Who invents? Standard theories usually deal just with
R&D-performing firms and individual inventors. But enormous
amounts of invention come as a byproduct of everyday firm
investment. This type of invention tends to be incremental, and
tends to be neither patentable nor held secret by the inventor.
Robert Allen, in this famous paper from the early 1980s, refers
to such invention as “collective invention.” Consider the
British blast furnace industry in the mid 1800s. There was
certainly no meaningful corporate R&D at the time, as the
world’s first corporate R&D labs were only just appearing then
(in the German chemical industry). Yet the blast furnace
industry in Cleveland changed enormously over a couple decades,
nearly doubling the height of blast furnaces, and more than
doubling temperatures. Such changes were greatly beneficial for
reducing fuel consumption. No single firm made these drastic
changes overnight. Rather, furnace heights were increased
incrementally by some firms when they built a new factory.