Posts filed under ‘Business/Economic History’

More on the Linear Model of Science and Technology

| Peter Klein |

51eaYmA7XfL._SY344_BO1,204,203,200_As Joel Mokyr notes, one of Nathan Rosenberg’s important contributions was to debunk the “linear model” in which basic science begets applied science, which begets useful technology.

Technology in his view is not the mechanical “application of science” to production; it is a field of knowledge by itself, quite different in its incentives, its modes of transmission, and its culture. It is affected by science, but in turn provides “pure research” with its instruments and much of its agenda. In many cases, [Rosenberg] noted, scientists were confronted by the fact that things they had previously declared to be impossible were actually carried out by engineers and mechanics and had to admit somewhat sheepishly that were possible after all.

The same issue is raised in Margaret Jacob’s book The First Knowledge Economy: Human Capital and the European Economy, 1750-1850 (Cambridge University Press, 2014), which “argues persuasively for the critical importance of knowledge in Europe’s economic transformation during the period from 1750 to 1850, first in Britain and then in selected parts of northern and western Europe.” In other words, as noted by Erik Hornung:

She especially focusses on the marriage between theoretical sciences and applied mechanical knowledge which helped creating many technological innovations during the Industrial Revolution. She, thus, aims at rectifying the prevalent hypothesis that technological progress resulted from tinkering of skilled but science-ignorant engineers. An impressive set of new archival sources supports her argument that English engineers were, indeed, well aware of and heavily influenced by recent advances in natural sciences.

14 September 2015 at 5:03 pm Leave a comment

Mokyr on Rosenberg

| Peter Klein |

Further to Dick’s post on Nathan Rosenberg, here is an obituary from Joel Mokyr, who with Rosenberg’s passing is probably the most eminent living historian of innovation and technology. The review appeared on EH.Net.

The economic history profession has lost one of its most original, creative, and wide-ranging minds in the passing of Nathan Rosenberg on Aug. 24, 2015. Rosenberg was one of the founding fathers of Cliometrics, a member of the first group of Cliometricians that with coining the term “congregated at Purdue University in the late 1960s, and which included other luminaries among them Lance Davis, Jonathan Hughes, and Stanley Reiter (who is widely credited Cliometrics”). By 1970, this group had moved away from West Lafayette and dispersed to institutions such as Northwestern and CalTech. Rosenberg was hired by the University of Wisconsin, and was a member of a different group of influential and distinguished economic historians in Madison, including at one time or another Jeffrey Williamson, Peter Lindert, Morton Rothstein, Rondo Cameron, and Claudia Goldin. While at Wisconsin, Rosenberg was the editor of the Journal of Economic History and instrumental in its growing focus on the new economic history that was theoretically informed by economics and quantitatively more sophisticated — the very essence of the Cliometric Revolution.

In 1974, Rosenberg moved to Stanford, where he taught for more than a quarter century until his retirement in 2002. As department chair at Stanford between 1983and 1986 he helped build the department and maintain its position as one of the top economics departments in the country. Moreover, his leadership guaranteed that economic history remained an integral part of the undergraduate and Ph.D. programs and includes some of its most distinguished practitioners such as Gavin Wright and Avner Greif, as well as younger and promising scholars. Today, thanks to Rosenberg’s initiative and entrepreneurship, the Stanford department is housed in a gorgeous building named after Ralph Landau, whose support for research and teaching in economics was first stimulated by a fortuitous meeting with Rosenberg. The partnership with Landau, a chemical engineer and entrepreneur fascinated by economics, led to a fruitful scholarly collaboration between him and Rosenberg, especially in two well-regarded collections they edited together. Thanks in large part to Rosenberg’s resourcefulness, the graduate program at Stanford has thrived and produced many distinguished members of the economic history profession and applied economists working on innovation. While not all of them worked with him directly, his influence on the flourishing of economic history at Stanford was undeniable. Many of the former graduate students he trained and inspired co-authored and co-edited papers and books with him, such as David Mowery with whom he wrote Technology and the Pursuit of Economic Growth (Cambridge University Press, 1989). Without exception these young economists admired and adored him; two of them, Scott Stern and Shane Greenstein, were my former colleagues, and the three of us were instrumental in Northwestern awarding him an honorary doctorate in 2006, in the same class of honorary degrees as the then little-known junior senator from Illinois. If ever there was an academic conspiracy that can be called a true labor of love, this was it. (more…)

7 September 2015 at 9:25 pm Leave a comment

Nathan Rosenberg (1927-2015)

| Dick Langlois |

I just learned that Nathan Rosenberg has passed away at 87. Nate was unarguably one of the most important economic historians and students of technological change of our era. He was also a one of the most important influences on my work.

I still regret that, out of ignorance, I didn’t take full advantage of all the resources available to me when I was a graduate student at Stanford. But Nate was a partial exception. I sat in on his course on history of economic thought; and when it came time to choose a thesis committee, he was kind enough to agree to be a member. I remember having a number of long conversations with him in his office in Encina Hall, although his greatest influence on me was through his writings. Nate had an eye for looking into — and theorizing about in a non-formal way — the micro structure of technology and innovation. I have always thought that his early work with Ed Ames is wonderful and greatly underappreciated. His work on the machine-tool industry in the United States is a progenitor of the economics of general-purpose technologies and one of the beginnings of what I like to think of as the Stanford School of technology-focused economic history.

I think Nate’s influence shows through on the range of my own work, including that with Paul Robertson. (It turns out that Nate was an associate advisor on Paul’s dissertation committee at Wisconsin before he was a member of mine at Stanford.) I was also fortunate to become part of the invisible college of technology economics of which Nate (along with Dick Nelson and others) was a dean, and I was fortunate to collaborate with other fellow Rosenberg students like David Mowery and Ed Steinmueller on policy-focused industry histories, another Rosenberg specialty.

25 August 2015 at 8:28 am 1 comment

M is for Multidivisional Structure

| Dick Langlois |

As a student of Alfred Chandler, I was excited to see Google’s conversion into Alphabet – which is essentially a multidivisional conglomerate. Chandler chronicled the development of the M-Form structure in the days of the Second Industrial Revolution, beginning with DuPont, and it remains an interesting question whether the same pattern will eventually take shape among the dominant firms of the Third Industrial Revolution.

Generally speaking, a move to the M-Form reflects a maturing of a technology and an industry, when information flows and incentives within a specialized unit – a module, if you wish – become more important than widespread and more flexible information flows within a functional organization. The more radically innovative the company, the more important these widespread information flows. Apple is organized in a functional form, and Microsoft famously returned to a functional form after a few years as an M-Form precisely in order to become more radically innovative in the face of declining revenues from Windows. Of course, Google remains as a functional entity within the Alphabet conglomerate, and the technologies in Alphabet’s other divisions are arguably less related to one another than in, say, the divisions into which Microsoft was once divided. Moreover, Alphabet will keep the two-tiered structure of stockholding that gives considerable power to the three founders, which makes Alphabet less like a vanilla conglomerate and more like the kind of widely diversified pyramidal holding company common around the world but essentially illegal in the United States.

17 August 2015 at 8:38 am Leave a comment

The Myth of the Patent Anti-Commmons

| Dick Langlois |

Just ran across the abstract of a fascinating paper called “The Anti-Commons Revisited” by Jonathan Barnett at USC, which is forthcoming in the Harvard Journal of Law and Technology. Here’s the abstract.

Intellectual property scholars and policymakers often assert that technology and creative markets suffer from “anti-commons” (“AC”) effects that restrain innovation within a web of conflicting intellectual property claims. A minority view asserts that market players have incentives and capacities to correct for AC effects through transactional solutions. To assess the relative merits of each side of this debate, I review a large and diverse body of empirical evidence relating to AC effects in contemporary and historical markets. I independently replicate the most controversial empirical findings, supplement additional research on selected markets, and provide a survey of all documented IP-pooling arrangements in U.S. markets since 1900. The weight of the evidence strongly favors the minority view. Evidence for AC effects is scarce while evidence that markets correct for AC effects is abundant. AC effects are typically preempted or mitigated through cooperative arrangements among small numbers of IP holders or transactional solutions devised by entrepreneurial intermediaries for large numbers of IP holders. This pattern recurs over a diverse array of markets and periods, including automobiles, petroleum refining, aircraft, and radio communications in the early to mid-20th century, and information and communications technology markets from the late 20th century through the present. Contrary to standard assumptions, there is little evidence that these markets experienced reduced or delayed innovation or output despite intensive levels of patent issuance and litigation.

3 August 2015 at 1:40 pm 3 comments

ICC Special Issue on Steve Klepper

| Dick Langlois |

The new issue of Industrial and Corporate Change is a special issue devoted to the legacy of Steve Klepper, who died a couple of years ago at age 64. The editors provide a good survey of Steve’s work, and there are a number of interesting papers in the issue, including one by David Mowery comparing Klepper with Alfred Chandler.

17 July 2015 at 12:45 pm 1 comment


| Peter Klein |

logoI’ve long been involved with the International Society for New Institutional Economics (ISNIE). (In fact, I first met the esteemed Professor Foss at the inaugural ISNIE conference in St. Louis in 1997.) ISNIE was established as an global academic society promoting the study of institutions within the broad tradition established by the organization’s co-founders Ronald Coase, Oliver Williamson, and Douglass North. ISNIE has been a great success, holding annual conferences in the US and Europe, sponsoring an important working-paper series, and boasting thousands of members from all over the world.

Times change, and over the last two decades the study of institutions has moved from the periphery towards the center of economic, social, political, and legal analysis. The statement, “institutions matter,” which might have been controversial in social science in the 1990s, seems trite today. As such, some of ISNIE’s leaders and members saw a need to reposition and rebrand the society to reflect the current academic and policy climate. Last year ISNIE’s members voted, and this year the board approved, a name change. The organization is now SIOE, the Society for Institutional and Organizational Economics. Along with the change is a new website, featuring news, information, a blog, and many other features. The site is a work in progress and editors Bruno Chaves and Jens Prüfer would be happy to receive comments and suggestions.

I’m looking forward to the next twenty years with SIOE!

6 July 2015 at 1:01 pm Leave a comment

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Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
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Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
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