How cartels stimulate innovation and R&D: Swiss cable firms, innovation and the cartel question

The purpose of this paper is to demonstrate that a cartel is not necessarily synonymous with a brake on innovation but that, on the contrary, it may become the site of information transfer and technology exchange. The example chosen is the cable industry. Research was based on the archives of two Swiss cable manufacturers and on those of a Swiss and an international cartel (International Cable Development Corporation) from the beginning of the twentieth century until the 1970s. The cartels studied, which were primarily based on territorial and price protection, fostered various forms of information and technology transfers: exchange of information in order to rationalise production, know-how sharing, transfers or sales of patents or licences, standardisation of products to ensure compatibility between products from various companies. Finally, one of the cartels studied became a key player in Research and Development (R&D) by creating test structures and R&D laboratories and controlling market introduction of innovating products. The historiography of the last 30 years had a tendency to consider cartels as an exception, however, as Jeffrey Fear wrote 'Yet, until the 1980s, the global story of big business must be told in conjunction with cartels rather than without them' (Fear, October 2006). The purpose of this paper is to once again look at one aspect of the cartels' impact on the innovation.