« Back to Results
Loews Philadelphia, Regency Ballroom C2
American Finance Association
Innovation Investment: Human Capital and Stressful Situations
Saturday, Jan. 6, 2018 8:00 AM - 10:00 AM
- Chair: Arpit Gupta, New York University
Roadblock to Innovation: The Role of Patent Litigation in Corporate R&D
AbstractUsing a difference-in-difference design around the Supreme Court decision “eBay vs. MercExchange,” I examine how patent enforcement can affect corporate R&D. To identify the effects of the decision, I compare innovative activity across firms that were differentially exposed to patent litigation before the ruling. Across several measures, I find that the decision led to a general increase in innovation. This result confirms that the changes in enforcement induced by the ruling were successful in reducing part of the distortions caused by patent litigation. Exploring the channels, the results show that patent litigation negatively affects investment because it lowers the returns from R&D and exacerbates its financing constraints.
Bankruptcy, Team-specific Human Capital, and Innovation: Evidence From United States Inventors
AbstractThis paper studies the impact of bankruptcies on the career and productivity of inventors in the U.S. We find that when inventor teams are dissolved because of bankruptcy, inventors subsequently become less productive. When, instead, inventor teams remain intact and jointly move to a new firm, their post-bankruptcy productivity increases. Consistent with the labor market recognizing the value of team stability, we find that the probability of joint inventor reallocation post-bankruptcy is positively associated with past collaboration. Our results highlight the important role of team-specific human capital and team stability for the production of knowledge in the economy, and shed light on the microeconomic channels by which the process of “creative destruction” operates.
Does Economic Insecurity Affect Employee Innovation?
AbstractOver the past several decades, economic insecurity among U.S. households has been steadily increasing. The effects of economic insecurity on consumption have been well-studied, however, little is known about whether there are broader impacts. In this paper, we study whether economic insecurity, stemming from declines in housing wealth during the 2008 financial crisis, affects the propensity of employees to pursue risky projects at work. We examine this question through the lens of technological innovation, which has long been thought to be a key driver of economic growth and productivity. Using a unique dataset that links the output of patent inventors with their housing transactions, we find that employees that experienced a negative shock to their housing wealth during the crisis pursued less risky projects relative to others in the same firm and metropolitan area. The effects are more pronounced among employees with limited outside labor market opportunities, and among employees who had little equity in their house before the crisis. Overall, these findings are consistent with a career concerns model in which negative housing wealth shocks lead to lower failure tolerance due to costly default concerns and therefore reduced risk taking within the firm.
Harvard Business School
Brigham Young University
New York University
- G3 - Corporate Finance and Governance