Short answer
When designing with digital intangibles, anticipate market concentration and potential unemployment impacts, and strategize for adaptability and workforce transition.
- Field
- Commercial Production
- Source
- Journal of Business Research (2020)
- Method
- Agent-based modelling
- Evidence
- Strong effect
The integration of intangible digital technologies into production systems can lead to significant economic shifts, including increasing returns and market dominance by a few, while simultaneously posing a risk of elevated unemployment. This commercial production research insight is drawn from a 2020 study published in Journal of Business Research. Using Agent-based modelling, researchers explored how this design variable affects real-world outcomes. The key design takeaway: When designing with digital intangibles, anticipate market concentration and potential unemployment impacts, and strategize for adaptability and workforce transition.
Digital Intangibles Drive Increasing Returns and Market Lock-in, but Risk Higher Unemployment
The integration of intangible digital technologies into production systems can lead to significant economic shifts, including increasing returns and market dominance by a few, while simultaneously posing a risk of elevated unemployment.
Journal of Business Research · 2020
Key Findings
- 01Emergence of increasing returns to scale in digital sectors.
- 02Prevalence of 'winner-take-most' phenomena and market lock-in.
- 03Significant decrease in employment rates within traditional mass-production systems.
- 04New job creation in the digital sector often insufficient to counterbalance job losses in mass production, leading to increased overall unemployment.
Application
Design takeaway
When designing with digital intangibles, anticipate market concentration and potential unemployment impacts, and strategize for adaptability and workforce transition.
How to apply
When developing new digital products or services, conduct scenario planning that includes market concentration and employment impact assessments.
Project actions
- 01When researching a new technology, consider its potential to create monopolies or displace workers.
- 02Think about how your design choices might affect the broader economic landscape.
Method & Evidence
Variables
Strengths & Limitations
Strengths
- +Utilizes a sophisticated agent-based modelling approach to capture complex interactions.
- +Addresses a timely and relevant economic phenomenon (digital economy).
Limitations
The complexity of real-world economies makes it difficult to perfectly model the impact of any single technology.
Reliability & validity
The reliability of agent-based models depends on the robustness of their underlying algorithms and the sensitivity of results to parameter changes. Validity is assessed by comparing model outputs to observed stylized facts of the real economy.
Think critically
To what extent can design interventions mitigate the negative employment consequences of increased automation driven by intangible digital technologies?
Design Principles
"Design for economic resilience by considering the broader systemic impacts of technological integration."
Understanding the dual nature of digital intangibles is crucial for strategic planning in design and manufacturing. Designers and engineers must consider how their innovations contribute to market concentration and potential job displacement, influencing product lifecycle and business model development.
What This Means for Your Design
New digital technologies can make a few companies very powerful and might lead to fewer jobs overall because computers do more work.
How to use in your project
- 1.Use this research to justify investigating the economic impact of your chosen technology or design solution.
- 2.Cite this paper when discussing market dynamics, such as increasing returns or winner-take-all scenarios, related to digital products.
Add to My Project
Quick Cite
Paragraph starter
The integration of intangible digital technologies, as highlighted by Bertani et al. (2020), can lead to significant market concentration through increasing returns and 'winner-take-most' phenomena. This has implications for design projects, as it suggests that the success of digital products may be less about inherent quality and more about early market capture, potentially leading to reduced competition and innovation over time. Furthermore, the study indicates a risk of increased unemployment as digital assets enhance productivity, a factor designers must consider in the societal impact of their work.
Source
Journal of Business Research
The complexity of the intangible digital economy: an agent-based model
journal · 2020
View sourceQuestions About This Research
- What does the research say about digital intangibles drive increasing returns and market lock-in, but risk higher unemployment?
- When designing with digital intangibles, anticipate market concentration and potential unemployment impacts, and strategize for adaptability and workforce transition. Evidence: Journal of Business Research (2020).
- Why does "Digital Intangibles Drive Increasing Returns and Market Lock-in, but Risk Higher Unemployment" matter for design?
- Understanding the dual nature of digital intangibles is crucial for strategic planning in design and manufacturing. Designers and engineers must consider how their innovations contribute to market concentration and potential job displacement, influencing product lifecycle and business model development.
- How can designers apply this research?
- When designing with digital intangibles, anticipate market concentration and potential unemployment impacts, and strategize for adaptability and workforce transition.
- What were the main findings?
- Emergence of increasing returns to scale in digital sectors.. Prevalence of 'winner-take-most' phenomena and market lock-in.. Significant decrease in employment rates within traditional mass-production systems.. New job creation in the digital sector often insufficient to counterbalance job losses in mass production, leading to increased overall unemployment.
- What research method was used?
- Agent-based modelling.
- How strong is the evidence?
- Evidence strength is rated Strong effect, based on a 2020 journal from Journal of Business Research.
- What should I do differently in my next project?
- When developing new digital products or services, conduct scenario planning that includes market concentration and employment impact assessments.
- What are the limitations?
- The model's assumptions about agent behavior and the specific characteristics of intangible digital technologies may not fully capture real-world complexities.