The Reiter Prize Lecture

1. The Reiter Prize Lecture By Johann Peter Murmann January 26, 2005

2. Stan Reiter: Some Early Papers Hughes, Jonathan R. T. and Stanley Reiter (1958). "The First 1,945 British Steamships." Journal of the American Statistical Association 53(282): 360-381. Davis, Lance E., Jonathan R. T. Hughes and Stanley Reiter (1960). "Aspects of Quantitative Research in Economic History." The Journal of Economic History20(4): 539-547.

3. The Two Central Inspirations

4. Key Idea 1: Evolution is a General Process An evolutionary process has three essentials: Mechanism for introducing variation Consistent selection processes and Mechanism for preserving and/or propagating the selected variants

5. Key Idea 2 & 3 What a person cannot do he or she will not do no matter how strong the urge to do it. (p. 28). In the face of real-world complexity, the business firm turns to procedures that find good enough answers whose best answers are unknowable. (p. 28).

6. Key Idea 2 & 3 What a firmcannot do it will not do no matter how strong the incentives to do it. In the face of real-world complexity, the business firm develops standard operation procedures to deal with most decision making situations.

7. Key Idea 4: Collect Historical Data [T]he evolution of firms and of economies does not lead to any easily predictable equilibrium, much less of an optimum, but is a complex process, probably continuing indefinitely, that is probably best understood through an examination of its history. (p. 48).

8. Key Idea 5: Many phenomena display a hierarchical organization

9. A Four Level Hierarchy

10. Whole The Global Economy Country Economies Industries FirmsProducts & Services Parts

11. Hierarchy of Selection Processes It is important to recognize: what are selection criteria at one level are but trials of the criteria at the next higher, more fundamental, more encompassing, less frequently invoked level (Campbell, 1974, p. 421).

12. The Global Economy National Economy Industry Firm Product

13. Key Idea 6: Sources of Success The […] variation-and-selection-retention model unequivocally implies that ceteris paribus, the greater the heterogeneity and volume of trials the greater the chance of a productive innovation. [...] unconventionality and no doubt numerosity [are] a necessary, if not sufficient condition of creativity. (Campbell, 1960, p. 395).

14. The Advisor: Richard Nelson

15. Why Synthetic Dye Industry? Ernst Homburg Professor for the History of Technology

16. British and French Firms are the Leaders in Dye Industry in 1862 Market Share U. S. Germany Switzerland France Other Britain

17. The Expert Predictions • A]t no distant date…[England will be] the greatest colour producing country in the world. • —August Wilhelm Hofmann (1863, p. 120) in his Report on the Chemical Section of the • International Exhibition of 1862

18. German Firms are Leaders in the Dye Industry in 1873 Market Share U. S. Germany Switzerland France Other Britain

19. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% German Firms Dominate World Dye Industry in 1913 Market Share U. S. Germany Switzerland France Other Britain

20. Concentration in Each Country, 1913

21. Number of Dye Firms by Country, 1857-1914 40 35 30 25 20 15 10 5 0 1914 1857 1914 1885 1857 USA Britain Germany Switzerland France

22. Industry Demography 1857-1914

23. Dye Development at Bayer in 1906

24. Global Share of Organic Chemistry Publications

25. German Share of Aromatic Organic Chemistry Publications cited in France

26. Three Empirical Chapters Chapter 2: Country-Level Performance Differences and their Institutional Foundations

27. Three Empirical Chapters Chapter 3: Three times Two Case Studies of Individual Firms

28. Three Empirical Chapters Chapter 4: The Coevolution of National Industries and Institutions

29. Final Theoretical Chapter Chapter 5: Toward and Institutional Theory of Competitive Advantage

30. Typology of Academic-Industrial (A-I) Complexes Strong Industrial Sector Weak Weak Strong Academic Discipline Academic Laggard Power-Union Quadrant I Quadrant II Quadrant III Quadrant IV Union of the Weak Industrial Laggard

31. Academic discipline in particular country Industrial sector in particular country Academic-industrial complexes Britain France Germany Switzerland United States Explanation of Symbols Used in Illustration

32. Organic Chemistry in Different Countries 1855 Strong Industrial Sector Weak Weak Strong Academic Discipline No synthetic dye industry existed before 1857 Britain France Germany Switzerland United States

33. Co-Evolution in the Synthetic Dye Industry 1860 Strong Industrial Sector Weak Weak Strong Academic Discipline Britain France Germany Switzerland United States

34. Co-Evolution in the Synthetic Dye Industry 1870 Strong Industrial Sector Weak Weak Strong Academic Discipline Britain France Germany Switzerland United States

35. Co-Evolution in the Synthetic Dye Industry 1913 Strong Industrial Sector Weak Weak Strong Academic Discipline Britain France Germany Switzerland United States

36. Co-Evolution Processes at the National Level Time 1 Strong Industrial Sector Weak Weak Strong Academic Discipline

37. Co-Evolution Processes at the National Level Strong Industrial Sector Weak Weak Strong Academic Discipline Time 2

38. Co-Evolution Processes at the National Level Strong Industrial Sector Weak Weak Strong Academic Discipline Time 3

39. Co-Evolution Processes at the National Level Strong Industrial Sector Weak Weak Strong Academic Discipline Time 4