Edited by Michael Dietrich and Jackie Krafft
Chapter 29: R & D and the Firm
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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