Using newly-assembled data encompassing up to 75 countries and starting circa 1910, we find that the Schumpeterian process of creative destruction aptly describes the replacement of large firms by other firms, but exceptions to the norm of replacement are not rare and replacement is often not by...

Creative destruction not only involves bringing new technology to market, it imposes higher risk on the future of existing assets. We characterize the asset pricing implications of creative destruction when investors compete for market share. Compared to the social optimum, the quest for...

We construct a model of creative destruction with endogenous firm dynamics. We integrate the theory into a general equilibrium multi-country model of technological convergence where countries interact via international spillovers. We derive implications for both firm dynamics and aggregate...

Artificial Intelligence is a powerful new technology that will likely have large impacts on the size, direction and composition of international trade flows. Yet almost nothing is known empirically about this. One AI-enabled set of services that can be tracked resides in the palm of our hands:...

Do large firms produce more valuable inventions, and if so, why? After confirming that large firms indeed produce more valuable inventions, we consider two possible sources: a superior ability to invent, or a superior ability to extract value from their inventions. We develop a simple model that...

Beginning in the late 1980s, American corporations began increasingly linking the compensation of central research personnel to the economic objectives of the corporation. This paper examines the impact of the shifting compensation of the heads of corporate research and development. Among firms...

Existing theories and empirical research on how innovation occurs largely assume that innovativeness is an inherent characteristic of the individual and that people with this innate ability select into jobs that require it. In this paper, we investigate whether people who do not self-select into...

Markets for technology provide a vibrant channel through which firms purchase ownership rights to patented inventions. Although such transactions enable firms to secure access to intangible assets originating beyond their borders, they also provide cues to competitors regarding the purchasing...

The incremental innovations that underly much of modern economic growth typically involve changes to one or more components of a complex product. This creates a tension. On the one hand, a principal would like an agent to contribute innovative components. On the other hand, ironing out...

Microeconomic flexibility, by facilitating the process of creative-destruction, is at the core of economic growth in modern market economies. The main reason for why this process is not infinitely fast, is the presence of adjustment costs, some of them technological, other institutional. Chief...