Working Paper: NBER ID: w15437
Authors: Ajay K. Agrawal; Iain M. Cockburn; Carlos Rosell
Abstract: We examine variation in the concentration of inventive activity across 72 of North America's most highly innovative locations. In 12 of these areas, innovation is particularly concentrated in a single, large firm; we refer to such locations as "company towns.'' We find that inventors employed by large firms in these locations tend to draw disproportionately from their firm's own prior inventions (as measured by citations to their own prior patents) relative to what would be expected given the underlying distribution of innovative activity across all inventing firms in a particular technology field. Furthermore, we find such inventors are more likely to build upon the same prior inventions year after year. However, smaller firms in company towns do not exhibit this myopic behavior; they draw upon prior inventions as broadly as their small-firm counterparts in more diverse locations. In addition, we find that inventions by large firms in company towns have less impact than those produced elsewhere, although the difference is modest, and that the impact is disproportionately appropriated by the inventing firms themselves. Finally, the geographic scope of impact realized by company town inventions is narrower, whether produced by large or small firms.
Keywords: Innovation; Company Towns; Knowledge Spillovers
JEL Codes: O18; O33; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Myopic behavior in large firms (D21) | Build upon their own inventions (O39) |
| NIH syndrome (I12) | Myopic behavior in large firms (D21) |
| Small firms in company towns (L19) | Do not demonstrate myopic behavior (E71) |
| Geographical concentration of inventive activity (O36) | Increased self-citation rates (A14) |
| Inventors in company towns (N61) | Higher levels of creative myopia (D91) |
| Geographical concentration of inventive activity (O36) | Reduced external citations (A14) |
| Large firms in company towns (L19) | Less impact on subsequent innovation (O39) |