The Ambiguous Effects of Agglomeration on Plant-Level Technological Change

Stephen Appold
Department of Sociology
National University of Singapore
10 Kent Ridge Crescent
Singapore 119260



Industry specialists have maintained that the use of numerically-controlled machine tools (NCMTs) in the metalworking industry radically raises productivity while economists and geographers theorize that presence in an agglomeration accelerates the adoption of innovations.  Decomposing the diffusion process into inter-firm and intra-firm sub-processes, I am able to derive predictions and test three theories, based on a) dynamic externalities, b) task mix, and c) technology choice, about the effect of agglomeration on plant-level modernization.  Examining 1) the adoption and use of NCMTs, 2) the penetration of NCMTs in the establishment tool stock, and 3) the increase in penetration, in a panel of approximately 1,000 plants in the U.S. metalworking sector between 1981 and 1991, I find no clear support for any of the popular theories leading me to speculate on theoretical refinements.

 

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