Table Of ContentCOMPETITION AND TECHNOLOGICAL CHANGE IN THE
TELEVISION INDUSTRY
There are few in-depth studies of individual industries available, and
even fewer which attempt to relate such studies to economic theory.
Erik Arnold's book breaks new ground by providing the first detailed
study of the United Kingdom television industry and by using the case
of that industry to launch a devastating attack on conventional
microeconomic theory of the firm. A central concern is the role of
viewdata (videotex) in the industry. The book offers important lessons
for industrialists, economists and policy-makers, showing the vital
importance of continuous technological progress to successful firms.
Part I sets out conventional neoclassical theory of the firm and
contrasts this with managerial and behavioural approaches, and with
more dynamic Schumpeterian theory. Part II describes the television
industry and viewdata, while Part III assesses economic theory in the
light of events in industry. Part IV concludes that while neoclassical,
managerial and behavioural theories do not offer very useful descrip
tions of successful firm behaviour, Schumpeterian thinking is relatively
appropriate and goes on to show that aspects of the Schumpeterian
approach are capable of fruitful further development.
Erik Arnold is a Research Fellow at the Science Policy Research Unit at
Sussex University. Previously he has worked in market research and in
computing. His research interests include the economics of industrial
innovations and the skill and manpower implications of new techno
logy in the engineering industry. He has published widely on office
automation and computer-aided design, and has jointly authored
Microelectronics and Women's Employment in Britain.
COMPETITION AND
TECHNOLOGICAL CHANGE
IN THE
TELEVISION INDUSTRY
An Empirical Evaluation of Theories of the Firm
Erik Arnold
Foreword by Christopher Freeman
M
© Erik Arnold 1985
Softcover reprint of the hardcover 1st edition 1985 978-0-333-37436-8
All rights reserved. No part of this publication
may be reproduced or transmitted, in any form
or by any means, without permission
First published 1985 by
THE MACMILLAN PRESS L TO
London and Basingstoke
Companies and representatives
throughout the world
Filmset in Monophoto Times New Roman by
Latimer Trend & Company Ltd, Plymouth
British Library Cataloguing in Publication Data
Arnold, Erik
Competition and technological change in
the television industry.
I. Television supplies industry~Great Britain
I. Title
338.4'7621388'00941 HD9696.T463G7
ISBN 978-1-349-07494-5 ISBN 978-1-349-07492-1 (eBook)
DOI 10.1007/978-1-349-07492-1
To Jenny
Contents
List of Figures and Tables
XI
Foreword by Christopher Freeman xiii
Acknowledgements XV
Introduction 1
Paradigms of Firm Behaviour 1
Research Method 4
The Representative Firm 5
Structure of the Book 10
I ECONOMIC THEORY OF THE FIRM 11
1 The Neoclassical Paradigm 13
1.1 Strategy and Control of the Firm 15
1.2 Technical Change 17
1.31 Marketing-Price 18
Competition 19
Monopoly 20
Oligopoly 20
1.32 Marketing-Quality 21
Competition 22
Monopoly 23
Oligopoly 23
1.4 Interaction Between Supply and Demand 24
1.5 Summary-A Neoclassical Model 25
2 A 'Managerial-Behavioural' Paradigm 26
2.1 Strategy and Control of the Firm 27
2.2 Technical Change 29
2.31 Marketing-Price 31
2.32 Marketing-Quality 33
2.4 Interaction Between Supply and Demand 34
2.5 Summary-A 'Managerial-Behavioural' Model 35
3 A 'Schumpeterian' Paradigm 37
3.1 Strategy and Control of the Firm 41
3.2 Technical Change 44
viii Contents
3.3 Marketing 46
3.4 Interaction Between Supply and Demand 46
3.5 Summary-A 'Schumpeterian' Model 48
II INDUSTRY 51
4 The UK Television Industry 53
Infrastructure and Innovation 55
Radio and Television 58
The Colour Television Era 61
Video and Text Products 71
5 Viewdata and British Telecom 75
Sales and Marketing 80
6 The Semiconductor Industry 84
III ANALYSIS 91
7 Strategy and Control of the Firm 93
Ownership 93
Goals 95
Planning 96
Growth of the Firm 105
8 Technical Change 109
Technical Change in the Television Industry 109
Reliability 112
R & D and Technology Sources 115
9 Marketing-Price 122
Capacity, Volume and Scale 122
Technology Licences, Trade Barriers,
and Prices 124
Price Policies-Established CTV Products 125
Price Policies-New Text Products 132
10 Marketing-Quality 136
Quality Variables which are inherent in the Product 136
Quality Variables which are not inherent in the
Product 137
Inherent Quality Variables-'Quality' 137
Inherent Quality Variables-'Features' 140
Non-Inherent Quality Variables-'Subjective' 142
ll Marketing - Distribution 148
12 Interaction Between Supply and Demand 159
Contents IX
IV CONCLUSIONS 171
13 Conclusions for Theory 173
13.11 Ownership and Control of the Firm 173
13.12 Strategy 175
13.13 Growth 178
13.2 Technical Change 180
13.31 Marketing-Price 186
13.32 Marketing-Quality 192
13.33 Marketing-Distribution 196
13.4 Interaction Between Supply and Demand 199
14 Implications for Theory 204
The Product Cycle 205
Inter-Cycle Movement 212
Firm Behaviour 214
Appendix I: Major Specialist Renters, 1980 218
Appendix II: Distribution Strategies of TV
Manufacturers, 1980 220
Bibliography 221
Index of Authors and Institutions 230
List of Figures and Tables
FIGURES
3.1 Business assessment of product performance 43
3.2 Innovation and stage of development in the product
cyck 45
4.1 Number of firms in the UK television industry, 1936--82 60
4.2 UK television sales and imports, 1968-82 61
7.1 Monochrome TV-UK market development, 1946--82 106
8.1 Television reliability, 1980 113
9.1 Trends in mean basic 20" CTV list prices, 1975-81, by
ownership of manufacturer 127
11.1 TV renters' principal sources of CTV, 1980 154
12.1 Proportions of households owning television and
licensed to receive broadcasts, 1945-82 165
12.2 Radio and television licences in force, 1922-82 166
12.3 Proportion of homes licensed to receive radio, mono-
chrome and colour TV, 1945-82 166
TABLES
4.1 Leading firms' shares of world television production
1977 54
4.2 Television market share estimates, 1968-79 54
4.3 Monochrome TV-UK import-export performance,
1968-82 62
4.4 UK television industry-new entry from 1974 64
4.5 Colour TV-UK import-export performance, 1968-82 68
4.6 Contribution of television manufacture to profits 69
4.7 Import shares of screen size market segments in the UK,
1973-79 70
4.8 UK videotape recorder market, 1972-81 72
4.9 Cumulative Prestel registrations, 1979-82 72
XI
XII List of Figures and Tables
4.10 Videotape recorder production in Europe by Japanese
companies 73
7.1 Origins and role of founder in firms active in the UK
television industry, 1980 94
7.2 Goals of firms in the UK television industry, 1980 95
7.3 Effective planning horizon needed for technical change 98
8.1 Japanese 14" CTV -one firm's component count
1972-80 112
8.2 Estimates of employment in TV manufacturing plant,
1980-81 112
8.3 Types of R & D done by firms in the UK television
industry, or their parent companies, 1980 117
8.4 Milestones in video tape recorder development 118
8.5 Strategies of the firm 119
8.6 Firms' product technology strategies, 1980 120
9.1 Real price of colour television, 1968-81 123
9.2 TV plant production volumes 124
9.3 Strategies for price determination 125
9.4 Mean prices of CTVs from different firms, 1975-81 128
9.5 Trade prices of teletext CTVs 1979-81 133
10.1 Advertising spend for TV by principal advertisers:
manufacturers and renters, 1971-78 143
10.2 Advertising expenditure by TV manufacturers, 1978-81 144
10.3 Advertising expenditure by TV renters, 1978-81 144
10.4 Manufacturers' brand names, 1968 145
11.1 Percentage of TV set disposals rented, 1970-80 149
11.2 TV market distribution channels, 1974 and 1980 149
11.3 Television: household penetration by social class,
1973--4 and 1978-9 150
11.4 Dominant specialist renters' shares of sets on rental,
1971-80 152
12.1 Households licensed to receive radio, monochrome and
colour television 163--4
12.2 UK television and VCR ownership, 1964---82 165
14.1 Characteristics of the product cycle (I) 206
14.2 Characteristics of the product cycle (II) 208-9
