ABSTRACT
Qualified scientists and engineers have long been recognized as crucial to the existence of a successful manufacturing industry. The first dimension of the model has been developed from research initiated under the ESRC-funded pilot study for the New Technologies and the Firm Initiative. It is essentially in the Schumpeterian tradition of industrial economics, emphasizing structure, conduct and performance. This implies the need for at least the rudiments of a mathematical model, linking the employment of PSEs to the characteristics of the company and its subsequent performance. In terms of the two stylized extremes, the dichotomous economic model clearly indicates that the non-innovative, cost-saving, alternative is a cul-de-sac leading to more intensive competition with other low-cost producers, often from the Third World. The strands of the model can be linked together in so far as professional scientists and engineers may respond quite differently to the challenges posed by competitive shocks.
