Although technological learning is indispensable for economic transformation in developing countries, recent research on industrial policy both lacks consensus regarding policy models and engages in little long-term analysis of policy impacts. This study contributes to this literature through a controlled case comparison of the varied addition of new and unique functional capacities in the Mexican and Brazilian automotive and petroleum industries from 1975 to 2000. It offers a dynamic industrial policy perspective that underscores the explanatory role of alternating state- and market-led industrial policy approaches and their associated cumulative processes of “exploration” and “exploitation” (March (1991)). It also suggests that two background conditions—prior investments in learning and exogenous shocks that undermine the status quo—intervene decisively in the successful sequencing of policy approaches. The study concludes by proposing a framework that recognizes three main learning pathways formed through different configurations of the main independent variable and background conditions. This framework can be deployed as a rough predictive tool to assess how other industries might most effectively increase their technological sophistication.

Using panel data on top management characteristics and a management quality factor constructed using common factor analysis on individual management quality measures, we analyze the relation between top firm management quality and corporate innovation input and output. We show that top management quality is an important determinant of corporate innovation, with individual aspects of management quality affecting innovation in younger and older firms differently. Further, firms with higher top management quality engage in more risky (“explorative”) innovation strategies. Finally, hiring more and higher-quality inventors is an important channel through which firms with higher management quality achieve greater innovation output.

This article provides a normative justification for unions. It discusses three arguments. The argument from consent justifies unions in some circumstances, but if the employer prefers to not bargain with unions, it may provide very little justification. The argument from contestability takes as its starting point the fact that employment contracts are incomplete contracts, where authority takes the place of complete contractual terms. This theory of contracts implies that consent to authority has been given under ignorance, and, therefore, that authority cannot be justified by consent. Contestability is a mechanism that can handle this problem for consent theory. It demands transparency, channels for voice, and a forum where contestations can be evaluated. This idea can be implemented in firms in different ways, but the argument from the separation of powers implies that unions are uniquely suited to implement contestability, since they are organized outside of the employer’s domain of authority.