A Study of Inventors

Prior to the industrial revolution in the late 18^th and the early 19^th century, firms carried out virtually no systematic research and development (R&D) processes. During that time, research processes were simply conducted as “trial and error”. Inventive activity did not depend in any major way on science. Most firms were relatively small, and large firms were rather uncommon. Inventions were conducted almost exclusively by individual inventors (Bruland/ Mowery 2004).

In December 2004, the German producer SIEMENS AG honored its top inventors for the tenth year in a row. The 13 winners were responsible for about 600 inventions made in 2004, accounting for approximately 7.5% of all reported inventions in the same year. The SIEMENS Inventor’s Award is aimed at enhancing inventive and innovative activities of the roughly 50,000 employees in the field of R&D. In 2004, SIEMENS spent 5.1 billion Euros in R&D (accounting for 6.8% of sales), resulting in 23.2 million Euros per working day.

Kai-Fu Lee, an expert on speech recognition and search technologies, graduated in computer science at Columbia University in 1983, and earned a Ph.D. in computer science from Carnegie Mellon University. In 1998, Lee moved to Microsoft to found the Chinese Microsoft research division in Beijing. In 2000 he became vice president of interactive services at Microsoft. In July 2005, Lee left Microsoft to work for Google. While working for Microsoft, Lee had signed a non-compete agreement, which bared him from working in research areas competing with Microsoft within one year after leaving the company. On July 19, 2005, Microsoft sued Google and Lee claiming that Lee was violating his non-compete agreement since working for Google would unavoidably lead to the disclosure of technical know-how to Google. On July 28, the Washington State Superior Court enacted a preliminary injunction, which prevented Lee from working on Google projects that competed with Microsoft. After a second hearing in September 2005, Lee was still not allowed to work in his main research area: speech recognition and search technology. On December 22, 2005 Google and Microsoft announced that they had entered into a private agreement, which put an end to the dispute between the two companies.

In 2001, the EU15 countries invested a total of €175.5 billion in research and development activities. Approximately two thirds of this amount were R&D expenditures made by business enterprises, the remainder shared by publicly financed research institutions and academia. Almost 70 percent of these investments are expenditures for R&D personnel. Yet, it is surprising how little attention is given to the transformational process behind these numbers. Clearly, the development of ideas and new concepts is financed by the funds just summarized. But the actual work is done by inventors, either in corporate labs, in publicly financed research institutions or in academic research, and their motivation and incentives should matter greatly for Europe’s chances of becoming more successful in global technology markets.

This dissertation thesis analyzed three key aspects of inventive activity: inventor productivity, the mobility of inventors, and incentives to invent. The thesis provides new results for the three issues separately, but it also improves on the current literature by pointing out connections between these topics.

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