top of page

EXISTENCE EXISTS

  • Aman Preet Singh

An Exercise in Obfuscation – A Review



Clear thinking is a rarity in regular life and in the social sciences. Professor Alfonso Gambardella’s oft-cited paper titled, “Does technological convergence imply convergence in markets? Evidence from the electronics industry” published in 1998 in the prestigious Research Policy journal is a case in point. Aside from coarse, crude, journalistic writing peppered with frequent grammatical errors, the paper also suffers from a considerable number of scientific shortcomings. I am s


orry to be reviewing such garbage for it makes me cringe at the sight of such sloppy work. However, in light of present circumstances, this distasteful task needs to be undertaken in the interest of scientific integrity and intellectual honesty.

 

With the collapse of philosophy, the social sciences have been increasingly reduced to word games and concern with the minutiae or the inconsequential, if you will. Professor Alfonso demonstrates both, amply, in this scientific endeavour. Thinking in terms of essentials or in terms of wider principles that have importance to crucial aspects of human existence is a skill that only an integrated philosophy of reason can provide. For scientists who study the organization of men and women towards production and trade, this skill is of vital importance. Professor Gambardella demonstrates a remarkable lack of this important skill.


First, some specifics. The Professor’s paper is available to read here. While the paper is written by two authors, my criticism of this piece is directed towards Professor Alfonso because he is the first and corresponding author, and presumably the major contributor. In any case, irrespective of the order of authors, Professor Alfonso is the author of this piece and should shoulder the guilt of subjecting his readers to repeated verbal contortions and obfuscations. It is best that I commence at the end – that is with what the paper concludes and purports to teach us. From there, we will work backwards.


So, what was the research question and what were the findings? For now, I shall merely focus on the abstract of this piece to commence with. The Professor states that the paper uses certain data “to examine the relationships between technological and business diversification.” Okay. So, what are the conclusions or findings? First, the Professor informs us that while many firms focused on fewer businesses, he found no evidence of greater technological focus. He attributes this to be related to the fact “that in spite of technological convergence, electronics sectors still command highly industry- or even product specific downstream assets.” In addition, the Professor found that “business focus improved performance but that better performance is also associated with greater technological diversification.”


Keeping in mind that I have only quoted from the abstract of this paper, one would have expected the research question raised to be exactly answered in the abstract. After all, the abstract is a summary of the work and should provide a quick snapshot of the question that was raised and answered. An abstract should not leave you with greater riddles to solve. It should only be a clear statement of what was asked, how it was answered, and what was answered so that you, the reader, can decide whether to delve into the work or not. The question that Alfonso Gambardella raised was “to examine the relationships between technological and business diversification.” Given this, one would expect Gambardella to answer exactly which relationships between technological and business diversification were examined within the abstract. The first clue is provided to the reader in the following sentence. I deliberately use the word ‘clue’ because Professor Gambardella has a knack for making the straight-forward obscure as is evident throughout his paper. That sentence is,


“We find that during the 1980s many firms focused on fewer businesses, but we find no evidence of greater technological focus.”


That firms focused on fewer businesses in the1980s suggests that firms in the 1980s focused on less business diversification. Okay. But a natural question that arises is fewer to what? Fewer to the 1970s, fewer to other industries, fewer than technological diversification? In the abstract, no answer is provided. This finding simply hangs in the air. Also, the Professor informs us that “many firms focused on fewer businesses.” How many firms? 10% of the sample, 20%, 90%, all of the sample, the entire population? Is this the proper manner to state a major finding in the abstract of a scientific paper? In the second part of the sentence, the Professor informs us that he found no evidence of greater technological focus. This begs the question – greater than what? Greater than the 1970s, greater than other industries, or greater than business diversification? No answer is provided in the abstract. Since the second part of the sentence concerns a finding about technological diversification, one is left to wonder how technological diversification is related to “technological focus.” Does the Professor use technological focus and technological diversification interchangeably? If so, is the relationship direct or inverse? Does evidence of greater technological focus imply more or less technological diversification? You could make the argument that greater technological focus translates into greater technological diversification because the firm is focusing on more kinds of technologies. Conversely, you could also make the argument that greater technological focus implies less technological diversification because the firm is focusing on lesser number of technologies but with greater depth. Your guess is as good as mine and the good Professor does not provide any further clues in the abstract. In the next sentence of the abstract, the Professor states,


“We argue that this is related to the fact that, in spite of technological convergence, electronics sectors still command highly industry- or even product-specific downstream assets.”


Since the previous sentence stated two findings instead of one, the reader is left to wonder which of the two previous findings is related to the fact stated in this sentence. Are both previous findings related to this fact? Let us assume that this is the case and then try to understand how each of the previously stated finding is related to the fact in the present sentence. The first finding was that “during the 1980s many firms focused on fewer businesses.” Therefore, the first finding is telling us that in the 1980s many firms (how many, we do not know) focused on lesser business diversification (how much less and compared to what, we do not know). The present fact is telling us that “in spite of technological convergence, electronics sectors still command highly industry- or even product-specific downstream assets.” Since we are assuming that this fact is related in some way to the finding on lesser business diversification, we are to conclude that firms that focused on lesser business diversification during the 1980s exhibited technological convergence (i.e. the opposite of technological diversification) and despite this technological convergence these firms in in the electronics sectors still command highly industry or even product-specific downstream assets. At this point, my head has started to spin and, therefore, I will attempt to rephrase this finding in simpler terms. According to the Professor, electronics firms exhibited lesser business diversification in the 1980s and exhibited technological convergence despite also exhibiting technological divergence in the form of highly industry-specific or even product-specific downstream assets. Somehow, according to the Professor, the fact of lesser business diversification by electronics firms in the 1980s is related to their technological convergence and, despite this technological convergence, these firms also exhibited technological divergence. If this sounds like the unprocessed vomit of an unfocused mind, it is. Such a finding and conclusion neither provides insight, nor knowledge, nor the motivation to read this paper in its entirety.


Now let us relate the second finding to this fact. The second finding was that the Professor found no evidence of greater technological focus. Therefore, this would imply that electronics firms in the 1980s did not exhibit greater technological focus and that this finding is somehow related to the fact that firms in the electronics sector depicted technological convergence despite also depicting technological divergence in the form of highly industry-specific or product specific downstream assets. Since we don’t know whether technological focus is directly or inversely related to technological diversification, we cannot be sure of the relationship between the finding and the fact. Again, this conclusion and finding mean nothing and are plain gibberish. The final finding as stated in the abstract is as follows,


“In addition, we find that business focus improved performance, but that better performance is also associated with greater technological diversification.“


Here, the Professor introduces yet another obfuscation by stating that business focus improved performance. Since the original purpose of this paper is to examine the relationships between technological and business diversifications, one is, again, left to wonder how business focus relates to business diversification. Are these terms interchangeable or is one a precursor to the other? If these terms are interchangeable, is the relationship direct or inverse? Your guess is as good as mine. In a short abstract of 100 words or so, the Professor depicts an extraordinary knack for verbal gymnastics and obfuscations.


Since the Professor introduces a number of terms in this abstract whose meaning and relationship to business and technological diversification is not clear, let us commence by listing these terms and then reading the paper closely for further clues. The terms are as follows –


i.                     Technological focus

ii.                     Technological convergence

iii.                    Business focus


One would also expect the Professor to clearly define what he means by business and technological divergence. Let us first commence with what the Professor means or implies by technological convergence. In the introduction, the Professor writes,

 

“The electronics industry is a quintessential example of technological convergence—the process by which different industries come to share similar technological bases (Rosenberg, 1976). Technological convergence in industries like office equipment, computers, telecommunications, and consumer electronics has been so profound that in the 1980s many observers predicted that they would soon merge into a unique sector, and that the main players in each of them would compete with one other.”


Keeping in mind that the title of the Professor’s paper is “Does technological convergence imply convergence in markets? Evidence from the electronics industry,” it would seem that the Professor is trying to answer whether technological convergence in the electronics industry also means, implies, or leads to market convergence. In other words, it would appear that the Professor is really trying to answer whether the consumer electronics industry which shares similar technological bases with industries such as office equipment, computers, and telecommunications also exhibits market convergence with these industries. Put another way, it would appear that the Professor is trying to answer whether the consumer electronics industry, which has a profoundly similar technological base with other related industries also depicts a convergence with the products of those industries. In other words, are the products of the electronics industry in the same niche or product category as the products of the office equipment, computers, and telecommunications industries? If so, why and if not, why not? It is a profound mystery to me that if this is the real question that the Professor is trying to answer then why would he state in the abstract that this paper uses data “to examine the relationships between technological and business diversification.” What then is the relationship between technological convergence, and technological and business diversification? It would appear that technological convergence, in this paper, is not being used as an antonym to technological diversification even though the abstract suggests otherwise. Let us prod further.

Within the paper, the Professor writes,


“Our findings can be summarised as follows. If one looks at their internal or external growth operations during 1984–1992, our companies are of fairly different types. Some of them show very diversified investments. Others are very specialised, having all their operations in one of the five sectors. Quite a few lay in between. By contrast, the companies in our sample are much more similar if one looks at their technological diversification. Whether highly specialised, very diversified, or in between, their patents in the 1980s tended to spread across the five sectors.”


These findings suggest that while almost all companies in their sample are technologically diversified as evidenced by the spread of their patents across the five sectors, they are not equally diversified when looking at their business diversification. Thus, while the title of the paper suggests that the question that is being answered in this paper is whether technological convergence also implies market convergence, the findings suggest that technological diversification does not imply business diversification. The connection between technological convergence, and technological and business diversification is still a mystery and unclear. There is a clear disconnect between the title of the paper, its abstract, and the findings as elucidated in the introduction section. Throughout the reading of this paper, the impression one gets as a reader is that the Professor uses words not to convey ideas in a clear and understandable manner but that he uses them for effect, for show, or as a stunt. But we shall prod further.

In the next paragraph, the Professor presents additional findings. He states,

 

“We also compared the diversification of the ‘stock’ of 1983 subsidiaries of these companies in the five sectors with their 1984–1992 internal and external operations. A good number of firms exhibit investments that are more focused than their 1983 subsidiaries, whilst only a few display more diversified investments. Some electronic companies have thus become more focused, a pattern common to other industries as well. At the same time, patent diversification has not changed between 1984–1991 and 1970–1983. Even the companies that focused downstream have maintained a certain degree of technological diversification.”


For the first time, we are able to infer that the Professor uses the term ‘focus’ as an antonym to diversification. Thus, according to these findings, “a good number of firms” became less ‘business diversified’ after 1983 during the 1984 – 1992 period, however, they continued to remain technologically diversified between 1984 – 1991 when compared with the 1970 – 1983 period. The good Professor still does not consider it appropriate to inform us just what percentage of firms in his sample constitute “a good number of firms.” This is left to the reader’s imagination. We are still not sure what the connection between business and technological diversification, and technological convergence is. One does wonder why these findings could not have been communicated in a simple manner in the abstract itself. Why the shroud of mystery and obfuscation in the Professor’s writing continues to remain a mystery. But we shall prod further.

Moving further, we appear to have struck gold. In the follow paragraph, the Professor, for the first time, hints at a connection between technological convergence, and technological and business diversification. He states,


“The most natural explanation of why companies focused on fewer activities is that, in spite of technological convergence, the downstream assets and capabilities that are needed to succeed in different markets have remained distinct. This is implied by the very nature of the process of technological convergence. Technological convergence is prompted by the rise of some generic technologies, which implies, by definition, that these technologies can be applied to a wealth of different products. But this means that they are applicable to industries and markets that preserve differences in the nature of their products, in the types of clients, and therefore, ultimately, in the types of assets, competencies and capabilities that are required for commercialisation. For instance, telecommunications equipment is still sold to few very informed buyers carriers. PCs or consumer electronics are vast markets of anonymous, non-specialised buyers, and firms have to invest in entirely different commercial services and distribution systems.”


For the first time, the Professor hints at but does not explicitly state the connection between technological convergence, and technological and market diversification. According to the Professor, technological convergence exists when generic technologies exist that are applicable across industries. Thus, in the context of this paper, technological convergence exists between office equipment, computers, telecommunications, and consumer electronics which means that generic technologies exist that are common to and applicable to each of these industrial sectors. Therefore, the prevalence of technological convergence should give rise to technological diversification because firms can adapt these generic technologies to each of these specific sectors and diversify technologically. Given this explanation, we are now better able to understand the title of this paper. The title of this paper is,


“Does technological convergence imply convergence in markets? Evidence from the electronics industry”


In other words, the question that the Professor is posing is this. Does technological convergence prevalent in the electronics industry, which should lead to technological diversification in the electronics industry, lead to convergence in product markets? Put another way, the Professor wants to understand whether the prevalence of generic technologies across industries related to the electronics industry such as PCs and telecommunications also lead to generic products that cut across these industries. In other words, do generic technologies across industries translate into generic products also which cut across industries? This is the question that is being posed in the title of this paper. It is a fantastical word game that the Professor engages in which has taken me eight to nine pages of complicated reasoning to get to the point where I can understand the meaning and purpose of this paper’s title. In the paper’s title, technological convergence is taken to be a precursor to technological diversification, but market convergence is not taken to be a precursor to market or business diversification. Instead, market convergence is used as an antonym of business diversification. Such mind-boggling reasoning is put over the reader as sophisticated writing when, in fact, it is an insult to the reader’s intelligence, patience, and intellectual integrity.

Now that clarity has been obtained as to the purpose of this paper, we are in a position to assess the research contribution and scientific merits of this study. My overall assessment of this paper is that it contributes negligibly to the existing body of literature, the research question that it raises and answers is of minor importance, and the scientific methodology employed is average to weak.

Let us first discuss the merits and sagacity of the research question raised. In the title of this study, the Professor raised the following question,


“Does technological convergence imply convergence in markets? Evidence from the electronics industry”


My first point of contentions is this – Why is this an important question to ask? Even if this question has been asked and answered in prior literature, even if this question has not been asked of the electronics industry in prior literature, my contention still remains. In this regard, the Professor gives us no justifying or qualifying reasons as to why this question is important or crucial to ask. His only justification of answering this “so what” question is that firms that are business focused (not diversified) but technologically diversified achieve superior performance in terms of sales and other measures of performance. As the Professor writes,


“After all, whether companies focus or diversify is relatively uninteresting unless one can link these patterns to economic performance.”


And what has the Professor shown us in terms of economic performance? In one conclusion, the Professor writes,


“Technologically diversified companies perform better, and this was true in 1984–1992 as well as in earlier periods.”


In another conclusion, the Professor writes,


“The opportunities associated with [business] diversification do not arise in a short period of time, and indeed they take longer to materialise than the opportunities associated with technological diversification….Thus, the companies that were already diversified before the 1980s obtained greater benefits from technological diversification because they already had these complementary assets and capabilities, and they benefitted more effectively from the economies of scope generated by technological convergence.”


Thus, if you were a decision maker in the electronics industry during or after 1998 which is when this paper was published, the Professor is teaching you to be technologically diversified, to be business focused on your niche over the short term but also to undertake business diversification over the long term because only then would you reap economic benefits. Any employee in the electronics industry – from the lowest assembly line worker in a semiconductor factory to the highest C-suite executive – would tell you that decisions to develop technologies via R&D and decisions pertaining to diversify into new lines of business – related or not – are based on countless factors including economic ones. Do you think that executives in the Electronics industry do not forecast sales or profits when investing in multi-million or, at times, multi-billion-dollar infrastructure to technologically diversify or to diversify into new lines of business? Do you think that these executives do not already know that to diversify into new lines of business (even related ones) would mean specialised after sales or support or dedicated business channels for reaching the end customer? Yet, the Professor does think that such decision-making executives do not understand these basic issues. Based solely on journalistic sources and simplistic arguments, the Professor makes the following statements –


“AT&T’s top management was convinced that a telephone network was like a big computer, and therefore the company could easily enter the computer market (cf. Business Week, 20. January 1992, p. 36). Diversification was pursued through acquisitions and agreements. AT&T first entered into a strategic alliance with Olivetti in 1984. This ended up a few years later after AT&T’s computer division registered negative results. (Datamation, 15 June 1989, p. 84). In 1987, AT&T signed an agreement with Sun Microsystems, specialised in workstations. In 1991, it acquired NCR, specialised in computers, software, and information technology services, and sold its 19% stake in (Sun Microsystems Financial Times, 4 June 1991, p. 17). AT&T’s strong technological basis was complemented by NCR’s base of customers in the financial and retail sector. But AT&T underestimated the differences between computers and computer services, on the one hand, and telecommunications services, on the other. For instance, it appointed as NCR’s CEO Jerre Stead, a former president of AT& T’s Global Business Communications Systems unit, with experience in PBX, wireless communications equipment, voice recognition and message systems. (Electronic Business, May 1993, p. 35).”


None of the sources that the Professor cites lead us to conclude definitively that AT&T’s top management was convinced that “a telephone network was like a big computer, and therefore the company could easily enter the computer market.” This is much too simplistic an argument based on one news story to render this line of reasoning credible. Yet, for both AT&T and IBM, the Professor relies on such simplistic arguments and a few isolated news stories to make the case that despite technological diversification, these companies failed at business diversification because they were unable to spot differences between, say, computers and computer services in the case of AT&T, or between computer and communication technologies as in the case of IBM.


It is for this reason I maintain that any social scientist wishing to do research in business management ought to first get some real-life experience in working for a commercial organization in a managerial capacity. No chemist or physicist or biologist is conferred a Doctoral degree without first having worked in a laboratory for many years with his or her sleeves up and having interacted with their specimens or objects of study, first hand. In the social sciences, particularly, in business management, economics, and organizational psychology, the laboratory, literally, is the real time, living, breathing world of commercial organizations, and the production and trading activities they engage in. Without having, actually, lived in and been accountable for one’s work in the reality of these organizations to understand how they function on a day to day or a minute-to-minute basis, no social scientist can truly appreciate how decision making really takes place under dynamic constraints of time, commercial uncertainty, and ever-increasing expectations of multiple stakeholders including customers, shareholders, and employees while also continuing to make a profit on a quarterly basis. Such simplistic prescriptions like diversify technologically but continue to remain business focused over the short term but also remember that diversification can be profitable over the long term if you are also technologically diversified within the electronics industry are laughable and make a mockery of the vital work and life-sustaining innovations that the electronics industry has produced over the last six decades.


Let us now also discuss the good Professor’s scientific methodology. My first major point of contention is this and this appears to be a major flaw in the research design of this paper. The good Professor has been repeatedly informing us that while the Electronics industry of the 1980s to 90s is technologically converged so that the firms in his sample are technologically diversified, he identifies such technological divergence by examining the patent classes of the patents obtained by his sample of firms. Thus, technological divergence is being operationalized at the patent level which is closer to the actual products that these patents are utilized in. However, when it comes to assessing business diversification, the opposite of which he identifies as business focus, the good Professor operationalizes this by identifying “the number of new subsidiaries, acquisitions, joint-ventures, and other collaborative agreements of these firms.” I state that the operationalization of business diversification by the number of new subsidiaries, acquisitions, joint-ventures, and other collaborative agreements is incorrect owing to measuring at the wrong organizational level. If the Professor wanted to truly measure business diversification as it exists at the product level of the organization and then draw meaningful insights by comparing this level with the technological diversification of the firm, he should have focused on measuring product diversification, not diversification in subsidiaries, acquisitions, joint-ventures, and other collaborative agreements. This would have meant that the good Professor should have looked at each product that exists in the marketplace for his sample of firms, and then assessed which industry category it fell under and how much of an inroad it made into other industry categories. Thus, the Professor would have had to devise a new technique or scale to assess how “business diversified” a product truly was and on this basis ought to have given an overall score of business diversification to his firm. This would also have meant that the good Professor was required to collect data diligently on each product for the sample of his firms from multiple sources instead of picking off his business diversification data in terms of subsidiaries, acquisitions, joint-ventures, and other collaborative agreements from a pre-made, off-the-shelf, database as he currently did. There is another problem with collecting data at the level of subsidiaries, acquisitions, joint-ventures, and other collaborative agreements. When it comes to measuring technological diversification, the good Professor is measuring the number of patents that have already been obtained by his sample of firms. These patents are then classified according to the industrial sector they fall under. However, when it comes to measuring business diversification by measuring the number of subsidiaries, acquisitions, joint-ventures, and other collaborative agreements, it is not imperative that each of these forms actually result in new diversified products being introduced into the marketplace immediately. For instance, while new subsidiaries and acquisitions might immediately result in a new pipeline of products – diversified or not – joint-ventures and other collaborative agreements might not result in any products introduced into the marketplace in the immediate or even in the long term. Therefore, if the Professor’s intention is to compare technological diversification with business diversification, then technological diversification is tangible in the sense that it is a measure and classification of the number of patents already obtained by the firm. However, this is not really true of business diversification in the manner the good Professor operationalizes this construct. The good Professor should not be making the argument that a business is really diversified when it enters into a joint-venture or a collaborative agreement if those ventures or collaborative agreements fail to introduce a single cross-industry product into the marketplace. Indeed, it is, sometimes, in the nature of ventures and commercial agreements to be exploratory and to not result in tangible outputs into the marketplace. Therefore, my point is that if a firm is technologically diversified as evidenced by the number of patents it holds across industries, then, in similar vein, it should be classified as commercially diversified as evidenced by the number of products it offers across industries. It is only then that a meaningful comparison can be made between the technological diversification of a firm and its business diversification so that relevant inferences can be drawn.

 

Aside from bad writing and grammatical errors, trivial research questions raised and answered, problems with the research design, the good Professor also exhibits sloppiness in elementary statistical analysis. It appears that the good Professor is confused regarding when a statistical distribution is left-skewed or right-skewed. Figures 1, 3, and 4 are right skewed as evidenced by the long tails of these distributions towards the right. However, the good Professor repeatedly refers to these distributions as left-skewed. Given the considerable intellectual lapses the Professor exhibits in this study, we shall have to forgive him this last transgression.



Gambardella, A., & Torrisi, S. (1998). Does technological convergence imply convergence in markets? Evidence from the electronics industry. Research policy, 27(5), 445-463.

Commentaires


bottom of page