Technological Change and the Evolution of Corporate Innovation: The Structure of Patenting, 1890-1990

Published by EH.NET (July 2001)

Birgitte Andersen, Technological Change and the Evolution of Corporate

Innovation: The Structure of Patenting, 1890-1990. Cheltenham, UK: Edward

Elgar, 2001. viii + 285 pp. $90 (cloth), ISBN: 1-84064-121-5.

Reviewed for EH.NET by B. Zorina Khan, Department of Economics, Bowdoin

College.

The research in this book is dedicated to the proposition that technological

change is best treated from an “evolutionary system perspective.” This

perspective raises “the difficult questions about what is it which constitutes

a distinct unit of membership, and what the processes are which create the

changing structure of this membership, and which explain how systems emerge,

grow, decline and disappear.” It also “applies a capability perspective to the

dynamics of industries, in which the industry systems’ populations are derived

from the changing distribution of capabilities of firms within industries,

participating in the generation and exploitation of the common knowledge

bases. This latter competence bloc view on systemic change is taken from one

of the most comprehensive attempts to investigate the systemic aspects of

innovation and competition at the microeconomic level, and which is provided

by Eliasson (1997) and colleagues” (p. 13).

The analysis is based on a data set of patents filed in the United States

between 1890 and 1990. Most scholars who use these data issue the caveat that

patents provide an imperfect index of inventive activity (since many

inventions are not patented), and a quite poor measure of innovation (since

few patents result in the commercialization of the underlying invention). This

is especially true in the modern period, because firms have tended to

appropriate returns through other means than property rights in patents.

Birgitte Andersen (Senior Lecturer, Department of Management, Birbeck College,

University of London) instead contends that previous research supports the

view that the propensity for corporations to patent is between 66 percent and

87 percent, and that “40% to 60% of total patent applications actually

progress to innovations” (p.20). Given these assumptions, the author proceeds

to analyze stocks of patents in order to draw conclusions about the nature of

technological innovation during the past century. Moreover, it is “argued that

patent data can serve as a proxy for accumulated technological impact or

socio-economic importance” (p. 25).

The data are organized in terms of technology classes. Based on this measure,

technology appears to progress in terms of small incremental improvements

instead of large fluctuations or discontinuous waves of creative destruction.

Technological change seems to have become more complementary and interrelated

over time. Contagion models are commonly used to examine the diffusion of new

products and technologies, and other studies have found that the pattern of

commercialization follows an S-shape. The book devotes one chapter to fitting

logistic curves to the accumulated patent stocks, and presents forty-four

graphs of the results for the various categories as well as twenty pages of

tabulated information on the properties of the associated cycles, which

confirm the logistic fit.

Time series analysts tend to speculate about the existence of long cycles or

waves in innovations by grouping key or basic applications of technology.

Andersen focuses on takeoffs in patents accumulated over time. She identifies

a wave between 1926-1934 associated with chemical technologies, and electrical

and mechanical inventions; a second wave between 1957-78 for chemical,

electrical, mechanical and transportation patents; and a third currently

underway in pharmaceuticals and biotechnology, electrical devices, and

mechanical technologies. For instance, the interwar chemical industry was

propelled by patented discoveries relating to distillation, coal and petroleum

products, and bleaching and dying; whereas the postwar period was noted for

chemical patents in synthetic resins and fibers, photographic chemistry, and

agricultural chemicals. (On the other hand, she finds no takeoffs in the

patent records for the periods between 1934-1947 and 1977-1985.) These

takeoffs tend to be introduced in the industrial area that is closest to the

particular technology, although over time this pattern appears to have become

attenuated because patents have become more interrelated.

At the firm level, the book categorizes some 284 large corporations in

existence between 1930 through 1990 in terms of their status as technological

followers or leaders and their degree of specialization in the fastest growing

fields of patenting. The author tracks changes in status over time, and argues

that firms do not readily develop capabilities in new areas. When there are

radical changes in technology former leaders lose standing although their

advantage is not completely eroded. The following chapter explores a data set

that includes “corporate technological top-leaders and largest contributors,”

such as Philips, Corning, Dow, and Chrysler. The patterns suggest that the

degree of concentration in technological leadership has fallen over time, and

declined most rapidly during periods when the growth in patent stock was

highest. Since only a few specific examples are sketchily discussed to

illustrate the process, the mechanisms that account for the prevalence of

statis, path dependence or change within corporations remain unclear.

In the final chapter the author’s overall conclusions are outlined in special

boxes and labeled as “Stylised Facts” I through XXI. These include insights

such as “some trajectories are more likely to be followed than others”

(Stylised Fact II), and “the innovative and competitive landscape underpinning

the dynamics of firms within industries is constantly changing” (Stylised Fact

XIII). Some of these Facts look very similar to each other (X and XXI, for

instance.) They are further clarified by explanations in the following vein:

“although technology develops over a broad complex technological front, some

technologies within the broad system are in the forefront or at takeoff at

certain times, and other technologies at other times” (p. 251).

The price of this book is $90, so it is difficult to understand why the

publisher appears to have economized by not employing an editor. This is the

only way one can reasonably explain the numerous grammatical and spelling

errors, logical non sequiturs, inaccuracies, misquotes, opaque prose, and

prolific use of jargon that clutter almost every page. According to the book

jacket, the potential audience for this book includes economists, historians

of technology, students, business analysts and policy makers. In reality the

market is most likely limited to libraries with porous budget constraints.

B. Zorina Khan is Assistant Professor, Department of Economics, Bowdoin

College. She has most recently published “‘Not for Ornament’: Patenting

Activity by Women Inventors,” Journal of Interdisciplinary History,

Fall 2000; and (co-authored with Kenneth L. Sokoloff) “The Early Development

of Intellectual Property Institutions in the United States,” Journal of

Economic Perspectives, Fall 2001. She is the author of a book on the

economic history of patents and copyrights (forthcoming, Cambridge University

Press).