IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v35y1989i2p208-225.html
   My bibliography  Save this article

Industry Concentration and Allocation of Resources to Basic Research

Author

Listed:
  • Prafulla Joglekar

    (School of Business Administration, La Salle University, Philadelphia, Pennsylvania 19141)

  • Morris Hamburg

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104-6302)

Abstract

While the mainstream of Western economic thought believes in competitive markets, the Schumpeterian school considers concentrated industry to be the ideal vehicle for the advancement of industrial technology. Empirical evidence on the Schumpeterian hypothesis that a concentrated industry allocates relatively more resources to its research and development (R&D) activities has been inconclusive. We believe the reason is that the Schumpeterian hypothesis is too general and vague. The fact is that there are several dimensions of industrial concentration, for example, total number of firms in an industry, interfirm differences on a variety of characteristics such as sales, assets, resources, and so forth. Similarly, R&D activities are of several types such as long-term or short-term research, and basic research or applied research and development. Unfortunately, modeling efforts focusing on resource allocation by specific types of concentrated industries to specific types of R&D activities are almost nonexistent, with the exception of Joglekar and Hamburg (Joglekar, P., M. Hamburg. 1986. A homogeneous industry model of resource allocation to basic research and its policy implications. Management Sci. (February) 225--236; Joglekar, P., M. Hamburg. 1987. Industry resource allocation to basic research under normally distributed benefits. Decision Sci. (Winter) 1--24.) who showed that industries consisting of smaller numbers of firms allocate relatively greater amounts of resources to their basic research than industries consisting of larger numbers of firms. Extending Joglekar and Hamburg's models here we find that when two industries consist of the same number of firms, in most cases, a heterogeneous industry falls as short of its Pareto optimal investment in basic research as its comparable homogeneous counterpart. Numerical examples suggest that in some cases, concentrated (heterogeneous) industries may do worse. Policy implications of the results as well as directions for further research are discussed.

Suggested Citation

  • Prafulla Joglekar & Morris Hamburg, 1989. "Industry Concentration and Allocation of Resources to Basic Research," Management Science, INFORMS, vol. 35(2), pages 208-225, February.
    • Handle: RePEc:inm:ormnsc:v:35:y:1989:i:2:p:208-225
    DOI: 10.1287/mnsc.35.2.208
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.35.2.208
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.35.2.208?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Scott A. Shane & Karl T. Ulrich, 2004. "50th Anniversary Article: Technological Innovation, Product Development, and Entrepreneurship in Management Science," Management Science, INFORMS, vol. 50(2), pages 133-144, February.
    2. Joglekar, Prafulla & Hamburg, Morris, 1996. "Conditions for government support of private research and development," European Journal of Operational Research, Elsevier, vol. 94(3), pages 626-630, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:35:y:1989:i:2:p:208-225. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.