Companies learning to innovate in recessions

Mario Amore ()

Research Policy, 2015, vol. 44, issue 8, 1574-1583

Abstract: Innovating in downturns can affect corporate success by improving a firm’s position relative to competitors during the recovery period. However, increased uncertainty and more binding financial constraints complicate such innovation activity. I find that past experience with innovation during recessions improves a firm’s ability to invest in R&D when a new downturn hits. This result holds controlling for traditional drivers of innovation as cumulated innovations and financial constraints, as well as mitigating endogeneity and selection concerns. Moreover, I find that past experience with innovation during recessions is beneficial to patent outcomes after a new recession. Overall, the paper provides novel evidence on how business cycles shape innovative capabilities.

Keywords: Recessions; R&D; Patents (search for similar items in EconPapers)
JEL-codes: E32 G30 O32 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:44:y:2015:i:8:p:1574-1583

DOI: 10.1016/j.respol.2015.05.006

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