Browsing by Author "Arora, Ashish"
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Item Open Access Essays on Corporate Investment in Scientific Research(2021) Sheer, LiaIn light of a reduction in corporate scientific research in recent decades, my dissertation examines the mechanisms that drive corporate investment in scientific research. More specifically, I explore the relationship between scientific research and its use in invention, how it is organized within the firm, and its aggregated effect on firm-level outcomes, within large firms in the U.S.. To answer my research questions, I construct a novel dataset that traces above 4,000 U.S. publicly traded firms’ investment in science and invention for 35 years (1980-2015). The second chapter of the dissertation provides an overview of the dataset and presents its advantages over previous data. The third chapter of the dissertation examines how the production of scientific research by U.S. corporations is related to its use in invention by the focal firm and to spillovers captured by rivals’ inventions. The fourth chapter further looks at the heterogeneity in firms’ investment in science by examining how the within-firm organization of scientific discovery and invention conditions research output. The findings from chapter three and chapter four suggest that as spillovers of science to rivals increase, and the greater the connectedness between research and invention practices within the firm, the less likely firms are to invest in internal scientific research.
Item Open Access Essays on Corporate Science and Firms’ Interactions with Academia(2024) Shvadron, DrorCorporate science plays a critical role in the modern research landscape, with firms making substantial investments in internal research and development and engaging extensively with academic institutions. Understanding the dynamics that drive corporate participation in scientific research is crucial for fostering innovation and technological progress. This dissertation explores the complex factors that shape firms' incentives to invest in science and the outcomes resulting from their engagement with the broader academic community.
The first study examines how firms' ability to capture value from their scientific investments influences their incentives to conduct additional research. By exploiting an exogenous reduction in patent protection, I find that firms respond to weaker intellectual property rights by reducing subsequent research in affected areas, particularly in technologies with thinner markets for technology. This suggests that patents and commercialization capabilities act as strategic substitutes. The results imply that stronger patents encourage corporate research but also shift the locus of research from larger to smaller firms and startups.
Shifting the focus outside the firm, the second study investigates why firms produce scientific research and share it publicly. Using data on corporate publications between 1990 and 2012, I show that external scientists build upon firms' research, producing findings that firms subsequently incorporate into their own innovations. To account for potential bias arising from the unobserved quality of the underlying science, I develop an instrumental variable based on the quasi-random assignment of manuscripts to journal issues. The results reveal that follow-on research by external scientists drives firms' subsequent scientific investments and patenting outcomes, with benefits being more pronounced for technological leaders, firms with complementary assets, and those in emerging fields. Moreover, follow-on research serves to validate the quality of firms' science, which is particularly valuable when there is greater uncertainty surrounding the research.
The third study introduces DISCERN 2.0, a major update and extension of the DISCERN dataset, which tracks the innovative output of U.S. public firms over the past four decades. The new version incorporates several key improvements, including extended coverage to 2021, the adoption of PatentsView and OpenAlex as primary data sources, and the inclusion of pre-grant patent applications and patent reassignment information. These enhancements enable researchers to investigate emerging trends and dynamic effects in corporate research and invention. An analysis of trends using DISCERN 2.0 reveals significant increases in corporate scientific publications related to quantum computing, AI, and robotics, highlighting the growing investments and prominent role of large firms in advancing these science-based technologies.
The final chapter focuses on the funding of scientific training in the United States. Using a comprehensive dataset spanning 75 years of doctoral dissertations, I examine the sources of financial support for PhD students, the fields they pursue, and how funding patterns have evolved over time. The analysis reveals significant shifts in funding sources, particularly within the government and private sectors, and highlights the substantial impact of different funding organizations' scale and subject matter priorities on the share of U.S. PhD graduates in specific fields. Notably, government funding plays a crucial role in determining the annual number of scientists produced by the U.S. higher education system, with an average of 80 additional domestic PhD graduates for every 100 dissertations funded.
Collectively, these studies contribute to our understanding of the key drivers of corporate scientific research and innovation. They underscore the importance of intellectual property protection, engagement with the broader scientific community, and the role of funding in shaping the scientific workforce. By providing new insights and valuable data resources, this dissertation lays the groundwork for further research on the dynamics of corporate science and its impact on technological progress. Ultimately, the findings presented here have important implications for firms seeking to optimize their R&D strategies and for policymakers aiming to foster an environment conducive to scientific advancement and economic growth.
Item Open Access Essays on Firm Innovation in Dynamic Product Markets: Examining Competitive Interactions During Technological Commercialization(2018) Du, Kevin KaiHow can firms gain competitive advantage from available technologies is a key question in strategy. In my dissertation, I develop new theory and provide evidence to show that a firm’s focus in selective technological areas may play a central role of creating competitive advantage in industries with rapid product turnover. Firms commit limited resources when selecting which technologies to develop, affecting the composition of their product portfolios and allowing some firms to subsequently capture greater value relative to others. I examine how firm attention to technologies within an industry affect their ability to swiftly incorporate them into products (essay 1); establish a theoretical foundation for firm-to-firm matching in the market for alliances (essay 2); develop an econometric methodology based on the insights from a firm-to-firm matching market (essay 3); and investigate how common technological interests attract partners in the market for interfirm collaboration (essay 4). Across four essays, I find that competitive advantage varies with the firm’s technological composition, its current focal area of technological development, and the collection of potential alliance partners. These findings contribute to understanding conditions under which a firm captures value from the component technologies scattered across its industry, and the key tradeoffs associated with allocating its technological focus.
Item Open Access Essays on Science and Innovation(2022) Suh, JungkyuThe commercialization of scientific discoveries into innovation has traditionally been the purview of large corporations operating central R&D laboratories through much of the past century. The past four decades have seen this model being gradually supplanted by a more decentralized system of universities and VC-backed startups that have displaced large corporations as the conductors of scientific research. This dissertation tries to understand how firms create and exploit scientific knowledge in this changing structure of American innovation. The first study examines how scientific knowledge can expand markets for technology and thereby encourage the entry of new science-based firms into invention. The argument is tested in the context of the U.S. patent market and finds that patents citing scientific articles tend to be traded more often, even after controlling for various proxies of patent quality. The second study explores why some American firms started investing in scientific research in the early twentieth century. The chapter relies on a newly assembled panel dataset of innovating firms consisting of their investments in science, patenting, financials and ownership between 1926 and 1940. The empirical patterns reveal that the beginnings of corporate research in America were driven by companies at the technological frontier attempting to take advantage of opportunities for innovation made possible by scientific advances. This investment was especially pronounced for firms based in scientific fields that were underdeveloped in the United States. The final study asks why startups are more likely to bring scientific advances to market. The existing literature has explained the higher innovative propensity of some startups by their superior scientific capabilities. However, it is also possible that the apparent innovativeness of startups may be a result of firm choice, rather than inherent capability gaps with respect to incumbents. Startups may choose novel products that are riskier but offer higher payoffs because they pay a higher entry cost in the form of investments in new factories, sales and distribution channels. I test this entry cost mechanism in the context of the American laser industry which responded to an exogenous influx of Soviet laser science following the end of the Cold War.
Item Open Access Essays on the Direction of Technical Change(2023) Dionisi, Bernardo AlessandroThe rate and direction of inventive activity are central to firms’ competitiveness as well as economic growth. A fundamental question arises from the fact that innovation increasingly relies on public scientific findings, many of which are freely published and accessible. How can firms capture private value from publicly available knowledge? Chapter 2 investigates the concept of first-mover advantage in utilizing public science. It finds that being first to apply cutting-edge public science enables broader patents, but requires active internal R&D to recognize opportunities early. Chapter 3 surveys the extensive literature employing quasi-experimental techniques to quantify forces shaping the direction of innovation. It contributes software tailored for innovation data to assist future research. Chapter 4 leverages FDA data to empirically analyze post-acquisition innovation trajectories in medical devices, revealing the slowed evolution of acquired technologies.Overall, this dissertation elucidates how firms derive competitive advantage from public science, surveys techniques for quantifying innovation’s direction, and empirically examines merger impacts on medical technology advancement. The studies contribute novel data, methods, and insights to support firms, policymakers, and other stakeholders with an interest in the evolution of technical change.
Item Open Access Internal Capital, External Knowledge, and Random Draws: Three Drivers of Organizational Structure(2016) Rios, Luis AdrianThis dissertation explores the complex interactions between organizational structure and the environment. In Chapter 1, I investigate the effect of financial development on the formation of European corporate groups. Since cross-country regressions are hard to interpret in a causal sense, we exploit exogenous industry measures to investigate a specific channel through which financial development may affect group affiliation: internal capital markets. Using a comprehensive firm-level dataset on European corporate groups in 15 countries, we find that countries
with less developed financial markets have a higher percentage of group affiliates in more capital intensive industries. This relationship is more pronounced for young and small firms and for affiliates of large and diversified groups. Our findings are consistent with the view that internal capital markets may, under some conditions, be more efficient than prevailing external markets, and that this may drive group affiliation even in developed economies. In Chapter 2, I bridge current streams of innovation research to explore the interplay between R&D, external knowledge, and organizational structure–three elements of a firm’s innovation strategy which we argue should logically be studied together. Using within-firm patent assignment patterns,
we develop a novel measure of structure for a large sample of American firms. We find that centralized firms invest more in research and patent more per R&D dollar than decentralized firms. Both types access technology via mergers and acquisitions, but their acquisitions differ in terms of frequency, size, and i\ntegration. Consistent with our framework, their sources of value creation differ: while centralized firms derive more value from internal R&D, decentralized firms rely more on external knowledge. We discuss how these findings should stimulate more integrative work on theories of innovation. In Chapter 3, I use novel data on 1,265 newly-public firms to show that innovative firms exposed to environments with lower M&A activity just after their initial public offering (IPO) adapt by engaging in fewer technological acquisitions and
more internal research. However, this adaptive response becomes inertial shortly after IPO and persists well into maturity. This study advances our understanding of how the environment shapes heterogeneity and capabilities through its impact on firm structure. I discuss how my results can help bridge inertial versus adaptive perspectives in the study of organizations, by
documenting an instance when the two interact.
Item Open Access The Management, Organization, and Geography of Novel Innovation(2017) Cunningham, Colleen MaryThis dissertation develops new theory and evidence on the antecedents and consequences of innovation for firms, and includes three empirical studies focusing on various facets of the management, organization, and geography of novel innovation.
Chapter 1 examines the role of relationships in mitigating change to firm boundaries for new firms entering the medical device industry, focusing in part on how the timing of novel innovation influences whether firms integrate their sales function. Using a new dataset on more than 1,600 new medical device manufacturers that documents both their full product portfolios and sales governance modes over time, this paper finds evidence that relationships develop and influence sales governance choices only when they cross firm boundaries. Further, launching a novel innovation has a nuanced relationship with integration: early in a firm's life, it increases the likelihood of sales integration, but this relationship diminishes over time. This research offers new insights into the limits of relational governance, and contributes to our understanding of the nuanced impact of novel innovation on firm boundaries.
Chapter 2 examines the “dual role” of local inventive activity in firm innovation. On one hand, a vibrant, local research community provides inputs into internal research and development activities: the seeds of internal invention. On the other, external inventive activity provides inventions which can substitute for internally generated inventions: the fruit. Furthermore, inventive activities also provide fertile ground for imitation. This paper develops a simple model of how geographically proximate inventive activity—or clusters—affect firms' innovation choices. Firm invention capability importantly conditions the value to a firm of local innovation-related inputs. The paper employs a recent survey of product innovation and the “division of innovative labor” among nearly 5,000 US manufacturing firms. Absent a direct measure, invention capability is treated as a latent, unobserved variable, and a latent class multinomial model is used to infer its value. Consistent with the model's predictions, more inventive firms make use of the richer soil whereas less inventive firms pick the fruit. Further, more capable firms make use of higher value external sources in clusters. This research expands our understanding of how location shapes both who innovates and how they innovate, and provides a novel method for identifying latent capability.
Chapter 3 examines how the novelty of a startup's invention conditions its likelihood of venture capital (VC) financing. In it, I argue novelty increases uncertainty about commercial viability, thus requiring startups to search more extensively to find willing VCs to fund them. Two factors lower the cost of search: prior startup experience and a thick VC market. Because these factors make extensive search cheaper, novel startups will disproportionately benefit from experience and cluster location. To test this, I build a hand-collected dataset of 4,700 patenting US medical device startups, and follow them from “birth” (first patent), to VC investment (if any), to eventual success or failure. While novelty has no impact on funding or success on average, firms with novel technologies who also have a lower cost of finding and attracting potential partners are much more successful than those with more incremental technologies. Further, thick markets are less useful for firms pursuing novel technologies if they lack prior startup experience, and experienced founders are not especially advantaged in thin markets. Advancing theories of innovation and entrepreneurship, this study highlights when, where, and for whom novelty pays.