- When the Corporation Almost Displaced the Entrepreneur:Rethinking the Political Economy of Research and Development
In 1988 I had the dubious distinction of being billed "The World's Expert on Failure" in the South Korean press. This headline came about when I shared the findings from my book on the RCA VideoDisc with the top hundred or so executives and staff members of Samsung Electronics. They were engaged in the strategic planning exercise that would mark Samsung's explosive entrance onto the international stage, as local host of the Olympics and as exporter of consumer electronics. I think you can see from the picture of me addressing the Samsung vice presidents and senior staffs that I could only wonder what the translator was making of what I had to say.
Following this year's Business History Conference's theme of Reinterpretation, I want to revisit that work on the business of R&D at Radio Corporation of America (RCA) and add a parallel account of the origins of advanced research at Xerox to offer some perspective on the rise and fall of corporate research, the institutionalized form [End Page 245]
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of industrial research.1 This is a personal perspective aiming to raise questions that are pointed at, but not resolved, in more recent research. Many of the sources that might support what are suggestions on my part are still classified or fall into the category of privileged communication between counsellor and client. Corporate research has dropped out of sight as a topic in the last decade or so, but it is likely to reemerge in the twentieth-first century as companies like Apple and Google build huge secretive research campuses in Silicon Valley and set up satellite research laboratories in many countries.2 I believe that there are lessons to be learned from the earlier work on this topic that are important not [End Page 246] only for what we took into account but also for what we overlooked.3 Once I might have viewed RCA as unparalleled in its mismanagement of innovation, but when I consider the shifts in the political economy for R&D that took place in the latter part of the twentieth century, I realize that RCA's difficulties were not entirely of its own making. My title alludes to Joseph Schumpeter's prediction that the large industrial laboratory would eventually displace the entrepreneur as the dynamic element in the twentieth-century economy. For decades it looked as though Schumpeter was right, but by the late 1980s, I and other interested observers were noting the decline of the corporate laboratory as a dynamic institution and a resurgence of entrepreneurial activity was once again visible in the wild.4
The time I spent at Samsung during its strategic planning exercise in the run-up to the Seoul Olympics gave me a ringside seat for what would prove to be a breakout for the company.5 My first book, RCA and the VideoDisc: The Business of Research, had been published in 1986, only months after RCA had been absorbed by General Electric and only a couple of years after the VideoDisc had failed in the marketplace. The book was unusual in telling an inside story that led to a highly visible business failure.6 Samsung's planners wanted to know more about the demise of RCA because they regarded the pioneering consumer electronics company as an important [End Page 247] forerunner to their own. Many, not knowing the murky story of the merger/acquisition by General Electric that followed, believed VideoDisc had sunk the company.7 Why had this project been allowed to become such a spectacular failure? Mr. Lee Kun-Hee, who had just succeeded his father, Lee Byung-Chull, the founder, as chairman and CEO of Samsung, no doubt recognized some disturbing parallels between his family company and RCA.8 By exposing Samsung's top several hundred managers to RCA's story, he hoped to avoid any foreseeable pitfalls...