Essays on Technological Change: Firm Organization, Problem Selection, and Diffusion

Abstract

This dissertation investigates three aspects of technological change. In the first essay, I build on prior research that suggests new ventures are often more innovative than established firms. One unexplored reason for this might be that new ventures work on different problems to begin with. I test this idea in the U.S. medical device industry and find evidence that established firms tend to select problems to which they can apply prior investments in complementary capabilities, leaving new ventures to undertake invention in less crowded areas. In the next chapter, I explore how artificial intelligence (AI) is being applied to medical devices, and which occupations are most affected. My analysis supports the notion that AI is different from prior digital technologies in its ability to perform non-routine tasks, but that concerns over its affect on high-skill labor might be misplaced. This provides some of the first systematic evidence of how AI is actually diffusing. Together, these two essays provide new insight into the direction of inventive activity in the medical device industry. Last, I look inside a firm to study how organizational factors influence communication patterns in an innovative financial services firm. This study complements the prior two by seeking to unpack the "black box" of a firm's innovation activities.