ABSTRACT
Having explored in Chapter 3 the Schumpeter–Baumol concept of innovations as competitive weapons, deployed to raise labor productivity and lower unit costs (Baumol, 2002; Baumol et al., 2007), we now seek to connect their origin with the mechanization of production activities as first considered in Adam Smith and later on in management science. Once we complete the outline of the sequential stages comprising the mechanization drive and its significance for competitive strategies, we will consider as illustration the stagnation of the British economy in the postwar years, allegedly due to insufficient innovating progress. As a byproduct of this inquiry, we examine critically the suggestions made by neo-Schumpeterian theorists to replace models of price competition with models of quality competitiveness. We believe advocates of quality competiveness simply overlook the fact that price competitiveness refers only to goods of comparable or superior quality and therefore both kinds of competitive strategies cannot be separated.
