Working Paper: NBER ID: w23187
Authors: Ashish Arora; Sharon Belenzon; Lia Sheer
Abstract: If scientific knowledge is a public good, why do firms invest in research? This paper revisits this classic question with new data on patent citations to scientific publications by corporations. Using data on 4,736 firms for the period 1980-2006, we document that corporate investment in research is closely related to its use in internal invention. Specifically, firms that build on their scientific research in their inventive activity invest more in research than those that are less successful in using their research internally. Consistent with this, research that is internally used is valued more and is more productive. Our results are consistent with the view that to justify further investment in research corporate scientists need to demonstrate that their recent scientific work is useful for the core inventive activity of the sponsoring firm.
Keywords: Innovation; Scientific Research; Development; Role of Science in Corporate R&D
JEL Codes: O31; O32; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| internal citations (Y50) | future publications (Y50) |
| corporate research investment (G30) | internal use in invention (O36) |
| internal use of research (O32) | R&D productivity (O32) |
| internal use of research (O32) | stock market valuation of scientific publications (G10) |
| spillovers to competing firms (O36) | internal production of scientific knowledge (O36) |