Chapter 13 - Collective Invention and Inventor Networks

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Abstract

Collective invention occurs when competing organizations share knowledge about the design and development of new technologies. Such exchange and circulation of ideas and practices among communities of inventors was relatively common in the nineteenth century, most notably in geographically localized industrial districts. This collective system of innovation was eclipsed in the early and mid-twentieth century by the rise to prominence of the large corporate R&D lab. Recent decades, however, have seen the decline of stand-alone, internal corporate labs and the resurgence of collective efforts by networks of inventors, distributed across organizations and spanning distant locations. We draw on literatures in economics, innovation studies, management, and sociology to posit explanations for this recent rise. Suggestive additional evidence is provided from comparative analyses of patent data from the 1970s and the present decade.

Introduction

Historians, sociologists, and economists who study innovation often differ in their emphases on the features of settings in which technical change occurs. For many business historians and economists, the “organizational synthesis” is the central story, as the large firm developed through linking investments in technology and corporate strategy (Chandler, 1977, Galambos, 1983). The corporate research laboratory, established after 1900 at General Electric, DuPont, Kodak, AT&T, RCA, and others, was created to bring the innovation process inside the large corporation, and provide a continuing basis for both control over and renewal of technological change (Carlson, 1991, Hounshell & Smith, 1988, Mowery, 1984, Reich, 1985). As Graham (2008) points out, even critics of the corporation viewed the large firm as the central force in technological change, although arguing that it also monopolized invention, repressed craft knowledge, and stifled the creativity of engineers (Noble, 1984).

Instead of focusing on the centrality of the firm, historians and sociologists of technology who have studied the evolution of industries have emphasized a different current of innovation. Systems technologies—electricity, the telephone, and its successors—have developed not because of a particular corporate champion or active commercial pursuit, but due to a collective “momentum,” or the accumulation of investment and interest in a system’s progress from a variety of participants (Bijker, 1987, Hughes, 1983, Hughes, 1987, Hughes, 1989, MacKenzie, 1990). These systems technologies were the combined product of research carried out by individual inventors, government and university researchers, and corporate labs. Many technological systems reflect a confluence of uncoordinated research efforts driven by intense and widespread interests that intersect around the development of a novel technology. As a new technology evolves in a growing web of social, economic, and artifactual parts, the primary control that individual firms have is to configure their own activities in light of the needs of these systems.

Alongside these two powerful currents, alternate modes for organizing the innovation process have persisted. In the nineteenth and early twentieth century, such alternatives typically involved craft-based models, based in local communities. In research on the blast furnace, Allen (1983) identified how a group of firms could produce “collective invention” by sharing information about the design and effectiveness of new technologies. From his studies of the disclosure of improvements in manufacturing processes within the iron industry, Allen suggested that the distinctive feature of collective invention is the exchange and circulation of ideas and practices among distributed networks of individuals located in diverse settings, rather than the housing of such efforts within the confines of particular firms. Building upon Allen’s (1983) work, Nuvolari (2004: p. 348), in his study of Cornish steam pumping engines, defines collective invention as a setting in which: “competing firms release information freely to one another on the design and the performance of the technologies they have just introduced.”

In Allen and Nuvolari’s analyses, there are four contributors to technical change: R&D labs of private firms, nonprofit institutions, individual inventors, and collective invention. Allen, 1983, Nuvolari, 2004 suggest that three propositions typify the setting of collective invention. First, technical change must be driven by primarily incremental improvements. Second, firms and other organizations must disclose any improvements they make. And third, firms must use the disclosed improvements to enhance the technology they have in common. We build on these insights, and connect them to recent work in the economics and sociology of technical change.

We begin by taking stock of the theoretical interests at stake in research on collective invention. In particular, collective invention has attracted much attention because it defies conventional wisdom about appropriability concerns; therefore, we suggest the link to intellectual property should be made explicit in defining collective invention. Next, it is important to highlight the tension implicit in the dual role of participants in collective invention as employees of competing organizations and as technologists who have personal or professional interests at stake in the overall advance of some technology. Thus, we distinguish between competing firms (or, more broadly, organizations including government and university labs), the loose network of inventors that cuts across these organizations, the growth of knowledge, and the actual improvement of technologies. We offer a substantively similar, but distinctly social definition of collective invention:

Collective invention is technological advance driven by knowledge sharing among a community of inventors who are often employed by organizations with competing intellectual property interests.

This definition broadens the scope of collective invention to instances of university–university and university–industry interactions, and encompasses voluntary and informal associations that are often critical to economic activity (Granovetter, 2009). In addition, the role of patent pools and other collective agreements that further technical change are more amenable to analysis within this framework.

We should note at the outset that collective invention is merely the tip of the iceberg of increased knowledge sharing over the past several decades. Such disclosure of valuable information to competitors is much more pervasive than “pure” collective invention. Yet, because it represents one end of a continuum of knowledge-sharing regimes, collective invention offers fertile ground for empirical research and novel theorizing about the determinants of technological change.

Having defined and situated collective invention, we turn to its origins. We argue that the increasingly specialized division of labor makes it difficult to predict where complementary knowledge will arise—leading to greater knowledge sharing in order for participants to remain abreast of developments in the field. Additionally, we suggest that high expectations for a technology (i.e., technological opportunity) can lead individuals across firms and nonprofit organizations to contribute their efforts to a community endeavor that drives collective invention despite the lack of apparent economic gain to any particular organization.

Historical examples bear out the importance of collective invention in improving a number of notable technologies (Lamoreaux & Sokoloff, 2000, McGaw, 1987, Meyer, 2003, Scranton, 1997). A general lesson from numerous historical studies is that collective invention was an attempt to overcome the limitations of information access that accompanied extant economic and organizational structures. For some organizations, the inability to appropriate many types of technical improvements resulted in a lack of motivation to pursue internal research programs. Why invest in expensive exploratory efforts when the odds of capturing the fruits of research were low? Participation in collective efforts offered one solution. Many instances of collective invention today represent joint efforts at solving problems whose value cannot be appropriated by a single party, but which represent a bottleneck for the interdependent economic activities of participants. On the other side of the fence, some companies that are actively engaged in R&D may want their researchers to be involved in a larger technical community. Collective invention affords the chance for access to more diverse sources of knowledge, even if gaining control over these divergent ideas proves difficult.

With time, many knowledge-sharing practices associated with collective invention can become institutionalized as a set of norms or agreements (David, 2008, Merton, 1979, Sabel & Zeitlin, 1985). In the case of the diffusion of the Bessemer steel process, a patent license that nearly all manufacturers signed had a clause that required any subsequent operational improvements to be disclosed. This mandated sharing of knowledge led to the establishment of a small community of practice among engineers from different firms and launched a productivity race between participants from different firms (Allen, 1983: p. 11). A variety of practices—such as mutually respected prices, collective training programs, and technological standards, that spread risks and dampened competition were commonplace across industrial districts. Nuvolari’s (2004) analysis of Cornish steam engines in the nineteenth century finds that the publication of advances in several trade outlets let to dramatic gains in the efficiency of the engines, due to the accumulation of myriad incremental improvements. Despite the variety of vibrant nineteenth century examples of collective invention, these efforts were largely displaced by the rise of the large corporate research and development (R&D) lab in the early twentieth century. For a time it seemed that these community efforts would be relegated to the annals of history.

Over the past 30 years, however, the large corporate R&D lab has fallen in prominence. Many of the most notable corporate labs have been shuttered and dismantled. A second wave of collective invention is now shaping the rate and direction of technological change in numerous technologically advanced industries (Freeman and Soete, 2009). These processes of distributed innovation characterize a wide array of contemporary industries, from the early origins of the computer to the development of software to the genesis and evolution of biotechnology. This transformation has been sparked by strategic, technical, and economic factors that influence the organization of innovative labor. Inventors with multiple contacts across organizations are more likely to be exposed to diverse ideas and benefit from them. Consequently, organizations attempt to position themselves in partnerships and alliances that foster connections across organizational boundaries, in hopes that novel ideas in one setting spark fresh approaches in another (Burt, 2004, Granovetter, 1973, Powell et al., 1996). Shared awareness of a technological frontier creates the circumstances for inventors to act in concert, regardless of the perceived tangible benefits for their organizations. The central technical drivers are shifts in technological opportunity, dictating the potential rate and direction of technological change (Malerba, 2007). The economic factors are demand (on economic demand vs. need, see Mowery and Rosenberg, 1979) and appropriability (Teece, 1986, Winter, 2006), which together represent necessary conditions for firms to invest in R&D.

Yet history and social structure also loom large, as many authors have noted (David, 2008, Scranton, 1993). The particularities of industry evolution and the historical organization of technical communities are deeply intertwined with economic and technical calculations. Whether nineteenth century glass making or blast furnaces, or the contemporary life sciences and open-source software, relationships within a community of inventors and researchers are influenced by a confluence of social, political, and economic forces. We summarize these disparate factors as follows:

  • 1

    The need to spread the costs of invention across multiple organizations.

    • a

      By implication, few participants possess a sufficient theoretical understanding to pursue new ideas without incurring the high costs of unguided trial and error.

  • 2

    The inability to appropriate innovations creates a discrepancy between the private value and social value of invention.

    • a

      The private value of invention is too low for some firms to pursue a technology individually, but individuals within these firms are able to recognize its potential benefits.

    • b

      Despite a lack of knowledge about demand and strong intellectual property rights, collective invention allows for continued improvement of technical performance.

  • 3

    The emergence of norms and identification of governance structures that encourage knowledge sharing among legally distinct parties.

  • 4

    Uncertainty about the direction a technology will evolve and the kinds of applications that may unfold encourage greater discussion within and across communities and provide an impetus for organizing.

In this chapter, we examine these and other reasons for the recent rise in collective invention. We look at the changing nature of technological opportunity, as well as factors shaping the organization and governance of innovative labor. One understudied aspect of collective invention is the growing fragmentation of the knowledge required for many promising technological opportunities, leaving relevant know-how spread across diverse organizations.

The knowledge boundaries of firms develop due to many social and economic processes that are unassociated with changes in technological opportunity. As Schumpeter (1942) argued, it would be naïve to expect firms to immediately and optimally adjust to changes in technology (Rosenberg, 2000). Indeed, it would be difficult to maintain that new technological knowledge is ever brought about under ideal circumstances for its evaluation, elaboration, and diffusion. By its very nature, new knowledge is, to varying degrees, at odds with the social structures in which it is discovered (Mokyr, 2005). Put differently, the inability to reconcile newly perceived goals with the internal and external distribution of knowledge for invention may, under certain circumstances, render collective invention a more viable option than internally funded R&D.

Unpredictable technical change also makes it more difficult for firms to house all the innovative labor required to pursue many technological opportunities. Such shortfalls in capability and opportunity can prompt some to make use of collective invention. Thus, to the extent that data for decision making overwhelms the machinery of hierarchical organization (Knudsen & Levinthal, 2007, Powell, 1990), collective invention becomes more prevalent. At the same time, for those companies with strong internal research capabilities that operate in domains in which technological futures are uncertain, collective invention provides an option to become involved in a broader effort of exploration and learning.

We organize our chapter around four arguments that account for the persistence of, and greater reliance on, collective invention:

  • 1

    As the stock of knowledge grows, the need to access specialized expertise outside the boundaries of individual organizations increases.

  • 2

    When the sources of potentially complementary knowledge become more diverse, engagement with external communities increases.

  • 3

    The emergence of new forms of governance makes collective invention less costly and still compatible with the goals of private enterprise.

  • 4

    Persistent interindustry variations in technological opportunities and social institutions result in marked differences across fields in the reliance on, and form of, collective invention.

Potentially complementary innovative labor spreads across a wider array of organizations as the stock of knowledge grows, making it more difficult for a single organization to possess requisite depth and breadth of expertise (Section 2). Intuitively, then, we would expect collective invention to expand as a result of the increasing complexity of products and processes and the narrower specialization of innovative labor. Put simply, one reason we see a resurgence of collective invention now is that there are more pieces to each puzzle and each player has fewer pieces.

The difficulty of identifying and absorbing complementary knowledge makes investments in access to diverse sources of knowledge more desirable. Because it is challenging to predict the spreading of organizational, technical, and geographic locations of relevant expertise and ideas, firms engage in collective invention to keep pace with recent developments (Section 3).

Collective invention is also fueled by the creation of governance structures that enable individuals from different organizations to share knowledge at lower cost and with reduced risks of misappropriation or malfeasance. Additionally, new technological and physical forms of organizing for collective invention help mitigate many of the challenges associated with asynchronous or remote coordination and collaboration (Section 4).

Finally, there are unique and persistent interindustry differences in the qualitative nature and magnitude of collective invention. These differences arise in part due to the distinctive social structures that characterize different industries and their divergent stages of technological evolution. These two factors alter the potential benefits that firms might hope to accrue, shifting the choice and mix of internal versus collective invention. Thus, interindustry differences in the use of collective invention stem from variation in technological opportunities, the uncertainty of technological trajectories, and the means of appropriating innovations that arise from collective knowledge. We discuss these differences, attending to the divergent norms found in various scientific and technical communities, which condition the creation and sharing of ideas (Section 5).

To add support for these arguments, we provide illustrative evidence from a number of technology-intensive industries. We also use patent data from key technology classes to add weight to our review of the literature, and gauge the extent of the changes over the course of recent decades.

Section snippets

The stock of knowledge has grown

Numerous arguments have been offered in recent decades that describe a transition from industrial society to a knowledge-based economy (Bell, 1973, Gibbons et al., 1994, Hicks & Katz, 1996, Powell & Snellman, 2004, Ziman, 1994 provide entry into these discussions). The relevance of these arguments for our purposes is their characterization of a marked change in the modern research enterprise. Collaboration—both domestic and international—has increased; and a more diverse set of organizations

The sources of knowledge have become more diverse

Increasing specialization is the double-edged sword of technological change. On one side, it reflects the deepening of knowledge that can lead to a greater rate of technological advance. On the other, increasing specialization also suggests that the directions of technological advance have become path dependent due to extensive learning and organizational investments (Antonelli, 2007, Arthur, 1989, David, 1975, David, 1985). Not only do firms become less likely to change course in their R&D

New forms of governance facilitate collective invention

Collective invention efforts depend on a social and organizational infrastructure for coordination. The complexity of most modern technologies requires the participation of many individuals from a practical standpoint, but the shared ethos of building something that people will use also encourages collaboration. Wray (2002) suggests that the increasing dependence of technical personnel on common equipment socializes scientists and engineers into norms of collective work. More generally, the

Interindustry heterogeneity

Despite the increase in collective invention in recent decades, there remain many reasons for persistent interindustry differences in its form and prevalence (Breschi et al., 2000, Klevorick et al., 1995, Levin et al., 1987). The longevity of collective invention in many industries also suggests that the need to both explore and exploit rapidly expanding technological opportunities has reshaped intellectual property choices. In some instances, collective invention has led to appropriability

Conclusion

The importance of collective invention has varied markedly across eras, locales, and technologies. We have emphasized the sharing of information across a network of participants as the central feature of collective invention. One notable point of departure between late nineteenth and early twentieth century examples and current ones is that in the earlier cases the participants were geographically concentrated, whereas in the present era this requirement for information exchange has relaxed,

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