Now in its third year, the Reiter award is named for Stanley Reiter, Charles E. and Emma H. Morrison Professor of Managerial Economics and Decision Sciences at Kellogg. It is presented to a Kellogg faculty member whose paper is judged by a panel of Kellogg professors across disciplines to be the best paper written in the preceding four calendar years.

"Knowledge and Competitive Advantage is a masterful achievement,” Reiter said. “It makes a valuable contribution to our understanding of the connections between basic knowledge and the growth of industries. This is fundamental to management and industrial policy.”

Said Murmann, “I am deeply honored to be recognized by my peers and to receive the award named for someone who has had such a profound impact on economic history.” He referred to a 1958 paper titled “1,945 British Steamships,” in which Reiter and Jonathan R.T. Hughes took the then-radical approach of quantifying their research by using statistical theory and econometric tools.

Murmann said he also drew inspiration from the works of two other noted researchers: Nobel Prize-winning economist Herbert A. Simon, known for creating the theory of “bounded rationality,” and celebrated psychologist Donald T. Campbell, who taught at Northwestern University in the 1960s.

The contribution of Knowledge and Competitive Advantage, Murmann said, is that it demonstrates how firms and nations prosper or fail under the pressure of competitive capitalism. He noted that the book also shows how the composition of a country’s institutions plays a role in determining which of its firms will be globally successful.

Murmann spent nine years on his book, much of it studying the life histories of 350 synthetic-dye firms. He traces how Germany came to dominate the industry for several reasons: Its universities trained more chemists than did England or the United States, so they were able to conduct extensive product research. Germany did not have a patent system, which allowed any number of firms to enter the market and compete in producing the best dyes.

This coevolution of firms, technology and government in each country had an effect on the political economy into the 20th century, Murmann said. He noted that “Germany’s example has parallels in the biotech industry, where access to scientific talent is crucial to a firm’s success.”

Murmann, whose research also earned him the 2004 Schumpeter Prize, named for Austrian economist Joseph Schumpeter, said he will continue to follow the industry through World War I into the 21st century to show how world trading patterns have changed.

The 2004 Reiter Award panel was composed of the following Kellogg School professors: Ehud Kalai, the James J. O'Connor Distinguished Professor of Decision and Game Sciences and director of the Center for Strategic Decision-Making; Robert Magee, senior associate dean, faculty and research, and the Keith I. DeLashmutt Distinguished Professor of Accounting Information and Management; Daniel Spulber, the Elinor Hobbs Distinguished Professor of International Business and professor of management strategy; Brian Sternthal, the Kraft Professor of Marketing; and Edward Zajac, the James F. Beré Distinguished Professor of Management & Organizations.