Technological Accumulation, Diversification and Organisation in UK Companies, 1945–1983

Abstract

A survey of more than 4,000 significant innovations and innovating firms in the UK from 1945–1983 shows that the scope and organisation of technological activities vary greatly as functions of firms' principal activities and size. 1. Technological opportunities and threats are greatest in firms in chemicals and engineering. Opportunities in such science-based and specialist supplier firms in general emerge horizontally (in related product markets) and downstream (in user sectors). In scale-intensive (e.g. steel, vehicles) and supplier-dominated (e.g. printing, construction) firms, opportunities tend to be upstream in related production technologies. Breakthrough innovations in science-based firms also induce clusters of technological opportunities upstream for suppliers, horizontally for partners, and downstream for users. Their effective exploitation requires diversity of firms' technological activities greater than that strictly required for current output. 2. The nature of technological opportunities, and of organisation for their exploitation, also varies with firm size. Firms with fewer than 1,000 employees have major opportunities with specialised strategies in mechanical engineering and instruments. The prevalence of broad front technological strategies, and of divisionalisation, increases sharply with firm size, together with dependence on formal R and D activities. The size of innovating divisions has diminished sharply over the period. Divisionalisation improves the “goodness of fit” between the core business of innovating divisions and the innovations themselves, but 40% have remained consistently outside the core business of divisions. 3. These findings help identify the key tasks of technological strategy in firms in different industries, and of different sizes. Thus, in large firms, divisionalisation can create the small size of unit conducive to effective implementation, but it cannot absolve central management from the continuous task of matching technological opportunities with organisational forms and boundaries.