Risk-Mitigating Technologies: The Case of Radiation Diagnostic Devices

70 Pages Posted: 24 Apr 2019

See all articles by Alberto Galasso

Alberto Galasso

University of Toronto - Strategic Management

Hong Luo

Harvard Business School - Strategy Unit

Date Written: April 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: Innovation, medical devices, product liabilities, risk perception

JEL Classification: K13, O31, O32, O34

Suggested Citation

Galasso, Alberto and Luo, Hong, Risk-Mitigating Technologies: The Case of Radiation Diagnostic Devices (April 2019). CEPR Discussion Paper No. DP13682. Available at SSRN: https://ssrn.com/abstract=3376613

Alberto Galasso (Contact Author)

University of Toronto - Strategic Management ( email )

Canada

Hong Luo

Harvard Business School - Strategy Unit ( email )

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

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