Are Inventors or Firms the Engines of Innovation?

Forthcoming, Management Science

48 Pages Posted: 12 Dec 2017 Last revised: 12 Jun 2020

See all articles by Ajay Bhaskarabhatla

Ajay Bhaskarabhatla

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus Research Institute of Management

Luis M. B. Cabral

New York University (NYU) - Leonard N. Stern School of Business - Department of Economics; Centre for Economic Policy Research (CEPR)

Deepak Hegde

New York University (NYU) - Leonard N. Stern School of Business

Thomas Peeters

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); University of Antwerp - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: December 3, 2017

Abstract

In this study, we empirically assess the contributions of inventors and firms for innovation using a 37-year panel of U.S. patenting activity. We estimate that inventors’ human capital is 5-10 times more important than firm capabilities for explaining the variance in inventor output. We then examine matching between inventors and firms and find highly talented inventors are attracted to firms that (i) have weak firm-specific invention capabilities, and (ii) employ other talented inventors. A theoretical model that incorporates worker preferences for inventive output rationalizes our empirical findings of negative assortative matching between inventors and firms, and positive assortative matching among inventors.

Keywords: Human Capital, Capabilities, Innovation, Matching, Competitive Advantage

JEL Classification: O30, O31, O32, J24

Suggested Citation

Bhaskarabhatla, Ajay and Cabral, Luis M. B. and Hegde, Deepak and Peeters, Thomas, Are Inventors or Firms the Engines of Innovation? (December 3, 2017). Forthcoming, Management Science, Available at SSRN: https://ssrn.com/abstract=3084638 or http://dx.doi.org/10.2139/ssrn.3084638

Ajay Bhaskarabhatla (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
+31 10 408 1004 (Phone)

HOME PAGE: http://people.few.eur.nl/bhaskarabhatla/

Erasmus Research Institute of Management ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 408 1004 (Phone)

HOME PAGE: http://www.erim.eur.nl/people/ajay-bhaskarabhatla/

Luis M. B. Cabral

New York University (NYU) - Leonard N. Stern School of Business - Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States
212-998-0858 (Phone)
212-998-4218 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~lcabral

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Deepak Hegde

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Thomas Peeters

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

University of Antwerp - Department of Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium

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