Knowledge that Transforms

This article provides new evidence on the patent trading flows of small and large firms. We document aggregate patterns of patent sales and acquisitions of small and large firms. We also examine the extent to which the initial innovator's and the potential buyers’ prior knowledge stocks in the same technology area and in geographical proximity with a patented invention are associated with the likelihood that the patent is sold, and whether the patent sold is bought by a small or large firm. To do so, we develop a dataset that matches patent sales and information on whether transacted patents are owned by small or large firms following a patent sale.

This introductory article raises a methodological challenge for scholars of technical change and innovation, on the one hand, and historians of technical change, on the other. We ask to what extent have economists and historians of technical change engaged in cross-fertilisation with regards to methods and the identification of relevant questions. We then provide an overview on the use and methods of history within the field of Economics of Technical Change and Innovation Studies (ETIS), which is traditionally considered as ‘history-friendly’. We locate the work and intellectual heritage of Nick von Tunzelmann among that of a small group of scholars in which history and economics of technical change have co-habited happily. We reflect on the variety of historical methods proposed by the contributors to this special issue, who were invited to respond to the above methodological challenge. Finally, we propose a way ahead in terms of the identification of relevant questions and pertinent methodological approaches.

The paper presents a model that evaluates how upgraded technological capabilities of emerging country based multinationals (EMNCs) and an increase in the domestic market size of large emerging countries affect value chain location choices and the competitiveness of emerging country based firms versus advanced country based ones. The model shows that, even without possessing a competitive advantage in terms of technology and/or brands, EMNCs from large or rapidly technologically advancing countries can become dominant players in the global system. The model highlights the central role of firm level technological intensity and product differentiation in determining the location of value chain activities as well as defining organisational boundaries. Empirical analysis of the location choices of the world's top multinationals from large advanced and emerging countries in 2010 supports the model's predictions.

This article considers the historiographical and theoretical significance of Nicholas von Tunzelmann's first book, Steam Power and British Industrialization to 1860. Von Tunzelmann assessed the quantitative impact of the Watt steam engine and its pirate copies on the British economy using the social savings method pioneered by R.W. Fogel, showing that the impact was smaller and later than many historians had supposed. These results are of more than quantitative significance because they call into question a dominant line in the history of industrialization that focuses on the steam engine as a key determinant of the dynamics of industrial growth in Britain from the late eighteenth century. This article discusses the origin of this line in the work of Arnold Toynbee and outlines its long-term influence on economic history, including contemporary debates on the question of why Europe outpaced China and India from the seventeenth century. These issues are important also for innovation studies, which often describes the relation between innovation and growth in terms of such ‘critical technologies’ as steam power; these accounts are subject to the same weaknesses as technicist histories of industrialization. Von Tunzelmann's early work is therefore of continuing theoretical and empirical significance as we seek an adequate theory of the links between innovation and growth.

This study considers the role of national differences, derived from structural characteristics in each country, and how they impact on companies’ innovation. To do this we include in a firm-level empirical model of innovation traditional factors impacting on innovation, and measure any differences in these determinants between two countries: the UK (comprising more advanced regions) and Spain (which belongs to the “follower” groups of countries in Europe). Using the European Community Innovation Surveys (CIS4), we select two samples comprising private manufacturing firms and estimate a two-step Heckman model to explain firms’ innovation. Our results suggest that Spanish firms are at a different stage, with Spain lagging behind the UK in terms of being able to benefit from RD whereas linkages with international markets are more important for companies in the UK. Based on our results, we would argue that in order to reduce the technological gap between these two countries regional policies to promote innovation in Spain should concentrate more on the promotion of market relationships between co-located firms; while a greater exposure to internationalisation would benefit both countries.