Still, oligopolistic behavior
does not sit well with another of Baumol's observations: that
innovators tend to maximize their returns by sharing their technology
and licensing it to more efficient and profitable manufacturers. Nor
can one square this propensity to share with the ever more stringent
and expansive intellectual property laws that afflict many rich
countries nowadays.
Very few inventions have forced "established companies from their
dominant market positions" as the "The Economist" put it recently.
Moreover, most novelties are spawned by established companies. The
single, tortured, and misunderstood inventor working on a shoestring
budget in his garage - is a mythical relic of 18th century Romanticism.
More often, innovation is systematically and methodically pursued by
teams of scientists and researchers in the labs of mega-corporations
and endowed academic institutions.
Governments - and, more particularly the defense establishment -
finance most of this brainstorming. the Internet was invented by DARPA
- a Department of Defense agency - and not by libertarian intellectuals.
A recent report compiled by PricewaterhouseCoopers from interviews with
800 CEO's in the UK, France, Germany, Spain, Australia, Japan and the
US and titled "Innovation and Growth: A Global Perspective" included
the following findings:
"High-performing companies - those that generate annual total
shareholder returns in excess of 37 percent and have seen consistent
revenue growth over the last five years - average 61 percent of their
turnover from new products and services.
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