Technological Diffusion in the Canadian Tool and Die Industry

Abstract

RECENT publications have underscored the priority being given by government officials to policies promoting more rapid technological change in Canadian manufacturing industries.' While major emphasis is being placed on encouraging the indigenous commercial development of new production techniques and products, i.e., innovation, relatively little concern has been paid to the subsequent diffusion of process and product innovations. Since the potential benefits of any innovation will remain largely unexploited by slow subsequent rates of adoption, policies fostering rapid adoption of existing technology are complements to policies encouraging innovation. Furthermore, quick imitation is an effective (and frequently necessary) means of blunting competitive disadvantages created by rival innovation.2 In view of the high costs usually associated with innovation, and the relatively small size of the domestic economy, imitative-rather than innovative-excellence might be a more feasible objective for many Canadian industries. Although an implicit presumption exists that geographical, cultural and economic ties with the United States insure that best practice technology in Canada will be close to that in other countries, the limited empirical evidence is inconclusive. Hufbauer (1966) found that production of a new synthetic material first took place in Canada approximately fourteen years, on average, after its initial production by the innovating country. Globerman's study (1974) comparing the adoption patterns of special presses in the paper industries of Canada and several Western European countries found that the rate of diffusion was faster among European firms, although the presses were initially introduced at approximately the same time as in Canada. Studies by Ault (1973) and Baumann (1973) of diffusion in the iron and steel industry provide evidence that Canadian firms, on average, adopted new technology as quickly as major Western European companies, and in the early stages, more quickly than their U.S. counterparts. In the light of limited research on an important policy issue, this study attempts to provide additional evidence on two related questions: 1. Do firms in Canada adopt innovations as quickly as their foreign counterparts? 2. What important factors influence industrial diffusion patterns in Canada? Analysis is focused on the diffusion of a major manufacturing innovation, numerical control, within comparable sets of potential users in Canada and the United States.3