The institutionalization of innovation, 1900-1990

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Citation: David C. Mowery, Nathan Rosenberg (1999) The institutionalization of innovation, 1900-1990. Paths of Innovation: Technological Change in 20th-Century America (RSS)
Internet Archive Scholar (search for fulltext): The institutionalization of innovation, 1900-1990
Tagged: Economics (RSS) business (RSS), innovation (RSS), R&D (RSS), history (RSS)


David Mowery and Nathan Rosenberg and two of the most well regarded historians of technological change. Paths of innovation is a short book that explores the long innovation processes behind three key industries or "clusters" of innovation in the 20th century: the internal combustion engine, chemicals, and electricity and electronics.

The books frames its argument in its second context where it argues that there were certain dominant patterns around the institutionalization of innovation during the 20th century in the United States and these followed from a specific government policy of strong support for research and development.

They argue that a number of different institutional factors influenced the patterns of technological change. One was the creation of in-house R&D which was essentially borrowed from the German chemical industry in the very beginning of the 20th century. The second was anti-trust policy which placed important limits of lateral growth and pushed firms toward patents as a legal ways of emulating the power of trusts which the state was now regulating heavily against.

With this context, the authors show a steady growth of industrial research over much of the 20th century as a percentage of the workforce with companies and within the United States. They also describe a large shift around World War II. Before the war, links between industry and academic existed but most "serious" US scientists were trained in Europe. WWII saw an explosion of R&D funding associated with the military which continued, to some degree, after the war. The post-war structure saw massive R&D investment in the US over all and that a massive portion of this was funded by the government (with most going to the military and to aircraft and missiles in particular). University research became increasingly funded by the government while industry, also funded heavily by the government and military, was much larger than in other countries as a proportion of the GDP and in absolute terms.

Essentially, the authors argue that the pre-war structure of R&D in the US, focused in corporate labs, resembled other countries structures with modest government involvement. After the war, this shifted and there were three important differences:

  • Small new firms played an important role in commercializing new innovations.
  • Military-based R&D was large and important.
  • Antitrust policy was very strong in the US.

The authors argue that these three interdependent forces played an important role in shaping the institutional structure around innovation in the US during the 20th century that the authors argue are likely to loose influence in the post-cold war period.

Theoretical and Practical Relevance

Mowery and Rosenberg's book has been cited 260 times since it's publication 11 years ago in the literature on innovation, and in spillovres in particular.