The%20Reiter%20Prize%20Lecture

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The Reiter Prize Lecture
January 26, 2005

• By
• Johann Peter Murmann

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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)
360-381.
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) 539-547.
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The Two Central Inspirations
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Key Idea 1 Evolution is a General Process

• An evolutionary process has three essentials
• Mechanism for introducing variation
• Consistent selection processes and
• Mechanism for preserving and/or propagating the
  selected variants

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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).
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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.
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Key Idea 4 Collect Historical Data
The 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).
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Key Idea 5
Many phenomena display a hierarchical
organization
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A Four Level Hierarchy
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Whole
The Global Economy Country Economies Industries
FirmsProducts Services
Parts
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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).
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(No Transcript)
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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).
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The Advisor Richard Nelson
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Why Synthetic Dye Industry? Ernst Homburg
Professor for the History of Technology
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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
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The Expert Predictions
At no distant dateEngland 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
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German Firms are Leaders in the Dye Industry in
1873

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

Market Share
U. S.
Germany
Switzerland
France
Other
Britain
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Concentration in Each Country, 1913
Firm Country Domestic Production Share Global Market Share Sum of Global Share
Bayer Germany 22 20.0 20.0
BASF Germany 22 20.0 40.0
Hoechst Germany 22 20.0 60.0
Levinstein U.K. 30 2.0 62.0
Read Holliday U.K. 30 2.0 64.0
Schoellkopf U.S. 50 1.7 65.7
Heller Merz U.S. 21 0.7 66.4
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Number of Dye Firms by Country, 1857-1914




40
35
30
25
20
15
10
5
0
1914
1857
1914
1885
1857
USA
Britain
Germany
Switzerland
France
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Industry Demography 1857-1914
Number of Firm Entries Number of Firm Exits Firm Failure Rates
Germany 116 91 78
France 63 55 87
Britain 47 36 77
United States 35 25 71
Switzerland 23 19 83
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Dye Development at Bayer in 1906
New dye molecules marketed 36
Dye molecules tested on larger scale 60
New dye molecules synthesized 2656
Theoretically possible dye molecules Billions

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Global Share of Organic Chemistry Publications
1852 1862 1877 1907
Germany 29 38 50-67 35-47
France 35 23 15.2 12.2
Britain 24 23 5.9 16.2
United States 0.9 3.6
Switzerland 7.4-24 5.0-17
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German Share of Aromatic Organic Chemistry
Publications cited in France
Papers devoted to aromatics German Share
1864 14 35
1867 38 85
1870 40 96
1874 35 97
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Three Empirical Chapters
Chapter 2 Country-Level Performance
Differences and their Institutional Foundations
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Three Empirical Chapters
Chapter 3 Three times Two Case Studies of
Individual Firms
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Three Empirical Chapters
Chapter 4 The Coevolution of National
Industries and Institutions
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Final Theoretical Chapter
Chapter 5 Toward and Institutional Theory of
Competitive Advantage
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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 Illustration
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Organic Chemistry in Different Countries
1855
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