FLEXIBILITY TRAP - A CASE ANALYSIS OF US AND JAPANESE TECHNOLOGICAL CHOICE IN THE DIGITAL WATCH INDUSTRY

This paper examines;he widely shared belief that a flexible system of transactions is faster in adapting to major technological change than an inflexible system. Borrowing some ideas from Elster (Ulysses and th e sirens, 1979; Explaining technical change, 1983; Nuts and bolts for social sciences, 1989, Cambridge University Press, Cambridge), this pa per contends that the flexible system may lead to a myopic selection o f technology, because it delays the technological turning point if the important part of the technological evolution is generated by the agg regation of the choice patterns of firms. This paper investigates the case history of technological choice in the U.S. and Japanese digital watch industries in the 1970s. The paper's conclusions beg a reconside ration of current and previous thinking on industrial policy and techn ology strategy.