EconPapers    
Economics at your fingertips  
 

Innovation externalities and the customer/supplier link

Keming Li

Journal of Banking & Finance, 2018, vol. 86, issue C, 101-112

Abstract: This paper proposes a novel channel through which innovation externalities can affect firm performance. I find cross-sectional evidence that the positive innovation outputs of customer firms increase their supplier profitability as measured by firm ROE. This result is robust to the inclusion of industry fixed effect, a control for both supplier and customer characteristics, such as ROE, advertisement expenditure, capital expenditure, firm age, industry concentration, institutional ownership, dividend yield, and a control for industry spillover or geographical spillover. To identify the causal effect of customer innovation outputs on supplier performance, I study an exogenous shock—State Street Bank and Trust Company v. Signature Financial Group, Inc.—and find that an increase in granted customer patents causes an improvement in future supplier performance. This effect is mainly driven by the demand channel and the knowledge diffusion channel from customers to suppliers.

Keywords: Innovation; Patent; Spillover; Customer/supplier link (search for similar items in EconPapers)
JEL-codes: E44 G11 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426617302170
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:86:y:2018:i:c:p:101-112

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Series data maintained by Dana Niculescu ().

 
Page updated 2017-11-11
Handle: RePEc:eee:jbfina:v:86:y:2018:i:c:p:101-112