Orville R. Butler

In a book review of Inventing America by Pauline Maier, Merritt Roe Smith, Alexander Keyssar, and Daniel J. Kevles, Sylvia Nassar complained that they conflated “invention” with “innovation” and failed to show how innovation was what distinguished American technology from that of other societies which failed to transform invention into economic growth.  The distinction Nasar makes can also be found in the repeated complaints in our survey of industrial physicists and R&D managers that academics do not understand industrial R&D.  In fact historians, even those who reject the golden age myth, appear to remain stuck in the “golden age” debate which focuses on defining research in terms of a select period where industry funded splendid laboratories where scientists sought after “new knowledge” distinct from the application of that knowledge.  Few have moved on to study the change in industrial R&D in terms of broader changes in industry.  AIPs five year study of the History of Physicists in Industry suggests changing perspectives of research and development and its role in industry.

Our survey found two well established but widely divergent models for these changes.  Some viewed changes in industrial research as cyclic.  According to this perspective in the 1950s and sixties basic research put forward a new electronics technology centered on the transistor and the integrated circuit.  Industry turned to exploiting these technologies finding new ways to make products less costly and to create new products which could enhance shareholder value.  R&D managers holding this perspective argue that the new technologies were rich and widely applicable, that turning to “basic” science to develop a new seedbed for technological innovation was cost prohibitive until the benefits of applying the current technologies had played out.  Focusing on tying the technology to new product development took precedence over seeking new seedbeds from basic science.  Innovative development took precedence over basic research.  As these technologies matured, however, a return to basic science would be essential.  This view argues that the interaction between research and development in industry is cyclical and several suggested that the pendulum was beginning to turn back towards fundamental research.

The second, far more prevalent perspective argues that fundamental changes in business in the last fifty years have necessitated a seed change in the nature of research.  Though not mutually exclusive of the cyclical model, those advocating this model argue, among other things, that globalization has brought about a transformation of business forcing it to focus on its core capabilities.  Increased competition in the global marketplace meant that companies could no longer effectively participate in “academic” style research.  The core value of business was in bringing a product to market which could increase the value chain to the company or create a new value chain.  Some pointed to a study that suggested a company with average research, average manufacturing and average customer service was just as profitable as a company which excelled in all areas and that both would survive, while any company having a failing or even “D” grade in any component of the value change was at risk of failure. The connections in the links along the value chain were as important as the individual links and no link had value separate from the chain. The cost of first rate research then did not add value to the company.  New ideas could be acquired more efficiently than they could be created and greater emphasis should be placed on integrating research into the value chain rather than continuing what they saw as a failed model of knowledge creation that was then tossed over the fence to development.  Innovation as increasing value along a value chain took precedence over knowledge creation.