Handbook on the Economics and Theory of the Firm
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Handbook on the Economics and Theory of the Firm

Edited by Michael Dietrich and Jackie Krafft

This unique Handbook explores both the economics of the firm and the theory of the firm, two areas which are traditionally treated separately in the literature. On the one hand, the former refers to the structure, organization and boundaries of the firm, while the latter is devoted to the analysis of behaviours and strategies in particular market contexts. The novel concept underpinning this authoritative volume is that these two areas closely interact, and that a framework must be articulated in order to illustrate how linkages can be created.
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Chapter 29: R & D and the Firm

Pier Paolo Saviotti


29 R&D and the firm Pier Paolo Saviotti 29.1 INTRODUCTION In this chapter we are going to discuss the relationship between R&D and the firm on the basis of three components. First, R&D is a new activity that emerged in the economic system towards the end of the nineteenth century. Since that time a growing number of firms, especially large ones, have adopted R&D as one of their internal functions. Second, starting from the Industrial Revolution the firm has been undergoing very profound transformations. Thus, the type of firms that use R&D and the uses they make of it have not been constant but have been changing in the course of time. Third, during the twentieth century and until the present the theories of the firm that economists have created underwent changes at least as important as the firms themselves. In this chapter the emergence of R&D as a new function and the evolution of the firm, including the internalization of R&D, are going to be discussed as a background to the analysis of the theories of the firm that economists have developed. 29.2 THE EMERGENCE OF R&D AS A NEW ECONOMIC ACTIVITY 29.2.1 Technology and the Firm Organizations constituted by a group of people and operating to achieve objectives that were at least partly economic have existed for a very long time. Antecedents of such organizations can even be located in Roman times (Rosenberg and Birdzell, 1986). Important examples of such...

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