Social Push and the Direction of Innovation

64 Pages Posted: 24 May 2019 Last revised: 28 May 2022

See all articles by Elias Einiö

Elias Einiö

VATT Institute for Economic Research

Josh Feng

University of Utah - David Eccles School of Business; National Bureau of Economic Research

Xavier Jaravel

London School of Economics & Political Science (LSE) - Department of Economics

Date Written: May 29, 2019

Abstract

Ideas are a key input into innovative activity. As a result, ideas accumulated through an innovators' personal and social experience may affect the direction of their innovative activity. Consistent with this “social push” channel, we document that innovators create products that are more likely to be purchased by customers similar to them along observable dimensions including gender, age, and socioeconomic status, both across and within detailed industries. Next, we provide causal evidence that social experience affects the direction of a person's innovative activity. Specifically, being exposed to peers from a lower-income group increases an entrepreneur's propensity to create necessity products, without affecting her rates of entrepreneurship and entrepreneurial income. We incorporate this channel into a general equilibrium model to assess its implications for inequality and long-run growth when there is unequal access to the innovation system.

Keywords: Entrepreneurship, Innovation, New Goods, Product Variety, Economics of Ideas

JEL Classification: O30, L26, J16

Suggested Citation

Einiö, Elias and Feng, Josh and Jaravel, Xavier, Social Push and the Direction of Innovation (May 29, 2019). Available at SSRN: https://ssrn.com/abstract=3383703 or http://dx.doi.org/10.2139/ssrn.3383703

Elias Einiö

VATT Institute for Economic Research

Arkadiankatu 7
Helsinki, Uusimaa 00180
Finland

Josh Feng (Contact Author)

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
2016977982 (Phone)

Xavier Jaravel

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom
7456842728 (Phone)
NW12AR (Fax)

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