Radical and Incremental Innovation: The Roles of Firms, Managers, and Innovators

Daron Acemoglu, Ufuk Akcigit and Murat Celik

American Economic Journal: Macroeconomics, 2022, vol. 14, issue 3, 199-249

Abstract: We investigate the determinants of radical ("creative") innovations that break new ground in knowledge creation. We develop a model focusing on the choice between incremental and radical innovation and on how managers of different ages and human capital are sorted across firms. Firm- and patent-level evidence reveals that firms that are more "open to disruption" are significantly more likely to engage in radical innovation and hire younger managers and inventors with a comparative advantage in radical innovation. However, once the effect of the sorting is factored in, the (causal) impact of manager age on creative innovations, though positive, is small.

JEL-codes: D22 L26 M10 M14 O31 O34 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (21)

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DOI: 10.1257/mac.20170410

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