Did Socialism Fail to Innovate? A Natural Experiment of the Two Zeiss Companies

By Bruce Kogut, Udo Zander. American Sociological Review, 2000

171 citations recorded by the source corpus.

Two Carl Zeiss companies provide a natural experiment for analyzing the effects of socialist versus market systems on innovation. By analyzing patent records from 1950 to 1990, we trace the technological contributions of Zeiss Jena in the German Democratic Republic and Zeiss Oberkochen in the Federal Republic of Germany. We show that Zeiss Jena gradually developed considerable technological competence, but a deficiency of innovative potential within the socialist system led to political pressures on key firms to innovate “by plan.” These findings on Zeiss Jena imply that technologically viable firms can fail during the initial period of transition from socialism to capitalism. The diagnosis of a lack of innovation and faulty managerial incentives as the disease that is “cured” by market reforms should be balanced by an understanding of the actual capabilities of socialist firms and the difficulties of radical change mandated by brutal shocks to the macroeconomic system.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/d6362a411af97443a56fd15cbf7764b3d6334e61

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Citations in the corpus

The impact of socialist imprinting and search on resource change: a study of firms in lithuania (2006, background): “In contrast, some studies (Kogut and Zander, 2000) observe that firm attributes/activities (which are the target of imprinting) may experience differential imprinting effects of the same founding conditions.”
Acquisitions As Exaptation: The Legacy of Founding Institutions in the U.S. Commercial Banking Industry (2010, unknown): “For example, in their case study of two similar companies founded by the same family under different ideological systems (socialism and capitalism), Kogut and Zander (2000) observed that the two companies developed different capabilities and routines regarding innovation, resulting in different…”
The impact of current and founding institutions on strength of competitive aspirations in transition economies (2012, background): “However, a parallel view argues that firms will be shaped by their founding institutional environment (Stinchcombe, 1965; Kogut and Zander, 2000).”
Probing theoretically into Central and Eastern Europe: transactions, resources, and institutions (2005, background): “The East German Zeiss in Jena, for instance, has developed distinct capabilities and a moderately successful export record (Kogut and Zander, 2000).”
Bringing history (back) into international business (2006, background): “More recently, Kogut has engaged in both qualitative and quantitative historical work in a range of studies, including the international diffusion of management principles and country competitiveness (Kogut, 1993) and the impact of different economic systems on corporate innovation (Kogut and Zander”
Post‐Acquisition Restructuring as Evolutionary Process* (2003, background): “With disrupted business relations, and priority for Western structures and practices; firms had few opportunities to develop their own innovations (Meyer and Møller 1998, Kogut and Zander 2000).”
A Behavioral Theory of the Firm - 40 Years and Counting: Introduction and Impact (2007, background): “…been shown to be the result of gradual learning and resource-allocation processes (Helfat 1997 ) that result in stable firm differences in performance (Henderson and Cockburn 1994), and to be determined more strongly by the history of the focal firm than by its environment (Kogut and Zander 2000).”
Exploring knowledge management to organizational performance outcomes in a transitional economy (2009, background): “Firms founded in this type of environment performed business applications differently than those founded in market-oriented economies (Kogut & Zander, 2000) therefore knowledge management functions may not be successful.”
Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China* (2018, background): “Firms founded in former socialist regimes, for example, exhibit a strong socialist imprint and have more difficulty developing new knowledge routines and capabilities required by the market economy (Kogut and Zander, 2000; Kriauciunas and Kale, 2006).”
Organizational transformation in transition economies: resource-based and organizational learning perspectives (2003, background): “However, improved market access allows the firm to learn from customers (Kogut and Zander, 2000; Krueger, 1995) and thereby improve existing products.”
Corporate Social Responsibility Reporting in China: Symbol or Substance? (2011, unknown): “A growing stream of research on how being founded in a socialist political environment affects a firm’s subsequent strategies (Kogut and Zander, 2000; Kriauciunas and Kale, 2006) describes such “socialist imprinting” as a process whereby firm-specific capabilities and knowledge resources are also…”
A Cross-Disciplinary Exploration of Entrepreneurship Research (2007, unknown): “…and entrepreneurship (Davis & Greve, 1997; Peng, 2004; Podolny, 2001), (c) innovation diffusion (Chang & Harrington, 2005; Podolny & Stuart, 1995; Wejnert, 2002),7 and (d) the effect of broader institutional forces on entrepreneurship (Clemens & Cook, 1999; Kogut & Zander, 2000; Rona-Tas, 1994).”