ABSTRACT
The purpose of this chapter is to explain the conceptual framework developed in this research and used to address the impact of flexible automation on scale and scope. The concepts of scale and economies of scale and of scope and economies of scope have all too often been used loosely in discussions about the impact of technical change on costs, firm size, industrial organization and industrialization. Much of the confusion has arisen from the fact that the circumstances and relationships these concepts attempt to describe involve a combination of physical, organizational and economic phenomena, which normally are not easy to disentangle. Thus, the first step in this research was to develop a proper understanding of their meaning, of the key factors accounting for their changes, of their different dimensions and of the possible relationships that emerge between them on the basis of established economic theory; and to relate this understanding to the ensuing debate on whether or not new technologies reduce optimal scale and increase economies of scope.
