Shadow of The Great Firewall: The Impact of Google Blockade on Innovation in China

Abstract

Building on the search-based view of innovation, we develop a framework regarding how Google guides innovative search behavior. We exploit an exogenous shock, China’s unexpected blockade of Google in 2014, and adopt a difference-in-differences approach with a matched sample of patents from China and nearby regions to test our predictions. Our analyses show that the blockade negatively affected inventors in China to search distantly in technological and cognitive spaces compared to those in the control group who were presumably unaffected by the event. The impact was less severe for inventors with larger collaboration networks but became more pronounced in technological fields proximate to science. Our findings contribute to innovative search literature and highlight the theoretical and practical importance of Internet technologies in developing valuable inventions.

Keywords: Google, Innovation, Recombinant Search, Distant Search, Internet Censorship

JEL Classification: D83, D80, H70