Knowledge that Transforms

A total of 164 innovation projects were sampled in five industries to determine the effect, if any, of government policy on their conduct and outcome. Sixty-six of the projects had at the time of the study achieved commercial success, in the view of the firms involved. Fifty-one were considered failures, while 47 were still underway. Nearly half of the projects had been affected by one or more mechanisms of government policy. There is no indication that this degree of government involvement has either increased or decreased in recent years. There is also no indication that government involvement influenced success or failure, in any way. It does appear, however, that technology has been relatively successful in coping with government regulation in the area of safety, pollution control, etc., since projects affected by these policies were significantly more likely to be successful.

A sample of one hundred and eleven scientific instrument innovations was studied to determine the roles of instrument users and instrument manufacturers in the innovation processes which culminated in the successful commercialization of those instruments. Our key finding was that approximately 80% of the innovations judged by users to offer them a significant increment in functional utility were in fact invented, prototyped and first field-tested by users of the instrument rather than by an instrument manufacturer. The role of the first commercial manufacturer of the innovative instrument in all such cases was restricted, we found, to the performance of product engineering work on the user prototype (work which improved the prototype's reliability, ‘manufacturability’, and convenience of operation, while leaving its principles of operation intact) and to the manufacture and sale of the resulting innovative product. Thus, this research provides the interesting picture of an industry widely regarded as innovative in which the firms comprising the industry are not in themselves necessarily innovative, but rather — in 80% of the innovations sampled — only provide the product engineering and manufacturing function for innovative instrument users. We term the innovation pattern observed in scientific instruments a ‘user dominated’ one and suggest that such a pattern may play a major role in numerous industries.

Why some firms die while others survive? Survival has long been recognized as a basic goal for a manufacturing firm. At least in the long term, survival should be related to various measures of performance, such as market share and profitability. Advocates of population ecology have argued that life chances of organizations are affected by population density at the time of founding. According to this argument, organizations founded during periods of intense competition will have persistently higher age-specific rates of mortality than those founded during periods with lower numbers of competitors. At least for the case of manufacturing firms, there may be more profound causes than competitive turmoil that explain a firm's survival chances. These have to do with the evolution of technology in an industry. Population density may only be a reflection of underlying driving forces based on technological change that determine the form and level of competition, the attractiveness of entry, and ultimately the structure of an industry.