EXTERNAL ECONOMIES AND ECONOMIC PROGRESS - THE CASE OF THE MICROCOMPUTER INDUSTRY

The following article provides a through chronicle of the microcompute r industry. That industry is a striking case, in which industrial grow th took place through the creation of ''external'' capabilities-that i s, capabilities produced by and residing in a specialized market netwo rk rather than in large organizations enjoying internal economies of s cale and scope. In the microcomputer industry, the most successful pro ducts were those that took the greatest advantage-and allowed users to take the greatest advantage-of the market; and the greatest failures occurred when business enterprises bypassed the external network and a ttempted to rely significantly on internal capabilities.