The Groundbreaking Study Unveiling a Pivotal Shift in Innovation History

A fascinating new study published in Research Policy has illuminated a critical chapter in the evolution of technological progress: industrial research labs (IRLs), those dedicated facilities where teams of scientists and engineers systematically pursue breakthroughs, were pioneered in Europe but propelled the United States to technological supremacy. Led by researchers Matte Hartog, Andres Gomez-Lievano, Ricardo Hausmann from Harvard's Growth Lab, and Frank Neffke from the Complexity Science Hub Vienna, the analysis draws on an unprecedented dataset of 1.6 million U.S. patents spanning 1856 to 2000, digitized from half a million pages of historical documents. This massive effort reveals how organizational innovations—not just lone geniuses or gadgets—reshaped economies.

The study pinpoints the early 1920s as a turning point, when U.S. firms rapidly adopted Europe's IRL model post-World War I. Before then, American invention was largely craft-based, relying on individual tinkerers like Thomas Edison and Nikola Tesla using trial-and-error in small workshops. After adoption, invention exploded into science-driven teamwork, with engineers—comprising just 0.7% of the population—filing 25% of all patents by 1945.

Europe's Pioneering Role: The Birth of Systematic Industrial R&D

The roots of industrial research labs trace back to 19th-century Europe, particularly the German-speaking world, where the modern scientific laboratory first took shape in universities. Chemistry departments at institutions like the University of Heidelberg and Justus Liebig's lab in Giessen set the template: dedicated spaces for controlled experimentation, peer review, and knowledge accumulation. This academic model spilled into industry, birthing corporate R&D.

BASF (Badische Anilin- und Soda-Fabrik), founded in 1865 in Ludwigshafen, Germany, exemplifies this. Initially a dye maker, BASF hired chemist Heinrich Caro in 1867 to lead systematic research, yielding breakthroughs like synthetic indigo (1897) and the Haber-Bosch process for ammonia synthesis (1910s), revolutionizing fertilizers and explosives. Siemens, starting as a telegraph workshop in 1847 Berlin, formalized physics research by 1905, powering electrification. AEG (Allgemeine Elektricitäts-Gesellschaft) followed suit in electrical engineering. These labs integrated science into production, fostering 'Neue Kombinationen'—novel tech recombinations economists credit for progress.

By the late 1800s, German firms dominated chemicals and electrotechnics, exporting know-how worldwide. Europe's fragmented markets and cartel structures (e.g., IG Farben) prioritized efficiency over radical novelty, but the IRL concept was born here.Explore research opportunities across Europe where this legacy endures.

Post-WWI Diffusion: How the U.S. Imported Europe's Organizational Secret

World War I exposed U.S. vulnerabilities: reliance on German chemicals like dyes and pharmaceuticals. With imports cut off, American firms scrambled to build capabilities. The war's end brought a flood of European expertise and ideas. By the early 1920s, U.S. companies established IRLs en masse—DuPont in 1902 (accelerated post-war), General Electric, and AT&T's iconic Bell Labs in 1925.

The study documents an abrupt shift: pre-1920s patents showed dispersed, family-linked inventors in small towns; post-adoption, collaboration surged within firms, spanning distances, citing academic papers, and blending distant tech fields. Public universities in the Rust Belt—Purdue, Michigan, Wisconsin—pivoted to patenting, bridging academia-industry. 'Invention became teamwork,' notes Frank Neffke.

The Explosive Impact: Engineers, Patents, and Urban Powerhouses

Quantitative evidence is stark. Patent novelty—measured by tech recombination—skyrocketed in the 1920s. Learning curves lengthened, demanding specialized skills. By 1945, engineers dominated despite tiny demographics. Invention reconcentrated: from spread to small towns (late 1800s), back to metropolises like Chicago, Detroit, Pittsburgh—the 'early Silicon Valley.'

Bell Labs epitomized success: transistors (1947), information theory, multiple Nobels. This fueled U.S. GDP surge, WWII edge, and post-war boom. Europe's wars (WWI, WWII) disrupted labs, while U.S. scale, venture capital, and antitrust policies spurred diversity. Current research jobs echo this team model.

Social Trade-offs: Who Was Left Behind in the New Paradigm

Not all gained equally. Craft era favored diverse participants—women (e.g., in textiles), immigrants via family networks. IRLs professionalized invention, erecting barriers: engineering education skewed male, native-born. Women's patent share plummeted; foreign-born underrepresented. Geographic clustering marginalized rural/small-town talent.

This mirrors today's debates: Big Tech labs revive IRLs for AI, but raise inclusivity concerns. Europe's historical edge included broader access; lessons for equitable R&D today.

Decline and Resurgence: Lessons from Cycles of Innovation Organization

IRLs peaked mid-century but waned post-1970s: firm teams lagged standalone inventors in novelty. Globalization, open-source, VC favored nimble startups. Yet, 2010s revival: Google DeepMind, Meta AI, Amazon AWS labs mirror Bell, driving LLMs, transformers.

Neffke warns: 'Organizational shifts like today's online platforms could reshape society profoundly.'

Europe's Perspective: Why Didn't the Inventors Capitalize?

Europe birthed IRLs amid industrialization, but fragmentation (nation-states, languages), world wars, and regulated markets curbed scaling. U.S. unified market, immigration talent pool, WWII R&D (Manhattan Project) amplified adoption. Post-war, Europe's welfare focus prioritized diffusion over frontier tech.

Today, EU invests heavily (Horizon Europe €95B), but trails U.S. in venture scaling, AI patents. Initiatives like AI Factories aim to revive IRL spirit.Craft your academic CV for Europe's R&D roles.

Case Studies: BASF and Siemens vs. Bell Labs

• BASF: From aniline dyes to Haber-Bosch (fed billions), lab-centralized R&D defined chemicals.
• Siemens: Electrotech pioneer, labs birthed X-rays, MRI precursors.
• Bell Labs: 1925 spawn: laser, UNIX, CCD—9 Nobels, proving IRL scalability.

Europe's labs excelled incrementally; U.S. pursued moonshots via capital depth.

Implications for Europe's Higher Education and Research Ecosystem

Universities remain IRL incubators. Europe's strength: balanced portfolios (ERC grants). Challenges: brain drain, funding fragmentation. New study urges hybrid models—industry-academia clusters like Germany's Fraunhofer.

Stakeholders: Policymakers eye 'social innovations'; unis train interdisciplinary teams. For faculty positions, emphasize team science.

Photo by National Institute of Allergy and Infectious Diseases on Unsplash

Future Outlook: Can Europe Reclaim IRL Leadership?

With EU's €100B+ R&D push, AI sovereignty plans, Europe eyes revival. Lessons: Scale teams, embrace novelty, foster inclusivity. Big Tech's lab resurgence signals IRLs' enduring power—Europe's invention could superpower again.

Researchers: Dive into Europe's research jobs, postdoc opportunities.