Working Paper: NBER ID: w29260
Authors: Ashish Arora; Sharon Belenzon; Konstantin Kosenko; Jungkyu Suh; Yishay Yafeh
Abstract: In the interwar period, some American firms began to invest in basic scientific research. Using newly assembled firm-level data from the 1920s and 1930s, we find that companies invested in research because inventions increasingly relied on science, but American universities lagged behind both Europe and the scientific frontier. Firms close to the frontier, relying on disciplines which were underdeveloped in American academia, were likely to invest in research, especially if they were large and operated in concentrated industries (could internalize the benefits). Corporate science seems to have paid off, resulting in novel patents and high market valuations for those engaged in research.
Keywords: corporate research; scientific knowledge; innovation; technological advancement
JEL Codes: N8; N82; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| corporate investment in scientific research (G31) | production of valuable patents (O34) |
| scientific knowledge (D80) | innovation outputs (O36) |
| proximity to technological frontier (O49) | corporate investment in scientific research (G31) |
| corporate investment in scientific research (G31) | high stock market valuations (G10) |
| patents citing scientific articles (O34) | publishing in scientific journals (A14) |