The Process of Technological Change

In business terms, technology is defined as the method by which people apply scientific knowledge to solve practical problems. Technological change is an important aspect of any modern society. Technological growth describes both the actual process of introducing new tools of production and consumption into a marketplace and, in addition, the impact of this introduction on the future overall technological development. Technological change can either be the result of spontaneous order from innovation in some sphere of human activity, or it can be the result of deterministic factors like the rate of technology diffusion in a society. In either case, technological change can have important consequences for both economic performance and social welfare.

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The Process of Technological Change

Technological growth can either displace older technology or initiate new technological development. For example, the adoption of computers and other information-based devices has resulted in a marked decline in the costs of manufacturing, translating into lower equipment prices and hence higher profit margins for manufacturers. At the same time, changes in the technology of communication have resulted in the dispersal of voice-recognition software across the market, with the result that many people are able to communicate with one another using speech-based applications rather than by typing. Both these changes have contributed to the general trend of improved quality of life.


However, technological change can also have major negative social effects. The widespread use of complex technologies in society – particularly information and communication technology – has resulted in widespread unemployment and under-employment. The rapid spread of information technology across various industries has led to the deification of technology, leading to increased separation of technology and society, and increasing the power of corporate control over society. Moreover, because of these trends, technological developments have often occurred in places that were not meant to receive them, pushing up urban crime rates and environmental degradation.


Technological diffusion can be seen everywhere in our society, from the emergence of the automobile to the Internet and everything in between. Some of these technological developments occur without the prior social conditions that would allow innovation to occur. For example, the invention of the automobile has not led to widespread employment because the conditions for purchasing an automobile do not exist. Likewise, even when there are sufficient economic conditions for businesses to purchase the necessary technology for innovation, diffusion does not lead to mass production of innovations. Instead, smaller businesses and consumers with limited economic power to buy these innovations via diffuse innovations – through the process of diffusion.


Technological diffusion is not the only force that contributes to technological change. Technological change can also result from changes in cultural norms, political systems, and in business practices. Diffusion also occurs among different types of industries. New business models emerge around new technologies, sometimes replacing existing business models. These include the rise of the information technology industry (ITI) and the emergence of knowledge based economies (KBEs), which are characterized by flexible and open economies that are not tied to specific industry components.


Diffusion also takes place at the societal level. Technological diffusion can occur when certain technologies are adopted en masse by the majority of the population. This is especially common in countries where there is not a tradition of technological change or a social system that encourages the diffusion of new technologies. The process of diffusion can also occur voluntarily, when consumers decide to adopt particular technologies. However, there may also be instances when technological change is driven by governmental policies, when the government develops a technology that will foster economic growth and societal welfare.


Diffusion can have different effects on different industries and societies. Some industries and societies experience significant societal benefits from the adoption of new technologies, while others are negatively affected. For example, while ITI promotes education, it also makes the economy more efficient. However, the spread of this educational technology across the country could have a negative effect on the employment rate and cause lower levels of investment in technology.


Technological change occurs in all economic sectors, and it has both positive and negative implications. It can stimulate business development and create new jobs. It can also deter investment and development in certain areas. However, as technology continues to develop and diffuses into various economic sectors, it will have an overall impact on society and its social conditions. Societies that embrace the principles of open economy and vibrant innovation will reap the benefits of technological developments.

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