We extend life cycle models of human capital investments by incorporating matching theory to examine the sorting pattern of heterogeneous scientists into different career trajectories. We link differences in physical capital investments and complementarities between basic and applied scientists across industry and academic settings to individual differences in scientist ability and preferences to predict an equilibrium matching of scientists to careers and to their earnings evolution. Our empirical analysis, using the National Science Foundation's Scientists and Engineers Statistical Data System database, is consistent with theoretical predictions of (i) sorting by ability into basic versus applied science among academic scientists, but not among industry scientists; and (ii) sorting by higher taste for nonmonetary returns into academia over industry. The evolution of an earnings profile is consistent with these sorting patterns: the earnings trajectories of basic and applied scientists are distinct from each other in academia but are similar in industry. This paper was accepted by Lee Fleming, entrepreneurship and innovation.

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We explore how changes in ownership and managerial control affect the productivity and profitability of producers. Using detailed operational, financial, and ownership data from the Japanese cotton spinning industry at the turn of the last century, we find a more nuanced picture than the straightforward "higher productivity buys lower productivity" story commonly appealed to in the literature. Acquired firms' production facilities were not on average less physically productive than the plants of the acquiring firms before acquisition, conditional on operating. They were much less profitable, however, due to consistently higher inventory levels and lower capacity utilization-differences which reflected problems in managing the uncertainties of demand. When purchased by more profitable firms, these less profitable acquired plants saw drops in inventories and gains in capacity utilization that raised both their productivity and profitability levels, consistent with acquiring owner/managers spreading their better demand management abilities across the acquired capital.

Research Summary We study the processes of firm growth in the evolution of the Japanese cotton spinning industry during 1883–1914 by integrating strategy and historical approaches and utilizing rich quantitative firm‐level data and detailed business histories. The resultant conceptual model highlights growth outcomes of path dependencies as firms evolve across periods of single versus shared leadership, establish stability in shared leadership, or experience repeated discord‐induced top management team (TMT) leader departures. While most firms do not experience smooth transitions to stable shared TMT leadership, a focus on value creation, in conjunction with talent recruitment and promotion, enabled some firms to achieve stable shared leadership despite discord‐induced departures, engage in long‐term expansion, and emerge as “centers of gravity” for output and talent in the industry. Managerial Summary We demonstrate stable shared leadership is at root of firms who emerge as centers of gravity in an industry and account for the lion's share of output. Stable shared leadership enables growth strategies such as talent recruitment, product diversification, downstream integration, and acquisitions. Stable shared leadership, however, is extremely difficult to maintain. Most firms experience discord‐induced departures in TMTs due to politics and power struggles. Firms that deviate from this norm to become industry leaders achieve stable shared leadership by adhering to fundamental principles related to long‐term value creation as opposed to short‐term gain, adoption of merit‐based promotion systems in defiance of stereotypes, sharing of power within TMT leadership to enable efficient division of labor, and honorable resolution of conflicts and ethical breaches.

We explore how changes in ownership and managerial control affect the productivity and profitability of producers. Using detailed operational, financial, and ownership data from the Japanese cotton spinning industry at the turn of the last century, we find a more nuanced picture than the straightforward "higher productivity buys lower productivity" story commonly appealed to in the literature. Acquired firms' production facilities were not on average less physically productive than the plants of the acquiring firms before acquisition, conditional on operating. They were much less profitable, however, due to consistently higher inventory levels and lower capacity utilization-differences which reflected problems in managing the uncertainties of demand. When purchased by more profitable firms, these less profitable acquired plants saw drops in inventories and gains in capacity utilization that raised both their productivity and profitability levels, consistent with acquiring owner/managers spreading their better demand management abilities across the acquired capital.