European Review of Economic History, , –. Printed in the United Kingdom ©  Cambridge University Press
Technological lock-in of large firms
since the interwar period

JOHN CANTWELL
Department of Economics, University of Reading, Reading RG AA,
UK
Since technology is localised and context-specific, the technological
trajectories of large firms tend to lock-in to particular national
configurations. This article examines evidence on the industrial patterns
of technological development in the largest firms originating from the US,
Germany, the UK, France, Switzerland and Sweden, through their
corporate patenting in the US since . It is shown that in each
national group the profile of development is path-dependent, but with
some selected convergence between groups leading to the formation of
three clusters of groups (the US and UK, German and Swiss, and French
and Swedish) that share common characteristics.
. Introduction
In previous research, it has been demonstrated that large firms tend to possess persistent patterns of technological specialisation, which implies pathdependency in the technological development of these companies (Cantwell
and Fai ). While technological path-dependency in such firms is strong
over relatively long periods of about  years, it weakens somewhat over
such very long periods of time as  years. Yet even over  years (from
 to ) the fields of principal technological specialisation in each of
the largest US and European industrial firms have been typically remarkably
stable, especially when considering the more dramatic shifts that have
occurred in the composition of their products or markets. By comparison,
over long periods the profiles of technological competence of the largest
firms considered individually tend to persist much more than the equivalent
patterns of technological comparative advantage of countries as a whole
(Cantwell , Vertova a). At a national level a significant degree of

The author gratefully acknowledges the helpul comments of a referee and the editors on
an earlier version of this article, and the support of Pilar Barrera, who worked with him
on the project on ‘The historical structure of innovative activity in the UK and Europe
since ’ which made this article possible. He wishes to also thank for the financial
support of the original project the UK Economic and Social Research Council (under
award number R).
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European Review of Economic History
persistence applies for most industrialised countries over periods of around
 years, but only rarely over  years. The difference between a single large
firm and a country lies essentially in the different extent of institutional continuity. In cases in which firms underwent a substantial change in their ownership and business structure, then unsurprisingly their patterns of
corporate technological specialisation were also subject to significant
change.
This article attempts to extend the argument by examining whether
national groups of large firms, when considered collectively by their home
country of ownership (the nationality of the relevant parent companies),
have the same characteristic of path-dependency in their patterns of technological specialisation, as do the individual large firms when considered
separately. Two kinds of influences point in different directions with respect
to whether technological persistence is likely to be sustained once aggregating up to the level of common national groups of large firms. First, the
changing composition of cross-company contributions to technological
activity, as some firms have grown rapidly while others have declined, is
likely to disrupt any tendency towards a persistent pattern in the specialisation of a national group as a whole. Second, however, linkages between
firms that belong to a common national group (which are partly geographical, and tied to the national system of innovation of their respective home
country) may mean that some types of technological tradition are collectively preserved when there is a shift in the volume of activity between individual firms, and perhaps even between industries. It is not clear a priori
how important the second influence is likely to be relative to the first, and
so the empirical analysis of this article aims to shed light on the actual extent
of collective technological persistence among the national groups of the
largest industrial firms from the US and five European countries, using data
on their corporate patenting in the US since .
To explain the persistence in profiles of technological competence over
time we can refer to the now familiar tenet that technological change is
cumulative, incremental and path-dependent, being in nature localised and
context-specific (Nelson and Winter , Rosenberg ). Innovation is
liable to ‘lock in’ to a particular industrial pattern or configuration in any
location, and this pattern is likely to change only gradually over time, even
allowing for shifts in the underlying pattern of technological opportunities.
International patterns of technological advantage, having been established,
remain relatively stable over time at least in the short or medium term. The
sectors in which each group of firms is technologically strongest changes
only gradually.
Nelson and Winter () had shown how technological change is a
path-dependent and localised process based on the experimental learning
and search activities conducted within firms, and thus the fruits of innovative improvements are partially embodied not just in devices or equip-
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Technological lock-in of large firms

ment, but also in the organisational routines of companies. This fundamental premise of the localised and hence partly tacit nature of technology
has since given rise to a substantial literature on dynamic corporate capabilities (e.g. Nelson , Langlois , Foss , Cantwell , ;
Teece and Pisano , Teece et al. , Loasby , Chandler et al.
), which has been further reflected in the strategic management literature in the renewed popularity of the ‘resource-based’ approach derived
from Penrose (), and in other work on industry life cycles and the evolution of firm capabilities (Nelson ). The essential point is that through
their continual learning and search activities, companies generate localised
and partially context-specific resources which cannot therefore be directly
copied by or transferred to others, although of course they may be imitated
by others once they are engaged in their own related learning process.
Indeed, if firms cooperate in their learning activities, or if they engage in
other technology interchanges or spillovers when facilitated by geographical
proximity, their respective corporate technological trajectories are likely to
become interdependent with one another.
Because technology is context-specific it is localised not just in firms, but
also in part geographically, as reflected in the continuing significance of
regional and national systems of innovation (Nelson , Vertova b).
Innovation is differentiated between firms and locations. That is, the path
of technological development followed by a particular firm or in a particular location is distinctive and characterised by elements that are specific to
that firm or location. A complementary line of research has thus been examining the locational aspects of innovation (Audretsch and Feldmann ,
Audretsch and Stephan ), the tendency towards geographical proximity in the relationships between science and technology (Jaffe et al. ),
the geographical dispersion of technological development within multinational companies (Cantwell and Piscitello ), and the regional localisation of knowledge sourcing in the affiliates of multinational firms (Almeida
, Cantwell and Iammarino ). The corporate and locational lines of
research are quite closely connected, since the major source of the comparative advantage of industrialised countries is the achievements of local
firms and institutions, which over time encourages geographical agglomeration of the activities in which local specialisation has become beneficial
(Nelson ).
The cumulativeness of technological change implies that the day-to-day
adaptation of technology, through an interaction between its creation within
a firm and its use in production, has a more pervasive influence than the
major technological breakthroughs which give rise to entirely new production processes. Even radically new technologies, once they move beyond the
purely scientific and experimental stage, often rely upon or are integrated
with earlier technologies in the course of their development (Usher ).
For this reason, innovation tends to gather a certain logic of its own through
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European Review of Economic History
the continual refinement and extension of established technologies
(Rosenberg ). As specific technological experience is accumulated, the
further development of production within the firm throws up new requirements, which its research and engineering departments must try and meet.
Improvements tend to set the stage for their own future problems, which
compel further modification and revision through the adaptation of production by innovative firms. Until there is a new stream of innovations
based on a different set of fundamental discoveries, firms at the existing
frontier of progress tend to establish dynamic advantages over others in the
same industries. This helps to explain why, for example, German firms in
the chemical industry have maintained a strong tradition for a period of at
least a hundred years. It may also explain why, despite their failure to move
as fast as others into the newer science-based sectors, British firms at the
turn of the century remained dominant in technological development in textile machinery, railway engines and shipbuilding (Walker ). They were
locked in to areas of innovation which had once ensured the success of
British industry, but at a time when technological opportunities had begun
to rise more rapidly elsewhere.
In this article we examine the extent to which the patterns of technological competence of national groups of large firms may lock-in to some established industrial profile over periods of around  years, in this instance by
investigating the extent to which patterns that were true of the interwar
period have still held true in recent years. As explained at the start, the
analysis considers the largest industrial firms considered in collective
national groups originating from the US, Germany, the UK, France,
Switzerland and Sweden, using data on their corporate patenting in the US
since  as a means of portraying their respective industrial profiles of
corporate technological competence. Given that many of the largest industrial firms of these countries were present throughout the period from
the interwar years onwards, some degree of technological persistence is
to be expected, but the effects of changes in company shares of activity
within groups remains to be weighed against the effects of inter-company
linkages and spillovers, as a matter for empirical assessment. In Section 
the article extends the discussion of how, when combined with technological path-dependency within firms, inter-company learning and technology
spillovers may contribute to a trend towards only a gradualist change in
the industrial patterns of technological development in each national group
of firms over time. In Section  the patent data are further described, and
the index of technological specialisation derived from them is set out,
with reference to how this index is designed to address the potential problems that might be encountered when using patent data. The empirical
findings are then discussed in Section , leading to a brief conclusion in
Section .
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Technological lock-in of large firms

. Coordination of learning and technology spillovers
between firms, and their influence on the persistence of
technological specialisation in national groups
In developing their technological competence, firms evolve typically along
paths in which their own past history plays a critical role, rather than
through a series of discrete and unrelated steps. Yet either active technological cooperation, or unintentional spillovers, between firms that share
some geographical or institutional proximity, may facilitate some common
systemic technological trajectories at the broader national level of firms,
despite the remaining differences in the more detailed focus of the individual companies concerned. Within particular industries, because there is a
variety of technological paths or lines of experimentation across firms, a
greater degree of continuity in the established profile of firms in the industry is preserved at times when the principal fields of technological opportunities change, since the new growth areas will be in the portfolios of at
least some existing companies (Nelson and Winter , Eliasson ).
Nor need this necessarily imply dramatic substitution effects between established firms, given the interaction between firms in their learning activities,
which means that although corporate paths are distinct they are not entirely
independent of one another. Thus, Cantwell and Andersen () find that
the composition of technological leadership across firms in an industry
tends to shift only gradually. Patel and Pavitt (, ) have suggested
that newly emergent fields are now more commonly synthesised with established technologies in broader systems, rather than leading to a competence-destroying displacement of older technological activities of the kind
envisaged by Tushman and Anderson (). Schumpeter’s notion of creative destruction applies more at the level of products or markets than it
does at the level of technologies or firms (Cantwell and Fai ).
Allied to this are insights with respect to the nature of technological
cooperation between firms, which from the competence-based perspective
of the firm (Teece et al. , Cantwell , Hodgson ) is not
reducible to market-like exchanges of technological knowledge. Firms may
cooperate directly in their learning activities, within which context
exchanges of technological knowledge (sometimes embodied in patents or
machinery) are just part of a broader story. Corporate problem-solving in
production is also facilitated by a wider public diffusion of certain types of
generic knowledge, and by cooperation with other institutions such as universities. As argued by Loasby (, ), the well-developed principles
of the coordination of a given set of activities through the exchange of some
given set of items (normally through the market mechanism) are unlikely to
be applicable to the analysis of the coordination of evolutionary learning
and novelty-generating processes, the latter being an open-ended and continuous process. The coordination of innovative learning requires a more
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European Review of Economic History
intensive face-to-face interaction, and a wider range of mutually shared (and
often implicit) understandings.
Since the extent of interaction between the technological activities of
firms tends to rise as geographical distance falls, national groups of firms
tend to cluster around certain common areas of technological search and
expertise. Hence, the degree of inter-firm variety in patterns of technological competence tends to increase over longer distances, which is what allows
us to distinguish the specific features of geographically bounded national or
regional systems of innovation. Such patterns are reinforced by the
additional interaction of firms in developing new technology not only with
other companies, but with other local institutions, including universities
and scientific research facilities (especially in the science-based industries),
other providers of specialised services, instruments and equipment, including innovative smaller firms and wider communities of engineering and
allied expertise, besides the particular conditions of local markets. As a consequence, firms that have common origins in a national system of innovation are likely to cluster in certain industries and in the development of
certain technological fields, in comparison with groups of firms that instead
originated in other countries.
So the fact that the creation of technological competence is a firmspecific process, associated with the formation of distinctive capabilities in
surviving companies, still allows for interchanges in the learning efforts of
firms. It is possible to distinguish between two types of technological
cooperation between firms. Cooperation may consist simply of an exchange
of knowledge (each exchange being a discrete act), or it may extend beyond
this to cooperative learning, involving the coordination of learning processes
themselves (Cantwell and Barrera ). The coordination of learning in
production between firms becomes more likely if the capabilities of firms are
closely complementary to one another, such that their learning activities are
highly interrelated (Richardson ), and inter-firm technological complementarities tend to increase among companies sharing common national
origins. The degree of complementarity between the technological traditions of firms affects the costs of transferring knowledge between them,
and the ease of implementing knowledge generated out of one tradition in
the context of another, as well as the scale of potential benefits that may
arise from cooperative learning. For this reason, when the technological traditions of two companies are quite different, the costs of imitation in a less
amenable environment may exceed the original costs of innovation
(Mansfield et al. , Klevorick et al. ), and the costs of technology
transfer between countries may be high (Teece ). Since it is in large
part an outcome of the firm’s own problem-solving agenda, the new technological knowledge generated by a firm tends to be more valuable in combination with the tacit capability of the same firm, and firms whose
capabilities are closely complementary to its own (Cantwell a).
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Technological lock-in of large firms

The degree of interchange between technological learning activities is
typically greatest within the same firm, and becomes less intense in moving
to inter-company connections within national groups of large firms. Since
there are more likely to be technological complementarities between the
learning efforts of large companies of common national origins in comparison with the different trajectories of the firms from other countries, the
closer inter-firm interchanges within national groups will reinforce the innovation of each company if they are in the same or closely related industries,
through the ability of each firm to absorb as inputs into their own learning
the knowledge generated by others of the same group. Hence, we can expect
that the industrial patterns of technological development in each national
group of the leading companies will be distinctive and will tend to persist
over time.
However, it should be noted that the profile of technological specialisation in national groups may give rise to some artificial contrasts when firms
are classified solely by their primary industry, given that large firms are generally technologically diversified (Granstrand et al. , Granstrand ,
Cantwell and Piscitello ). Thus, within a national group of large firms
cross-industry combinations may be formed that share technological fields
of interest, which fields lie outside the ‘principal’ area of technological
development of at least one of the industries involved. When such technological overlaps between industries are important, their effect is to further
tend to enhance the continuity of technological specialisation at the level of
broader national groups of firms. The specific industry combinations that
provide clusters of related technological developments in each national
group will vary, since for example, in the UK synthetic fibres were developed by textile industry firms, while in Germany or the US they remained
mainly the preserve of the chemical industry itself. Corporate patent statistics enable us to examine this issue, by distinguishing the type of technology
developed from the industry of output of the firm.
. The data and the measurement of profiles of technological
specialisation
Patenting is a measure of invention, and so corporate patenting is not just a
measure of outputs from research and development (R&D), but more a
measure of wider technological activity in firms (representing knowledge
inputs into the learning processes that give rise to changes in production
methods, the creation of which knowledge has generally been tailored to the
problem-solving agenda of such learning in production). For large firms
such as those covered here, it is true that R&D is the most important source
of new knowledge and skills. However, production engineering is often an
important complementary source of new inventions that are incorporated
into technology. While Schmookler () used patents as a direct measure
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European Review of Economic History
of invention as such and others (Scherer , Bound et al. ) have since
used them as an indirect measure of R&D inputs, the patents granted to the
largest industrial firms are used here instead as an indirect measure of the
pattern of technological change in these companies. This is a valid inference, so long as the knowledge requirements of the learning processes by
which firms generate accumulated capabilities reflect the profile of those
resultant technological competences across types of innovative activity.
Two common objections to the use of patent statistics – that they capture
only weakly the contribution to innovation of smaller firms (Acs and
Audretsch ), and that time trends in absolute numbers can be misleading (Griliches ) – are not relevant here. A survey by Mansfield
() has shown that for large firms most patentable inventions are in fact
patented, even in industries in which patenting is relatively unimportant as
a means of protecting intellectual property. The reason seems to be that, for
the largest firms, patents function more as a mechanism for regulating intercompany exchanges of technological knowledge rather than as a pure monopoly device (Cantwell and Barrera ). Patent statistics are also far more
reliable when examining the properties of cross-sectoral distributions of
technological activity as opposed to time series (Griliches ), and here
attention is focused on the cross-sectoral patterns of patenting by the largest
firms at selected points in time. While a further potential difficulty is that
the propensity to patent varies across industries (Scherer ), an index is
deployed here that normalises for such inter-sectoral variations, which is
described in greater detail below.
Using the US Index of Patents and the US Patent Office Gazette, all patents
were recorded that were assigned to a selection of large US-owned and
European-owned firms between  and . From  onwards equivalent information has been computerised by the US Patent Office. The
firms selected for the historical patent search were identified in one of three
ways. The first group consisted of those firms which have accounted for the
highest levels of US patenting after ; the second group comprised other
US, German or British firms which were historically among the largest 
industrial corporations in each of these countries (derived from lists in
Chandler ); and the third group was made up of other companies
which featured prominently in the US patent records of earlier years (a
method that proved most significant for a number of French firms that had
not been identified from other sources).
In each case, patents were counted as belonging to a common corporate
group where they were assigned to affiliates of a parent company. Affiliate
names were normally taken from individual company histories. In all, the
US patenting of  companies or affiliates was traced historically; together
these comprise  corporate groups. Owing to historical changes in ownership,  of the affiliates were allocated to more than one corporate group
over the period as a whole. No significance has been attached to the par-
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Technological lock-in of large firms

ticular affiliate to which each patent is assigned, since this may be different
from the affiliate that gave rise to the patent. However, the location of the
parent company is an important dimension in the analysis, as this is treated
as the home country or the country of origin of the corporate group. Each
corporate group is also allocated to an industry on the basis of its primary
field of production; occasionally, firms have moved between industries historically, sometimes associated with changes in ownership, and this has
been allowed for.
The company to which a patent has been assigned (if any), and the name
and location of residence of the inventor responsible for the underlying
invention, are both recorded separately in the US Patent Office data,
including the earliest data. Where patents have been assigned to firms, the
inventor is normally an employee of the company or is directly associated
with it in some other way, but occasionally independent individual inventors do choose to assign their patents to firms (Schmookler ).
Assignments by independent individuals were more common in the nineteenth century but, at least from the interwar years onwards, the typical
assignor was a prominent member of a corporate research laboratory, or
some other similar in-house company facility. Although it is normally difficult to trace these named individuals in secondary sources on the firms concerned (as they are not usually also senior managers), the location of
assignors can be checked against business history sources on the international location of research facilities in particular firms. Such checks on a
selection of large firms have confirmed that whenever a location has been
responsible for significant numbers of patents being assigned to a company,
that firm did indeed have some in-house facility in the location in question
at the relevant time. Companies checked in this fashion include various US
firms active abroad and European companies in the US (Stocking and
Watkins , Beaton , Wilkins , ; Chandler ),
Courtaulds and British Celanese (Coleman ), Du Pont and ICI
(Hounshell and Smith ), and General Electric and GEC (Reich ,
Jones and Marriot ).
One distinction between different aspects of these classifications of the
data is worth emphasising, and becomes a central feature of the empirical
analysis below. The sectoral classification of patents, in terms of the type of
technological activity with which each patent is associated as derived from
the US patent class system, is distinguished from the main industrial output
or markets of the companies to which patents may be assigned, both of
which have been recorded separately. Most large companies have engaged
in at least some development in most of the general spheres of technological activity (for instance, chemical firms develop many mechanical technologies, including chemical machinery and equipment), irrespective of the
industry in which they operate.
The industrial patterns of technological specialisation of national groups
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European Review of Economic History
of firms can be observed by means of a ‘Revealed Technological Advantage’
index (RTA) as developed by Soete (), Cantwell (, ) and Patel
and Pavitt (). This index is designed to normalise for cross-sectoral and
cross-national group variations in the propensity to patent, as well as for
variations over time (Cantwell ). The RTA index of the largest firms
originating from selected countries can be calculated across industrial
groups of companies, and is defined as each national group’s share of all
corporate patenting in the US in a given industry relative to its share of such
patenting in all industries. The overall total in the denominator consists of
all patents granted in the US to the largest US-owned or European-owned
firms in the historical dataset. Denoting by Pij, the number of US patents
of the national group of firms headquartered in country j in a particular
industry i, the RTA index for each country in that industry is defined as
(Pij / j Pij) / (i Pij / ij Pij). The index varies around unity, so a value greater
than one suggests that the national group is comparatively advantaged or
specialised in innovation in the industry considered in relation to firms
of other nationalities, and a value less than one shows comparative disadvantage.
The use of US patents in the construction of the RTA index is an advantage, since it allows us to compare legitimately the activities of large firms of
different nationalities against the benchmark of a common legal framework
and screening process, given that, as remarked upon earlier, the largest
firms almost all patent most of their inventions in the US (Soete and Wyatt,
). Indeed, for non-US-owned firms US patent grants are an especially
useful indicator, since companies tend to extend abroad (and usually
initially to the US, after their own home country) those patents that are of
higher quality and which have survived early tests as to their utility at home
(Archibugi ). The fact that not all European firms are active to the
same extent in the US market is not a problem, since the largest firms
licence the right to use the US patents of their inventions to others if they
do not exploit them themselves, and this applied in the interwar period as
well as more recently (Cantwell and Barrera ). The one significant
remaining problem is that the point about the particular utility of foreign
patenting implies that for US-owned companies the measure is not fully
comparable, since it involves what is for them domestic patenting. While the
RTA index controls for the higher propensity of US-owned firms to patent
at home, the greater volume of their domestic patenting activity (especially
historically, since foreign patenting has been rising with the greater internationalisation of the postwar years) leads to a lower cross-sectoral variance in
the RTA index, and this issue is taken into account where it is relevant in
the discussion of the empirical findings which follows below.
The industrial classification scheme used here spans  industries as
listed in Table a. An equivalent procedure was used to calculate the RTA
index for the same national groups of firms across a roughly corresponding
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Technological lock-in of large firms

Table . RTA values of the largest US-owned firms, – and
–.
(a) Across industries
In the interwar period
Food and drink
Chemicals
Pharmaceuticals
Metal products
Mechanical engineering
Electrical equipment
Office equipment and computing
Motor vehicles
Other transport equipment
Textiles
Paper products and publishing
Rubber and plastic products
Non-metallic mineral products
Coal and petroleum products
Professional and scientific instruments
In the recent period
–
–
–
–
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
(b) Across technological fields
In the interwar period
Food and drink
Chemicals
Pharmaceuticals
Metal products
Mechanical engineering
of which: agricultural equipment
construction equipment
mining equipment
Electrical equipment
Office equipment and computing
Motor vehicles
of which: engines
vehicles
Other transport equipment
of which: aircraft
Textiles
Rubber and plastic products
Non-metallic mineral products
Coal and petroleum products
Professional and scientific instruments
In the recent period
–
–
–
–
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Source: US patent database compiled by John Cantwell at the University of Reading, with the assistance of the US
Patent and Trademark Office. In the first panel of the Table, patents are allocated collectively for each firm to the
primary industry of the corporate group, while in the second panel patents are individually arranged by the field of
technological activity with which each patent is primarily associated, using a classification derived from the US
patent class system (see text).
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
European Review of Economic History
 sectors of technological activity,  of which are shown in Table b. This
technology-based classification, developed from an assignment of individual
patents according to their primary US patent sub-class (as determined by
the US Patent Office examiners) which have been grouped under common
categories of activity, can also be arranged at a more disaggregated level of
up to  fields of technological activity, as indicated for a few selected cases
in Table b. Thus, examining the RTA index across technological fields
provides a useful complement to the cross-industry analysis, allowing as it
does for a study of the patterns of technological specialisation according to
a more detailed set of categories. More importantly, the comparison of RTA
distributions arranged by industries and by technological fields establishes
in which (other) fields firms of a technologically dynamic industry have
developed an innovative competence outside the ‘core’ areas most directly
connected with their industry.
. The industrial pattern of technological specialisation of
the largest US and European firms
Table  provides the evidence on the RTA indicator for the largest USowned firms. The comparative advantage in technological activity of US
corporations in the interwar period lay mainly in electrical and office equipment (through the world leaders AT&T/Bell Telephone, General Electric,
Westinghouse Electric, RCA, IBM and Remington Rand), but also in
mechanical engineering, certain fields of transport equipment (including
rubber tyres), and oil, as well as building materials and food products. In the
transport area a more refined disaggregation by the field of technological
activity indicates that US-owned research was comparatively advantaged in
the development of aircraft (from the s), and in vehicles but not engine
technologies. In the mechanical fields, the US technological advantage was
most pronounced in agricultural equipment, construction and excavating
equipment, and mining equipment. Technologically advantaged US firms
in the food, other transport equipment, rubber and building material industries have had strengths in developing (inter alia) metal and mechanical
technologies relevant in their respective industries, as can be seen from a
comparison of Tables a and b. However, the US oil companies have also

An initial classification of US patent sub-classes into  fields of technological activity
(see Cantwell b) was aggregated into  fields of technology to facilitate comparison
with the equivalent industrial categories. However, ‘other non-industrial’ fields are not
shown in Table b since there is no match in Table a, and there is no entry in principle
under the technology-based classification for paper products and publishing, since the
major corresponding fields of technology are grouped under mechanical equipment or
(to a lesser extent) chemicals. While likewise, textile industry firms, for example, develop
mainly mechanical or chemical technologies, there is still a separate additional
technological classification pertaining to textile, clothing and leather product inventions.
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Technological lock-in of large firms

been notable for their tradition of success in the development of petrochemical technologies as such (as well as in mining equipment).
During the interwar period the US corporate profile of technological specialisation did not change very much, except for some strengthening of
activity in the areas of vehicles and transport equipment, perhaps linked to
the US advantage in oil-related technologies, and the continued expansion
and success of the US mass production system in the motor vehicle industry or ‘Fordism’ (von Tunzelmann ). By the recent period the one striking change has been the erosion of the US technological dominance in
general electrical equipment, although US firms have improved their technological position in office equipment vis-à-vis the largest European firms,
while not in comparison with the rising innovation of Japanese companies
(which are not included here). Large US firms enjoy continuing strength
from the interwar years through to today in oil, food products, rubber tyres,
other transport equipment, and building materials. The increases in RTA
values in these areas since the war is attributable mainly to the rise in the
concentration of the RTA index for the US group as the overall share of US
firms in US patenting has fallen (from just under  per cent in – to
just below  per cent in – of the combined total of the largest US
and European firms).
The comparative advantage of large German firms in the technological
development of chemicals and pharmaceuticals, as shown in Table , stands
out clearly in the interwar years, when IG Farben (or, before , its predecessors) was the world’s technological leader in this industry. In this period
German firms were also prominent in technology development in instruments (particularly optics, through Zeiss), and in the metal products industry (through firms such as Krupp and Mannesmann). The German strength
was most significant in the technological field of organic chemicals including dyestuffs, although in this field their comparative advantage declined
somewhat during the interwar period. This is perhaps not surprising given
that German firms began from a position of overwhelming superiority in
artificial dyestuffs in the latter part of the nineteenth century, and given the
major new developments in organic chemistry between the wars. German
companies were also well represented by European standards in electrical
equipment – if one calculated the RTA index relative to all other European
firms, excluding the dominant US position in this area – or in other words,
together with chemicals and instruments, in all the fields of the most significant technological opportunities. However, in comparison with its position in the s, the German corporate group slipped back in motor
vehicle technology, in both the vehicle and engine fields.
Apart from the decline in the motor vehicle industry, the German corporate RTA profile was fairly stable during the interwar period. The fall in
the degree of concentration of the index is due to the higher share of patenting of German companies in the s, following the recovery from the First
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
European Review of Economic History
Table . RTA values of the largest German-owned firms, – and
–.
(a) Across industries
Chemicals
Pharmaceuticals
Metal products
Mechanical engineering
Electrical equipment
Motor vehicles
Rubber and plastic products
Professional and scientific
instruments
In the interwar period
In the recent period
–
–
–
–
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
(b) Across technological fields
Chemicals
of which: dyestuffs and other
organic
Pharmaceuticals
Metal products
Mechanical engineering
Electrical equipment
Motor vehicles
of which: engines
vehicles
Other transport equipment
of which: railway equipment
Rubber and plastic products
Professional and scientific
instruments
of which: photographic
equipment
In the interwar period
In the recent period
–
–
–
–
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Source: As for Table .
World War and very low levels of patenting in the early s. Moving to
more recent times, the German company strength in chemicals and metal
products has held up. Since the war there has been some loss of position in
the instruments industry, much of Zeiss’s operations having been located in
what became East Germany, and to a lesser extent in pharmaceuticals, perhaps because the linkage with organic chemistry has not been quite as close
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Technological lock-in of large firms

as it was in the interwar years, and instead more independent pharmaceutical specialist companies have increased their activity relative to chemical
generalists (Cantwell and Bachmann ). While the German corporate
strength in chemical technologies in general has persisted, it has been
Germany’s chemical generalists (such as Bayer) that have sustained the
strength of development of pharmaceutical technologies (Table b), despite
a relative decline of the German pharmaceutical specialists (Table a).
Meanwhile, German industry has become more engineering-based and
less science-based than it had been in the interwar period, with a restoration
of its technological excellence in high quality motor vehicles and an
improvement in related mechanical engineering. Other evidence suggests
that this has much to do with a favourable interaction between innovation
in large and small firms in motor vehicles and engineering in the German
system, most notably in the region of Baden Würtemburg (Cantwell et al.
). The continuing technological strength of the German metal
companies has rested on fields outside the metal technologies as such (comparing Tables a and b), especially in transport equipment and most
notably engines. This transport-related technological tradition of the
German metal industry may also help to account for the technological
improvement of German mechanical and vehicle firms in the recent period.
The technological advantage of the UK corporate group in the interwar
period, as set out in Table , lay principally in the textiles and other transport industries, and was based mainly on mechanical innovations, and in
more traditional technologies such as in dyeing processes and shipbuilding.
Within British company mechanical development, important technological
fields were food and drink equipment, assembly and material handling
equipment, mining equipment, and other specialised machinery. Although
relatively weak in chemicals by German standards between the wars, British
firms had some strengths in synthetic resins and fibres as well as bleaching
and dyeing processes (due in large part to firms in the textiles rather than
the chemicals industry – British Celanese and Courtaulds), and they performed much better after the formation in  and subsequent growth in
research of ICI. British firms were also prominent in patenting in the rubber
products industry. Overall, however, UK firms slipped back in the interwar
period in development in the mechanical engineering industry, and in building materials. Conversely, the research of the oil firms (Shell and BP) took
off like that of ICI during the s, but unlike ICI this was attributable to
facilities they set up in the US, rather than at home in the UK – so in many
ways they were closer to the US innovation system.
Interestingly, the dominance of British company innovation in the textiles
industry is nearly as great now as it was in the interwar period (once we
allow for the fall in concentration of the UK RTA index as British firms
increased their share of patenting after the war), and of course this area of
specialisation can be traced back to the eighteenth century! The firms of the
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
European Review of Economic History
Table . RTA values of the largest UK-owned firms, – and
–.
(a) Across industries
In the interwar period In the recent period
Food and drink
Chemicals
Pharmaceuticals
Metal products
Mechanical engineering
Electrical equipment
Office equipment and computing
Motor vehicles
Other transport equipment
Textiles
Rubber and plastic products
Non-metallic mineral products
Coal and petroleum products
–
– –
–
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
(b) Across technological fields
In the interwar period In the recent period
Food and drink
Chemicals
of which: chemical compositions
synthetic fibres
dyeing processes
Pharmaceuticals
Metal products
Mechanical engineering
of which: food equipment
assembling equipment
mining equipment
other specialised machinery
Electrical equipment
Office equipment and computing
Motor vehicles
Other transport equipment
of which: aircraft
ships and marine motors
Textiles
Rubber and plastic products
Non-metallic mineral products
Coal and petroleum products
–
– –
–
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Source: As for Table .
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Technological lock-in of large firms

British textile industry have made a persistent contribution since the interwar years to the development of chemical composition and synthetic fibre
technology (which has impacted positively and significantly on the UK corporate advantage in the wider chemicals technology category). Likewise, the
technological strength of large British companies in the oil industry has persisted since the s. The research base of these firms lies mainly outside
the UK, and the same is true of the new technological development of
British-owned enterprises in the metal products industry. In each case they
rely on research which is geographically closer to the point of extraction,
and their position may be linked with the traditional strength of UK firms
in mining and extractive technologies. The British oil and metal companies
have both made a continuing historical contribution to the strengths of the
largest British-owned firms in mining (mechanical), petrochemical and
chemical technologies, a contribution that if anything has increased over
time.
The development of related competences beyond the primary field of the
firms of an industry may also help to explain the apparent rise of British
firms in motor vehicle components. This has occurred due to a convergence
in vehicle and aerospace engines and components technologies, which helps
to account for the switching of British expertise from ‘other transport’ into
the motor vehicle industry since the interwar period. Despite the shift in
industry-level strengths, the underlying focus of transport technology development in UK-owned firms has in any case changed less. Firms in the
‘other transport’ equipment industry developed vehicle components and
engine technology in the interwar period, while vehicle component
companies have developed other transport (aircraft-related) technologies in
more recent times (as evidenced from a comparison of Tables a and b).
Another feature of the UK corporate case is the continuing somewhat
above-average technological performance of the largest British firms in the
chemical industry since the war, but a dramatic improvement in pharmaceuticals with the rapid growth of the pharmaceutical specialists referred to
above (Cantwell and Bachmann ), whose origins lay in the British food
industry. Building upon the lead of the chemical generalists (mainly ICI) in
the s (see pharmaceuticals in Table b), the pharmaceutical specialists
developed a strong postwar British interest in the fields of pharmaceutical
and food-related technologies. In some respects the revival of the British
position in pharmaceutical technology can be seen alternatively as a return
to a mid-nineteenth century strength in medical and related technologies,
perhaps related to the rising significance of biological science relative to the
dominance of organic chemistry since the end of the nineteenth century;
which may also help to account for some weakening in the German position
in this industry since the war.
As shown in Table , the revealed technological advantage of the largest
French firms between  and  was concentrated in the metal prod-
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
European Review of Economic History
Table . RTA values of the largest French-owned firms, – and
–.
(a) Across industries
Chemicals
Pharmaceuticals
Metal products
Mechanical engineering
Electrical equipment
Office equipment and computing
Motor vehicles
Other transport equipment
Rubber and plastic products
Non-metallic mineral products
Coal and petroleum products
In the interwar period
In the recent period
–
–
–
–
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
(b) Across technological fields
Chemicals
Pharmaceuticals
Metal products
Mechanical engineering
Electrical equipment
of which: telecommunications
other electrical
communications
Office equipment and computing
Motor vehicles
Other transport equipment
of which: aircraft
Rubber and plastic products
Non-metallic mineral products
Coal and petroleum products
Professional and scientific
instruments
In the interwar period
In the recent period
–
–
–
–
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Source: As for Table .
ucts, motor vehicles, other transport (and rubber tyres by the s), and
building materials industries. Some early strength in the chemicals and
mechanical engineering industries seemed to have dissipated by the s;
in the case of chemicals this may be due simply to the recovery and re-
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Technological lock-in of large firms

emergence of the German chemical industry from the mid-s onwards.
Despite a comparative disadvantage in the electrical equipment industry,
French firms had some strengths in electrical technological fields, notably
in telecommunications and other electrical communications. In one respect,
French firms occupied a position mid-way between British and German
companies in terms of the composition of their technological activity. They
were relatively well represented in the fast growing areas of electrical communications, aircraft and some instrument technology; but their position in
chemicals slipped during the interwar period. Indeed, the RTA distribution
for French companies displays a greater mobility or restructuring of activity
during the interwar period than for either the UK or German-owned,
although this is partly due to the smaller scale of French-based patenting,
related to the lesser number of large French industrial companies at that
time.
By more recent times there were still some areas of innovative French
corporate strength that have held up since the interwar years – namely, in
the metal products, rubber products and building materials industries –
although the tyre companies have weakened very recently, and (comparing
Tables a and b) the French building material firms have focused on areas
other than non-metallic mineral product technologies as such. Even the new
comparative advantage in technological development in the electrical equipment industry is no great surprise, given the early French corporate presence in innovation in the field of electrical communications (Table b), and
the subsequent growth in importance of this area in the electrical equipment
industry. Less easy to account for is the decline in the technological specialisation of large French firms in motor vehicles and other transport
equipment. This may be due to a shift in the locus of innovation in the area
of aircraft, engines and components after the war, which increasingly
favoured large scale research efforts in place of the expertise of the smaller
specialised company (by the standards of the world giants) in which the
French had excelled in the earlier stages of the aircraft industry. Meanwhile,
the growth of French technological efforts in the pharmaceutical industry,
from no large firm presence in the interwar period, may be partially attributable to the emergence of new opportunities for pharmaceutical specialists
as described already, and perhaps also to the postwar French regulation
which insisted upon a local research presence as a condition for selling medicines in the French market. As in the British corporate experience, the
recent success of the French pharmaceutical specialist firms can be linked
to the earlier development of pharmaceutical technology by French chemical generalist firms in the interwar period (the postwar emergence of technological efforts in pharmaceutical firms being indicated in Table a, and
the longer interwar heritage of pharmaceutical innovation in other French
firms is shown in Table b).
Some evidence on the comparative advantage of the major firms origi-
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
European Review of Economic History
Table . RTA values of the largest Swiss-owned firms, – and
–.
(a) Across industries
Chemicals
Pharmaceuticals
Metal products
Mechanical engineering
Electrical equipment
In the interwar period
In the recent period
–
–
–
–
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
(b) Across technological fields
Chemicals
of which: dyestuffs and other
organic
Pharmaceuticals
Metal products
Mechanical engineering
of which: food equipment
papermaking apparatus
textile machinery
Electrical equipment
In the interwar period
In the recent period
–
–
–
–
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Source: As for Table .
nating from the smaller but technologically active European countries is
given in Tables  and . As might have been expected, the main Swiss
strength lay in chemicals and pharmaceuticals. Especially in the interwar
period there was a close association between the German and Swiss chemical industries, running across the Swiss-German border. The leading Swiss
companies Ciba, Sandoz and Geigy were merged as Swiss IG, and enjoyed
common cartel links with IG Farben (Cantwell and Barrera ).
However, to the extent that there is a relative difference between the
German and Swiss industries, it is that the Swiss companies have been
stronger historically in pharmaceuticals (through Sandoz and Hoffman La
Roche), and this comparative innovative advantage has persisted through to
the present day. More recently, the performance of large Swiss firms in
metal products and mechanical engineering has improved, but in their
strengths in the science-based industries Swiss companies still do relatively
better in pharmaceuticals and chemicals than they do in electrical equip-
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Technological lock-in of large firms

Table . RTA values of the largest Swedish-owned firms, – and
–.
(a) Across industries
Chemicals
Pharmaceuticals
Metal products
Mechanical engineering
Electrical equipment
Motor vehicles
Other transport equipment
Rubber and plastic products
Professional and scientific
instruments
In the interwar period
In the recent period
–
–
–
–
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
(b) Across technological fields
Chemicals
Pharmaceuticals
Metal products
Mechanical engineering
of which: metalworking
equipment
woodworking machinery
Electrical equipment
of which: telecommunications
Motor vehicles
Other transport equipment
Rubber and plastic products
Professional and scientific
instruments
Other non-industrial
of which: power plants
In the interwar period
In the recent period
–
–
–
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
–
Source: As for Table .
ment. The recent emergence of technological advantage in the Swiss metal
and mechanical firms seems also to have relied on their development of
chemicals-related technology including food, paper making and textile
equipment (Table b), more so than for the leading German companies.
During the interwar period the technological development of the larger
Swedish firms was concentrated in the mechanical engineering industry,
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
European Review of Economic History
mainly through Alfa Laval and Asea. The most favoured technological fields
of these companies lay in engineering and machinery themselves (especially
metalworking and woodworking machinery, doubtless related to Sweden’s
resource availabilities in metals and wood), motor vehicle components and
power plants. These strengths have again largely persisted through to the
present day. In the recent period large Swedish firms have continued to hold
a high RTA value in the mechanical engineering industry and mechanical
technological fields, and this now extends to cover the efforts of other
Swedish companies in the metal products and motor vehicles industries.
Perhaps again the Swedish metal and vehicle companies have built upon the
technological traditions in the engineering and vehicle fields established
earlier (Table b) by the Swedish machinery firms. However, some change
in the Swedish corporate pattern can be observed in the very latest period
–, in the form of a greater innovative presence in the science-based
industries of pharmaceuticals (perhaps due to some Swedish success in
developing biotechnology), and in electrical equipment (owing to
Scandanavian efforts in the new telecommunications fields). The recent
increase in telecommunications development (Table b) in Swedish electrical firms (Table a) such as LM Ericsson may build partly upon the
Swedish engineering tradition and on some historical presence in this field
and in instrument technology (Table b), while the emergence of innovative
Swedish pharmaceutical specialist firms (Table a) seems also to have had
some historical precedent in the contribution to pharmaceutical technology
of Swedish chemical and allied firms in the interwar period (Table b).
. Technological lock-in and the evolution of the
competence profiles of national corporate groups – the
emergence of clusters?
Examining patterns of technological specialisation among national groups
of the largest firms from six countries, it has been seen that these profiles are
path-dependent and tend to persist to some extent even over periods of 
years, from the interwar period to the present day. This may be taken to
imply that the positive effect on the continuity of collective technological
trajectories of inter-company technological cooperation and spillovers
within national groups has tended to outweigh the negative effect of
mobility in cross-company distributions of activity. Perhaps just as interestingly, there is some evidence that through the evolution in these patterns of
technological competence that has occurred, certain national groups have
come somewhat closer to one another than they were in the past, or they
have changed in similar ways. Indeed, it might be argued that the six
national groups examined can now be divided into three clusters of two
countries each.
The first cluster comprises the largest US and UK firms, in which the
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Technological lock-in of large firms

profile of technological competence can be characterised as being resourcebased, oil-related and defence-related. In the US case since the interwar
period, a continuing comparative advantage in innovative activity in the
largest industrial firms has been sustained in the oil, food products, rubber
products, aerospace (defence and larger scale transport systems) and building materials industries. The greatest continuing strengths for the largest
British companies over the same historical period have been in textiles,
other transport (defence) and oil since the s. Thus, it can be argued
that there has been some convergence in the profiles of the US and UK
innovation systems (Vertova a). However, UK firms have also seen a
postwar shift into technological competence in the pharmaceutical industry,
although it can be claimed that this too represents the revival of a much
earlier nineteenth century tradition in biological and medical technologies.
In any event, consistent with the overall UK or US pattern of technological
development, the British pharmaceutical industry had links with the food
industry, unlike in Germany in which it derived purely from the chemicals
industry (Cantwell and Bachmann ).
The second cluster is that of the German and Swiss-owned corporate
groups, in which technological development since the end of the nineteenth
century has been largely science-based, and revolved around the dominance
of the chemicals industry. In the postwar period this has been increasingly
complemented by engineering excellence, although some recent commentators have seen this direction of change (as opposed to a move into the
other science-based area of electronics) as a weakness of the modern
German innovation system (Albach , Audretsch ). The leading
German firms have held a consistent focus on development in the chemicals
and metal product industries, with some recent shift towards industries
more reliant on engineering-based technologies, linked in part to the emergence of a wider range of innovative smaller specialist supplier companies.
The Swiss concentration historically on chemicals and pharmaceuticals
makes it a microcosm of (part of) the German innovation system, which has
also been shifting in the direction of engineering excellence.
The third cluster may be more a matter of coincidence than due to any
historical, geographical or cultural ties, involving as it does the French and
Swedish national groups of companies. This grouping has emphasised infrastructural types of technology, spanning engineering, construction, transport and communications systems, and some recent moves into health care.
In the French case comparative advantage in large firm innovation has been
sustained since the interwar years in metal products, rubber products and
building materials, while some earlier strengths in electrical communications technologies have been subsequently consolidated. This infrastructural orientation is less reliant upon large scale private corporate R&D than
the German system has been, but is not as resource-oriented as the US or
UK company systems of technological development. Swedish technological
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
European Review of Economic History
excellence has also been engineering-based (and has become increasingly
so) around the metals and vehicles industries, but it has been shifting more
closely towards the French pattern with the recent rise of development in
the areas of telecommunications and pharmaceuticals.
The apparent convergence of certain national systems of large firm innovation with continuing differentiation between these clusters of groupings
may be another feature of the rise in technological interrelatedness and
interlinked systems of technologies, which have eroded the more highly
specialised national systems of the past. Just as at the corporate level firms
have been diversifying their technological base and entering into more intercompany alliances for the purpose of cooperative learning (Cantwell and
Fai ), so at the broader level of national groups of large firms there has
been some broadening out of the areas of expertise, which has created more
overlaps between groups. Hence, the significance of technological lock-in
and path-dependency in each respective system has still been accompanied
by some selected convergences between particular national groups.
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