Coevolution of Industries and Academic Disciplines

1
Coevolution of Industries and Academic
Disciplines
Wharton, March 26, 2004

• Johann Peter Murmann

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Road Map for Talk

• General Hypothesis about Coevolution of National
  Industries National Academic Disciplines
  
• The Research Site Synthetic Dye Industry
  1850-1914
  
• What are Evolutionary Explanations
• Previous Research and my Definition of
  Coevolution
  
• Analysis of Coevolution of Synthetic Dye Industry
  Academic Chemistry
  
• Formulating a General Hypothesis from the Study
• Contributions of the Paper Future Research

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Academic Laggard
Power-Union
Quadrant I
Quadrant II
Quadrant IV
Quadrant III
Union of the Weak
Industrial Laggard
4
Explanation of Symbols
Academic discipline in particular country
Industrial sector in particular country
Academic-industrial complexes
1 2 3

n
5
Co-Evolution Processes at the National Level
Time 1
6
Co-Evolution Processes at the National Level
Time 2
7
Co-Evolution Processes at the National Level
Time 3
8
Co-Evolution Processes at the National Level
Time 4
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Key Argument of Current Paper

• Coevolutionary analysis requires two steps
• Need to show that both partners in the
  coevolutionary relationship can be conceptualized
  as populations that change through variation,
  selection, retention (VSR) processes.
• Need to specify bi-directional causal mechanisms
  that link the fate of the two populations
  
• a. Exchange of personnel (EP)
• b. Commercial ties (CT)
• c. Lobbying for each other (L)

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2. The Site Synthetic Dye Industry
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British and French Firms are the
Leaders in Dye Industry in 1862

Market Share
U. S.
Germany
Switzerland
France
Other
Britain
12
German Firms are Leaders in the
Dye Industry in 1873

Market Share
U. S.
Germany
Switzerland
France
Other
Britain
13
German Firms Dominate World Dye Industry in 1913

Market Share
U. S.
Germany
Switzerland
France
Other
Britain
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Data Methods

• Inductive Case Method (Eisenhardt, 1989)
• Comparative historical analysis (Stinchcombe,
  1978, Tilly, 1984 Ragin, 1987, Chandler 1990)
  
• ?Repeated dialogue between ideas and evidence to
  develop new theories
  
• Constructed database of virtually all synthetic
  dye firms in the world from 1857 to 1914
  
• 379 distinct dye firms (648 firms in
  database)
  
• Studied industry and firm histories
• 6 case studies of a winner and loser in
  Britain, Germany and the U.S.
  
• Collected data on academic disciplines in five
  different countries.
  
• Studied biographies of leading industrialists and
  chemists
  

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2. Background Requirements for an Evolutionary
Explanation of Industrial Change

• Populations evolve not individuals
• Sources of Variation (Variation)
• Innovations
• Process of Transformation (Selection)
• Differential adoption and survival of routines in
  a population of entities
  
• Units of Transmission (Retention)
• Routines (standard operating procedures)
• Mechanism of Transmission (Retention)
• Social intercourse, i.e imitation

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Population of Firms at Time 2
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Population of Ideas at T2
Population of Ideas at T1
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Population of Ideas at T2
Population of Ideas at T1
Selection Filter
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Population of Firms at Time 2
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Firm at Time 2
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4. Previous Research on Coevolution
Coriat and Dosi, 1998 McKelvey, 1997 Haveman an
d Rao, 1997 Barnett and Hansen, 1996 Levinthal a
nd Myatt, 1995 March, 1994 Baum and Singh, 1994
Rosenkopf and Tushman, 1994 Yates, 1993 Dosi
Kogut, 1993 Kieser, 1989
Burgelman, 2002 Repenning Sterman 2002 Eisenha
rdt and Galunic, 2000 McKelvey, 1999 Lewin and V
olberda, 1999 Baum and McKelvey, 1999 Lewin et a
l., 1999 Van De Ven and Grazman, 1999 Rosenkopf
and Nerkar, 1999 Koza and Lewin, 1998
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Diverse meanings Coevolution

• Two things are developing in parallel
• Technology and Organization
• micro and macro level (firm evolves and industry
  evolves)
  
• One thing that develops has a causal impact on a
  second thing that develops
  
• Environment and organizational forms
• Two things mutually influence each others
  development
  
• Two (or more) business units (Eisenhardt and
  Galunic, 2000)
  
• Each thing changes to a large extent through a
  selection process
  
• Mutualism (not only competition) is important
  coevolutionary mechanism

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My Definition of Coevolution
Two evolving populations coevolve if and only
if they have a significant causal impact on ea
ch others ability to persist

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5. Analysis of Coevolution of Synthetic Dye
Industry Academic Chemistry
Step 1 Need to identify two populations tha
t change through VSR processes
Population 1 firms (differing in blueprints fo
r action) Population 2 scientific ideas (differ
ing in their content)
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Specific Evolutionary Mechanisms
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Evidence for evolutionary change in the two
populations

• Synthetic Dye Industry from 1857 to 1914
• Percentage of firms with local formal RD
  laboratory
  
• Ownership structure of firms
• Percentage of firms with global sales force
• (Global market share of firms from particular
  country)
  
• Organic Chemistry
• Share of Organic Chemistry in the Literature of
  Chemistry
  
• (Global share of organic chemistry literature by
  researchers from particular country)
  

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Frequency of Important Firm Traits 1
of Firms with Local Formal RD Department
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Frequency of Important Firm Traits 2
of Firms that are either Single individual fi
rms, Family firms Partnerships
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Industry Demography 1857-1914
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Frequency of Organic Chemistry Ideas 1857-1914
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Coevolutionary Analysis Step 2

• Identify bi-directional causal
• mechanisms linking
• population of industrial firms (representing
• Industries) and
• population of scientific ideas (representing
• disciplines)
• Exchange of personnel (EP)
• Commercial ties (CT)
• Lobbying for each other (L)

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Causal Relationships Connecting the two
Populations 1
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Causal Relationships Connecting the two
Populations 2
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Causal Relationships Connecting the two
Populations 3
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Causal Relationships between the Coevolving
Populations
EP,CT
EP,CT, L
EP
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British and French Firms are the
Leaders in Dye Industry in 1862

Market Share
U. S.
Germany
Switzerland
France
Other
Britain
37
German Firms are Leaders in the
Dye Industry in 1873

Market Share
U. S.
Germany
Switzerland
France
Other
Britain
38
German Firms Dominate World Dye Industry in 1913

Market Share
U. S.
Germany
Switzerland
France
Other
Britain
39
German Share of Aromatic Organic Chemistry
Publications cited in France
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Global Share of Organic Chemistry Publications
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6. Generalizing the Argument

• National Industries and National Academic
  Disciplines coevolve
  
• This has profound implications for what industry
  and what academic discipline in a particular
  country will be strong in
  

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Academic Laggard
Power-Union
Quadrant I
Quadrant II
Quadrant IV
Quadrant III
Union of the Weak
Industrial Laggard
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Explanation of Symbols Used in Presentation
Academic discipline in particular country
Industrial sector in particular country
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Organic Chemistry in Different Countries
1850
No synthetic dye industry existed before 1857
Germany
France
Switzerland
United States
Britain
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Co-Evolution in the Synthetic Dye Industry
1860
Germany
France
Switzerland
United States
Britain
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Co-Evolution in the Synthetic Dye Industry
1870
Germany
France
Switzerland
United States
Britain
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Co-Evolution in the Synthetic Dye Industry
1913
Germany
France
Switzerland
United States
Britain
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Co-Evolution Processes at the National Level
Time 1
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Co-Evolution Processes at the National Level
Time 2
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Co-Evolution Processes at the National Level
Time 3
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Co-Evolution Processes at the National Level
Time 4
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7. Contributions

• 0. Strategy is also about changing the rules of
  the game.
  
• Industries can influence the direction of
  cognitive change in universities through
  
• Commercial ties
• Lobbying
• Exchange of personnel
• Firm strategy needs to be tailored to specific
  institutional environment

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Some other Cases Future Research

• Agriculture 1850-1914
• Computer Software 1950-1996
• Biotechnology 1973-2001
• These cases seem to support the coevolutionary
  hypothesis.