Knowledge Spillovers and Corporate Investment in Scientific Research
Ashish Arora, Sharon Belenzon, Lia Sheer
American Economic Review · 2021 · Volume 111 · Issue 3
Abstract
Using data on 800,000 corporate publications and patent citations to these publications between 1980 and 2015, we study how corporate investment in research is linked to its use in the firm's inventions, and to spillovers to rivals. We find that private returns to corporate research depend on the balance between two opposing forces: the benefits from the use of science in own downstream inventions, and the costs of spillovers to rivals. Consistent with this, firms produce more research when it is used internally, but less research when it is used by rivals. As firms become more sensitive to rivals using their science, they are likely to reduce the share of research in R&D.
Keywords
Firm Behavior: Empirical Analysis, Intertemporal Firm Choice: Investment, Capacity, and Financing, Capital Budgeting, Fixed Investment and Inventory Studies, Higher Education, Research Institutions, Innovation and Invention: Processes and Incentives, Technological Change: Choices and Consequences, Diffusion Processes, Intellectual Property and Intellectual Capital
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