A new study by Professors Francesco Cinnirella, Erik Hornung and Julius Koschnick sheds light on a key driver of innovation during Germany’s path to industrialisation: economic societies. Published open access in The Economic Journal under the title “Flow of Ideas: Economic Societies and the Rise of Useful Knowledge”, the paper shows that these largely forgotten institutions played an important role in shaping regional technological progress over more than a century.
Economic societies, which began to be established across Europe from the mid-18th century onwards, aimed to promote economic progress by collecting, producing, and disseminating useful knowledge. In Germany, these societies emerged in the wake of the Seven Years’ War (1756 - 1763) as part of reform efforts, often under state initiative. Unlike in Britain or France, where such associations were often based in capital cities, a decentralised structure emerged in Germany, with societies founded in many different towns and regions.
The researchers make use of this regional distribution and link it to long-term innovative capacity. To do so, they recorded where the roughly 3,300 members of the societies lived and examined whether these locations later had higher numbers of patent applications and exhibited innovations at the World’s Fair in Vienna.
Francesco Cinnirella, Erik Hornung, and Julius Koschnick thus identify a clear pattern: the more members a region had, the more innovative it was. This was particularly evident during the Second Industrial Revolution, with up to 25% higher patent activity in regions with stronger society networks.
What mechanisms explain this effect? The authors argue that economic societies created an environment in which knowledge could circulate easily. Through public lectures, technical journals, prize competitions and libraries, the societies lowered the barriers to accessing new scientific ideas. They also helped establish vocational schools, enabling the training of skilled mechanics, who were central to 19th-century technological change.
Remarkably, members of the same society, residing in different regions, often invested in similar industries, suggesting that the exchange of knowledge within these groups influenced the direction of technological change. Over time, this led to regional specialisation and path-dependent development, effects comparable in size to the introduction of railroads.
The findings also echo the founding vision of institutions such as the Handelshochschule in Cologne, established in 1901. Rooted in the idea of bridging academic knowledge and economic practice, the school emerged at a time when the value of applied knowledge and structured vocational training was becoming increasingly evident. A development that the study traces back to the influence of economic societies.
The full paper is available open access and contributes to ongoing debates on the social roots of innovation, the role of informal education, and the long-term effects of knowledge diffusion.