Research in the Industrial Corporation: II
It is not easy to obtain any very exact idea of the scale on which corporations engage in research for the purpose of increasing the stock of invention. Most quoted figures of expenditure are for ‘research and development’; that is to say they group together the costs of invention, of development (including pilot plants) and of routine testing, production control and a wide variety of everyday tasks, often minor but sometimes very important, commonly known as ‘trouble shooting’. The proportion of this total directly devoted to real innovation will, of course, vary from case to case but it tends to be low.1 Most industrial laboratories are small — in the United States, for example, more than one-half of them employ less than fifteen scientific workers — and in many of these it is more than likely that the whole, or the overwhelming proportion, of such costs are incurred in development or routine work. The number of firms in the world which, year in and year out, devote more than one per cent of their total costs to activities likely to emerge as inventions must be very limited.
KeywordsSmall Firm Large Firm General Motor Manufacturing Firm Price Competition
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- 1.Kenneth Lee, Industrial Research: A Business Man’s View, Royal Institution of Great Britain, Dec. 15th, 1933.Google Scholar
- 5.This is suggested by the growing practice of joint—authorship in scientific papers. Thus in the first 100 Papers in the British Journal of the Chemical Society for 1954, only 13 were by one author, 48 were by two joint authors, 23 by three authors, 12 by four authors and 4 by five authors; whereas in 1905 47 were by one author and 53 by two authors. (See R. M. Lodge, Economic Factors in the Planning of Research, Nov. 1954.) In the United States the proportion of Papers in the Journal of the American Chemical Society written by a single author fell from 45 per cent in 1918 to 14 per cent in 1950. It must, however,Google Scholar
- 1.Fermi is quoted as saying, ‘There is much to be said for the small group. It can work quite efficiently. Efficiency does not increase proportionately with numbers. A large group creates complicated administrative problems, and much effort is spent in organisation.’ Atoms in the Family, Laura Fermi, p. 185. ‘I am not myself a blithe optimist about the future of the large Experimental Station for the solution of our kind of problem. To go into some of them is extremely depressing. You see crowds of people milling around with an air of fictitious activity, behind a façade of massive mediocrity. There is a kind of Malthusian Law acting on research institutes. Just as a population will breed up to the available food supply, research institutes will enlarge themselves as long as the money holds out.’ S. C. Harland, ‘Recent Progress in the Breeding of Cotton for Quality’, Journal of the Textile Institute, Conference Issue, Feb. 1955.)Google Scholar
- 1.D. H. Wallace, Market Control in the Aluminium Industry, 1937, p. 59.Google Scholar
- 2.F. Mortimer, Model Research, Iron and Steel, Feb. 1951.Google Scholar
- 5.See pp. 235–7 for a case history of the catalytic cracking of petroleum. P. H. Frankel, Essentials of Petroleum, 1946, p. 148, has summed up as follows: ‘Looking back dispassionately we may find that they (major oil companies) mainly took up and developed ideas which were brought to them by men who did not, in the first instance, belong to their own team’.Google Scholar
- 1.A. Phillips, ‘Concentration, Scale and Technological Change in Selected Manufacturing Industries, 1899–1939’, Journal of Industrial Economics, June 1956, has made an interesting study of the statistical relation between indices of ‘concentration’ in a number of industries and the increase in output per head or horse—power per wage—earner 1899–1939 in these industries. He finds that the ‘concentrated’ industries show a rather more rapid technical advance than the others and, negatively, that ‘the alternative hypothesis that industries with large numbers of small firms tend to be technologically more progressive, while not disproved, received no support from the data’. But the limitations of his statistical material, which he scrupulously catalogues, make it doubtful whether his conclusions throw any light on the sources of innovations. For instance, if a ‘concentrated’ industry, consisting of a few large firms and a number of smaller ones, shows rapid technical progress this may not be due to the concentration; the innovations may have arisen in the smaller firms and been taken up by the larger firms – a type of case of which there are some notable illustrations.Google Scholar