Industrial productivity dilemma in management and economics: Retrospect and prospect

Abstract

Industrial productivity dilemma refers to a situation in which modifying and refining existing technologies helps maximize an industry's productivity but constrains productivity from leaping forward. As substantial research exists on this topic in both management and economics, we seek to clarify the concept and its utility. We synthesize relevant studies in various disciplines by reviewing 731 pieces of literature. We summarize various mechanisms that explain why, as the industry develops, the proportion of disruptive innovation declines and the ratio of productivity research and development increases. Our results suggest that industrial productivity dilemma occurs because under a given technological paradigm, there are economic and natural limits to technological development. Only through disruptive innovation can industries improve their long-term adaptability to the environment and promote industrial upgrading or forming new industries. Although with modern technology developments, industrial productivity dilemma may be resolved, because some giant firms can balance the exploration–exploitation conflict well; moreover, structural problems occur as productivity is unbalanced among firms. The productivity dilemma (and its by-product, the structural problem) will always exist. We develop a conceptual framework based on the environment, industry, firm, and policy dimensions to guide future research.