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Incremental vs. Breakthrough Innovation: The Role of Technology Spillovers

Seong K. Byun (), Jong-Min () and Han Xia ()
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Seong K. Byun: School of Business, Virginia Commonwealth University, Richmond, Virginia 23284
Jong-Min: SKK Business School, SungKyunKwan University, Seoul 03063, South Korea
Han Xia: Naveen Jindal School of Management, University of Texas at Dallas, Richardson, Texas 75080

Management Science, 2021, vol. 67, issue 3, 1779-1802

Abstract: We show that technology spillovers shift the composition of corporate research and development by promoting innovation based on the exploitation of existing knowledge while disincentivizing innovation that explores new areas and breaks new ground. Accordingly, firms facing large technology spillovers attain fewer superstar inventors among their human capital, who are important drivers of breakthrough technology advancement. These findings complement the existing studies documenting the positive effect of technology spillovers in increasing firms’ overall innovation outputs; they highlight potential downsides of technology spillovers in reducing firm investment in technology breakthrough and valuable human capital. This paper was accepted by Gustavo Manso, finance.

Keywords: technology spillovers; innovation strategies; research direction; human capital accumulation (search for similar items in EconPapers)
Date: 2021
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