaning
processes as well as generational changes in ICTs themselves. Strategies become
more articulated, with different patterns of expenditure, applications, management, and
user awareness,7 as ICT use shifts from simply managing the technology (typically
viewed as a utility to be handled by a separate Data Processing (DP) Department) to
managing information resources as a source of comparative advantage. Thus, for
example, databases move from being purely administrative aids for payroll and similar
functions to being vital records of customer characteristics for marketing purposes.
Numerous case studies have documented such changes, though they can occur at very
different rates, and it is not necessary for all firms joining the process at later periods to
progress through all stages. For organisations to leapfrog stages, requires senior
management recognition of the advantages of adopting the more sophisticated
procedures characteristic of the later stages. It should not be forgotten, too, that
changing management structures, personnel, or attitudes, can actually shift
organisations backwards to “earlier” stages.

In an exemplary analysis of this kind, Galliers and Sutherland (1995) argue that
organisations frequently begin with “ad hocracy”— a felt need to acquire ICT systems
results in acquisition (usually packages to accomplish basic financial processes). But
there is no organisational structure associated with the acquisition, nor planning for its
wider implications for users and relations within and beyond the organisation. As ICT
staff are acquired and wider uses are foreseen, a separate IT or DP section (usually in
the Finance or Accounting section) is established to provide (limited) services to the rest
of the organisation. The DP manager and other expert staff typically have a highly
technical orientation, with limited appreciation of rapidly changing user awareness and
requirements. In a later stage, “centralised dictatorship”—top-down planning—is
imposed in an effort to align ICT development with business goals. Often, there is
tension between end-users and the ICT department, with some end-users taking their
own initiatives in systems acquisition and training. This unstable situation may be
resolved in a more federal approach, with “mini DP departments” set up throughout the
organisation. ICT personnel are related more closely to end-users, and expected to
have business skills as well as technical ones. This shift is one that many DP/IT Centres
have found uncomfortable to negotiate. Still, innovative firms have learned to view ICT
as more than merely a tool to be applied to certain routine number-crunching operations
(data processing), but rather as a strategic asset underpinning almost all activities
(management information systems, knowledge management). A stage of
“entrepreneurial opportunity” may follow, where the major operational systems are in
place and new coalitions are formed within the federal organisation of ICT to forward
A good overview of relevant literature is Galliers and Baker (1995) .

ICT and Innovation: background paper for DGRC study FIRST DRAFT

strategic opportunities (often under visionary product champions). Further steps may
bring such initiatives together co-operatively, with specialist IT staff more attuned with
business activities.

Organisational learning thus involves ICT specialists learning about wider business
needs, opportunities, and constraints, as well as “ordinary” personnel learning about
ICT. Both elements are involved in the shift from centralised to end-user concerns and
experience; they act as drivers of ICT use and further innovation. We should reiterate
that there is nothing mechanical about the stages presented in accounts such as this,
though some exponents may portray the developments in rather rigid ways.
Management can usually draw on other resources to make its strategic choices, and
firm-specific circumstances – including the behaviour of collaborators and competitors –
may foster distinctive development trajectories. Like other accounts of “stages” and “life
cycles”, the analysis provides more of an ideal type than a template which individual
cases are liable to follow.

Q2 What are the key intellectual and policy issues which arise at the interface
of ICT and the theme?

Three points will be highlighted here, all with both intellectual and policy dimensions.

First, the relation between technological and organisational change has to be

understood as involving neither “technological impacts” nor unfettered “organisational
choices”; “Rather, technology and knowledge are closely intertwined through flows of
knowledge and ideas which transcend the individual organisation but which find
expression in, and are reinforced by, political interests and agendas at the organisation
level.” (Scarborough and Corbett, 1992, p157). It cannot be assumed that there is a
general-purpose blueprint for ICT-using organisational design in the knowledge
economy, and several researchers have demonstrated that great problems can come
from implicitly or explicitly seeking to buy designs “off the shelf”, especially from other
cultures (Smith*** on US banking systems, **** on Japanese management systems).
Good practice usually consists of perspectives and principles, rather than plans and
recipes. Distinguishing these, and explicating and communicating the former, is a major
challenge for management research. The policy implications should be confronted by
public sector organisations both in respect of their own strategies as ICT adopters, and
in terms of their support for ICT innovation in their wider environments.

Similarly, organisational choice is conditioned by the capabilities that have been

developed by the firm, by the articulated interests and strategies of individuals and
groups within the organisation, and, not least, by the challenges faced from external
competition and ongoing evolution of relevant technological capabilities. This implies
both that major choices are imposed upon organisations (e.g., how to respond to e-
commerce opportunities? to a new market entrant, or a competitors shift of strategy
from price to quality competition? etc.); and that their responses and proactive initiatives
will always be undertaken with substantial uncertainty, unintended consequences, and

ICT and Innovation: background paper for DGRC study FIRST DRAFT

with some diversity of experience and motivation across employees (not to mention
collaborators). ICT may be developed so as to better sound out views, assess
capabilities and weaknesses, and communicate messages in-house, of course. But the
more substantial point is to avoid seeing one or other management slogan as panacea
(last year TQM, this year BPR, and so on). The succession of such slogans does not
mean that they are vacuous – sometimes they do signify profound organisational
innovations, sometimes with major impact on product and process innovations. Rather,
it indicates that the complexity of organisational change is such that no such initiative
can be the solution. While there is much scope for learning from experience and good
practice, for raising awareness of innovative management practices, for encouraging
attainment of high standards, and so on, schemes promoting such initiatives require
careful management in their own right – the vanguard of adopters will have moved on to
the next slogan and the next, before the long tail of laggards confronts the challenge.

Second, the importance of ICT for services, mentioned earlier, has certain implications
which should be pointed to here. Some service firms are in the vanguard of ICT use,
and there is one line of analysis (Barras’ “reverse product cycle” theory)8 that suggests
that many more services are liable to follow this route. (The claim is that services first
import ICT from manufacturing sectors to improve their process efficiency, subsequently
learning about technological potentials so as to embark upon first quality enhancement
and then product innovation – from which point on their innovation dynamics should
become much more like those characteristic of manufacturing.) The implication is that
there is liable to be a major wave of organisational change in service sectors, which
constitute the bulk of the economy, as more of these follow the service vanguard. Given
the highly skewed size distribution of firms in most service sectors, this implies a large
number of small firms embarking upon “informatisation”, and possibly a new competitive
environment as the large firms in their sectors embark upon expansion and market
acquisition using new design paradigms. This will have implications for employment,
regional development, technology support, and other policy arenas.

The public services are liable to face particular organisational challenges in the
knowledge economy. Hopefully this themes will be taken up in other essays for this
project, but one key points is that many public services may find themselves challenged
both by users who demand greater levels of interactive, online, and ICT-assisted support
than they are used to providing, and by private suppliers of informational and in some
cases more general services competing with the traditional forms (e.g. online degree
courses from the USA). More generally, internal organisational change so as to make
effective choices about, and uses of, ICTs will be evermore pressing for public services.

Third, and following on from earlier discussions of the generational changes in ICT, its
rapid evolution, and its ongoing roll-out, it must be acknowledged that few firms begin
with a clean slate. In terms of technology itself, we note that, even before the alarm
about the “millennium bug”, growing attention was being paid to the problem of “heritage
Barras (****). This approach has been subject to heavy conceptual and empirical criticism (see especially
Upachalanan 1998, 2000) but has helped draw attention to the similar and dissimilar features of
manufacturing and services innovation, and stimulated much reconsideration of the significance of services
ICT innovation.

ICT and Innovation: background paper for DGRC study FIRST DRAFT

systems”. (Actually, the “bug” provided a good rationale for many firms to modernise or
at least tidy up their heritage systems.) Firms with a long history of IT use are now
confronting a wide range of problems as they try to integrate these systems with more
modern ones, or to shift their data and software to new platforms. Part of the problem is
that it was only recognised late in the day that the details of IT operations needed to be
documented; in consequence many companies are operating systems that are highly
idiosyncratic, and which were designed by staff who have long since left. Such factors
help explain the persistence of products (e.g., mainframe computers whose design
dates back to the 1960s) which are widely declared to be obsolete by industry experts.

The ICT systems themselves may be antique by the standards of this fast-moving field
(though the millennium bug panic has meant a large number of users being forced to
upgrade their systems). But there are also questions of organisational structures (DP
departments, telecommunications management being seen as a purely office
administration task, etc.), skills and training (inadequate end-user training, limited
acquisition of new skills associated with newer technological capabilities, absence of
hybrid skills, etc.) having been forged in earlier eras of ICT. The “stages” models, if not
interpreted mechanically, offer some entry points into examining how and why some
firms and organisations are capable of rapid renewal, while others remain rooted in
outdated systems and structures.

Q3 What alternative possibilities are there for future evolution of these issues
looking 5 to 10 years ahead? What are the most/least attractive of these
Attractive possibilities:
Widespread organisational change emphasising worker empowerment and aimed more
at quality enhancement and new services than at simple efficiency improvement.
Participation of many SMEs and new entrants in new and emerging clusters and modes
of ebusiness.

Undesirable possibilities:
ICT applied in uncreative ways, aimed at control of labour and labour-saving and
intensification; rigid organisational structures failing to allow for experimentation and
creativity in end-user ICT and systems support; SMEs largely responsive rather than
proactive, dragged into networks mainly by large trading partners and under their terms;
many areas of service sector undergo shift to "“hypermarket"-style delivery structures at
expense of local establishments.

ICT and Innovation: background paper for DGRC study FIRST DRAFT

Q4 What factors are likely to have the most significant impact on the pattern of
this evolution?

Role of DTI, business schools, major consultancies, and media in promoting messages
of two sorts:
(a) need to accept complexity of organisational change, and especially learn relevant
principles from good practice here and overseas, rather than attempt simply to import a
set of procedures.
(b) raise awareness in those firms and sectors where scope for change seems so far not
to have been widely grasped.

ICT and Innovation: background paper for DGRC study FIRST DRAFT

Theme 3: Infrastructure for innovation

Q1 What does social science tell us about the role of ICT in the UK in relation
to the theme?

As noted at the beginning of this paper, ICT itself forms part of the infrastructure for
innovation. Computer networks (e.g. JANET and superJANET) and desktop PC
equipment and software are standard tools across effectively all disciplines; specialised
instrumentation, advanced computers (e.g. supercomputers for computational chemistry
and bioinformatics) are also widely required. In terms of physical infrastructure, it is
telematics (computer-communication) networks that have received most attention, and
which will be focused on below. However, the question of infrastructure can also be
read as directing attention to social underpinnings of ICT innovation: innovation systems
and their components such as training, collaborative networks, IPR and related
instruments. We shall also consider social infrastructure in this account.

(a) Physical Infrastructure

For almost two decades there have been analyses suggesting that improved
telecommunications networks – usually seen in terms of broadband systems capable of
delivering high-quality interactivity to end-users – are important for the development of
information society. On the one hand, technological convergence means that traditional
distinctions between broadcast and communications media have been eroded, with
Internet and potentially digital TV systems offering a wide panoply of services. On the
other hand, many of the new services are seen as only liable to take off once a
sufficiently large and variegated user base is established. Externalities to scale have a
crucial impact on the rate of expansion of networks and telematics services. The value
of a network to suppliers and users is liable to increase as more users join—there are
more potential clients, collaborators and contactees. Innovators are more likely to find
users, and thus more likely to risk investment in bringing products to market. One
interesting feature of the “new economy” is that, in the Internet, users may promote or
critique such offerings, and form user communities who add further value to products –
this is particularly evident around ICT products, where software add-ons (and advice on
piracy!) are often widely available.

(b) Social Infrastructure

This paper cannot discuss the whole innovation system (or set of systems) governing
ICT innovation and deployment. The social infrastructure should be seen, however, as
containing both the traditional public knowledge infrastructure, and the new
infrastructure – particularly prominent in ICTs – in which business services play a vital
role (den Hertog, 2000). ICT services (telematics and network services, software,
systems integration, etc) are of course important, and recognised as also significant
players in trade and other policy arenas. But also of considerable interest here are other
ICT-related business services such as consultancy, training, engineering services, and a
wide variety of emerging activities at the interfaces of new media, new technologies,

ICT and Innovation: background paper for DGRC study FIRST DRAFT

design and content provision. Case study and macroanalyses suggest that the
utilisation of these services can play a major role in industrial success. There is also
some suggestive evidence that, although the UK does have an extensive and
competitive presence in many of these services, our utilisation of them may yield less
returns than is the case in some other industrialised countries (Tomlinson, 1999).

In addition to this economic infrastructure, and the (mainly intangible) assets it

generates, there is also the institutional infrastructure which bears on ICTs. One
element is the Intellectual Property regime, where the software and service components
of ICT are seen to challenge the largely patent-based traditional systems of protection of
technological knowledge. In addition to the problems associated with application of
copyright law (etc.) to technological knowledge (most obviously, that copyright systems
lack the diffusion functions of patenting), there are arising ICT-based challenges to the
technological regimes within which copyrights have been enforced – most famously the
MP3 challenge whereby music can be distributed over the Internet (Andersen et al
2000) Property rights in the information age are bound to remain subjects of practical
concern and contention – as are other rights, e.g. privacy. Thus, other relevant
elements of the institutional regime are the governance of security and privacy,
competition and antimonopoly laws. (Professional regulatory systems are relatively
underdeveloped in the field of ICT services, unlike many traditional professional
services, however)..

Q2 What are the key intellectual and policy issues which arise at the interface
of ICT and the theme?

(a) Physical Infrastructure

The OECD (***) argues that “the development of a network-based information economy
• the availability and diffusion of high speed interactive infrastructures;
• non-discriminatory access to and use of infrastructures for both customers and service
• the interconnection and interoperability of infrastructures and services;
• growth and development of on-line services, especially digital applications across all
including multimedia services;
• safeguards which provide for universal service, and ensure privacy, confidentiality of
information, and security of payments, and protection of intellectual property.”

The telecommunications infrastructure may be a significant constraint to the realisation

of some ICT innovations (especially new communication services of various sorts) the
service. Even in cases where the infrastructure is relatively adequate, other constraints–
for example the cost of digital TV receivers – may limit the pace of market growth. Yet
without a large user base, there may be little incentive to develop appropriate
programming and really new services. It is plausible that multimedia and even video

ICT and Innovation: background paper for DGRC study FIRST DRAFT

services (including remote monitoring, telephony and conferencing) will be widely

utilised at some point in the medium-term future, in a variety of locations (desktop, living
room, portable and pocket systems), but major efforts to develop and roll out relevant
hardware and services requires more advanced infrastructure than currently available in
most UK locations.9

Some researchers suggest that the development of services often lags behind
infrastructure by long periods (just as software typically lags behind hardware (e.g.
Miles, ***). Improved infrastructure does make a difference. Reduced costs, higher
service speeds, and multimedia facilities are bound to affect the perceived quality and
desirability of new services, and thus their uptake. Furthermore, expectations about the
infrastructure are still liable to be important determinant of business decisions,
influencing key strategic choices bearing on the development of new services.
Questions of cost, user-friendly peripherals and interfaces, and organisational
restructuring loom large, as does the establishment of design paradigms and standards
for inter operability. The availability of infrastructure is probably not the primary issue for
services that are on the near horizon, although there are cases where the geographical
extension of services is limited by uneven development of infrastructure. Even if
networks and hardware were to be “frozen” at their current state, with only roll-out and
diffusion of established systems to 2005, continuing dramatic change in software and
services would be expected. (Indeed, proponents of “bit taxes” as solutions to problems
of government revenues in the information age, argue that many of the latter are
needlessly profligate with resources, and could be “lightened” or “compressed” in
various ways – bit taxes would stimulate such innovations ***. However, such taxes
would probably deter development of applications that are necessarily data-intensive,
and may be based on a faulty conceptualisation of where the scarce resources are in
the knowledge economy.).

Infrastructural decisions have an important role to play, and uncertainty about these can
be a source of delay in innovation. But in an environment featuring heavy competition
between delivery modes, they may often only have limited impact on stimulating take-off
and relieving uncertainty. Competitive telecommunications service provision appears to
have a strongly positive influence on the rate of diffusion of associated ICTs (e.g. mobile
telephony). In part this is because increased competition often means import of
overseas experience; in part it reflects increased marketing efforts on the part of
suppliers, and greater scope for consumer choice.

While there may not be a set threshold in the number of networked users, a “critical
mass” which is required to prompt service take-off, there are important scale effects in
network infrastructure. (refs****) Early adoption of networked services may require co-
operation between different service suppliers to reduce uncertainties about standards
and designs (or to persuade regulatory authorities to permit new services). Systems are
likely to be institutionalised which can reduce and arbitrate conflicts between different
actors in terms of shouldering the costs of new services – e.g. between banks and

Refs to follow OECD on Internet indicators, John Harpur book.

ICT and Innovation: background paper for DGRC study FIRST DRAFT

retailers concerning the charges for EPOS system use, between different
telecommunications and telematics services about costs of carriage and interoperability.

(b) Social Infrastructure

Again we can only select certain issues that arise in the context of ICT innovation
systems for elaboration here. In cases of collaboration in innovation, trustworthiness
becomes a major issue. Any entrant into a collaborative relationship could subsequently
utilise the knowledge gained from collaboration to enter into direct competition with their
former partner, or could transmit that knowledge (or technology) to their partner's
competitors. Without some basis of trust between partners, the possible costs of such
information transactions would make collaboration unlikely. Further, setting up the
channels by which information will be transmitted between partners, and agreeing on a
suitable common language for communication, is not a cost-less process. It takes a
significant investment of time and money to form an effective relationship. A minimum
set of organisational and technological capabilities will almost certainly be required in
order to absorb technological knowledge generated outside the firm. All this suggests
that in practice a firm is likely to have close (& enduring) links with only a small number
of the potential population of collaborators. These collaborative networks are innovative
entities in their own right.10

Networks allow for interactive learning to occur among their members. A social pool of
knowledge relating to the technology in question, is shared by the collaborating firms;
and this allows them to proactively shape or organise markets (see specifically
Flanagan’s study of the multimedia sector in the UK, and more generally Lundvall ***.
Teubal et al (1991)). The Foresight programme can be seen as an effort to extend
networking in UK innovation systems around critical areas of social and technological
change, and its contribution to ICT innovation systems should be considered carefully.

Saxenian (1991) described how the computer systems firms of California’s Silicon Valley formed innovative
production networks with customers and suppliers throughout and beyond the region – with these inter-firm
networks building on long-established traditions of informal knowledge-trading and interfirm labour mobility,
and effectively institutionalising the ability of the participating firms to learn from one another.

ICT and Innovation: background paper for DGRC study FIRST DRAFT

Q3 What alternative possibilities are there for future evolution of these issues
looking 5 to 10 years ahead? What are the most/least attractive of these

(a) Physical Infrastructure

Attractive possibilities:
Widespread availability at low costs of high-bandwidth infrastructure, with considerable
scope for learning and opportunities for innovative supply on the part of, for examples,
manufacturers of peripherals, suppliers of content and communication services;
communities of users.

Undesirable possibilities:
Limited roll-out of infrastructure, and/or strong commercial or other disincentives for
newcomers to enter hardware, software or services supply. For example, ecommerce
infrastructure dominated by “walled gardens” which allow for limited service suppliers
and formats.11

(b) Social Infrastructure

Attractive possibilities:
UK maintains and enhances world class knowledge infrastructures, takes a leading
position in setting standards, providing good business models, etc. High quality training
and other services are used effectively by industry and public sectors, boosting quality of
output, morale and motivation of staff, and innovative activities more generally.

Undesirable possibilities:
Rigid performance indicators restrict development of innovative capabilities; UK social
infrastructure fails to gain proper appreciation and support, so that disorganisation and
decay predominate while success stories go unheard.

There is a case that such walled gardens might well overcome the infoirmation overload, lack of trust, and
fears of porn and other online evils on the art of mass user bases. Our caution about the difficulty of
monochrome evaluations of these trends should be recalled.

ICT and Innovation: background paper for DGRC study FIRST DRAFT

Q4 What factors are likely to have the most significant impact on the pattern of
this evolution?

(a) Physical Infrastructure

Policy measures in three areas as identified by the OECD (***) are of major significance
for developments here:
• those directly related to the development and diffusion of information infrastructures,
nationally and on a global scale;
• those related to the access and use of these infrastructures; and, linked to this,
• those related to the existing and new services and applications, including multimedia
applications and electronic commerce, using infrastructures.

However, these policies will necessarily interact with the strategies of industrial actors in
the ICT sectors – where considerable activity is underway around the “convergence” of
networks, computing, and media. Some observers see this activity as consolidating
industrial capabilities to roll out infrastructure and associated services at a rapid rate.
Others see a host of problems, ranging from corporate myopia stifling many of the
potentially most beneficial innovative possibilities of the new media, through to the
familiar concerns about Americanisation and massification of culture. The implications
of industrial strategies for the future scenarios are thus highly debatable.

(b) Social Infrastructure

Similarly, there are longstanding controversies as regards the future of the public realm,
reflected in current debates about the strategies for renewal of public services – some of
which constitute the public infrastructure here. The elements that interact in the debate
(which largely concerns the stress put on one or other element) are: levels and modes of
funding of public services; reward structures, obligations, and innovative potential of
public sector workers; appropriate systems for evaluating and managing performance,
including the attribution of responsibility for quality of (and effective use of ICT potentials
in) service provision. The role of the private knowledge infrastructure is clearly affected
by developments in the public sphere, but this is a matter of complementarity and
interaction in many cases, though the familiar saga of competition between public and
private services (and associated social inequalities) remains significant. Business
services are an area where this saga is less of an issue, and one where policies can
play a role in stimulating their development and utilisation. However, business services
are also prone to their own processes of international competition, mergers and
acquisitions, and the like.

ICT and Innovation: background paper for DGRC study FIRST DRAFT

Part C: Other topics not covered in B; including important Issues not

addressed in the Thematic Priority statement.
• [several points will follow if time and space permit: one line of argument is about the
need for better indicators]

Part D: Bibliography
[Note: this is still incomplete]

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K Ducatel (ed.) Employment and Technical Change in Europe Aldershot, Edward

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W Dutton (ed.) 1999, Society on the Line: Information Politics in the Digital Age
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ICT and Innovation: background paper for DGRC study FIRST DRAFT

R.D. Galliers and R. Sutherland (1995) “Information Systems Management and Strategy
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J Harpur ***

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