Why do firms acquire technology?

A paired comparison is made between rival attempts to develop the first continuous rolling mill for wide strip in the United States during the 1920s. One firm was secretive, and the other relied on collaboration. Development of the wide strip mill is a natural experiment comparing closed and open innovation as two firms were competing for the same target using different institutional arrangements for their R&D. Wide strip‐rolling technology was developed by rival teams in the United States during the mid‐1920s. The less successful team at Armco, Ashland, Ky was closed to outside influences. Breakthroughs came from Columbia Steel at Butler, PA, which pursued an open pattern of cooperation with equipment suppliers. Columbia Steel's collaboration with machinery suppliers, use of independent advice on bearing technology and willingness to learn from precursors in copper rolling enabled them to build a successful wide strip mill complex, commissioned in 1926. Butler established the dominant design for the next 80 years. The leading equipment supplier at Butler, the United Engineering and Foundry Co., led global sales of the technology for four decades. It is not clear how far this example of successful open innovation in the US inter‐war economy is typical. Historical studies of the management of R&D focus on formal, science‐based research in large corporate labs rather than engineering development.

show abstract

Commercializing User Innovations by Vertical Diversification: The User-Manufacturer Innovator

Block

Henkel

Schweisfurth

et al. 2010

SSRN Journal

View full text Add to dashboard Cite

This paper explores a pathway to commercializing user innovations hitherto not studied, namely, the vertical diversification of a user firm into an upstream industry supplying capital goods, and subsequent coexistence of user and manufacturing units. Such coexistence creates synergies regarding innovation, marketing, and financials. It enables the manufacturing unit to benefit from user innovations in its new product development, while the user unit profits from improved tools. Yet, selling the firm's own user innovations risks loss of the competitive advantage originating from use of these innovations. We employ case evidence from firms in the fields of foundation engineering, tunnel construction, tea-packaging, and geological surveying to derive a set of five propositions regarding the conditions under which user-manufacturer diversification is attractive and viable in the long run. These conditions relate to innovation, marketing, the organization, and financial aspects. Our study offers three contributions. We show how user entrepreneurship can originate from established corporations rather than from individual user innovators; we carve out factors that favor the move toward and the success of user-manufacturer diversification; and we link user innovation and corporate strategy by showing how user innovation can affect the boundaries of organizations.

show abstract

Why do firms acquire technology?

Cited by 4 publications

References 11 publications

Nobel Prizes and New Technologies

Nobel Prizes and New Technologies

Open versus closed innovation: development of the wide strip mill for steel in the United States during the 1920s

Commercializing User Innovations by Vertical Diversification: The User-Manufacturer Innovator

Contact Info

Product

Resources

About