Abstract: Nortel and the Canadian Governemnt

John Smart

Abstract

Until its eclipse in 2000 Nortel was historically the largest and most successful high technology company in Canadian history. The federal government played a pivotal role in its early successes in the 1950s and 1960s but was nowhere to be found as the company faltered and almost disappeared. Ottawa went out of its way to help Northern Electric build new research labs in Ottawa after 1958 and then heavily subsidized Northern's digital telephone strategy after 1968. The Nortel case provides a unique look at how changing attitudes to business stimulus and innovation affected a major Canadian company. The paper concentrates on two episodes in Nortel's history—the creation of Bell-Northern Research on government land in Ottawa in 1958 and the foundation of Microsystems International (Northern's chip factory) with federal money in 1968 and contrasts this early hands-on treatment of the company with the hands-off attitude adopted by Ottawa as the company almost collapsed after 2000.