The United States’ emergence as a technological superpower was not the result of gradual progress, but of a sudden and significant shift in the 1920s, driven largely by the rise of industrial research labs, according to a new study published in the journal Research Policy.

The Making of a Tech Superpower

Researchers from the Complexity Science Hub and the Growth Lab at Harvard University analyzed over 1.6 million patents spanning more than 140 years, revealing that the U.S. transitioned from a craft-based innovation model to a science-driven system centered around research labs.

The study highlights that the shift was abrupt, occurring primarily in the early 1920s. This period saw the emergence of industrial research labs, an innovation originally rooted in the German-speaking world, which spread rapidly in the U.S. after World War I.

According to Frank Neffke, a researcher at the Complexity Science Hub and co-author of the study, the transformation was marked by the rise of teamwork, science-based invention, and a shift from individual craftsmen to specialized engineers and scientists.

The Rise of the Industrial Research Lab

For much of the 19th century, American innovation relied on individual inventors such as Thomas Edison and Nikola Tesla, who worked largely in isolation or with small teams. This model, while effective, was limited by its dependence on trial and error and lacked systematic scientific inquiry.

The early 1920s marked a turning point. Firms began hiring teams of specialized engineers and scientists, leading to what economists refer to as ‘Neue Kombinationen’—novel combinations of existing technologies that drive innovation forward. By 1945, engineers, who constituted just 0.7% of the U.S. population, accounted for 25% of all patents.

This shift not only accelerated technological progress but also professionalized invention, making it a structured, science-based process rather than a craft.

Teamwork Supercharged Innovation

Research labs proved highly effective at organizing teamwork, according to the study. Teams within these labs were more likely to collaborate repeatedly, work across long distances, and produce novel technological combinations compared to teams outside of such environments.

Moreover, the reliance on formal scientific knowledge over practical know-how marked a decisive shift from a craftsmanship-based system to one rooted in science and engineering. This transformation helped concentrate innovation in large metropolitan areas, creating a new geography of invention.

“This shift helped fuel the rise of a small number of large cities in what we now know as the American Rust Belt, but which in its heyday was the Silicon Valley of the early 20th century,” Neffke said.

BARRIERS TO PARTICIPATION

While the new system accelerated innovation, it also created barriers to participation. The study finds that women and foreign-born inventors became significantly underrepresented in the emerging science-based innovation system compared to the earlier craftsmanship-based model.

These exclusionary practices persisted for decades, highlighting how changes in the organization of innovation can have lasting social consequences, particularly in terms of workforce diversity and inclusion.

A Century Later, the Lab Is Back

Industrial research labs did not remain dominant indefinitely. Their importance declined after the 1970s, when firm-based teams underperformed in novelty creation compared to standalone teams. However, in recent years, there has been a revival of R&D labs driven by tech giants like Google, Meta, and Amazon.

“We have seen a revival of R&D labs driven by tech giants like Google, Meta, and Amazon,” Neffke said. “They have rebuilt large-scale research operations, and the pattern looks familiar: As in much of the 20th century—when behemoths like Bell Labs not only patented, but also pushed the scientific frontier, spawning several Nobel Prize winners and entire academic fields—many of today’s most consequential breakthroughs in AI are coming from industrial labs.”

Lessons for Today’s Innovation Systems

The study suggests that the history of technology is often viewed as a series of technological breakthroughs, but it argues that social innovations—like the rise of industrial research labs—may be just as important in shaping economies and societies.

Industrial research labs not only accelerated invention but also reshaped the structure of the innovation system and the composition of the workforce. Today, we see another organizational innovation—online collaboration platforms—transforming how work and innovation are organized.

Understanding these dynamics is crucial, the researchers argue, because such shifts in the organization of innovation can have far-reaching consequences—not only for technological progress, but for economic development and society as a whole.