Open Versus Closed Innovation: Development of the Wide Strip Mill for Steel in the United States During the 1920s

Abstract

A paired comparison is made between rival attempts to develop the first continuous rolling mill for wide strip in the USA during the 1920?s. One firm was secretive, the other relied upon collaboration. Development of the wide strip mill is a natural experiment comparing closed and open innovation since two firms were competing for the same target using different institutional arrangements for their R&D. Wide strip rolling technology was developed by rival teams in the USA during the mid-1920?s. The less successful team at Armco, Ashland, Kentucky was closed to outside influences. Breakthroughs came from Columbia Steel at Butler, Pennsylvania which pursued an open pattern of cooperation with equipment suppliers. Columbia Steel?s collaboration with machinery suppliers, use of independent advice on bearing technology and willingness to learn from precursors in copper rolling enabled them to build a successful wide strip mill complex, commissioned in 1926. Butler established the dominant design for the next 80 years. The leading equipment supplier at Butler, the United Engineering and Foundry Co., led global sales of the technology for four decades. It is not clear how far this example of successful open innovation in the US inter-war economy is typical. Historical studies of the management of R&D focus on formal, science based research in large corporate labs rather than engineering development.