Hostname: page-component-cd9895bd7-q99xh Total loading time: 0 Render date: 2024-12-26T08:38:20.428Z Has data issue: false hasContentIssue false
  • English
  • Français

Fission, forking and fine tuning

Published online by Cambridge University Press:  19 September 2017

RICHARD N. LANGLOIS
RICHARD N. LANGLOIS*
Affiliation:
Department of Economics, University of Connecticut, USA Institutions and Political Economy Group, School of Economic and Business Sciences, University of the Witwatersrand, Johannesburg, South Africa
*
*Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Does innovation proceed from the top down or the bottom up? This is a crucial question for those who think about the sources of economic growth and especially for those who think about policies and institutions to promote innovation. The answer lies in part with the structure of the existing system of production and the array of assets that an innovation would displace, especially on the extent of complementarity and modularity in that structure. But it also depends on institutions. This paper argues for the centrality of decision rights to the process of innovation. Especially if it takes place in a systemic, non-modular way, innovation may require unified decision rights, often implying integrated control of complementary stages of production, in order to overcome the dynamic transaction costs of change. But the processes of subdivision, differentiation, and learning – the processes of fission, forking, and fine tuning – may also require changes in decision rights in order to overcome dynamic transaction costs. I illustrate these points with a case study of three generations of an American family of inventor-entrepreneurs in electricity and electronics.

Type
Research Article
Information
Journal of Institutional Economics , Volume 14 , Special Issue 6: Special Issue on Innovation and Institutions From The Bottom Up , December 2018 , pp. 1049 - 1070
Copyright
Copyright © Millennium Economics Ltd 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D. (2015), ‘Localised and biased technologies: Atkinson and Stiglitz's New View, induced innovations, and directed technological change’, Economic Journal, 125 (583): 443–63.Google Scholar
Ames, E. and Rosenberg, N. (1965), ‘The progressive division and specialization of industries’, Journal of Development Studies, 1 (4): 363–83.Google Scholar
Atkinson, A. B. and Stiglitz, J. E. (1969), ‘A new view of technological change’, Economic Journal, 79 (315): 573–8.Google Scholar
Baldwin, C. Y. (2008), ‘Where do transactions come from? Modularity, transactions, and the boundaries of firms’, Industrial and Corporate Change, 17 (1): 155–95.Google Scholar
Baldwin, C. Y. and Clark, K. B. (2000), Design rules: the power of modularity. Cambridge: MIT Press.Google Scholar
Bessen, J. (2015), Learning by Doing: The Real Connection between Innovation, Wages, and Wealth, New Haven: Yale University Press.Google Scholar
Bresnahan, T. F. and Greenstein, S. (1996), ‘Technical progress and co-invention in computing and in the uses of computers’, Brookings Papers on Economic Activity. Microeconomics, 1–78.Google Scholar
Brusoni, S., Prencipe, A. and Pavitt, K. (2001), ‘Knowledge specialization, organizational coupling, and the boundaries of the firm: why do firms know more than they make?’ Administrative Science Quarterly, 46 (4): 597–621.Google Scholar
Chandler, A. D. Jr. (1990), Scale and Scope: the Dynamics of Industrial Capitalism, Cambridge: Belknap Press.Google Scholar
Dalzell, F. (2010), Engineering Invention: Frank J. Sprague and the US Electrical Industry, Cambridge: MIT Press.Google Scholar
David, P. A. (1990), ‘The dynamo and the computer: an historical perspective on the modern productivity paradox’, American Economic Review, 80 (2): 355–61.Google Scholar
David, P. A. (2004), ‘Understanding the emergence of “open science” institutions: functionalist economics in historical context’, Industrial and Corporate Change, 13 (4): 571–89.Google Scholar
David, P. A. and Wright, G. (1997), ‘Increasing returns and the genesis of American resource abundance’, Industrial and Corporate Change, 6 (2): 203–45.Google Scholar
Field, A. J. (2012), A Great Leap Forward: 1930s Depression and US Economic Growth, New Haven: Yale University Press.Google Scholar
Fleming, L. (2001), ‘Recombinant uncertainty in technological search’, Management Science, 47 (1): 117–32.Google Scholar
Ford, H. and Crowther, S.(1922), My Life and Work, Garden City: Doubleday.Google Scholar
Gladwell, M. (2008), Outliers: The Story of Success, Boston: Little, Brown and Company.Google Scholar
Hammond, J. W. (1941), Men and Volts: the Story of General Electric, Philadelphia: J. B. Lippincott Company.Google Scholar
Hansmann, H. (1996), The Ownership of Enterprise. Cambridge: Belknap Press.Google Scholar
Hart, O. (1989), ‘An economist's perspective on the theory of the firm’, Columbia Law Review, 89 (7): 1757–74.Google Scholar
Henderson, R. M. and Clark, K. B. (1990), ‘Architectural innovation: the reconfiguration of existing product technologies and the failure of established firms’, Administrative Science Quarterly, 35 (1): 9–30.Google Scholar
Hodgson, G. (2015), ‘Much of the “economics of property rights” devalues property and legal rights’, Journal of Institutional Economics, 11 (4) 683–709.Google Scholar
Hughes, T. P. (1983), Networks of Power: Electrification in Western Society, 1880–1930, Baltimore: Johns Hopkins University Press.Google Scholar
Jensen, M. C. (1986), ‘Agency costs of free cash flow, corporate finance, and takeovers’, American Economic Review, 76 (2): 323–9.Google Scholar
Klepper, S. (2016), Experimental Capitalism: the Nanoeconomics of American High-tech Industries, Princeton: Princeton University Press.Google Scholar
Knight, F. H. (1921), Risk, Uncertainty, and Profit, Boston: Houghton-Mifflin.Google Scholar
Lachmann, L. M. (1978), Capital and Its Structure, second edition, Kansas City: Sheed Andrews and McMeel.Google Scholar
Lachmann, L. M. (1986), The Market as an Economic Process. Oxford: Basil Blackwell.Google Scholar
Landes, D. S. (1986), ‘What do bosses really do?’ Journal of Economic History, 46 (3): 585–623.Google Scholar
Langlois, R. N. (1992), ‘Transaction cost economics in real time’, Industrial and Corporate Change, 1 (1): 99–127.Google Scholar
Langlois, R. N. (1999), ‘Scale, scope, and the reuse of knowledge’, in Dow, S. C. and Earl, P. E. (eds) Economic Organization and Economic Knowledge: Essays in Honour of Brian J. Loasby, Cheltenham: Edward Elgar, pp. 239–54.Google Scholar
Langlois, R. N. (2002), ‘Modularity in technology and organization’, Journal of Economic Behavior & Organization, 49 (1): 19–37.Google Scholar
Langlois, R. N. (2003), ‘Cognitive comparative advantage and the organization of work: lessons from Herbert Simon's vision of the future’, Journal of Economic Psychology, 24 (2): 167–87.Google Scholar
Langlois, R. N. (2013), ‘Organizing the electronic century’, in Dosi, G. and Galambos, L. (eds) The Third Industrial Revolution in Global Business, New York: Cambridge University Press, pp. 119–67.Google Scholar
Langlois, R. N. and Robertson, P. L. (1995), Firms, Markets, and Economic Change: A Dynamic Theory of Business Institutions, London: Routledge.Google Scholar
Langlois, R. N. and Steinmueller, W. E. (1999), ‘The evolution of competitive advantage in the worldwide semiconductor industry, 1947–1996’, in Mowery, D. C. and Nelson, R. R. (eds) The Sources of Industrial Leadership, New York: Cambridge University Press, pp. 19–78.Google Scholar
Lécuyer, C. (2006), Making Silicon Valley: Innovation and the Growth of High Tech, 1930–1970, Cambridge: MIT Press.Google Scholar
Levin, D. P. (1995), Behind the Wheel at Chrysler: the Iacocca Legacy, New York: Harcourt, Brace & Company.Google Scholar
Lewin, P. and Baetjer, H. (2011), ‘The capital-based view of the firm’, Review of Austrian Economics, 24: 335–54.Google Scholar
Marglin, S. A. (1974), ‘What do bosses do?’ Review of Radical Political Economy, 6: 33–60.Google Scholar
Menger, C. (1950), Principles of Economics. Translated by: Dingwall, J. and Hoselitz, B. F., New York: Free Press.Google Scholar
Middleton, W. D. and Middleton, W. D. III (2009), Frank Julian Sprague: Electrical Inventor and Engineer, Bloomington: Indiana University Press.Google Scholar
Mokyr, J. (2002), The Gifts of Athena: Historical Origins of the Knowledge Economy, Princeton: Princeton University Press.Google Scholar
Moore, G. and Davis, K. (2004), ‘Learning the Silicon Valley Way’, in Bresnahan, T. and Gambardella, A. (eds) Building High-Tech Clusters: Silicon Valley and Beyond, New York: Cambridge University Press, pp. 7–39.Google Scholar
Nelson, R. R. (1993), National Innovation Systems: A Comparative Analysis, New York: Oxford University Press.Google Scholar
Noyce, R. N. and Hoff, M. E. (1981), ‘A history of microprocessor development at Intel’, IEEE Micro, 1 (1): 8–21.Google Scholar
Passer, H. C. (1952), ‘Frank Julian Sprague, father of electric traction, 1857–1934’, in Miller, W. (ed.) Men in Business: Essays on the Historical Role of the Entrepreneur, Cambridge: Harvard University Press, pp. 212–37.Google Scholar
Polanyi, M. (1958), Personal Knowledge, Chicago: University of Chicago Press.Google Scholar
Rosenberg, N. (1963), ‘Technological change in the machine tool industry, 1840–1910’, Journal of Economic History, 23 (4): 414–43.Google Scholar
Rosenberg, N. (1969), ‘The direction of technological change: inducement mechanisms and focusing devices’, Economic Development and Cultural Change, 18 (1): 1–24.Google Scholar
Rosenberg, N. (1972), ‘Factors affecting the diffusion of technology’, Explorations in Economic History, 10 (1): 3–33.Google Scholar
Rowsome, F. Jr (2013), The Birth of Electric Traction: the Extraordinary Life and Times of Inventor Frank Julian Sprague, Charleston: CreateSpace Independent Publishing Platform.Google Scholar
Seider, M. (2014), ‘“Mr. Sprague did not believe the people would do it”: The Sprague Electric Strike in North Adams, 1970’, Historical Journal of Massachusetts, 42 (1): 45–80.Google Scholar
Silver, M. (1984), Enterprise and the Scope of the Firm, London: Martin Robertson.Google Scholar
Simon, H. A. (1960), ‘The corporation: will it be managed by machines?’ In Anshen, M. L. and Bach, G. L. (eds) Management and the Corporations, 1985, New York: McGraw-Hill, 17–55.Google Scholar
Simon, H. A. (1962), ‘The architecture of complexity’, Proceedings of the American Philosophical Society, 106 (6): 467–82.Google Scholar
Smith, A. (1976), An Enquiry into the Nature and Causes of the Wealth of Nations, Oxford: Clarendon Press.Google Scholar
Sporck, C. E. (2001), Spinoff: a Personal History of the Industry that Changed the World, Saranac Lake, NY: Saranac Lake Publishing.Google Scholar
Sprague, J. L. (1993), Revitalizing US Electronics: Lessons from Japan, Boston: Butterworth-Heinemann.Google Scholar
Sprague, J. L. (2015), Sprague Electric: An Electronics Giant's Rise, Fall, and Life after Death, Charleston: CreateSpace Independent Publishing Platform.Google Scholar
Sprague, R. C. (1958), Sprague Electric of North Adams: a pioneer in electronics in New England, New York: Newcomen Society in North America.Google Scholar
Teece, D. J. (1986), ‘Profiting from technological innovation: implications for integration, collaboration, licensing, and public policy’, Research Policy, 15 (6): 285–305.Google Scholar
Weitzman, M. L. (1998), ‘Recombinant growth’, Quarterly Journal of Economics, 113 (2): 331–60.Google Scholar