Knowledge Spillovers and Corporate Investment in Scientific Research
- (pp. 871-98)
Abstract
Using data on 800,000 corporate publications and patent citations to these publications between 1980 and 2015, we study how corporate investment in research is linked to its use in the firm's inventions, and to spillovers to rivals. We find that private returns to corporate research depend on the balance between two opposing forces: the benefits from the use of science in own downstream inventions, and the costs of spillovers to rivals. Consistent with this, firms produce more research when it is used internally, but less research when it is used by rivals. As firms become more sensitive to rivals using their science, they are likely to reduce the share of research in R&D.Citation
Arora, Ashish, Sharon Belenzon, and Lia Sheer. 2021. "Knowledge Spillovers and Corporate Investment in Scientific Research." American Economic Review, 111 (3): 871-98. DOI: 10.1257/aer.20171742Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- D25 Intertemporal Firm Choice: Investment, Capacity, and Financing
- G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
- I23 Higher Education; Research Institutions
- O31 Innovation and Invention: Processes and Incentives
- O33 Technological Change: Choices and Consequences; Diffusion Processes
- O34 Intellectual Property and Intellectual Capital