ABSTRACT
In the 1950s, Edwin H. Land invented a process for developing film in a camera immediately after a picture has been taken. To market this revolutionary invention he founded the Polaroid Company. Several companies were founded in the 1950s by scientists and engineers from the Bell Laboratories, where the transistor was invented, because they thought that they could profitably develop and manufacture transistors in this rapidly expanding industry. Akio Morito cofounded Sony after the Second World War, because he thought that there would be a market for tape recorders in post-war Japan. None of these firm start-ups seems to bewell described by the statement that their founders foresaw ways to economize on transaction costs. Schumpeter depicted the birth of a firm as the result of the innovative idea of
some would-be entrepreneur.1 The birth of many firms seems linked to some innovative idea of its founder, and thus for many firms Schumpeter’s explanation for why firms exist offers an alternative and perhaps a more accurate characterization; andmany economists have approached the study of the birth and evolution of firms and industries with a Schumpeterian perspective. In this chapter, we review this literature.
