Review

Author(s): C. Freeman
Review by: C. Freeman
Source: The Economic Journal, Vol. 79, No. 314 (Jun., 1969), pp. 403-405
Published by: Wiley on behalf of the Royal Economic Society
Stable URL: http://www.jstor.org/stable/2230196
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1969] BURNS AND STALKER: THE MANAGEMENT OF INNOVATION 403

We are still left with the question of the title " Is Scientific Management
Possible? " It is never very clear exactly what the author means by
scientific management, but assuming that it is management which takes
account of empirically grounded and tested theories of behaviour in organisa-
tional settings, the author's answer would seem to be a limited yes.
Scientific theories of organisational behaviour do not yet extend far enough
to inform many of the decisions facing men in industry, but they are possible,
and with increasing research will grow in importance.
The author appears to confuse moral and scientific issues in assuming
that scientific management will produce affluence " without offending the
human condition." Research findings could be used for various purposes,
not all of them inoffensive.
ALEXANDER STEWART
Department of Applied Economics,
Cambridge.

The Management of Innovation. By T. BURNS and G. M. STALKER. Social

Science Paperbacks. (London: Tavistock, 1961 (paperback, 1966).
Pp. xxii + 269. 35s.)

THE appearance of this sociological study in a new paperback edition is

very welcome. Most, if not all, of those economists who have been con-
cerned with research and innovation have concluded that sociology has at
least as much to contribute as economics to the understanding of these
complex processes. The economist can measure some of the inputs into
research and development. Taking his courage in both hands, he can
attempt to measure some of the outputs and some of the ways in which
research and innovation affect economic performance. But he knows all
the time that the interpretation of this data requires sociological information
and insight of the kind which is found in The Management of Innovation.
It can easily be shown that some firms with high expenditures on re-
search and experimental development have few economically successful in-
novations, poor profit records, export performance and growth rates.
Theoretically, it is quite possible to have a highly productive R. and D.
system, but a disproportionately small flow of commercially viable in-
novations and a slow rate of diffusion. The output of R. and D. is not
innovations but inventions and information. To turn this into successful
innovations requires management of the highest calibre and some good luck.
The Federation of British Industries Survey of Industrial Research showed
only a weak correlation between research intensity and company growth in
firms in chemicals and electrical engineering. In the management of
innovation, more than most other kinds of management, the best-laid
schemes " gang oft a-gley."
Some economists and sociologists have concluded that the incidence of

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404 THE ECONOMIC JOURNAL [JUNE

accidental factors in the research-innovation chain of events is too great to

permit any systematic explanation of the patterns involved. But this is a
counsel of despair. Enough has been learnt about the management of
innovation, and the understanding of the process is sufficiently important
to justify continued efforts. One of the most fruitful lines of research is
likely to be the comparison of successful innovating organisations with those
which have been less successful or failed.
Rich material for such comparisons can be found in this book. Whereas
most case studies of innovation confine themselves to successful examples,
Burns and Stalker have a good deal to say about failures. They studied
the experience of firms which entered the Scottish Council's " electronics
scheme " in the early 1950s. Summarising the results of this experience,
they say:

" No firm attempted to match its technical growth with a compar-

able expansion of sales activities; in particular no attempts were made
at organised and thorough exploration of user needs for products which
firms thought it possible to develop, or even for those which they had
developed. Most of the Scottish firms failed to realise expectations.
In half the cases, laboratory groups were disbanded or disrupted by the
resignation of their leaders. Others were converted into test depart-
ments, ' trouble-shooting' teams, or production departments....
These failures were interpreted by us as an inability to adapt the man-
agement system to the form appropriate to conditions of more rapid
technical and commercial change."

On the basis of numerous interviews within respondent electronics firms,

they elaborated a theory of two " types " of management. The first type,
mechanistic,' is appropriate to a firm operating under stable conditions
and is characterised by a strong specialised hierachy with vertical lines
of communication familiar from organisation charts. The second type,
" organic," has a far less formal structure and is characterised by constant
redefinition of roles and strong lateral communications networks. In their
view the first type cannot adapt itself to rapid technical change.
Many of their findings on weaknesses in innovation systems have since
been confirmed by further studies in industry in the United States as well as
in Britain. Examples are: the attempted application of methods appro-
priate to the defence market to the quite different circumstances of the civil
market; the relative isolation of some R. and D. laboratories; the lack
of any constructive dialogue between sales and R. and D. departments; and
other breakdowns in the formal and informal communication networks.
The degree of consensus between sociologists and economists in the inter-
pretation of these phenomena is encouraging. But it cannot yet be said
that the critical factors or patterns in the process are understood. Parti-
cularly unsatisfying is the treatment of the " entrepreneur " in the " organic "
management system and the lack of definition of " success." It is also a

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1969] GEORGE: SOCIAL SECURITY: BEVERIDGE AND AFTER 405

pity that more information was not included on the products under con-
sideration and the scale factors involved in their development.
C. FREEMAN
Science Policy Research Unit,
University of Sussex.

Social Security: Beveridge and After. By V. GEORGE. (London: Routledge

and Kegan Paul, 1968. Pp. xiv + 258. 35s.)
Social Services in British Industry. By A. F. YOUNG. (London: Routledge
and Kegan Paul, 1968. Pp. xiv + 258. 40s.)

THERE is a very considerable overlap between the subject matter of

these two books, although the approach is rather different. Miss Young's
book is more concerned with the physical movement of people into industry,
whether by Labour Exchanges, Youth Employment Bureaux, or after a time
of training in a Government centre, and with their hours and conditions of
work. The role of Labour Exchanges in the payment of unemployment
benefits is, of course, discussed but the size of the unemployment benefit
is of secondary consideration. Mr. George's book, however, is concerned
with the way in which people's mobility between jobs, their incentives to
work, their willingness to insure or to retire from industry are all affected
by the financial provisions made with our social security system, but his
primary concern is to describe the financial benefits that are available to the
general population, whether currently in industry or not. Of course, both
authors are forced to deal with the financial implications of unemployment.
But the coverage is much wider in Mr. George's book, in that he can deal
with monetary benefits to the whole population, and he discusses retirement
pensions, family allowances, maternity benefits and death benefits.
The other fundamental difference between the two books is in the degree
of criticism they apply to our social services. Miss Young is almost entirely
descriptive. Occasionally she comments, for instance in her chapter on the
Youth Employment Service, that by 1966 the average case load per officer
was down to 500 for the first time in the service, although there were con-
siderable regional variations above and below this. Five hundred was
generally regarded as the maximum number of youngsters for whom an
officer should be responsible, so the problem of staff shortage has remained
acute. But I feel it would be helpful if she suggested reasons for this shortage.
Is it that there are inadequate opportunities for training suitable people to
become Youth Employment Officers? Or is it that perhaps the service is
up to its establishment, but that, to the outsider, it seems simply that the
establishment itself is too low? For we are sometimes told by hospital
administrators that an apparent shortage of nurses is merely an apparent
one-the hospital has its established number of nurses! Of course, Miss
Young comments that the training courses have not always been full. But
No. 3I4.-VOL. LXXIX. D D

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