This article investigates how a firm's financial strength affects its dynamic decision to invest in R&D. We estimate a dynamic model of R&D choice using data for German firms in high-tech manufacturing industries. The model incorporates a measure of the firm's financial strength, derived from...

This paper estimates a dynamic structural model of discrete R&D investment and quantifies its cost and long-run benefit for German manufacturing firms. The dynamic model incorporates linkages between the firm's R&D choice, product and process innovations, and future productivity and profits. The...

Stringent labor laws can provide firms a commitment device to not punish short-run failures and thereby spur their employees to pursue value-enhancing innovative activities. Using patents and citations as proxies for innovation, we identify this effect by exploiting the time-series variation...

Several studies based on US and UK data have used market value as an indicator of the firm''s expected R&D performance. However, there exist no investigations for the continental countries in the European Union, partly because the analysis is complicated by data availability problems. In this...

Using detailed product- and invention-level data from the pharmaceutical industry, we demonstrate that firms with particularly high-selling "blockbuster" products concentrate their development efforts on new products that both target the same customer segments and are more likely to be...

Most U.S. innovation output originates from firms that operate R&D facilities across multiple local markets. We study how this geographic structure influences aggregate innovation and growth, and whether it is socially optimal. First, we develop an endogenous growth model featuring multi-market...

We quantify the private returns to government R&D contracts awarded to firms. We present new evidence that R&D contracts not only finance innovation but also embed an implicit government guarantee of noncompetitive future procurement for the winning R&D contractor. We measure its private value...

We examine how artificial intelligence transforms the core pillars of collaboration--performance, expertise sharing, and social engagement--through a pre-registered field experiment with 776 professionals at Procter & Gamble, a global consumer packaged goods company. Working on real product...

We study the post-World War II "Golden Age" of American corporate research from 1945 to 1980, using multiple indicators of corporate research activity. We use an ensemble learning approach to classify firms as either Science Leaders, Absorbers or Followers. Our analysis reveals that only a small...

This paper studies how hedge fund activism reshapes corporate innovation. Firms targeted by hedge fund activists experience an improvement in innovation efficiency during the five-year period following the intervention. Despite a tightening in R&D expenditures, target firms experience increases...