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Companies learning to innovate in recessions

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  • Amore, Mario Daniele

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.

Suggested Citation

  • Amore, Mario Daniele, 2015. "Companies learning to innovate in recessions," Research Policy, Elsevier, vol. 44(8), pages 1574-1583.
    • Handle: RePEc:eee:respol:v:44:y:2015:i:8:p:1574-1583
    DOI: 10.1016/j.respol.2015.05.006
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    References listed on IDEAS

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    More about this item

    Keywords

    Recessions; R&D; Patents;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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