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

 Stan Reiter: Some Early Papers Hughes, Jonathan R. T. and Stanley Reiter (1958). "The First 1,945 British Steamships." Journal of the American Statistical Association 53(282): Davis, Lance E., Jonathan R. T. Hughes and Stanley Reiter (1960). "Aspects of Quantitative Research in Economic History." The Journal of Economic History 20(4):

 The Two Central Inspirations

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

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

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

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

 Key Idea 5: Many phenomena display a hierarchical organization

 A Four Level Hierarchy

 The Global Economy Country Economies Industries Firms Products & Services Whole Parts

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

 The Global Economy National Economy Industry Firm Product

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

 The Advisor: Richard Nelson

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

 Market Share U. S. Britain GermanySwitzerlandFranceOther British and French Firms are the Leaders in Dye Industry in 1862

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

 Market Share U. S. Britain GermanySwitzerlandFranceOther German Firms are Leaders in the Dye Industry in 1873

 Market Share U. S. Britain GermanySwitzerlandFranceOther German Firms Dominate World Dye Industry in 1913

 Concentration in Each Country, 1913 FirmCountryDomestic Production Share Global Market Share Sum of Global Share BayerGermany22%20.0% BASFGermany22%20.0%40.0% HoechstGermany22%20.0%60.0% LevinsteinU.K.30%2.0%62.0% Read HollidayU.K.30%2.0%64.0% SchoellkopfU.S.50%1.7%65.7% Heller MerzU.S.21%0.7%66.4%

 Number of Dye Firms by Country, USABritainGermanySwitzerlandFrance

 Industry Demography Number of Firm Entries Number of Firm Exits Firm Failure Rates Germany % France635587% Britain473677% United States352571% Switzerland231983%

 Dye Development at Bayer in 1906 New dye molecules marketed 36 Dye molecules tested on larger scale 60 New dye molecules synthesized2656 Theoretically possible dye moleculesBillions

 Global Share of Organic Chemistry Publications Germany29%38%50-67%35-47% France35%23%15.2%12.2% Britain24%23%5.9%16.2% United States0.9%3.6% Switzerland7.4-24%5.0-17%

 German Share of Aromatic Organic Chemistry Publications cited in France Papers devoted to aromatics German Share %35% %85% %96% %97%

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

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

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

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

 Weak Academic Discipline Strong Weak Industrial Sector Strong Typology of Academic-Industrial (A-I) Complexes Quadrant IQuadrant II Quadrant IVQuadrant III Academic LaggardPower-Union Union of the WeakIndustrial Laggard

 Explanation of Symbols Used in Illustration Academic discipline in particular country Industrial sector in particular country Academic-industrial complexes GermanyFrance SwitzerlandUnited States Britain

 Organic Chemistry in Different Countries Weak Academic Discipline Strong Weak Industrial Sector Strong 1855 GermanyFrance SwitzerlandUnited States Britain No synthetic dye industry existed before 1857

 Co-Evolution in the Synthetic Dye Industry Weak Academic Discipline Strong Weak Industrial Sector Strong 1860 GermanyFrance SwitzerlandUnited States Britain

 Co-Evolution in the Synthetic Dye Industry Weak Academic Discipline Strong Weak Industrial Sector Strong 1870 GermanyFrance SwitzerlandUnited States Britain

 Co-Evolution in the Synthetic Dye Industry Weak Academic Discipline Strong Weak Industrial Sector Strong 1913 GermanyFrance SwitzerlandUnited States Britain

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

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

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

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