Essays on Corporate Investment in Scientific Research

Abstract

In 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.