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The Reorganization of Inventive Activity in the United States during the Early Twentieth Century

In: Understanding Long-Run Economic Growth: Geography, Institutions, and the Knowledge Economy

Author

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  • Naomi R. Lamoreaux
  • Kenneth L. Sokoloff
  • Dhanoos Sutthiphisal

Abstract

The standard view of U.S. technological history is that the locus of invention shifted during the early twentieth century to large firms whose in-house research laboratories were superior sites for advancing the complex technologies of the second industrial revolution. In recent years this view has been subject to increasing criticism. At the same time, new research on equity markets during the early twentieth century suggests that smaller, more entrepreneurial enterprises were finding it easier to gain financial backing for technological discovery. We use data on the assignment (sale or transfer) of patents to explore the extent to which, and how, inventive activity was reorganized during this period. We find that two alternative modes of technological discovery developed in parallel during the early twentieth century. The first, concentrated in the Middle Atlantic region, centered on large firms with in-house R&D labs and superior access to the region's rapidly growing equity markets. The other, located mainly in the East North Central region, consisted of smaller, more entrepreneurial enterprises that drew primarily on local sources of funds. Both modes seem to have made roughly equivalent contributions to technological change through the 1920s. The subsequent dominance of large firms seems to have been propelled by a differential access to capital during the Great Depression that was subsequently reinforced by the regulatory and military procurement policies of the federal government.
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Suggested Citation

  • Naomi R. Lamoreaux & Kenneth L. Sokoloff & Dhanoos Sutthiphisal, 2008. "The Reorganization of Inventive Activity in the United States during the Early Twentieth Century," NBER Chapters,in: Understanding Long-Run Economic Growth: Geography, Institutions, and the Knowledge Economy, pages 235-274 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:12001
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    References listed on IDEAS

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    Cited by:

    1. Neal, Larry & White, Eugene N., 2012. "The Glass–Steagall Act in historical perspective," The Quarterly Review of Economics and Finance, Elsevier, vol. 52(2), pages 104-113.
    2. repec:ssa:lemwps:2013/20 is not listed on IDEAS
    3. Howard Bodenhorn, 2016. "Two Centuries of Finance and Growth in the United States, 1790-1980," Working Papers id:11352, eSocialSciences.
    4. Alessandro Nuvolari & Michelangelo Vasta, 2015. "Independent invention in Italy during the Liberal Age, 1861–1913," Economic History Review, Economic History Society, vol. 68(3), pages 858-886, August.

    More about this item

    JEL classification:

    • N0 - Economic History - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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