Université Paris-Sud
                       Faculté Jean Monnet – Droit, Economie & Gestion



        Centre de recherche...
2
The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
Remerciements
Je tiens à exprimer ma gratitude et mon amitié à Bertrand Bellon, mon directeur de thèse
pour avoir accepté ...
Comment vivre sans inconnu devant soi?
                                                                                   ...
Table of content



Table of content ........................................................................................
A. Attentiveness: the power of observation ..................................................................................
B. Experimentation: division of labour in the laboratory.............................................................. 151...
Chapter I- Inventors at the age of predictive science ............................................................ 208
Sec...
Section III- New collective arrangements on the rise ................................................................... 2...
Executive summary



The chief characteristic of the present economy is the uncertainty. Uncertainty is a partial
and shar...
intertwined within the personal life of inventors. The practices specific to each ability can be
allocated to different le...
When uncertainty is less prominent, another form of collective arrangements is more
appropriate: the product development t...
uncertain context and strategizing would therefore be described as the mechanism used to
guide the attention of agents tow...
Note de synthèse

Comprendre la manière dont nous agissons face à l’incertitude est essentiel dans un monde
où l’innovatio...
promouvoir leur travail (Persuasion). Au cours de l’Histoire, les pratiques qui sous-tendent
ces facultés se sont développ...
investissements dans un contexte de forte incertitude. Les inventeurs à succès de ces
laboratoires restent attentifs à ce ...
L’approche adoptée dans cette recherche place l’inventeur individuel au cœur de l’analyse et
pourrait contribuer à rapproc...
A brief history of inventiveness


The present overview provides a condensed version of the historical facts studied in th...
Sometimes, they joined forces to persuade other people of the value of their ideas. They
provoked or challenged each other...
Transformations in the rail industry: the rise of ‘inventive hierarchies’
In 1831, Robert L. Stevens for the Camden & Ambo...
capacity in a growing market. Westinghouse did not want to licence his brake systems to
railroad companies as he was deter...
Alexander Bell brought the telephone to life. Shortly after Elmer Sperry, inventor of the
gyroscope, applied the principle...
In such industrial laboratories, a new breed of inventors, often called scientists, was
pioneering new inventive practices...
The first directors of industrial laboratories had a ‘Soft hand’ approach that pushed their
inventors to exchange informat...
focused on creating defect free and reliable production capacity. From a Persuasion
perspective, demonstrating the possibi...
Introduction

Millions of economic transactions are performed every day and, in order to study their
aggregated effects, i...
Since Schumpeter’s contribution, the study of innovation has largely abandoned the
‘methodological individualism’ approach...
terms of individuals – that is, individual endowments, intentions, desires, expectations, and goals ...
In contrast, metho...
which enable and constrain, at the same time human actions. At no point, will it be inferred
that all social phenomenon ca...
This was also emphasized by Keynes in a famous sentence. ‘By ‘uncertain’ knowledge, let me
explain, I do not mean merely t...
As inventors have played an increasing role in economic activities due to the growing
division of labour, it is safe to be...
B/1 Attentiveness is about the acquisition of information, knowledge and insights. It has
some similitude with (1) the imp...
(2) Herbert Simon and his colleagues have categorized methods used as part of scientific
discovery or more generally probl...
C. How the model will be tested using historical evidences

The validation of the hypothesis presented above will be carri...
D/1 The study of the inventive abilities of three ‘career inventors’ for each of the
periods studied. This will include Ar...
chief characteristics of a common case, an ideal type 7. An ideal type should not be confused
with a general truth, a law ...
Recent History is not studied here. It is first due to a certain caution, historians have not yet
distilled their analytic...
Introduction


Des millions de transactions économiques s’effectuent tous les jours et, afin d’étudier leurs
effets cumulé...
preuve d’innovation, nous réservons le terme d’Entreprise; et les individus qui les accomplissent sont
appelés Entrepreneu...
A. La notion d’individualisme méthodologique

Selon Hodgson (2007), le terme d'individualisme méthodologique a été employé...
L’individualisme méthodologique fort implique que toutes les « situations sociales »
s’expliquent elles-mêmes à travers la...
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Thesis: History Of Inventors

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Here is the final versions of my PhD thesis on the history of inventors

it is in english with few chapters in french

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Thesis: History Of Inventors

  1. 1. Université Paris-Sud Faculté Jean Monnet – Droit, Economie & Gestion Centre de recherche Analyse des Dynamiques Industrielles et Sociales (ADIS) Les facultés de l’inventeur Une analyse économique du comportement des inventeurs dans l’incertitude Thèse de doctorat en Sciences Economiques Hervé LEGENVRE Sous la direction de Bertrand BELLON, Professeur à l’Université Paris-Sud 11 Membres du Jury : - Bertrand BELLON, Professeur, PARIS-SUD - Alain BRAVO, Directeur général, SUPELEC - Philippe LAREDO, Professeur, UNIVERSITE PARIS-EST, ENPC & MANCHESTER BUSINESS SCHOOL - Jacques MISTRAL, Directeur des études économiques, IFRI - Bertrand QUELIN, Professeur, HEC - Alain RALLET, Professeur PARIS-SUD 2008
  2. 2. 2 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  3. 3. Remerciements Je tiens à exprimer ma gratitude et mon amitié à Bertrand Bellon, mon directeur de thèse pour avoir accepté de superviser l’écriture de ma dissertation. Son attention et ses encouragements ont alimenté de manière constante ma détermination. Sa patience, ses conseils et ses questions ont été précieux tout au long de cette tâche. Merci également à son épouse, Blanche qui m’a accueilli avec gentillesse dans leur maison pour les échanges réguliers qui ont jalonné ce travail. Je remercie le Professeur Rallet de me faire l’honneur de présider le jury. Je remercie le Professeur Laredo et le Professeur Quelin d’avoir accepter d’être rapporteurs de ma thèse. Je remercie Mr Bravo et Mr Mistral de me faire l’estime d’être membre du jury. J’aimerais également remercier toute l’équipe de de l’ADIS et de L’université Paris Sud pour leur accueil, leurs conseils et leur confiance. Je pense plus particulièrement à Mme Bonésio, Mr Carayol et Mme Plunket Les conseils avisé de Paul David ont alimenté mes reflexions. Les encouragements et les discussion que j’aie eu avec Paula Stephan ont nourri mon travail et ma détermination. Je tiens tout particulièrement à remercier Marie-Gabrielle Hubler pour ses relectures, ses remarques et son aide inestimable. Sue Sweet m’a fait l’amitié de relire les épreuves en anglais de cette dissertation, j’aie tout particulièrement appreciè ses encouragements. Zoé Mauss m’a offert une assistance précieuse dans le travail bibliographique, qu’elle en soit remerciée. Les bavardages philosophico-pratique avec Alexis, Ivan, James, Jean-Pierre, Marie- Gabrielle, Patrick, Pierre, Stéphane A., Stéphane M. et Zoé ont alimenté mes reflexions. Je voudrais également remercier tous ceux qui ont offert un toit à mes reflexions : mes parents, Katherina, Justine, Pierre, Jean-Pierre et Marylise. Les illustrations artistiques de mon travail par Alice et Anatole mériteront une édition spéciale. Je souhaite également adresser mes remerciements à ma famille, mes amis, collègues. qui m’ont soutenu et encouragé. Pour finir, j’aie une pensée particulière pour les villes, les aéroport et les hotels de par le monde qui ont abrité mon travail et mes reflexion. 3 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  4. 4. Comment vivre sans inconnu devant soi? René Char 4 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  5. 5. Table of content Table of content ........................................................................................................................................... 5 Executive summary .................................................................................................................................... 10 Note de synthèse ........................................................................................................................................ 14 A brief history of inventiveness .................................................................................................................. 18 Introduction (English version) ........................................................................................................... 26 A. Methodological Individualism ........................................................................................................... 27 B. The Attentiveness-Experimentation-Persuasion model ............................................................. 29 C. How the model will be tested using historical evidences ......................................................... 34 Introduction (Version française) ...................................................................................................... 38 A. La notion d’individualisme méthodologique ................................................................................. 40 B. Le modèle AEP : Attention, Expérimentation et Persuasion .................................................... 42 C. Comment le modèle sera testé en utilisant l’Histoire comme source de preuves............. 46 Part 1. Inventing during the late 18th century in Britain .................................................. 51 Preliminary Chapter - Overview of the late 18th century ........................................................................ 51 Chapter 1- Career inventors and the three abilities ................................................................ 57 Section 1. Richard Arkwright ................................................................................................................ 57 A. Attentiveness: listening to people ................................................................................................... 59 B. Experimentation: tinkering for success .......................................................................................... 62 C. Persuasion: self-fashioning and glibness ......................................................................................... 64 Section II. Josiah Wedgwood ................................................................................................................ 68 A. Attentiveness: learning from History and scouting in London ................................................. 71 B. Experimentation: Wedgwood’s experimental laboratory ......................................................... 75 C. Persuasion: Royal Patronages .......................................................................................................... 77 Section 3. James Watt ............................................................................................................................ 81
  6. 6. A. Attentiveness: the power of observation ..................................................................................... 85 B. Experimentation: the ‘perfect engine’ as a guide ......................................................................... 87 C. Persuasion: ‘steam connections’ ..................................................................................................... 90 Chapter 2. Networks of inventors in 18th century Britain ...................................................... 93 Section I. The Lunar society and relationships.................................................................................. 96 A. Presentation of the Lunar Society .................................................................................................. 96 B. Relationship between regular members of the Lunar Society .................................................. 98 C. Relationship between regular members of the Lunar Society and another person.......... 100 Section II. The A-E-P triptych, a framework to explain the existence and functioning of network of inventors ............................................................................................................................ 103 Chapter 3. Passion for Experimentation .................................................................................... 106 Section I. Balloons, igniting a passion for Experimentation .......................................................... 108 Section II. Experimentation and entertainment .............................................................................. 110 Section III. Experimentation, education and religion, the figure of Joseph Priestley .............. 113 Closing remarks on Experimentation and institutional transformation .................................... 115 Part 2. Inventing during the late 19th century in America ............................................ 118 Preliminary Chapter - Overview of the late 19th century ...................................................................... 118 Chapter I. Inventors at the age of large systems ..................................................................... 125 Section I. Alexander Bell A. Attentiveness: family and city as crucibles .................................................................................. 129 B. Experimentation: analogies, cross-fertilisation and systematic debugging ........................... 133 C. Persuasion: prominent occupations and partners..................................................................... 138 Section II. Thomas Edison .................................................................................................................... 144 A. Attentiveness: going systematic .................................................................................................... 148 6 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  7. 7. B. Experimentation: division of labour in the laboratory.............................................................. 151 C. Persuasion: Edison, a prophet of his time ................................................................................... 157 Section III. Sperry ................................................................................................................................... 164 A. Attentiveness: getting the timing right ......................................................................................... 167 B. Experimentation: breakthrough versus fine tuning, the dual reality of invention............... 171 C. Persuasion: Courting the rich and the Navy .............................................................................. 174 Chapter 2. The rise of the inventive hierarchy ......................................................................... 180 Section I. Theoretical background ..................................................................................................... 182 A. Frank Knight: a world of uncertainty ........................................................................................... 182 B. Uncertainty and collective arrangements according to Knight .............................................. 183 C. Coase, Williamson and the transaction cost theory ................................................................ 184 Section II. The evolution of the railroad industry throughout the 19th century in America 186 A. The early years of inventive activities in the railroad industry: networks of inventors and attentive railroad companies (Regime I) ........................................................................................ 188 B. Charles Dudley, a transition figure from invention regime I to II .......................................... 192 C. The later years of inventive activities in the railroad industry during the late 19th century: Inventive hierarchies (regime II) ....................................................................................................... 194 Section III. Comparative analysis between regime I and II of invention .................................... 199 A. Comparative analysis of the regime I and II of inventive activities in the American railroad industry .................................................................................................................................................. 199 B. The two regimes analysed through the triptych Attentiveness – Experimentation – Persuasion ............................................................................................................................................... 201 Part 3. Inventing during the early 20th century in America.......................................... 203 Preliminary chapter - Overview of the early 20th century ..................................................................... 203 7 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  8. 8. Chapter I- Inventors at the age of predictive science ............................................................ 208 Section I. Thomas Midgley ................................................................................................................... 208 A. Attentiveness: the firm as a guide ................................................................................................. 212 B. Experimentation: under the guidance of the periodic table .................................................... 216 C. Persuasion: creating information asymmetries .......................................................................... 220 Section II. William Coolidge ................................................................................................................ 225 A/ Attentiveness: open innovation at the start of the 20th century ........................................... 229 B/ Experimentation: serendipity and systematism .......................................................................... 232 C/ Persuasion: ‘The House of magic’ ................................................................................................ 235 Section III- Wallace Carothers ........................................................................................................... 240 A/ Experimentation: theory and practice as ‘friends’ .................................................................... 247 B/ Persuasion: the battle for ‘Pure Science’ ..................................................................................... 251 Chapter II. Collective arrangement: the ‘Soft Hand’ ............................................................. 256 Section I - Theoretical background ................................................................................................... 258 Section II - The ‘Soft Hand’ at the General Electric research laboratory ................................. 260 A/ The ‘Soft Hand’ within the laboratory......................................................................................... 261 B/ The ‘Soft Hand’ and the other departments of General Electric .......................................... 263 C/ The ‘Soft Hand’ and the outside world ....................................................................................... 265 Closing remarks on the ‘Soft Hand’ .................................................................................................. 266 Chapter III - The rise and limits of industrial laboratories................................................... 268 Section I. The pioneering years of industrial laboratories ............................................................ 269 A/ Attentiveness..................................................................................................................................... 273 B/ Experimentation ................................................................................................................................ 276 C / Persuasion ........................................................................................................................................ 277 Section II- The celebration of industrial laboratories in the post-war period ......................... 281 8 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  9. 9. Section III- New collective arrangements on the rise ................................................................... 286 Closing remarks ..................................................................................................................................... 290 Taking stock, looking ahead ........................................................................................................ 297 A/ The abilities of career inventors ................................................................................................... 298 A/1 Attentiveness .................................................................................................................................. 302 A/2 Experimentation ............................................................................................................................. 305 A/3 Persuasion........................................................................................................................................ 309 A/4 Conclusions related to the three abilities ................................................................................ 312 B/ Collective arrangements ................................................................................................................. 314 C/ Further potential investigations .................................................................................................... 320 Bibliographie...........................................................................................................................322 9 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  10. 10. Executive summary The chief characteristic of the present economy is the uncertainty. Uncertainty is a partial and shared ignorance of what will happen in the future. Its consequences are manifold, for instance, consumers show distrust when the long term impact of recent technologies are not understood and entrepreneurs find it difficult to predict the combinations of factors that might turn profitable for them in the future. Understanding how inventors act before uncertainty enhances our comprehension of the modern economy. It allows us to identify the abilities that enable inventors to confront uncertainty; it explores the collective arrangements used by inventors and offer new perspectives for institutional economics. Inventors studied here are scientists, engineers, entrepreneurs or simply independent inventors. The model tested focuses on three abilities: Attentiveness, Experimentation and Persuasion (triptych A-E-P). It investigates how inventors are attentive to the information, knowledge or insight that could lead them to success; how they experiment in order to create new information, knowledge or insight and how they persuade other agents of the value of their work. This investigation is performed by using History as a source of evidence. Three periods of intensive inventive activities are studied: the ‘age of the machines’ during the late 18th century in Great Britain, the ‘age of systems’ during the late 19th century in America and the ‘age of predictive science’ at the start of the 20th century in America. Career inventors who met success more than once, collective arrangements used by inventors and institutional transformations are studied for each of these periods. Inventors can come across valuable insights by luck or can perform systematic searches to find what they need (Attentiveness). They can progress by trial and error or use scientific knowledge to guide their experiments (Experimentation). They rely on their personal persuasion power or they accepted facts to promote their work (Persuasion). Throughout history, practices underpinning these three abilities have developed and accumulated, they have been imitated and re-used in different contexts and they have sometimes been 10 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  11. 11. intertwined within the personal life of inventors. The practices specific to each ability can be allocated to different levels of uncertainty. Contrary to popular belief, inventors do not act alone, they mobilise their family, friends and collaborate with other agents. The description of collective arrangements based on the A-E- P triptych, casts light on what inventors do collectively. Over the three periods studied, the division of labour in inventive activities has never ceased to progress. It has engendered a diversity of collective arrangements at the forefront of inventive activities: networks (1), inventive hierarchies (2), research laboratories (3) and product development teams (4). A network (1) is described as sets of relationships between individuals facing uncertainty. When uncertainty prevails, attentive inventors form networks to share and gather information that could lead them to a winning combination of factors. They acquire information, they experiment together and they enhance their reputation and build their social capital as they interact with established inventors and investors entrepreneurs. Such relationships can be interpreted as repeated transactions where information is exchanged for free because of the reigning uncertainty. Another form of collective arrangement studied is the ‘inventive hierarchy’ (2) which appeared with the development of large systems such as the cost reduction and standardisation offices of the late 19th century in the railroad industry. Engineers within those inventive hierarchies are inward looking and focus on the optimisation of specific parameters, such as costs using strict decision making rules. Costs of experiments tend to rise when inventor-scientists investigate the forefront of scientific knowledge to hedge the risk of losing ground to competitors. Only research laboratories (3) established on the back of large firms can sustain such investments in such uncertain contexts. However successful inventors, within such laboratories, remain attentive to what happens outside of their walls. This is described using the metaphor of the ‘soft hand of management’ where a hierarchy guides and controls the work of inventors while encouraging them to networks that nourishes them with new ideas and knowledge. 11 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  12. 12. When uncertainty is less prominent, another form of collective arrangements is more appropriate: the product development team (4) where inventors are attentive to specific applications and experiment with a diversity of parameters in order to learn and bring innovations to the market. These collective arrangements are presented using a taxonomy based on different levels of uncertainty. The study of institutional transformations suggests that during the late 18th century in Great Britain, Experimentation became a passion for people from all walks of life. They considered experiments as entertaining and educational and enjoyed the optimism their diffusion inspired. This popular passion stimulated the development of a new set of norms, incentives, and organisational structure. Networks of individuals who shared an interest for technical matters emerged and economic agents developed a preference for occupations and investments that involved pursuing experiments and inventive activities. This contributes to the explanation for the intensification of inventive activities during this period as measured by the number of patents registered. The study of another institutional transformation: the evolution of the railroad industry shows that transaction costs help to understand organisations and their boundaries but it also needs to be complemented by analysis, using for instance the E-A-P triptych, in order to understand informal organisations, complex industry structures or the transformation of an industry structure especially when inventive activities play an important role. The approach adopted in this dissertation, by putting the individual inventor at the heart of the analysis, could contribute to bridge the understanding between economists who see economic activities as the outcome of individual actions and economists who study innovation and technical change as the outcome of collective actions. This would require forging a common vocabulary and to re-interpret some of the existing concepts used by different economists building on the triptych of abilities proposed here. This is only outlined in the present work and will need to be pursued. There are also promising developments that could be undertaken following this dissertation. Attentiveness, one of the three abilities, could serve to further understand what a firm’s strategy is and how it operates. A strategy is a hypothesis about the future of the firm in an 12 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  13. 13. uncertain context and strategizing would therefore be described as the mechanism used to guide the attention of agents towards the assets that could become a source of rent in the future. Another development that could be studied relates to the ability named Persuasion. By investigating the practices used by inventors to persuade other agents of the value of their work, we could better understand some of the institutional mechanisms that shape the preferences of economic agents. This would allow us to understand how some information asymmetries are created to gain economic advantages by agents and firms engaged in inventive activities. 13 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  14. 14. Note de synthèse Comprendre la manière dont nous agissons face à l’incertitude est essentiel dans un monde où l’innovation est la norme et où les consommateurs sont sensibilisés de manière croissante aux dangers liés à l’usage des nouvelles technologies. L’incertitude est définie ici comme une ignorance partielle et partagée sur ce qui va se passer dans le futur. L’étude du comportement des inventeurs face à l’incertitude est un levier de compréhension de l’économie moderne. Elle conduit à identifier les facultés qui permettent aux inventeurs d’affronter l’incertitude; elle explore les arrangements collectifs utilisés par les inventeurs et elle offre de nouvelles perspectives à l’économie institutionnelle. Les inventeurs étudiés ici sont des scientifiques, des ingénieurs, des entrepreneurs ou simplement des indépendants. Le model testé se concentre sur trois de leurs facultés : l’Attention, l’Expérimentation et la Persuasion (triptyque A-E-P). Il permet d’examiner l’attention que portent les inventeurs à des informations, connaissances ou idées qui pourraient accroître leurs chances de succès (1) ; la manière dont ils expérimentent afin de créer de nouvelles informations, connaissances ou idées (2) et, finalement, leur capacité à persuader d’autres agents de la valeur de leur travail (3). Cette étude est réalisée en utilisant l’Histoire comme source de postulats et de preuves. Trois périodes d’intenses activités inventives sont étudiées : « l’âge des machines » à la fin du 18ème siècle en Grande Bretagne, « l’âge des systèmes » à la fin du 19ème siècle aux Etats Unis, et, enfin, « l’âge de la science prédictive » au début du 20ème siècle, toujours aux Etats-Unis. Pour chacune de ces périodes, sont étudiés : des inventeurs de carrière, dont l’histoire personnelle et le parcours témoignent de multiples « succès », ou « échecs », des arrangements collectifs et des transformations institutionnelles. L’étude des faits historiques montre que les inventeurs découvrent des idées prometteuses par chance et/ou réalisent des recherches systématiques pour trouver ce qu’ils poursuivent (Attention). Ils progressent par essais et erreurs et/ou utilisent des connaissances scientifiques pour guider leurs expériences (Expérimentation). Ils utilisent leur pouvoir de persuasion personnel et/ou exploitent des faits tangibles et admis par tous, pour 14 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  15. 15. promouvoir leur travail (Persuasion). Au cours de l’Histoire, les pratiques qui sous-tendent ces facultés se sont développées et se sont accumulées. Elles ont été imitées et réutilisées dans des contextes différents et se sont parfois trouvées mêlées à la vie personnelle de leurs utilisateurs. Les pratiques spécifiques à chacune de ces facultés peuvent être classées selon différents « niveaux » d’incertitude. De plus, les inventeurs n’agissent pas seuls, ils mobilisent leur famille, leurs amis et collaborent avec d’autres agents. L’analyse des arrangements collectifs basée sur le triptyque A-E-P nous éclaire sur les formes collectives d’action des inventeurs. Au cours des trois périodes étudiées, la division du travail dans les activités inventives n’a pas cessé de progresser. Elle a suscité une diversité d’arrangements collectifs: des réseaux (1), des hiérarchies inventives (2), des laboratoires de recherche (3) et des équipes de développement de produits (4). Un réseau (1) se définit comme un ensemble de relations entre des individus qui font face à un contexte d’incertitude. Quand l’incertitude prévaut, des inventeurs attentifs forment des réseaux pour partager et recueillir des informations, ils expérimentent ensemble, font progresser leur réputation et construisent leur « capital social » au fur et à mesure de leurs interactions avec leurs pairs, avec des entrepreneurs et des investisseurs établis. De telles relations peuvent être interprétées comme des transactions répétées où l’information est échangée gratuitement du fait de la prégnance de l’incertitude. Une autre forme d’arrangement collectif est la « hiérarchie inventive » (2) qui apparaît avec le développement des grands systèmes techniques, comme les bureaux de standardisation propres à l’industrie du rail à la fin du 19ème siècle. Les ingénieurs faisant partie de ces hiérarchies inventives se tournent vers l’intérieur et se focalisent sur l’optimisation de paramètres spécifiques, tel que les coûts, en utilisant des règles de décision strictes. A partir du 20ème siècle, le coût des expérimentations dans les laboratoires de recherche (3) tend à s’accroître car les inventeurs-scientifiques explorent les fronts les plus avancés de la connaissance pour ne pas perdre de terrain face à la concurrence. Seuls des laboratoires de recherche associés à de grandes entreprises sont en mesure d’initier et de maintenir de tels 15 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  16. 16. investissements dans un contexte de forte incertitude. Les inventeurs à succès de ces laboratoires restent attentifs à ce qui se déroule en dehors de leurs murs. La métaphore de « la main souple du management » présente une hiérarchie qui guide et contrôle le travail des inventeurs, tout en encourageant leur participation à des réseaux qui les nourrissent de nouvelles idées et connaissances. Quand l’incertitude est moins importante, une autre forme d’arrangement collectif émerge : il s’agit de l’équipe de développement produit (4). Les inventeurs y concentrent leur attention sur des applications spécifiques et expérimentent avec une diversité de paramètres dans le but d’apprendre et d’amener des innovations sur le marché. Une taxonomie de ces arrangements collectifs basée sur différents niveaux d’incertitude est proposée en conclusion. La transformation historique étudiée à la fin du 18ème siècle en Grande Bretagne trouve sa source dans la passion populaire pour l’expérimentation qui traverse et transcende les catégories sociales de l’époque. Le grand public considère ces expériences comme divertissantes et éducatives et se révèle sensible à l’optimisme que leur diffusion inspire. Cette passion populaire stimule également le développement d’un nouvel ensemble d’incitations, de normes et de structures organisationnelles. Des réseaux d’individus partageant un intérêt pour les choses techniques émergent et les agents économiques développent une préférence pour les professions ou les investissements impliquant la réalisation d’expériences et des activités inventives. Ces éléments contribuent à expliquer l’intensification des activités inventives mesurée par le nombre de brevets enregistrés durant cette période. L’étude d’une autre transformation historique, celle de l’évolution de l’industrie du rail au 19ème siècle aux Etats-Unis, montre que les coûts de transaction permettent de comprendre la nature et les limites des organisations, mais elle doit être complétée par des analyses utilisant notamment le triptyque A-E-P, de manière à comprendre comment fonctionnent les organisations informelles et les structures industrielles complexes et la manière dont se transforment les industries où les activités inventives jouent un rôle important. 16 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  17. 17. L’approche adoptée dans cette recherche place l’inventeur individuel au cœur de l’analyse et pourrait contribuer à rapprocher les économistes qui voient les activités économiques comme le résultat d’actions individuelles et ceux qui étudient l’innovation et le changement technique comme le résultat d’actions collectives. Ceci nécessiterait de forger un vocabulaire commun et de réinterpréter certains des concepts existants en utilisant le triptyque de facultés proposé ici. Le présent travail constitue une esquisse dans cette direction nécessitant d’être poursuivie. D’autres axes de recherche prometteurs pourraient être explorés. L’Attention, l’une des trois facultés, pourrait servir à mieux comprendre ce qu’est la stratégie d’une entreprise et la manière dont elle opère. Une stratégie peut être considérée comme une hypothèse sur le futur dans un contexte d’incertitude. L’action stratégique peut, dès lors, être décrite comme le mécanisme utilisé pour guider l’Attention des agents vers les actifs susceptibles de devenir une de revenus dans le futur. Un autre développement qui pourrait être étudié réside dans la faculté de Persuasion des inventeurs. L’exploration des pratiques utilisées par les inventeurs et les scientifiques pour persuader d’autres agents de la valeur de leur travail permettrait de comprendre les mécanismes institutionnels qui façonnent les préférences des agents économiques. Cet axe de recherche aurait l’ambition d’étudier comment certaines asymétries d’informations sont consciemment créées par des agents ou des entreprises impliqués dans des activités inventives afin de gagner des avantages économiques. 17 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  18. 18. A brief history of inventiveness The present overview provides a condensed version of the historical facts studied in this dissertation. It looks at the three periods of history investigated and outlines some of the salient facts that will be examined below. The ‘Age of the machines’, a popular passion for experiments During the last 20 years of the 18th century, across Europe, children enjoyed making and playing with balloons, they were small scale replicas of the ones that were now flying in the air following the initial breakthrough of the Montgolfier brothers in France. Those children sometimes put haystacks on fires and learned the harsh lessons that nature was ready to teach them. The balloon was regarded as an emblem of hope; a balloon-mania was raging across Europe. Those balloons fortified the passion for Experimentation that had already started some years before with itinerant lecturers who travelled from one country to another to educate people and share their experimental tricks. Dissenters who had separated from the established church of England were amongst the strongest supporters of Experimentation and used it as part of the education they provided to children. This led many of them to prefer jobs and investments that involved experimental and inventive activities. Networks of inventors: the Lunar Society Networks of independent inventors such as the Lunar Society developed across England. The Lunar Society brought together people who had a scientific curiosity such as Joseph Priestley, the chemist; people who were part time inventors such as Doctor Erasmus Darwin, also known as the grandfather of Charles Darwin; and also inventors-entrepreneurs such as James Watt, inventor of the steam engine and Josiah Wedgwood (another grandfather of Charles Darwin) who revolutionized the pottery industry. On a regular basis, they exchanged ideas, shared scientific and technical information amongst themselves coming from other people they knew, they advised each other. They helped each other procuring scientific and technical instruments, they organised experiments together. 18 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  19. 19. Sometimes, they joined forces to persuade other people of the value of their ideas. They provoked or challenged each other in a playful way; they drank and laughed as they argued late into the night when the full moon could ease their way back home. Such a network is an attack on uncertainty. Scientists, inventors and entrepreneurs taking part in the Lunar Society were attentive to each other ideas and achievements; they used experiments to gain feedback from each other and to spread knowledge. They joined forces to persuade others to adopt their inventions. Sharing is a rational behaviour when uncertainty prevails. Career inventors during the ‘Age of the machines’ During this ‘Age of the machines’, inventors like James Watt and Josiah Wedgwood that we already mentioned or Richard Arkwright who transformed, through his inventions, the textile industry stole from nature new ways of doing things. Those inventors, who remained in history, and many others we have forgotten, started to harness water and steam energy and basic chemical reactions in order to create practical mechanical devices that grew more complex over time. Their work resulted in new machines that were meant to serve mankind and that sometimes mankind ended up serving. These inventors were attentive to the technical discoveries, market opportunities and social issues of their time; they enjoyed talking with people in search for an idea or valuable information. Arkwright was even accused of stealing other people’s ideas. They travelled across the country and like Wedgwood; they sometimes scouted in the streets of London to understand the latest fashion and the needs of the new bourgeoisie. Experimenting meant for them tinkering with mechanical constructs and conducting systematic trial and error. Wedgwood created a small laboratory in his kitchen to avoid mixing production and experimental activities. Watt explored systematically the physical principles of a ‘perfect engine’ in order to understand why the model of a Newcomen engine was very inefficient. To persuade others, some relied on their natural glibness, most of them engaged family and friends in their inventive and business activities as they were easier to convince and more reliable when it came to keeping secrets. Arkwright fashioned himself as a ‘Grand man’, Wedgwood used the patronage of the Queen to sell his work. 19 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  20. 20. Transformations in the rail industry: the rise of ‘inventive hierarchies’ In 1831, Robert L. Stevens for the Camden & Amboy Railroad in America bought a locomotive to Stephenson, the British rail pioneer. Three years after, rail lines had been established in New Jersey, Maryland, Pennsylvania, South Carolina, Massachusetts, and Delaware. In 1840, with 2800 miles of tracks, the U.S. railroad had more tracks than the British. In 1859, it was 28,800 miles of tracks connected American cities. The steam engine of James Watt had paved the way for the locomotive and this roaring machine crossed the Atlantic where a young, vast and expanding nation was in need of new means of transportation and communication. The railroads materialized as a large-scale system capable of carrying a diversity of people and goods. It required complex machines, tracks and fuel but also tunnels and signals. The so-called ‘Yankee ingenuity’ was at work. People with an interest and an aptitude for technical and scientific matters, were attracted by the numerous practical issues that needed to be solved. Skilled migrants brought their diverse experience and sometimes their ideas with them. They joined the machine shops across the country. Railroad companies hired machinists who built the machines and often used and repaired them. Machinists moved from one firm to another, selling their skills to the highest offer, taking with them the knowledge and experience they had gained. Redundancy of skills encouraged them to specialise and invent new things. They visited each other to keep up to date with the technical developments. International exchange also occurred between experts especially with the British ones. This network of attentive machinists, keen to experiment and tinker with new ideas, eager to persuade others of their talent expanded alongside the railroads. Inventions were usually attributed to them as railroad companies preferred to take licences from inventors than to buy patented products on the market. On such a network, talent irremediably rose to its best use; new needs and opportunities were constantly emerging, sharing knowledge was a way of helping others, helping oneself and signalling one’s worth. However, during the 1860’s, transaction costs were on the rise. The increasing number of patents made the work of railroad companies difficult. They were facing mounting complexity on legal cases; assigning rights to the right inventors was becoming difficult. At the same time, the rising power of some suppliers threatened them. For instance, Carnegie in the steel business had increased its bargaining power by building a massive production 20 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  21. 21. capacity in a growing market. Westinghouse did not want to licence his brake systems to railroad companies as he was determined to exploit and profit from his invention. As materials became more sophisticated; railroad companies needed to specify and verify what they were buying. Moreover, it was time for an industry that had grown in an ad hoc way, to rationalize its functioning and adopt a different approach to inventive activities. Railroad companies therefore adopted a different approach to inventive activities. They established centralized, corporate departments staffed with professional engineers. The personal authority of the technical experts was diminished and replaced by an ‘inventive hierarchy’ where salaried engineers took decisions based on defined rules. Such engineers had a knack for uniformity. They pursued a policy of standardization as the industry had developed haphazardly during its formative period. They established methods to analyze materials and developed sound technical specifications that were integrated into a supplier’s contract. They used managerial innovation as much as technical ones to optimize the performance of the traffic on the railroads and to improve the efficiency of the system. They were attentive to internal operational discrepancies and costs reduction opportunities. They conducted systematic experiments to select solution amongst existing technologies. They persuaded others and based their decisions on financial information, not on expert opinion. A new collective arrangement had emerged. This inventive hierarchy was well suited to rationalize a large scale system but inadequate to defy the providence and bring original inventions into the limelight. The railroad, with its complexity and the challenge of size, led the development of an engineering culture, out of which the so-called ‘scientific management principles’ of Frederick Taylor emerged. Career inventors during the ‘Age of the systems’ During this ‘Age of the systems’, the rail and the telegraph were loosely coupled systems that emerged out of a machine shop culture thanks to the contribution of many inventive minds and hands. Electricity was a system of a different kind, it needed a master architect: Edison created parts that worked together to illuminate New York and other cities. Similarly, 21 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  22. 22. Alexander Bell brought the telephone to life. Shortly after Elmer Sperry, inventor of the gyroscope, applied the principles of feedback loop to many practical problems. At that time, towns like Boston offered to an attentive inventor like Bell all he needed: libraries, scientific institutions, the expertise of many other inventors and access to investors. Luck and errors continued to trigger the attention of inventors. However, inventors also conducted systematic investigation of patents, technical and scientific literature and they performed systematic searches for appropriate materials. Someone like Edison enjoyed working on a diversity of projects that cross fertilized each other. Sperry learned to recognise when to invest in a business field, move rapidly from one invention to another through close collaborations with the users and then abandon the field as it matured. Experimenting still included painstaking trial and error. Sometimes metaphors and analogies acted as guides for experiments. Finalising an invention often meant systematically testing design parameters in search for the most efficient solutions. Edison created his own laboratory where tens of experimenters and machinists worked together. Sperry scaled up models little by little to create his inventions. To persuade others, Bell found a prominent partner and enjoyed demonstrating his telephone using his theatrical skills. Edison fashioned himself as the wizard of Menlo Park. He grabbed the attention of Americans and Europeans by telling them of what the future would be made. Sperry convinced others simply because he was a talented inventor who courted his peers, his customers and investors. Career inventors during the ‘Age of predictive science’ At the turn of the 20th century, science offered some gifts to inventors. The scientific understanding of the physical world was transformed; it offered predictive power: the periodic table of elements allowed screening of relevant materials and chemical reactions could be anticipated. Science started to play an important role in inventive activities undertaken by firms, at least in specific sectors such as electricity, the communications or chemical. This was the ‘Age of the predictive science’. Industrial laboratories, an emerging collective arrangement capable of performing expensive Experimentation, took the centre stage. 22 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  23. 23. In such industrial laboratories, a new breed of inventors, often called scientists, was pioneering new inventive practices. This group included Midgley from General Motors who came up with leaded fuel and Freon, Coolidge, who worked for General Electric Research Laboratory, the first laboratory of this kind, was the father of ductile tungsten filament for lamps and of the medical applications of X-rays and Carothers who spearheaded the development of nylon and other giant man-made molecules at DuPont. Such inventor- scientists were attentive to what mattered to the decision makers of the firm for which they worked. They monitored inventions occurring outside of their firm in order to anticipate competitive threat and possibly turn them into opportunities. Industrial laboratories were established far from the manufacturing activities; nevertheless, these scientists concentrated their effort on the core business activities of the firm they served. They were attentive to scientific development and benefited from the ‘golden age of physics’ which brought them new instruments and scientific knowledge that could be put to good use. With these inventors, science and theory contributed to Experimentation without fully replacing serendipity, trial and error and the systematic variation of parameters needed to fine-tune products and production processes. Theory and practice worked hand in hand. Experiments required teamwork as inventing became more and more the work of specialists. Inventors and their boss exploited the image of science to persuade decision makers in their firms of the value of science and consumers of the value of their products. General Electric Research laboratory was fashioned as the ‘house of magic’. At the same time, inventors with their scientific authority were capable of contributing to the creation of potentially dangerous information asymmetries. Midgley with the leaded fuel is a deadly example. If it was difficult at the start to persuade high calibre scientists to join research laboratories and top management of the value of performing pure science to explore the frontiers of science but the early success at General Electric and A.T.T. helped others to follow. The First World War convinced some politicians and businessmen that science would play an increasing role in warfare. The ‘Soft hand of management’ Research laboratories were established in large businesses but their research directors tried to keep the network culture of inventors in order to maintain contacts between the scientists and the business needs or the scientific and technical development of their time. 23 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  24. 24. The first directors of industrial laboratories had a ‘Soft hand’ approach that pushed their inventors to exchange information amongst themselves, with people in other departments of the firm they served and with the outside world. As a consequence, hierarchy guided and controlled the work of inventors while networks continued to nourish them with new ideas and knowledge. Division of labour amongst collective arrangements Industrial laboratories survived the great depression. Their promoters created the erroneous belief that independent inventors had disappeared. The emerging passion for science was strengthened by the American victory in the Second World War Firms started to invest heavily in science. This led to the isolation of corporate inventors and scientists. A lack of Attentiveness started to reign in the inventive activities of large businesses. Passion is not always virtuous. After the war, Bell laboratories, the research arm of A.T.T remained the largest corporate research laboratory with 2000 scientists and engineers and 5700 people overall. Brattain and Bardeen discovered the amplifying capabilities of semiconductor devices. Shockley brought some refinement to their invention that was announced in 1948 by Bell Laboratories under the name of transistor. The three of them received a Nobel Prize in 1954 for their discovery. The transistor, to release its full economic potential, needed two fertile grounds different to the one initially offered by A.T.T. It needed specialised firms such as Texas Instruments attentive to its immediate new applications and production issues. It also needed inventive networks such as the ones that emerged in the Silicon Valley to explore its future applications. A company like Texas Instruments was a specialised manufacturer with development teams dedicated to semi-conductors. The management of the company and employees were attentive and dedicated to the exploitation of the market opportunities offered by semi- conductors. Experimentation meant developing low-cost semi-conductors which was different in nature to inventing the transistor. It was essentially the work of engineers 24 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  25. 25. focused on creating defect free and reliable production capacity. From a Persuasion perspective, demonstrating the possibility of creating an inexpensive and simple product such as a radio proved to be a winning strategy. Companies like Intel later followed a similar path of specialised manufacturers which did not have to invest in basic research but who combined rigorous engineering approaches with a market orientation. Intel, however, was the fruit of another fertile ground: the Silicon Valley. The Silicon Valley, was a network of individuals who job-hopped between firms. They were attentive to both technical and market opportunities that could make best use of their skills. They experimented by tinkering with their electronic circuits. They continuously tried to persuade others: venture capitalists, colleagues and potential users of the value of their ideas and work. They did not investigate scientific problems but simply combined and re-combined electronic components, hoping to bump into a star component or product. Today, a diverse set of collective arrangements continue to bring inventions to the market, using the Attentiveness, the ability to experiment and the persuasive powers of independent inventors, entrepreneurs, engineers, scientists and others. 25 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  26. 26. Introduction Millions of economic transactions are performed every day and, in order to study their aggregated effects, it is a fruitful assumption to see them as the result of rational actions conducted with perfect information. However, society is also shaped by the work of individuals who, without acting irrationally, are braving the frontiers of ignorance and defy uncertainty to bring new economic goods to reality. Those individuals who face uncertainty are inventors and their practices are still badly understood by economists. Exploring how agents such as inventors act before uncertainty should therefore prove helpful in uncovering the functioning of modern economic practices. This will help to understand the abilities and practices used by agents when uncertainty prevails. It will throw some light on how agents collaborate to address this uncertainty collectively. This will also prepare the ground to better understand what a firm’s strategy is and it will offer new perspective in exploring how the preferences of economic agents are shaped and information asymmetries consciously created by firms and individuals engaged in inventive activities. The inventor has often been portrayed as a lucky guy, a mistakes maker, a hero or an acclaimed magician. Economists have tended to regard him as someone alien to the economic system. The inventor can, more prosaically, be treated as an agent who contributes to the creation of new markets thanks to a number of specific abilities: Attentiveness, Experimentation and Persuasion, as this will be demonstrated here. Schumpeter defines the entrepreneur as the one who brings innovation, new combinations of economic factors to the market: ‘(F)or actions which consist in carrying out innovations we reserve the term Enterprise; the individuals who carry them out we call Entrepreneurs’. (Schumpeter, 1939) He therefore outlines a difference between the inventor and the entrepreneur but recognise that they can sometimes be the same person. ‘The entrepreneur may, but need not; be the ‘inventor’ of the goods or process he introduces’ (Schumpeter, 1939). In other words, the inventor creates something useful and the entrepreneur is the one who transforms something useful into profit. The inventor takes some necessary steps in bringing something new towards the market or the public sphere although he may not necessarily be the one who completes the process of commercialisation or diffusion. 26 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  27. 27. Since Schumpeter’s contribution, the study of innovation has largely abandoned the ‘methodological individualism’ approach to adopt a ‘social collectivities’ perspective. This is the case, for instance, of the evolutionary and the strategic management schools of thought (Felin & Foss, 2004) for which routines (Nelson & Winter, 1982) and capabilities (Teece, Pisano & Shuen, 1997) appear in this literature as ‘social facts’ somehow independent from human actions (Felin & Foss, 2004). By adopting here a methodological individualism perspective and exploring how inventors act before uncertainty, some bridges can possibly be established between concepts and tools belonging to different traditions of economic thinking. This introduction outlines the specific form of methodological individualism adopted here (A/) and it develops a model appropriate to the study of inventive practices (B/) and, finally, it describes some methodological issues related to the use of History as a source of evidence to validate this model (C/). A. Methodological Individualism According to Hodgson (2007), methodological individualism was an expression first used by Schumpeter, he defined it as follows: ‘just means that one starts from the individual in order to describe certain economic relationships.’ In fact, Schumpeter was inspired by Max Weber who in Economy and Society looked at ‘social collectivities’, such as states, associations, business corporations, foundations: ‘in sociological work these collectivities must be treated as solely the resultants and modes of organisation of the particular acts of individual persons, since these alone can be treated as agents in a course of subjectively understandable action’ (Weber, 1968). However, methodological individualism has since been at the core of a heated debate between different traditions in social sciences. Felin and Foss (2004) presented the terms of this debate: ‘Methodological individualism in its purest form builds on the ontological argument that only individuals are real (...). This strong form of individualism denies the existence and causal influence of collectives and institutions and argues that they must be reduced to and explained in 27 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  28. 28. terms of individuals – that is, individual endowments, intentions, desires, expectations, and goals ... In contrast, methodological collectivism starts with the assumption or even assertion of the independence of collectives from individuals. That is, collectives such as organisation and society, and ‘social facts’ such as institutions and culture serve as the independent variables determining individual and collective behaviour and outcome’. This polarised debate has hidden the diversity of interpretations behind the methodological individualism perspective. The intent in this work is not to debate methodological individualism and its diversity of interpretations but to specify what it means for the present study of inventive activities. Udehn (2001) distinguishes ‘weak methodological individualism’ from ‘strong methodological individualism’. Strong methodological individualism implies that all ‘social situations’ are themselves explicable through the understanding of individual’s actions. On the contrary, weak methodological individualists allow the existence of autonomous institutions and social structures that shape individual behaviour. In the present work, the intent is to develop an understanding of inventive practices by starting from the intentional or unintentional 1 actions of individuals. This is not a reduction to a purely atomistic perspective on human actions as it accepts the possibility that human action might have an irreducibly social dimension. Methodological individualism is here a methodological stance and a ‘weak’ version of it is adopted: It is a point of departure that can contribute to the explanation of what will be called ‘collective arrangements’ and ‘institutional transformations’ 2. In fact we will see how individual actions contribute to the formation of collective arrangements such as networks of inventors or inventive hierarchies 1 A proponent of methodological individualism is Hayek. He did not reduce methodological individualism to the idea that the world is the result of intentional human design. He provides the example of the development of a path in the woods. One person makes his way through, choosing the route that offers the least resistance. His passage reduces, ever so slightly, the resistance offered along that route to the next person who walks though, who is therefore, in making the same set of decisions, likely to follow the same route. This increases the chances that the next person will do so, and so on. Thus the net of effect of all these people passing through is that they ‘make a path,’ even though no one has the intention to do so, and no one even plans out its trajectory. It is a product of spontaneous order: ‘Human movements through the district come to conform to a definite pattern which, although the result of deliberate decisions of many people has yet not been consciously designed by anyone’ (Hayek 1942). 2 Collective arrangements can be understood here as the ‘Social Collectivities’ of Weber discussed above. The word ‘arrangement’ is used here to indicate that it can be interpreted as a result of human actions. Elster (1989) wrote ‘History is the result of human action, not of human design’. The model proposed here will take this quote seriously and see how the understanding of human actions can help to explain some institutional transformations. 28 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  29. 29. which enable and constrain, at the same time human actions. At no point, will it be inferred that all social phenomenon can or should be reduced to individual actions. Moreover, this interpretation of methodological individualism cannot be reduced to the rational choice assumption. The present work will espouse the logic explicated by Arrow (1994) who sat with Weber and Hayek on the weak side of methodological individualism: ‘(I)n this quick presentation of individualism, I have avoided the term, ‘rational choice.’ The individualist viewpoint is in principle compatible with bounded rationality, with violations of the rationality axioms, and with the biases in judgment characteristic of human beings. The additional step to rational choice is, of course, of the greatest practical importance to theory formation, but it is not in principle necessary for the individualist viewpoint’. B. The Attentiveness-Experimentation-Persuasion model In economics, uncertainty was defined by Knight. According to him, we know something about the future but we know very little: ‘(T)he facts of life in this regard are in a superficial sense obtrusively obvious and are a matter of common observation. It is a world of change in which we live, and a world of uncertainty. We live only by knowing something about the future; while the problems of life or of conduct at least, arise from the fact that we know so little. This is as true of business as of other spheres of activity. The essence of the situation is action according to opinion, of greater or less foundation and value, neither entire ignorance nor complete and perfect information, but partial knowledge. If we are to understand the workings of the economic system we must examine the meaning and significance of uncertainty; and to this end some inquiry into the nature and function of knowledge itself is necessary’ (Knight, 1921). He suggests limiting the notion of uncertainty to situations where measurement in terms of probability is not possible. In other words, uncertainty applies when the past does not inform us about the future. ‘It will appear that a measurable uncertainty, or ‘risk’ proper, as we shall use the term, is so far different from an unmeasurable one that it is not in effect an uncertainty at all. We shall accordingly restrict the term ‘uncertainty’ to cases of the non-quantitive type’ (Knight, 1921). 29 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  30. 30. This was also emphasized by Keynes in a famous sentence. ‘By ‘uncertain’ knowledge, let me explain, I do not mean merely to distinguish what is known for certain from what is only probable. The game of roulette is not subject, in this sense, to uncertainty...The sense in which I am using the term is that in which the prospect of a European war is uncertain, or the price of copper and the rate of interest twenty years hence (…). About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know’ (Keynes, 1937). More recently, Post Keynesian economists have continued to explore the concept of radical uncertainty (Dequesch, 2001). Today, an appropriate definition of uncertainty would distinguish it from information asymmetries: uncertainty is not the result of disequilibrium in the allocation of information amongst agents but a partial knowledge and a shared ignorance of what will happen in the future. As outlined before, understanding how agents act individually and collectively before uncertainty is here pursued by focusing on a specific category of agents who have specialised in creating something useful and bringing it toward the market or the public sphere. This specific category of agent is the inventor, and more specifically, career inventors who met success on a recurring basis. They brave the frontiers of ignorance and defy uncertainty to bring new economic goods to reality. This does not however mean that individuals act haphazardly. They imagine what could work, balance options, explore one or more paths, and come back when they have reached a dead end. They sometimes abandon ideas and sometimes celebrate their success. As methodological individualism is adopted as an epistemological point of departure, the word ‘inventor’ will be used throughout this work to refer to agents who are engaged in inventive activities and innovation at large. It should not be reduced solely to ‘patent holders’. Economists have often used the expressions inventors as a synonym of ‘patent holders’ adopting de facto the practice of patent offices. In this work, inventors will include individuals who have sometimes been called in the profane literature ‘independent inventors’, ‘engineers’ or ‘scientists’ depending on the context studied. This terminology may be punctually used according to its relevance to the historical context. 30 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  31. 31. As inventors have played an increasing role in economic activities due to the growing division of labour, it is safe to believe that they have developed and acquired some specific abilities to face uncertainty. The A-E-P (Attentiveness-Experimentation-Persuasion) triptych of inventor’s abilities (See Fig 1) is introduced here in order to enhance our economic understanding of human actions when uncertainty prevails. This triptych has first emerged from the reading of many biographies of inventors. Attentiveness These three abilities present an Persuasion inventor as someone who: − is Attentive to the information, knowledge and insight that could Experimentation lead him to success − Experiments in order to create new, useful information, knowledge and insight − Persuades others (potential investors, Figure 1: The A‐E‐P triptych of inventors' abilities  potential users, etc.) of the value of his work. The Model proposed is an informational one that tackles the acquisition, the creation and the transmission of information and knowledge. Such abilities are not specific skills that can help to address given problems but rather a wider set of tactics, strategies, traits and situations used by an inventor in relation to specific problems and contexts. 31 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  32. 32. B/1 Attentiveness is about the acquisition of information, knowledge and insights. It has some similitude with (1) the importance given by Adam Smith (1776) to observation 3; (2) the concept of ‘alertness’ proposed by Kirzrner (1997) which privileges accidental discovery 4 of previous mistakes; (3) the notion of ‘opportunity recognition’ which recognises the possibility of deliberate search process (R. Teach, R. Schwartz, & F. Tarpley, 1989); (4) the concept of ‘spillovers’ especially when it is associated with a theory of entrepreneurship where knowledge created endogenously results in knowledge spillovers and give rise to opportunities to be identified and exploited by entrepreneurs (Acs, Audretsch, Braunerhjelm & Carlsson, 2006) and (5) with the idea of ‘absorptive capacity’ (Cohen & Levinthal, 1990) which from an organisation point of view refers to the ability to recognise the value of new knowledge. B/2 Experimentation has been extensively studied by the philosophers of science. For economists, two authors or schools should be mentioned. (1) John Stuart Mill has very eloquently talked about ‘the labour of the brains and the labour of the hands’. He observed that inventions are adopted and then superseded by better ones. Nature offers its secrets through Experimentation and a thorough selection, comparison and confirmation of facts 5. 3 According to him, inventions result from sustained attention and observation: ‘(M)en are much more likely to discover easier and readier methods of attaining any object, when the whole attention of their minds is directed towards that single object, than when it is dissipated among a great variety of things. But in consequence of the division of labour, the whole of every man's attention comes naturally to be directed towards someone very simple object. It is naturally to be expected, therefore, that someone or other of those who are employed in each particular branch of labour should soon find out easier and readier methods of performing their own particular work, wherever the nature of it admits of such improvement’ (Smith, 1776). Inventions are not conceived by operators only, makers of machines and philosophers also invent through observation:’(All) the improvements in machinery, however, have by no means been the inventions of those who had occasion to use the machines. Many improvements have been made by the ingenuity of the makers of the machines, when to make them became the business of a peculiar trade; and some by that of those who are called philosophers or men of speculation, whose trade it is not to do anything, but to observe everything; and who, upon that account, are often capable of combining together the powers of the most distant and dissimilar objects’ (Smith, 1776). 4 ‘Entrepreneurial alertness refers to an attitude of receptiveness to available (but hitherto overlooked) opportunities. The entrepreneurial character of human action refers not simply to the circumstance that action is taken in an open-ended, uncertain world, but also to the circumstance that the human agent is at all times spontaneously on the lookout for hitherto unnoticed features of the environment (present or future), which might inspire new activity on his part. Without knowing what to look for, without deploying any deliberate search technique, the entrepreneur is at all times scanning the horizon, as it were, ready to make discoveries’ (Kirzner, 1997). 5 ‘Inventors, besides the labour of their brains, generally go through much labour with their hands, in the models which they construct and the experiments they have to make before their idea can realize itself successfully in act. Whether mental, however, or bodily, their labour is a part of that by which the production is brought about. The labour of Watt in contriving the steam-engine was as essential a part of production as that of the mechanics who build or the engineers who work the instrument; and was undergone, no less than theirs, 32 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  33. 33. (2) Herbert Simon and his colleagues have categorized methods used as part of scientific discovery or more generally problem solving as ‘weak’ or ‘strong’ 6 depending on the extent that knowledge pre-exists in the specific fields of scientific investigation. B/3 Persuasion We can mention here two similarities with existing work. (1) Akrich, Callon and Latour see innovation very much as an act of Persuasion. They define innovation as ‘the art of interesting an increasing number of allies who will make you stronger and stronger.’ (Akrich, Callon & Latour, 2002a). They see the success of an innovation as being very much linked to the people who take cause for it: ‘(T)he fate of innovation, its content but also its chances of success, rest entirely on the choice of the representatives or spokespersons who will interact, negotiate to give shape to the project and to transform it until a market is built.’ (Akrich, Callon & Latour, 2002b). (2) Persuasion can also be related to another stream of research known as the ‘signalling’ theory. Different agents taking part in a transaction often have different levels of information about the transaction which can lead to ‘adverse selection’. This was highlighted by G. Akerlof (1970) in his articles about used cars: a good quality seller can have difficulty in signalling good quality. Spence (1973) describes signals as ‘activities or attributes of individuals in a market which (...) alter the beliefs of, or convey information to, other individuals in the market’. The signaller tries to ‘create a favourable impression or, more precisely, to affect the [receiver’s] subjective probabilistic beliefs. in the prospect of remuneration from the produce. The labour of invention is often estimated and paid on the very same plan as that of execution. Many manufacturers of ornamental goods have inventors in their employment, who receive wages or salaries for designing patterns, exactly as others do for copying them. All this is strictly part of the labour of production; as the labour of the author of a book is equally a part of its production with that of the printer and binder’ (Mill, 1848). 6 Weak methods demand little or no specific knowledge about the problem. Pure trial and error is one of the weakest methods that can be chosen. It consists simply of picking a solution and trying it. An everyday life example would be trying a full set of keys to see which one opens a door. Hill climbing, another weak method consists of going in the most promising direction and to review progress as you go. Means-end analysis consists in analyzing the gap between the current situation and the goal before starting experimenting. Weak methods rely extensively on experiments as no knowledge is there to guide the search for a solution. Strong methods are procedures or calculations which take you close to the right answer. Strong methods are typically domain dependent. They require an attentive inventor capable of associating the problem with the method. They still require experiments often in limited number but with extensive use of specialised instruments or simulation techniques. In between all sorts of situations exist where more and more domain specific knowledge can be used and less and less experiments are required. Analogy is one method that can help to bridge the gap between the weak and strong methods. An attentive inventor could see similarities between his work and another domain and therefore import some strong methods to help him solve the problem. 33 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  34. 34. C. How the model will be tested using historical evidences The validation of the hypothesis presented above will be carried out by confronting them with historical evidences and facts and, more precisely, by investigating the practices of inventors at different points in time and space. The present dissertation will proceed by studying a diversity of cases throughout history. This approach is well-suited to understanding complex issues. The case will focus on human actions but will require outlining the context of those actions. Yin (1984) defines the case study research method as an empirical enquiry that investigates a contemporary phenomenon within its real-life context. It is sometimes contended that generalising from a series of case studies can be difficult. To prevent this, a clear and limited set of hypothesis to be tested has been established before proceeding and well informed and fact based sources of information used to build the cases will be preferred to judgemental interpretation of what happened. Furthermore, by adopting an historical perspective it is possible to identify what has endured and what has changed over time, a form of analysis that contributes to bringing to the surface the modalities of human actions before uncertainty. This will require careful investigation of the events, discourses and circumstances that have shaped inventive practices and the actions of inventors. Three groups of evidences throughout three periods and places within the History of inventive activities will be investigated. The three periods have been selected because they are recognised as periods of intensive inventive activities within human history. The rationale behind the selection of each individual inventor or collective arrangement will be introduced at a later stage. The inventors selected here are career inventors who have met success more than once in their inventive practices; this makes the investigation of the practices they use richer and more robust. The collective arrangements selected are ideal types of their time, and for most of them, the first or amongst the first of their kind. This provides an opportunity to see the events, discourses and practices underpinning them at the very specific moment when significant institutional transformations occur. 34 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  35. 35. D/1 The study of the inventive abilities of three ‘career inventors’ for each of the periods studied. This will include Arkwright, Wedgwood and Watt for the late 18th century in Britain: ‘the age of the machines’ (Chapter 1); Bell, Edison and Sperry for the late 19th century in America: ‘the age of the systems’ (Chapter 2); Midgley, Coolidge and Carothers for the early 20th century: ‘the age of predictive science’ (Chapter 3). These inventors are not selected because they are sometimes treated by their hagiographers as iconoclastic genius but because they have achieved success more than once. They are career inventors who brought a diversity of inventions to life. This will therefore require detaching the legend from the basic historical facts, to focus on evidences and not their existing interpretations. D/2 The analysis of the ‘regimes of invention’ and the collective arrangements supporting inventive activities during each of those periods. This will include a network of inventors such as the ‘Lunar Society’ during the late 18th century in Britain (Chapter 1); inventive hierarchies in the railroad industry during the late 19th century in America (Chapter 2) and the soft hand of management (superposition of network and hierarchy) in research laboratories such as in the General Electric research laboratory in America during the early 20th century (Chapter 3). This will reveal the role of the A-E-P triptych within collective actions. We will describe each regime using these three abilities. This will provide an opportunity to connect individual behaviours and collective arrangements. It will also help to understand how the collective arrangements studied can enable and constrain human actions. We will describe different ‘regimes of invention’ in order to compare inventive practices adopted by groups of agents. A regime of invention is a coherent set of inventive practices used by a group of individuals at a particular point in time and in a given situation. It is not the description of what one individual has done but a description of what a group of people has done. It is not a recipe for success but a set of practices. Regimes of invention here are an organised description of the reality that uses the A-E-P triptych to guide the analysis. When appropriate, regimes of invention will be seen as a particular case that embodies the 35 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  36. 36. chief characteristics of a common case, an ideal type 7. An ideal type should not be confused with a general truth, a law that could be applied, for instance, to understand how History unfolds. An ideal type is considered here as an abstract description of a set of practices and their context that can be common to a diversity of situations that resemble each other. Such a ‘regime of invention’ that can represent a diversity of daily practices and situations will therefore be called here: ‘collective arrangement’. In other words by describing regimes of invention we intend to characterize recurring patterns of how individuals can work together to invent. D/3 The investigation of some institutional transformations that have impacted inventive hierarchies during the three periods studied. This includes the widespread passion for Experimentation during the late 18th century (Chapter 1); the transformation of the regimes of invention in the railroad industry during the late 19th century in America (Chapter 2); the rise and limits of fundamental research conducted by the industry during the 20th century (Chapter 3). Such investigation will focus on the contiguity of historical facts during a given period. It will highlight the succession of practices, at the specific cases that were much talked about in order to understand what lead to ‘tipping points’. It will look at the coherence throughout time between what is said and what is done. Some institutional factors will be considered to investigate how the economic history of organisation takes time and history into account. The emergence of new collective arrangements or the passage from one collective arrangement to another will be treated in the present work as an institutional transformation. Here again, the intent is not to look for underlying causes in history but to look at tipping points. We will investigate how, throughout a certain period of time, specific inventive practices have evolved, how they succeeded each other, how they have created new situations, how they have sometimes contradicted their initial intention and therefore left very different practices emerge. 7 Ideal types are often associated with the research work of Max Weber. They are common mental construct in the social sciences derived from observable reality. They are a constructed ideal used to approximate reality by selecting and accentuating certain elements. 36 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  37. 37. Recent History is not studied here. It is first due to a certain caution, historians have not yet distilled their analytical power to comprehend this period. We need a certain distance in time and peace in mind to look at our period in the same way as we will study the other three. Without doubt, the crest of knowledge has progressed, new ideas, new tools, new problems and new practices have emerged but it is safe to assume that they can still be interpreted using the approach developed here. The dissertation will proceed by investigating the three Ages (the ‘Age of the machines’; the ‘Age of the systems’ and the ‘Age of predictive science’) one after the other. The three career inventors, the collective arrangements and the institutional transformation will be examined in this order for each of them. This will lead to the establishment of a table that presents the three abilities along different levels of uncertainty 8 and to another table that present a diversity of collective arrangements supporting inventive activities along the same three levels of uncertainty 9. Further potential development will finally be suggested. 8 See infra: ‘Taking Stock and looking ahead’. 9 See infra: ‘Taking Stock and looking ahead’. 37 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  38. 38. Introduction Des millions de transactions économiques s’effectuent tous les jours et, afin d’étudier leurs effets cumulés, il est judicieux de les envisager comme le résultat d’actions rationnelles menées par des individus parfaitement informés. Cependant, la société est également façonnée par le travail d’individus qui, sans pour autant agir de manière irrationnelle, bravent les frontières de la connaissance et défient l’incertitude afin que de nouveaux biens économiques voient le jour. Les individus qui affrontent l’incertitude sont des inventeurs, et les économistes comprennent encore mal leurs pratiques. Etudier la manière dont certains agents tels que les inventeurs agissent face à l’incertitude devrait, par conséquent, nous permettre de dégager le fonctionnement des pratiques économiques modernes, et de mieux comprendre les aptitudes de ces agents et les pratiques auxquelles ils ont recours lorsque l’incertitude prévaut. Cette analyse se propose également de mettre en lumière la manière dont les agents coopèrent pour faire face ensemble à cette incertitude. Cette nouvelle perspective concluera par des suggestions pour mieux comprendre comment les firmes exécutent leur stratégie. Des propositions seront aussi faites pour étudier sous un angle nouveau la manière dont les préférences des agents économiques sont façonnées, et comment des asymétries d’informations sont consciemment créées par les entreprises et les individus impliqués dans des activités inventives. On a souvent décrit l’inventeur comme un homme découvrant des idées par chance, progressant par erreurs, comme un héros ou encore un magicien acclamé par tous. Les économistes ont souvent eu tendance à le considérer comme un élément étranger au système économique. De manière plus prosaïque, on peut concevoir l’inventeur comme un agent contribuant à la création de nouveaux marchés grâce à certaines facultés spécifiques, à savoir l’Attention, l’Expérimentation et la Persuasion, comme nous le démontrerons plus loin. Selon Schumpeter, l’entrepreneur apporte des innovations et de nouvelles combinaisons de facteurs économiques au marché : « Pour les actions qui consistent à faire
  39. 39. preuve d’innovation, nous réservons le terme d’Entreprise; et les individus qui les accomplissent sont appelés Entrepreneurs » (Schumpeter, 1939). Schumpeter fait ainsi la distinction entre la figure de l’inventeur et celle de l’entrepreneur mais reconnaît qu’ils peuvent parfois ne faire qu’un: « L’entrepreneur peut être, mais pas nécessairement, l’inventeur des biens ou des procédés qu’il introduit (sur le marché) » (Schumpeter, 1939). En d’autres termes, l’inventeur crée quelque chose d’utile tandis que l’entrepreneur est celui qui transforme quelque chose d’utile en profits. L’inventeur prend les initiatives nécessaires pour apporter quelque chose de nouveau vers le marché ou à la sphère publique, même s’il n’est pas nécessairement celui qui réalisera la commercialisation ou la diffusion. Depuis les travaux de Schumpeter, les recherches dans le domaine de l’innovation ont largement abandonné l’approche de « l’individualisme méthodologique » pour lui préférer un angle d’étude centré sur les « collectivités sociales ». C’est par exemple le cas des théories du management stratégique et le courant évolutionnistes (Felin & Foss, 2004) qui considèrent dans les ouvrages qui leur sont consacrés les routines (Nelson & Winter, 1982) et les compétences (Teece, Pisano & Shuen, 1997) comme des « faits sociaux » indépendants des actions humaines (Felin & Foss, 2004). En adoptant ici l’approche de l’individualisme méthodologique et en cherchant à comprendre comment les inventeurs agissent face à l’incertitude, certains liens peuvent être établis entre des concepts et des outils d’analyse appartenant à différents courants de pensée économique. Nous présenterons dans cette introduction la forme spécifique d’individualisme méthodologique employée dans cette étude (A/) et proposerons un modèle permettant l’analyse des pratiques inventives (B/). Enfin, nous décrirons certaines difficultés méthodologiques liées au recours à l’Histoire en tant que source de preuves pour valider ce modèle (C/). 39 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  40. 40. A. La notion d’individualisme méthodologique Selon Hodgson (2007), le terme d'individualisme méthodologique a été employé pour la première fois par Schumpeter, qui le définit comme suit: « il faut tout simplement se baser sur l'individu afin de décrire certaines relations économiques 10 ». En effet, Schumpeter s’est inspiré de Max Weber qui, dans son ouvrage « Economie et société », se penche sur les « collectivités sociales » telles que les États, les associations, les entreprises, ou les fondations: « Lors de toute étude sociologique il faut uniquement envisager ces collectivités comme des modes d'organisation résultant des actions d’individus donnés, étant donné que seuls ces derniers peuvent être considérés comme des agents engagés dans des actions compréhensibles subjectivement 11 » (Weber, 1968). Toutefois, l'individualisme méthodologique a depuis lors fait l’objet d'un vif débat entre différentes traditions des sciences sociales. Felin et Foss (2004) ont présenté en ces termes ce débat: « l'individualisme méthodologique dans sa forme la plus pure se fonde sur l'argument ontologique selon lequel seuls les individus sont réels (...). Cette forte forme d'individualisme nie l'existence et l'influence déterminante des collectivités et des institutions et soutient qu'elles doivent être réduites et expliquées en termes d’individus – à savoir de dotations, intentions, désirs, attentes et objectifs individuels (...). En revanche, le collectivisme méthodologique se base sur l'hypothèse voire même l’affirmation de l'indépendance des collectivités par rapport aux individus : les collectivités telles que les organisations et sociétés, et les « faits sociaux » tels que les institutions et la culture servent de variables indépendantes déterminant les comportements et les résultats individuels et collectifs 12 ». Ce débat polarisé a occulté la diversité d’interprétation inhérente à la perspective de l'individualisme méthodologique. Le but de ce travail n'est pas de débattre de l'individualisme méthodologique et de la diversité de ses interprétations, mais de préciser ce que nous entendons par « individualisme méthodologique » lors de notre analyse des activités inventives. Udehn (2001) fait la distinction entre « individualisme méthodologique faible » et « individualisme méthodologique fort ». 10 Traduction personnelle. 11 Traduction personnelle. 12 Traduction personnelle. 40 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008
  41. 41. L’individualisme méthodologique fort implique que toutes les « situations sociales » s’expliquent elles-mêmes à travers la compréhension des actions individuelles. Au contraire, l’individualisme méthodologique faible conçoit l'existence d'institutions et de structures sociales autonomes qui façonnent les comportements individuels. Notre intention est de développer au cours de notre étude une compréhension des pratiques inventives en partant des actions intentionnelles ou non intentionnelles des individus. Nous ne nous restreignons nullement à une perspective purement atomistique des actions humaines dans la mesure ou nous acceptons l’éventualité que l'action de l'homme puisse posséder une dimension sociale irréductible. L'individualisme méthodologique s’emploie ici comme positionnement méthodologique et nous l’adoptons dans sa version « faible » : il s'agit d'un point de départ qui peut contribuer à expliquer ce que nous appellerons les « arrangements collectifs » et les « transformations institutionnelles ». Nous verrons en effet comment les actions individuelles contribuent à la formation d’arrangements collectifs tels que les réseaux d'inventeurs ou les hiérarchies inventives qui favorisent et limitent à la fois les actions humaines. Nous n’insinuerons à aucun moment que tous les phénomènes sociaux doivent ou devraient être réduits à des actions individuelles. En outre, cette interprétation de l'individualisme méthodologique ne peut être assimilée à une hypothèse de choix rationnel. Le présent travail épousera la logique explicitée par Arrow (1994) qui se situe du côté de l'individualisme méthodologique « faible » avec Weber et Hayek. « Dans cette rapide présentation de l'individualisme, j'ai évité le terme de «choix rationnel». Le point de vue individualiste est, en principe, compatible avec la rationalité limitée, les violations des axiomes de rationalité, et les préjugés caractérisant les êtres humains. L'étape supplémentaire que constitue le choix rationnel est, bien sûr, d’une grande importance pratique à l’heure d’élaborer une théorie, mais n'est en principe pas nécessaire pour ce qui est de la perspective individualiste. 13 » 13 Traduction personnelle. 41 The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008

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