Government Spending and Corporate Innovation

Lei Kong ()
Additional contact information
Lei Kong: Department of Economics, Finance, and Legal Studies, Culverhouse College of Business, The University of Alabama, Tuscaloosa, Alabama 35487

Management Science, 2020, vol. 66, issue 4, 1584-1604

Abstract: I study the impact of government spending on corporate innovation. Using changes in U.S. Senate committee chairmanships as a source of exogenous variation in state-level federal government expenditures, I find that firms headquartered in states with increases in government spending significantly reduce their innovation output, as measured by their number of patents and the citations to these patents. These reductions are mostly concentrated in labor-intensive industries, in firms headquartered in states with lower unemployment rates, and in government-dependent industries. My findings suggest that resource diversion induced by increased government spending is a channel through which government spending may affect corporate innovation.

Keywords: corporate innovation; government spending; resource diversion; government dependence (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://doi.org/10.1287/mnsc.2018.3252 (application/pdf)

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:inm:ormnsc:v:66:y:2020:i:4:p:1584-1604

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().