Introduction of Innovations during the 2007-8 Financial Crisis: The Role of Innovator Type

50 Pages Posted: 29 Apr 2014

See all articles by James Waters

James Waters

University of Warwick - Warwick Business School

Multiple version iconThere are 2 versions of this paper

Date Written: April 29, 2014

Abstract

In this paper, we examine the changes in innovation by US companies, non-US companies, and US universities during the 2007-8 financial crisis. Our theoretical framework describes their different solutions to the informational and control problems associated with innovation funding, and how a financial crisis affects their ability to attract funding. We hypothesise that the change in the amount of innovation undertaken during the crisis will be negatively influenced by external funding requirements and innovation uncertainty for companies, but positively influenced by them for universities. Our examination of patenting in the US finds agreement with our theoretical predictions. We also find that for US companies the effect of external funding requirements becomes positive as time since the crisis increases. Counterfactuals investigate the effect of US companies retaining their innovation portfolios but responding to the crisis the same way as non-US companies or US universities, and vice versa. US company responses are associated with larger reductions in patenting.

Keywords: Innovation, patenting, economic crisis, financing constraint

JEL Classification: O31, G01

Suggested Citation

Waters, James, Introduction of Innovations during the 2007-8 Financial Crisis: The Role of Innovator Type (April 29, 2014). Nottingham University Business School Research Paper No. 2014-03. Available at SSRN: https://ssrn.com/abstract=2430675

James Waters (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

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