Institutions and Innovation: A Review of Recent Literature

33 Pages Posted: 11 Feb 2020

See all articles by Jie He

Jie He

University of Georgia - Department of Finance

Xuan Tian

Tsinghua University - PBC School of Finance

Date Written: February 2, 2020


Technological innovation, which is critical to a country’s economic development and a firm’s long-term success, has become an increasingly important topic that attracts much attention from academic researchers in recent years. This article reviews the recent literature that links institutions and innovation. Specifically, we focus on five aspects of the linkage. First, we discuss the literature that explores how the culture of a society or a corporation influences the process, features, and outcomes of innovation activities. We then review papers that focus on the role of a geographical area’s or a firm’s demographic characteristics in innovation. The third section of the article covers studies examining the relation between market development and firms’ incentives as well as their abilities of engaging in innovative investments. Fourth, we discuss the literature on how innovation is shaped by a nation’s laws and policies. Finally, we review the academic papers regarding the effects of government regulations and policies on innovation activities. Overall, this survey aims to provide a synthetic and evaluative monograph of recent academic research that links various aspects of institutions and innovation. We also provide our views on potential directions for future research in this area.

Keywords: innovation, institutions, survey, culture, demographics

Suggested Citation

He, Jie and Tian, Xuan, Institutions and Innovation: A Review of Recent Literature (February 2, 2020). 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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