Heterogeneous Innovation over the Business Cycle

Manso, Gustavo; BALSMEIER, Benjamin; Fleming, Lee

doi:10.1162/rest_a_01104

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Heterogeneous Innovation over the Business Cycle

Manso, Gustavo; BALSMEIER, Benjamin; Fleming, Lee

2022 • In Review of Economics and Statistics

Peer Reviewed verified by ORBi

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https://hdl.handle.net/10993/50258

DOI
10.1162/rest_a_01104

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Keywords :

Innovation; Business Cycles; Patents

Abstract :

[en] Schumpeter (1939) claims that recessions are periods of “creative destruction,” concentrating innovation that is useful for the long-term growth of the economy. However previous research finds that standard measures of firms’ innovation, such as R&D expenditures or raw patent counts, concentrate in booms. We argue that these measures do not capture shifts in firms’ innovative search strategies. We contemplate firms’ choice between exploration vs. exploitation over the business cycle and find evidence with more nuanced measures of patent characteristics that firms shift towards exploration during contractions and exploitation during expansions, with a stronger effect for firms in more cyclical industries.

Disciplines :

Strategy & innovation

Author, co-author :

Manso, Gustavo

BALSMEIER, Benjamin ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)

Fleming, Lee

External co-authors :

yes

Language :

English

Title :

Heterogeneous Innovation over the Business Cycle

Publication date :

2022

Journal title :

Review of Economics and Statistics

ISSN :

0034-6535

eISSN :

1530-9142

Publisher :

MIT Press, United States - Massachusetts

Peer reviewed :

Peer Reviewed verified by ORBi

Focus Area :

Entrepreneurship and Innovation / Audit

Available on ORBilu :

since 11 February 2022

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