Conformism and Innovation: Evidence from R&D and patents

Innovation is central to productivity growth, yet firms facing similar technological and policy environments differ in their R&D investment behavior. We examine whether persistent regional social norms help explain this variation. Using prefecture-level data from Japan, we measure regional conformism based on a 1941 military conscription examination and contemporary school education surveys, demonstrating that regional differences have persisted over time. Linking them to data on all Japanese manufacturing firms from 1995 to 2022, we find that firms in more conformist regions exhibit significantly lower R&D intensity even after controlling for cognitive ability, firm characteristics, and fixed effects. The relationship with patenting is weaker and less robust. To isolate the historical component of conformity, we instrument pre-war conformism using differences in domain-level educational curricula during the Edo-period (1603–1868). The IV results similarly indicate a significant negative effect on firms’ R&D intensity. Overall, the findings suggest that persistent regional social norms are most strongly related to firms’ innovation investment rather than realized innovation output.