Yet, Bell Labs weren't the only corporate research lab. And on the big picture, they did disappear at the time that merges become common and most markets turned into monopolies.
This article has a very good argument for why only the market leaders would invest on those labs, and yet they are caused by the enforcement of competition rules.
It's worth noting that Bell Labs existed because the government recognized that the Bell monopoly was a social ill and insisted that to counteract the problem some of the money had to be earmarked for research.
Today the government doesn't even dream of that kind of regulation anymore. The idea of doing something purely for the public good seems to be lost in the race to make the quarterly numbers as big as possible.
The trend changed partly due to the 80s cult of shareholder value worship enthused by Milton Friedman / Reagan that permanently altered the social contract of corporations. If the only responsibility of corporations is shareholders, then long-term growth and investment is difficult to justify given market tendencies to be so short-term focused over time.
These days, those corporate insiders have a lot of their wealth tied up their company's stock. So while it's a terrible way to think about running a company, a lot of companies are run that way because it benefits the people running them.
> These days, those corporate insiders have a lot of their wealth tied up their company's stock.
Yes, that helps a bit to align incentives. In practice, it's only a start.
(It's especially interesting because investors these days tend to be broadly diversified and typically own shares in all the companies in an industry. Managers are typically highly concentrated.)
I think you're coming to the opposite conclusion I implied. Because corporate insiders' wealth is tied up in company stock, they are incentivized to optimize for the value of the stock, which may be counter to the long-term health of the company.
> [...], they are incentivized to optimize for the value of the stock, which may be counter to the long-term health of the company.
That would imply that shareholders are idiots. And especially that all hedgefunds are idiots as well. Otherwise you'd expect a lot of short-selling once the stock price exceeds the long term health, wouldn't you?
If everyone was rational and had full information, yes. But it can take a while for outsiders to catch on, and people are not fully rational. For two high profile examples, look at GE and Boeing. They had a reckoning, but it took a long time.
The operating companies were charged a 1% fee on revenues as a patent royalty and this funded Bell Labs Research, Systems Engineering, and part of Advanced Development of devices and systems. A similar amount was provided by Western Electric for advanced development, development and research on manufacturing technology. At times the research and development funding by the DoD was larger than the civilian part.
I was told that one reason that Bell Labs was formed from parts of AT&T Engineering and Western Electric Engineering was to keep the researchers from meddling with the business and to keep the business from meddling with the research. The latter was important because a strategic objective was to use technological change as a driver to prevent the monopoly telecom business from going to seed. Within Bell Labs there were often competing groups working on alternative next generation systems - analog versus digital, tube versus transistor, space division versus time division switching, coax versus microwave, microwave versus fiber, etc.
Yet, Bell Labs weren't the only corporate research lab. And on the big picture, they did disappear at the time that merges become common and most markets turned into monopolies.
This article has a very good argument for why only the market leaders would invest on those labs, and yet they are caused by the enforcement of competition rules.