Finance and Corporate Innovation: A Survey

59 Pages Posted: 1 Nov 2017 Last revised: 25 Dec 2017

See all articles by Jie He

Jie He

University of Georgia - Department of Finance

Xuan Tian

Tsinghua University - PBC School of Finance

Date Written: December 22, 2017


Corporate innovation has become an increasingly important topic that attracts a great deal of attention from academic researchers in financial economics in recent years. Although the top three finance journals (i.e., the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies) together published a total of only 5 papers on the topic of corporate innovation between 2000 and 2008, the number of such papers published by these three journals has skyrocketed to 56 ever since 2009 (until 2017Q3). This newly emerged strand of research generally has two central themes: (1) how to best motivate corporate managers to invest in innovation; and (2) how to finance innovation efficiently. The purpose of this survey is to provide a synthetic and evaluative monograph of academic papers that examine the drivers and financing sources of corporate innovation. This survey consists of four sections. The first one reviews the literature that links firm-level characteristics and innovation activities. We discuss papers that explore how venture capital and entrepreneurship as well as firms’ internal and external characteristics influence the process, features, and outcomes of corporate innovation. The second section covers studies examining the relation between market-wide economic forces (such as product market competition, import penetration, banking competition, market conditions, etc.) and firms’ incentives to engage in innovative investments. The third section analyzes the literature on how macro-level social or country characteristics (such as a nation’s institutional features, laws and policies, financial market development, etc.) affect corporate innovation. Finally, in the last section, we provide our view on potential directions of future research on this important topic.

Keywords: Finance; Innovation; R&D; Patent; Survey

Suggested Citation

He, Jie and Tian, Xuan, Finance and Corporate Innovation: A Survey (December 22, 2017). Available at SSRN: or

Jie He

University of Georgia - Department of Finance ( email )

B318 Amos Hall
Terry College of Business, University of Georgia
Athens, GA 30602-6253
United States

Xuan Tian (Contact Author)

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengfu Road
Haidian District
Beijing 100083
+86-10-62794103 (Phone)


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