Firm network structure and innovation
Andrew Prevost and
Journal of Corporate Finance, 2017, vol. 44, issue C, 193-214
This study examines how various dimensions of a firm's network affect innovation and pricing of innovation by market participants. We use board interlocks to build interfirm network and construct different network measures to capture firm centrality in the interfirm network, cohesion within firm network, and diversity, innovativeness, and propinquity of firm network. Our results show that these different characteristics of network connectedness affect firm innovation input and output, particularly for firms in relatively intangible industries. These results are robust to the use of an instrumental variables approach as well as a natural experiment of state-level changes in R&D tax credits. We also find that innovation has a positive (negative) marginal effect on corporate bond yield spreads when firms have lower (higher) connectedness, suggesting that the market perceives innovative activities by more connected firms as less uncertain. Yield spread changes around patent filings further support this finding.
Keywords: Network; Connectedness; Innovation; R&D; Board interlock; Bond yield (search for similar items in EconPapers)
JEL-codes: G30 G31 D80 L14 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:44:y:2017:i:c:p:193-214
Access Statistics for this article
Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter
More articles in Journal of Corporate Finance from Elsevier
Series data maintained by Dana Niculescu ().