Knowledge and Competitive Advantage: The Coevolution of Firms, Technology, and National Institutions. By Johan Peter Murmann. New York: Cambridge University Press, 2003 (paperback edition, 2006). Pp. xxi, 294

Altogether, Malone effectively depicts what Thomas Hughes called a technological system. Hughes noted that electric light and power requiring the coordination of organizations and technologies over long distances, in contrast to the steam engine, which supplied power locally. Water power had a similarly complex character because Locks and Canals controlled water flow from distant sources, solved coordination problems among organizations, and innovated to more effectively deliver, measure, and utilize power. The two systems differed because waterpower at Lowell was organizationally centralized; Lowell firms—and related Lawrence and Manchester concerns—internalized most of the decisions. The systems also differed because the water power at Lowell was limited in quantity and found supplementary support by steam power. Hydroelectric power ultimately brought water power within the electrical system. Given its purpose, the book rightly sticks closely to water power in Lowell. But it does raise broader issues of interpretation and importance. One is linked to its centralized organization. The ownership of Locks and Canals by waterpower-using firms created a collective interest in extensive, organized research, which benefited each firm in proportion to its water usage. This organization overcame free rider problems and minimized litigation. As such, it is an interesting solution to the appropriability problem. It readily shared its knowledge; Locks and Canals did not patent its inventions, and Francis’s publications were widely disseminated. However innovators such as Uriah Boyden, who had worked at Locks and Canals, did patent his turbines, which he licensed to Locks and Canals and to others. In addition, the choice between steam and water power could be further examined. Around 1850 Charles James, a leader in the steam mill movement, argued that steam power offered superior regularity of motion needed in higher-quality textiles, and the Corliss engine augmented this advantage. How did the power source affect the quality of the product? Finally, a fuller discussion of the lines of communication linking Lowell to the wider waterpower system could be illuminating. Malone does a good job situating Francis’s work in the European and American context, but his provocative claim that Francis’s experiments “had lasting impact not only on the field of hydraulics but also on American research and development in general” (p. 142) is surely worth exploring.