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Firms as the source of innovation and growth: the evolution of technological competence

Author

Listed:
  • John Cantwell

    () (Economics Department, University of Reading, PO Box 218, Whiteknights, Reading RG6 6AA, UK)

  • Felicia Fai

    () (School of Management, University of Bath, Claverton Down, Bath BA2 7AY, UK)

Abstract

It is argued that the firm is the principal source of innovation and growth, a device for the establishment of technological competence, and for its continued development over time. Markets, products and background knowledge may change quite dramatically over time. Yet as a result of the cumulative nature of learning in the production processes of firms, the profile of corporate technological competence will tend to persist over quite long periods, provided there is institutional continuity. Within the same firm, competence may evolve into related areas, but the firm's technological origins will remain identifiable in its subsequent trajectories. However, if the institution itself changes more dramatically, this technological persistence may be disrupted. Supporting evidence is provided from data on the patenting of 30 large US and European companies, which have been continuously active since the interwar period. The science and the knowledge base, and the composition of products and markets may shift quite radically, but the firm's productive and technological system itself is potentially more stable. The firm provides a vehicle for potential institutional continuity and a device for managing transitions within the economic system.

Suggested Citation

  • John Cantwell & Felicia Fai, 1999. "Firms as the source of innovation and growth: the evolution of technological competence," Journal of Evolutionary Economics, Springer, vol. 9(3), pages 331-366.
  • Handle: RePEc:spr:joevec:v:9:y:1999:i:3:p:331-366
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    Citations

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    Cited by:

    1. Vertova, Giovanna, 2002. "A historical investigation of the geography of innovative activities," Structural Change and Economic Dynamics, Elsevier, vol. 13(3), pages 259-283, September.
    2. Rossi, Federica, 2002. "An introductory overview of innovation studies," MPRA Paper 9106, University Library of Munich, Germany, revised Jun 2008.
    3. Huang, Mu-Hsuan & Chang, Han-Wen & Chen, Dar-Zen, 2012. "The trend of concentration in scientific research and technological innovation: A reduction of the predominant role of the U.S. in world research & technology," Journal of Informetrics, Elsevier, vol. 6(4), pages 457-468.
    4. Zouhour Karray & Mohamed Kriaa, 2009. "Innovation and R&D Investment of Tunisian Firms: A Two-Regime Model with Selectivity Correction," Working Papers 484, Economic Research Forum, revised Apr 2009.
    5. Barnard, Helena, 2008. "Uneven domestic knowledge bases and the success of foreign firms in the USA," Research Policy, Elsevier, vol. 37(10), pages 1674-1683, December.
    6. Helena Barnard & John Cantwell, 2006. "Knowledge in the Theory of the Firm and MNC: Asset or Action? A Commentary on Foss N. “Knowledge and Organisation in the Theory of the MNC”," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 10(1), pages 21-27, March.
    7. Bart Leten & Rene Belderbos & Bart Van Looy, 2016. "Entry and Technological Performance in New Technology Domains: Technological Opportunities, Technology Competition and Technological Relatedness," Journal of Management Studies, Wiley Blackwell, vol. 53(8), pages 1257-1291, December.
    8. Dimitri UZUNIDIS & Sophie BOUTILLIER, 2012. "Globalisation de la R&D et innovation collaborative : l’expansion des frontières de la firme GLOBALIZATION OF R&D AND COLLABORATIVE INNOVATION: THE EXPANSION OF THE FIRM’S BORDER," Working Papers 255, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation.
    9. Rodrigo Martín-Rojas & Virginia Fernández-Pérez & Encarnación García-Sánchez, 0. "Encouraging organizational performance through the influence of technological distinctive competencies on components of corporate entrepreneurship," International Entrepreneurship and Management Journal, Springer, vol. 0, pages 1-30.
    10. Grillitsch, Markus & Nilsson , Magnus, 2013. "Technological competencies and firm performance: Analyzing the importance of internal and external competencies," Papers in Innovation Studies 2013/24, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
    11. Christensen, Jens Froslev, 2002. "Incongruities as a source of organizational renewal in corporate management of R&D," Research Policy, Elsevier, vol. 31(8-9), pages 1317-1332, December.
    12. Girum Abebe, 2012. "Ownership, Management Practices, Upgrading, and Productivity in the Metalworking sector: Evidence from Ethiopia," Working Papers 009, Ethiopian Development Research Institute.
    13. repec:spr:intemj:v:13:y:2017:i:2:d:10.1007_s11365-016-0406-7 is not listed on IDEAS
    14. Chia-Chin Chang, 2015. "Influences of knowledge spillover and utilization on the NIS performance: a multi-stage efficiency perspective," Quality & Quantity: International Journal of Methodology, Springer, vol. 49(5), pages 1945-1967, September.
    15. repec:eee:tefoso:v:127:y:2018:i:c:p:258-270 is not listed on IDEAS
    16. Fai, Felicia & von Tunzelmann, Nicholas, 2001. "Industry-specific competencies and converging technological systems: evidence from patents," Structural Change and Economic Dynamics, Elsevier, vol. 12(2), pages 141-170, July.

    More about this item

    Keywords

    Corporate technological competence ; Technological persistence ; Firms ; Innovation ; Growth;

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • N80 - Economic History - - Micro-Business History - - - General, International, or Comparative

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