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The Rise of Scientific Research in Corporate America

Author

Listed:
  • Yafeh, Yishay
  • Arora, Ashish
  • Belenzon, Sharon
  • Kosenko, Konstantin
  • Suh, Jungkyu

Abstract

Corporate science in America emerged in the interwar period, as some companies set up state-of-the-art corporate laboratories, hired trained scientists, and embarked upon basic research of the kind we would associate today with academic institutions. Using a newly assembled dataset on U.S. companies between 1900 and 1940 combining information on corporate ownership, organization, research and innovation, we attempt to explain the rise of corporate research. We argue that it was driven by companies trying to take advantage of opportunities for innovation made possible by scientific advances, while facing an underdeveloped academic research system in the United States: In line with this conjecture, we find that firms close to the technological frontier, operating in sectors where American universities were relatively underdeveloped, were more likely to initiate scientific research in response to rising scientific opportunities. We also find that firms that invested in scientific research were large, diversified and operated in concentrated industries, i.e., were able to capture significant rents from the provision of this public good. Indeed, corporate research was positively correlated with novel and valuable patents, and with high market-to-book ratios.

Suggested Citation

  • Yafeh, Yishay & Arora, Ashish & Belenzon, Sharon & Kosenko, Konstantin & Suh, Jungkyu, 2022. "The Rise of Scientific Research in Corporate America," CEPR Discussion Papers 16592, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:16592
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    Cited by:

    1. Sinuany-Stern, Zilla, 2023. "Foundations of operations research: From linear programming to data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 306(3), pages 1069-1080.
    2. Filippo Mezzanotti & Timothy Simcoe, 2023. "Research and/or Development? Financial Frictions and Innovation Investment," Working Papers 23-39, Center for Economic Studies, U.S. Census Bureau.

    More about this item

    Keywords

    Innovation; Corporate science; Institutional voids;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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