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Inventors and firm innovation: Does location matter?

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  • Yu, Junbiao

Abstract

This study examines the impact of corporate headquarters location on firm innovation from the perspective of inventors. Utilizing a sample of Chinese publicly listed firms—a setting characterized by highly concentrated corporate R&D activities and the hukou-related labor frictions—we find that firms located near a higher density of local inventors achieve superior innovation output, as measured by patent counts and forward citations. The positive effect is more pronounced for younger, high-tech firms and those in less developed regions, supporting the local skilled labor supply mechanism. This talent supply also incentivizes firms to reallocate innovation efforts toward exploitative activities and accelerate human capital accumulation. Instrumental variable analysis using the Ming-Qing jinshi density supports a causal interpretation. Our findings provide novel evidence on the value of proximity to specialized human capital and inform policy discussions on mobility constraints.

Suggested Citation

  • Yu, Junbiao, 2026. "Inventors and firm innovation: Does location matter?," Pacific-Basin Finance Journal, Elsevier, vol. 96(C).
    • Handle: RePEc:eee:pacfin:v:96:y:2026:i:c:s0927538x25003919
    DOI: 10.1016/j.pacfin.2025.103054
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    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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