The Impact of Organization Capital on Firm Innovation

61 Pages Posted: 25 Oct 2015 Last revised: 7 Nov 2015

See all articles by Bill B. Francis

Bill B. Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management

Suresh Babu Mani

Rensselaer Polytechnic Institute (RPI)

Qiang Wu

Rensselaer Polytechnic Institute (RPI) - Lally School of Management

Date Written: October 18, 2015

Abstract

Using a sample of patents granted to U.S. firms over the period 1980-2008, we find that firms’ organization capital has a positive impact on innovation. Specifically, we find that firms with more organization capital generate greater number of patents and receive more citations on their patents. The results are robust to the use of alternative measures of organization capital and innovation and using a two-stage least squares method and propensity-score matching to control for endogeneity. In addition, we find that better capabilities to handle inherent difficulties associated with the innovation process and reducing career concern threats are possible mechanisms through which organization capital affects firm innovation. Overall, the results provide strong evidence about the vital role organizational characteristics such as investment in organization capital play for innovation, an important driver of firm value and economic growth.

Keywords: Organization capital; innovation; patents; citations

JEL Classification: G31; O31

Suggested Citation

Francis, Bill B. and Mani, Suresh Babu and Wu, Qiang, The Impact of Organization Capital on Firm Innovation (October 18, 2015). Available at SSRN: https://ssrn.com/abstract=2675779 or http://dx.doi.org/10.2139/ssrn.2675779

Bill B. Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management ( email )

Troy, NY 12180
United States

Suresh Babu Mani (Contact Author)

Rensselaer Polytechnic Institute (RPI) ( email )

Troy, NY 12180
United States

Qiang Wu

Rensselaer Polytechnic Institute (RPI) - Lally School of Management ( email )

110 8th St
Troy, NY 12180
United States
518-276-3338 (Phone)
518-276-8661 (Fax)

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