Tom Nicholas

William J. Abernathy Professor of Business Administration

Tom Nicholas is a Professor in the Entrepreneurial Management Group of Harvard Business School. He holds a doctorate in Economic History from Oxford University. Prior to joining HBS, he taught Technology Strategy at MIT's Sloan School of Management and technology and finance courses at the London School of Economics. He was also an economics consultant in San Francisco where he performed economic analysis for environmental and antitrust litigation including Sun Microsystems v. Microsoft. At HBS he has taught the first year course, The Entrepreneurial Manager, and he currently teaches in Executive Education programs on entrepreneurship and intellectual property as well as two second year elective courses: The Coming of Managerial Capitalism, which examines entrepreneurship, innovation and business development in the United States over the past 230 years; and Venture Capital in Historical Perspective (with Felda Hardymon), which focuses on the changing organizational structure of the venture capital industry and its impact on entrepreneurship and innovation over time. He has received theFaculty Teaching Award in both the Required Curriculum and the Elective Curriculum and the Charles M. Williams Award for teaching excellence.

His research focuses on the historical foundations of entrepreneurship and wealth accumulation in Europe, and on the organizational structure and incentives for innovation in late nineteenth and early twentieth century America, Britain and Japan. His work shows how the foundations of new technology formation across countries can only be understood by examining the coexistence of large corporations, formal R&D establishments and independent inventors operating outside the boundaries of firms. It also highlights that alternative mechanisms to patents—specifically prizes—can exert a powerful influence on the rate and direction of technological change. He has also constructed historical real estate price indices for Manhattan from the 1890s through to the Great Depression in order to understand the relationship between real estate and stock market cycles.​

  1. Scale and Innovation During Two U.S. Breakthrough Eras

    by Tom Nicholas

    The relationship between scale and innovation is central to R&D-based growth. This paper uncovers new empirical evidence using comprehensive data on U.S. R&D firms active during the interwar and post-WWII eras. Variability in the nature of innovation is shown to be a primary determinant of the scale effect with novel innovation scaling at approximately half the rate of normal technological discoveries. This result holds across time and for different firm types (public, private and external finance dependent). The findings help to explain why novel innovations tend to be developed in such unpredictable ways.
  2. Prizes, Patents and the Search for Longitude

    by Tom Nicholas

    The 1714 Longitude Act created the Board of Longitude to administer a large monetary prize and progress payments for the precise determination of a ship’s longitude. It is frequently cited to justify the use of prize-based incentives over patents. We use new data on marine chronometer inventors from 1714 to 1939 to show that the search for longitude reflected a complementarity between prize and patent-based incentives. The propensity to patent was high and the level of patents increased significantly as chronometers were refined. While the prize encouraged competitive entry, patents aided disclosure.
  3. The Origins of High-Tech Venture Investing in America

    by Tom Nicholas

    The United States has developed an unparalleled environment for the provision of high-tech investment finance. Today it is reflected in the strength of agglomeration economies in Silicon Valley, but historically its origins lay in the East Coast. Notably, the New England Council’s immediate post-WWII efforts to create the American Research and Development Corporation created a precedent for “long-tail” high-tech investing. This approach became institutionalized in America over subsequent decades in a way that has been difficult to replicate in other countries. The role of history helps to explain why.