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Sustained Innovation: Career Engineers, Stock Markets, and the Theory of the Innovative Enterprise

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The aim of this paper is to document the role that career engineers played in the investment strategies and eventual survival of an organization producing large high technology capital goods. Using the theory of innovative enterprise developed by Lazonick and O'Sullivan (2000), we analyze the locus of strategic control and its interactions with the cognitive and behavioral dimensions of Rolls-Royce, nowadays a successful industrial firm. The company has been analyzed during an intense period of radical changes in the ownership structure of the company that followed the firm's misdemeanors. Analysis of the role of engineers is paralleled with an analysis of what influence the firm's exposure to the stock market had on its innovative activities. The case analyzed shows that there was a clear lead by the engineering-related functions, while other functions had little say in important investment decisions. Company decisions were driven by the creed of engineering excellence transmitted from generation to generation of engineers via the recruitment and apprentice systems that were at the basis of the company's internal training policy.

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  • William Lazonick & Andrea Prencipe, 2004. "Sustained Innovation: Career Engineers, Stock Markets, and the Theory of the Innovative Enterprise," SPRU Working Paper Series 121, SPRU - Science Policy Research Unit, University of Sussex Business School.
    • Handle: RePEc:sru:ssewps:121
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    File URL: http://www.sussex.ac.uk/spru/documents/sewp121.pdf
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    1. Marie Carpenter & William Lazonick & Mary O’ Sullivan, 2003. "The stock market and innovative capability in the New Economy : the optical networking industry," Post-Print hal-02447314, HAL.
    2. Marie Carpenter & William Lazonick & Mary O'Sullivan, 2003. "The stock market and innovative capability in the New Economy: the optical networking industry," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 12(5), pages 963-1034, October.
    3. O'Sullivan, Mary, 2000. "The Innovative Enterprise and Corporate Governance," Cambridge Journal of Economics, Oxford University Press, vol. 24(4), pages 393-416, July.
    4. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    5. Chris Freeman & Luc Soete, 1997. "The Economics of Industrial Innovation, 3rd Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262061953, December.
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    More about this item

    Keywords

    career engineers; investment strategies; Rolls-Royce; innovative processes;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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