The abilities of inventors - Les facultés de l’Inventeur, Hervé Legenvre 2008

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

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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 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.

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Comment vivre sans inconnu devant soi?
René Char

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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

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

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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

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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

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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

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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

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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.

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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

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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.

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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

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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

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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.

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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.

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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.

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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.

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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

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

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

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 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

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.

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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.

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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

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

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

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

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

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

(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

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

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

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

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

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

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

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
12

40

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

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