Assessing the effects of divestiture on Bell telephone laboratories

Abstract

Testimony in the antitrust suit filed by the U.S. government against the American Telephone and Telegraph Company included a number of predictions of the effects on Bell Telephone Laboratories of restructuring A T& T. This paper examines these predictions, analyzing the conceptual and theoretical basis for them, discussing their relevance to the operations of Bell Labs before divestiture, and analyzing the accuracy of the predictions with the limited evidence on the structure and performance of the Labs since divestiture in 1984. The modest performance of these predictions underlines the imperfect state of theoretical undcrstanding of the organization of research and innovation.