Quality improvement versus cost reduction: A broader perspective on evolutionary economic change

Abstract

A new framework is explored for analyzing scientific and engineering advances by their economic, business and social effects. For this framework, scientific and engineering advances are categorized in two contexts: the function served by the good(s) or service(s) associated with the advance, and whether the advance is directed toward the goal of cost reduction or quality improvement. It is argued that this categorization can be used to identify important patterns of technological change, and allow for better understanding of industrial research and development, as well as improved national strategies for economic growth. Data are obtained on scientific and engineering advances that might be of interest to business investors and managers, based on 783 news stories in 1994 in the business journals Business Week, Forbes, Fortune and The Economist. The approach taken is compared with traditional economic approaches to technologcal change, which are of in constrained by archaic methods of categorizing data.