Technological Change Through Product Improvement in Aircraft Turbine Engines

An area of R&D activity often as important as new product R&D is R&D directed at improving an existing object, often called product improvement. Multiple regression techniques were used to estimate a multidimensional technology trade-off surface for U.S. aircraft turbine engines. Product-improvement engines embody a higher level of technology than their original versions, but the rate of technological advance is significantly less than the long-run average for new designs. Further, thrust-growth product improvement is subject to diminishing returns with respect to the hypothesis that cost-reducing product improvement can result in lower production costs independent of the so-called learning curve phenomenon was also found. The uncertainty in product-improvement R&D was not found to be inherently less than new product R&D, but since typical product-improvement programs are shorter and involve fewer resources, the dollar risk is usually lower.