The Schumpeterian hypothesis and technical change

Abstract

This paper provides an empirical test of the available evidence concerning firms’ productivity structure and the Schumpeterian hypothesis using the Japanese trunk route airlines during the period 1977‐1993. Empirical tests of this hypothesis have traditionally examined the relationship between some measure of innovative activity and firm size. Former studies have employed the growth rate of productivity as a measure of innovative activity in empirical tests. However, the innovative activity should be measured as the rate of technical change using some innovative inputs and outputs. Since the total factor productivity (TFP) can be decomposed into the technical change and the scale economies terms, this study demonstrates the shift in the cost function associated with technical change, and the change of economies of scale. In this study, the technical change and the scale economies are directly measured by using trans‐log type function. Lastly, the Schumpeterian hypothesis is tested by the technical change. From the empirical results, the Schumpeterian hypothesis is rejected.

Citation

Kinugasa, T. (1998), "The Schumpeterian hypothesis and technical change", International Journal of Social Economics, Vol. 25 No. 6/7/8, pp. 1207-1216. https://doi.org/10.1108/03068299810212694