The interaction of design hierarchies and market concepts in technological evolution

This paper develops a conceptual framework for analyzing the sequence of technological changes that underlie the development of industries. The framework examines the interaction between design decisions and the coices of customers. Using examples from autos and semiconductors the paper argues that the logic of problem solving in design and the formation of concepts that underlie choice in the marketplace impose a hierarchical structure on the evolution of technology. The nature of the evolutionary process has implications for the dynamics of competition and the management of innovation.