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

62 Pages Posted: 3 Nov 2009 Last revised: 29 Oct 2014

See all articles by Naomi R. Lamoreaux

Naomi R. Lamoreaux

Yale University; National Bureau of Economic Research (NBER)

Kenneth L. Sokoloff

University of California, Los Angeles (UCLA) - Department of Economics; National Bureau of Economic Research (NBER)

Dhanoos Sutthiphisal

Assumption University; National Bureau of Economic Research (NBER)

Date Written: October 2009

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.

Suggested Citation

Lamoreaux, Naomi R. and Sokoloff, Kenneth L. and Sutthiphisal, Dhanoos, The Reorganization of Inventive Activity in the United States During the Early Twentieth Century (October 2009). NBER Working Paper No. w15440. Available at SSRN: https://ssrn.com/abstract=1498942

Naomi R. Lamoreaux (Contact Author)

Yale University ( email )

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HOME PAGE: http://www.econ.yale.edu/faculty1/lamoreaux.htm

National Bureau of Economic Research (NBER)

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Kenneth L. Sokoloff

University of California, Los Angeles (UCLA) - Department of Economics ( email )

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United States
310-825-4249,310-825-1011 (Phone)
310-825-9528 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Dhanoos Sutthiphisal

Assumption University ( email )

Dept of Business Economics, Assumption University
Bangna Trad Rd, Km 26
Bang Sao Tong, Samut Prakarn 10540
Thailand

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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