Key Characteristics of the Large Innovating Firm*

Abstract

SUMMARY: Large innovating firms are a major source of the world's technology, and in the 20th century have shown great resilience in absorbing successive waves of radical innovations. The key characteristics of these firms derive from the properties of their innovative activities. First, given the specific, differentiated and cumulative nature of technological development, the range of possible choices about both product and processed technologies open to the firm depends on its accumulated competence. Second, given functional and professional specialization, the implementation of technological choices requires organization and orchestration across disciplinary, functional and divisional boundaries. Third, given cumulative development and uncertainty, the improvement of these competences requires continuous and collective learning. Fourth, in the light of these characteristics, systems for allocating resources must take into account the benefits of learning by doing, as well as the benefits of outcomes. As a consequence, the technical function in large firms involves not just the implementation of innovations, but also the definition of appropriate divisional objectives and boundaries, the exploration of radical technologies, and the formation of technological expectations about the future.