Growth Through Heterogeneous Innovations

60 Pages Posted: 28 Oct 2010 Last revised: 23 Sep 2016

See all articles by Ufuk Akcigit

Ufuk Akcigit

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); Center for Economic and Policy Research (CEPR)

William Kerr

Harvard University - Entrepreneurial Management Unit

Multiple version iconThere are 7 versions of this paper

Date Written: September 20, 2016

Abstract

We build a tractable growth model where multi-product incumbents invest in internal innovations to improve their existing products, while new entrants and incumbents invest in external innovations to acquire new product lines. External and internal innovations generate heterogeneous innovation qualities, and firm size affects innovation incentives. This framework allows us to analyze how different types of innovation contribute to economic growth and how the firm size distribution can have important consequences for the types of innovations realized. Our model aligns with many observed empirical regularities, and we quantify our framework by matching Census Bureau operating data with patent data for U.S. firms. We observe that internal innovation scales moderately faster with firm size than external innovation.

Keywords: Endogenous Growth, Innovation, External, Internal, Research and Development, Patents, Citations, Scientists, Entrepreneurs

JEL Classification: O31, O33, O41, L16

Suggested Citation

Akcigit, Ufuk and Kerr, William R., Growth Through Heterogeneous Innovations (September 20, 2016). Harvard Business School Entrepreneurial Management Working Paper No. 11-044. Available at SSRN: https://ssrn.com/abstract=1698787 or http://dx.doi.org/10.2139/ssrn.1698787

Ufuk Akcigit

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

HOME PAGE: http://www.ufukakcigit.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Center for Economic and Policy Research (CEPR) ( email )

London
United Kingdom

William R. Kerr (Contact Author)

Harvard University - Entrepreneurial Management Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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