The social conditions that affect innovation change over time and vary across productive activities. Hence theoretical analysis of the innovative enterprise must be integrated with historical study through the use of what I call a historical-transformation methodology—a methodology that stands in sharp contrast to, but can nonetheless be complemented by, the constrained-optimization methodology favored by conventional economists. In surveying some major attempts to analyze the role of the business enterprise in generating superior economic performance in the advanced economies, including the works of Oliver Williamson, Alfred Chandler, Edith Penrose, and resource-based theorists, I explain what a historical-transformation methodology is and why such a methodology is needed for understanding how and under what conditions business enterprises can in fact be innovative enterprises.

British industrial policy in the 1930s has generated considerable historical controversy. This article furthers the debate by using the cotton industry as a case study. The biggest constraint on active government policies toward cotton was not institutional inertia or “industrial diplomacy,” as some historians claim, but the sheer practical difficulty of intervening in such a complex industry. Cotton also poses problems for historians who see British industrial policy in the 1930s as largely about restraining competition. The government feared that restriction would make matters worse in the cotton industry and was therefore hesitant about backing schemes designed to limit competition. Its dilemma was how best to maintain private-sector confidence.

This article examines the formation of China's state enterprise system, using the case of the Dadukou Iron and Steel Works (DISW). I argue that the basic institutional arrangement of the DISW, and by extension other state-owned enterprises, consisted of a bureaucratic governance structure, distinctive management and incentive mechanisms, and the provision of social services and welfare. This arrangement took shape during the Sino-Japanese War, with the sustained systemic crisis and the nature and character of the institutional endowments leading to the formation of China's state enterprise system. In considering implications for understanding institutional change, I suggest that crisis shapes radical institutional change and that both path dependence and path independence characterize such change.

This article examines the role of British exchange and import controls in stimulating the dramatic increase in overseas (particularly American) multinationals in Britain from the end of the Second World War to the late 1950s, together with the ways in which the government used controls to regulate the foreign direct investment (FDI) inflow. Exchange controls were both an important stimulus to inward investment and a powerful and flexible means of regulating its volume and character. Government was relatively successful in using these powers to maximize the dollar balance and industrial benefits of FDI to Britain, given initially severe dollar and capacity constraints, and in liberalizing policy once these constraints receded and competition from other FDI hosts intensified.