IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this book chapter

Inventors, Firms, and the Market for Technology in the Late Nineteenth and Early Twentieth Centuries

In: Learning by Doing in Markets, Firms, and Countries

Listed author(s):
  • Naomi R. Lamoreaux
  • Kenneth L. Sokoloff

Recent scholarly literature explains the spread of in-house research labs during the early 20th century by pointing to the information problems involved in contracting for technology. We argue that these difficulties have been overemphasized and that in fact a substantial trade in patented inventions developed over the course of the 19th century, much of it the form of transactions conducted at arms-length through the market. This expansion of trade in technology made possible a growing division of labor, as inventors increasingly took advantage of their greater ability to sell of rights to patented technologies and focused their energy and resources on invention itself. Firms responded to the expansion of this trade by developing ways to to learn about and assess externally generated inventions. Although large firms were beginning to invest in their internal inventive capabilities, in doing so they faced many significant problems. They had to overcome resistance to contracts requiring employees to sign over patents to their employers, and they had to reduce the high turnover rates that made such requirements effectively unenforceable. The increased costs of inventive activity and the greater risks borne by independent inventors by the early 20th century helped firms make their case. But there was a lot of organizational learning to do. Hence where other scholars have emphasized the difficulties of contracting for technology in the market and the relative ease of integrating invention and production within the firm, we reverse the story. Economic actors at that time had a lot of experience contracting for new technological ideas in the market; what they had to spend a great deal of time and energy learning was managing creative individuals within the firm.

(This abstract was borrowed from another version of this item.)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

in new window

This chapter was published in:
  • Naomi R. Lamoreaux & Daniel M. G. Raff & Peter Temin, 1999. "Learning by Doing in Markets, Firms, and Countries," NBER Books, National Bureau of Economic Research, Inc, number lamo99-1, November.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 10229.
    Handle: RePEc:nbr:nberch:10229
    Contact details of provider: Postal:
    National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.

    Phone: 617-868-3900
    Web page:

    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    in new window

    1. Sokoloff, Kenneth L. & Khan, B. Zorina, 1990. "The Democratization of Invention During Early Industrialization: Evidence from the United States, 1790–1846," The Journal of Economic History, Cambridge University Press, vol. 50(02), pages 363-378, June.
    2. Khan, B. Zorina, 1995. "Property Rights and Patent Litigation in Early Nineteenth-Century America," The Journal of Economic History, Cambridge University Press, vol. 55(01), pages 58-97, March.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:nbr:nberch:10229. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.