Knowledge And Competitive Advantage: The Coevolution Of Firms, Technology, And National Institutions (cambridge Studies In The Emergence Of Global Enterprise)

A comparison of the development of the synthetic dye industry in Great Britain, Germany, and the US. The rise of this industry constitutes an important chapter in business, economic, and technological history because synthetic dyes - invented in 1857 - represent the first time that a scientific discovery quickly gave rise to a new industry. British firms led the industry for the next eight years, but German firms came to dominate the industry for decades before WWI, while American firms played only a minor role during the entire period. This study identifies differences in educational institutions and patent laws as the key reasons for German leadership in this industry. Successful firms had strong ties to the centers of organic chemistry knowledge. The book also argues that a complex coevolutionary process linking firms, technology and national institutions resulted in very different degrees of industrial success for dye firms in the three countries. Cover......Page 1 Half-title......Page 5 Series-title......Page 7 Title......Page 9 Copyright......Page 10 Dedication......Page 11 Contents......Page 13 Series Editors’ Preface......Page 15 Author’s Preface......Page 16 Acknowledgments......Page 18 Timeline of Key Events in Development of the Synthetic Dye Industry before 1914......Page 23 chapter 1 Introduction......Page 25 The Puzzle......Page 26 Is This Book for You?......Page 29 Key Ideas in Evolutionary Theory......Page 32 Evolution of Technology......Page 41 Evolution of Institutions......Page 43 A Sketch of Coevolution......Page 45 The Economics and Science of Dye-Making......Page 48 The Road Ahead......Page 51 Intriguing Questions about Industrial Leadership......Page 56 Performance under the Microscope......Page 59 Dye Production and Consumption in 1913, Imports and Exports......Page 61 Relative Shares of Patents around 1877 and 1900......Page 62 Entry, Exit, and Density Patterns......Page 65 Background Information on the Three Countries......Page 69 Economic Development in 1850 and 1913......Page 70 Political Systems and State Machinery......Page 71 Role of the State in Economic Affairs......Page 73 National Research and Training Systems......Page 74 Comparing Britain and Germany......Page 75 Interface between Technical Education and the Dye Industry......Page 80 Government Policies......Page 82 The Case of the United States......Page 83 Supporting Organizations and the State......Page 86 Professional Organizations......Page 87 Trade Organizations......Page 90 British Organizations and Natural Indigo......Page 91 Taking Stock......Page 92 The Academic–Industrial Knowledge Network......Page 93 Reasons for an Academic–Industrial Alliance......Page 94 Anatomy of the Knowledge Network......Page 95 How the Network Was Formed, Maintained, and Expanded......Page 98 Origins......Page 99 Maintenance......Page 101 Functions and Consequences of the Knowledge Network......Page 102 Social Organization of Production at the Shop Floor......Page 104 What about the United States?......Page 107 Intellectual Property Right Regimes......Page 108 Review of Patent Law Developments in the Three Countries......Page 110 Period 1, 1857–1865: Early Synthetic Dyes......Page 113 Period 2, 1866–1885: The Rise of Scientific Theory in Dye Innovation......Page 114 Period 3, 1886–1914: The Age of Corporate R&D Laboratories......Page 115 chapter 3 Three Times Two Case Studies of Individual Firms......Page 118 Purpose of the Matched Comparisons......Page 120 The Cast of Firms......Page 121 The German Firms: Bayer and Jäger......Page 122 The British Firms: Levinstein and Brooke, Simpson & Spiller......Page 125 The American Firms: Schoellkopf and American Aniline Works......Page 127 Organization of the Chapter......Page 129 Product Strategies: Making or Buying Dye Inputs?......Page 130 Organization of Production: Improvise and Improve......Page 132 Marketing: Visit Your Customers and Win Medals......Page 133 Internationalization: Customers Are Everywhere in the World......Page 138 R&D Strategy: Serendipity Is King......Page 139 Patent Strategy: Getting or Avoiding Them......Page 141 Relationship with Competitors: Let Die!......Page 142 Science Unbound (1866–1885)......Page 144 Product Strategies: Go after the Natural Dyes......Page 145 A Digression: The Short “Life” of American Aniline Works and Its Causes......Page 147 Organization of Production: Getting Killed on the Shop Floor by Chemists......Page 149 Marketing: Replacing Commission Agents with Employee Representatives......Page 152 Internationalization: Planting Foreign Factories......Page 153 R&D Strategy: First Steps toward Routine R&D......Page 155 The Beginning of Systematic Patent Strategies......Page 157 See You in Court: Bayer versus BASF in the United States......Page 158 Levinstein versus BASF......Page 159 Relationship with Competitors: Make Them Fail, Then Buy Them Up......Page 161 The Age of Bayer (1886–1914)......Page 162 Product Strategies: Exploiting the Azo Gold Mine......Page 163 Organization of Production: The Advantage of Large Integrated Factories......Page 167 “The Most Beautiful Chemical Plant in the World”......Page 168 A Look at the Plants of Bayer’s Competitors......Page 169 Marketing: The Triumph of the Sales Empire......Page 171 Internationalization of Efforts: Foothold Strategies......Page 173 R&D Strategy: The Industrialization of Innovation......Page 174 The Testing and Application Development Departments......Page 175 Getting Access to the Network of Chemists from Abroad......Page 176 The Patent Strategies: Making the Courtroom the Battlefield......Page 179 The Congo Red Case: Bayer versus AGFA, Then Bayer and AGFA versus Ewer & Pick......Page 180 Patent Strategies of the Other Firms......Page 182 Ivan the Great or Ivan the Terrible?......Page 183 Building Cartels......Page 184 Did Managerial Action Make a Difference?......Page 185 Overview of Collective Strategies......Page 188 Forging a National Science Capability......Page 189 Germany: A Triple Alliance......Page 190 Inside the Bureaucracy: “The System Althoff”......Page 191 Strategy One: Using Collective Organizations to Mobilize Support......Page 192 Strategy Two: Working on the Parliament Directly......Page 193 The Alliance in Action: The Formation of the Kaiser Wilhelm Institute for Chemistry......Page 194 When the Alliance Breaks Down......Page 195 Britain: Under the Curse of Having Been the Leader......Page 196 Manchester......Page 197 Technical Education in Leeds, Bradford, and Huddersfield......Page 198 Imperial College, London......Page 199 Coevolutionary Dynamics......Page 200 United States: The Land of Unlimited Practical Opportunities......Page 201 Episode One: The Exception......Page 203 Episode Two: Keeping the Swiss Out......Page 207 Episode One: A Working Clause without Bite......Page 209 Episode Two: A Short-Lived Victory......Page 212 Influencing Tariff Laws......Page 216 chapter 5 Toward an Institutional Theory of Competitive Advantage......Page 218 Theoretical Gaps......Page 219 Evolution of Technology......Page 223 Evolution of the Industry......Page 225 Evolution of National Institutions......Page 227 A Theory of Coevolution......Page 233 Coevolution of Industry and Technology......Page 234 Coevolution of Industry and the University System......Page 235 Formation of Commercial Ties......Page 236 The Explanatory Structure of a Coevolutionary Analysis......Page 237 Enriching the Firm Capabilities Theory......Page 242 Implications for Industrial Organization Studies......Page 245 Level of a National Economy......Page 247 Level of a National Industry......Page 250 Level of an Individual Firm......Page 251 Opportunities for Future Research on Industrial Development......Page 254 Uses of Dyes......Page 263 Performance Dimensions of Dyes......Page 264 The Craft of Dyeing and Printing......Page 265 Dyeing Techniques......Page 266 Printing Techniques......Page 267 The First Synthetic Dyes......Page 268 A Quantitative Overview......Page 271 Synthetic Alizarin......Page 273 Azo Dyes......Page 275 Synthetic Indigo......Page 277 Looking Ahead: More Innovations to Come......Page 281 Overview of Databases......Page 282 Bibliography......Page 293 Index......Page 311

Entrepreneurs, managers, and policy makers must make decisions about a future that is inherently uncertain. Since the only rational guide for the future is the past, analysis of previous episodes in industrial development can shape informed decisions about what the future will hold. Historical scholarship that seeks to uncover systematically the causal processes transforming industries is thus of vital importance to the executives and managers shaping business policy today. With this in mind, Johann Peter Murmann compares the development of the synthetic dye industry in Great Britain, Germany, and the United States through the lenses of evolutionary theory. The rise of this industry constitutes an important chapter in business, economic, and technological history because synthetic dyes, invented in 1856, were the first scientific discovery quickly to give rise to a new industry. Just as with contemporary high tech industries, the synthetic dye business faced considerable uncertainty that led to many surprises for the agents involved. After the discovery of synthetic dyes, British firms led the industry for the first eight years, but German firms came to dominate the industry for decades; American firms, in contrast, played only a minor role in this important development. Murmann identifies differences in educational institutions and patent laws as the key reasons for German leadership in the industry. Successful firms developed strong ties to the centers of organic chemistry knowledge. As Murmann demonstrates, a complex coevolutionary process linking firms, technology, and national institutions resulted in very different degrees of industrial success among the dye firms in the three countries.

This book compares the development of the synthetic dye industry in Great Britain, Germany, and the United States. The rise of this industry constitutes an important chapter in business, economic, and technological history because synthetic dyes invented in 1857 represent the first time that a scientific discovery quickly gave rise to a new industry. Although British firms led the industry for the next eight years, German firms dominated the industry for decades before World War I, while American firms played only a minor role during the entire period