Risk-Mitigating Technologies: The Case of Radiation Diagnostic Devices

67 Pages Posted: 6 May 2019

See all articles by Alberto Galasso

Alberto Galasso

University of Toronto - Rotman School of Management; University of Toronto - Strategic Management

Hong Luo

Harvard Business School - Strategy Unit

Date Written: April 12, 2019

Abstract

We study the impact of consumers' risk perception on firm innovation. Our analysis exploits a major surge in the perceived risk of radiation diagnostic devices, following extensive media coverage of a set of over-radiation accidents involving CT scanners in late 2009. Difference-in-differences regressions using data on patents and FDA product clearances show that the increased perception of radiation risk spurred the development of new technologies that mitigated such risk and led to a greater number of new products. We provide qualitative evidence and describe patterns of equipment usage and upgrade that are consistent with this mechanism. Our analysis suggests that changes in risk perception can be an important driver of innovation and shape the direction of technological progress.

Keywords: risk perception, innovation, medical devices, product liabilities

JEL Classification: O31, O32, O34, K13

Suggested Citation

Galasso, Alberto and Luo, Hong, Risk-Mitigating Technologies: The Case of Radiation Diagnostic Devices (April 12, 2019). Available at SSRN: https://ssrn.com/abstract=3371223 or http://dx.doi.org/10.2139/ssrn.3371223

Alberto Galasso (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/facbios/viewFac.asp?facultyID=alberto.galasso

University of Toronto - Strategic Management ( email )

105 St George Street
Toronto, ON M5S 1L2
Canada

Hong Luo

Harvard Business School - Strategy Unit ( email )

Harvard Business School
Soldiers Field Road
Boston, MA 02163
United States

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