DRUID21 Best Paper Nominees

Nominees for the STEVE KLEPPER AWARD FOR BEST YOUNG SCHOLAR PAPER

Innovation in standardization networks: The effect of brokerage and technological distance

Philipp Heß, Technical University Berlin, Chair of Innovation Economics
Magnus Buggenhagen, Technical University Berlin, Chair of Innovation Economics

Firms can use the market influence of standards to shape technological trajectories and promote the diffusion of their innovations. The involvement in the development process of standards can, at the same time, foster firms' subsequent innovation. While prior research provides evidence of this "side effect" of standardization, so far, little is known about it. This article investigates determinants for the relationship between participation in standard-setting and firm-level innovation by taking on a knowledge-based view of firms' exchanges during the development of standards. Modeling knowledge networks formed by co-authors of chemical technology standards published between 2000 and 2010, we find that innovative output is associated with the network structure and participant heterogeneity. Results from panel regression show that firms' patent output after standardizing activity is higher when their network position grants them broker status, while the relationship is inverse U-shaped regarding technological distance to co-standardizers. The findings contribute to research on the relationship between standardization and innovation, particularly underlining standardization functioning as a knowledge transfer channel. We discuss how the concept of modeling interaction in standard-setting as co-authorship networks can be applied to investigate the effect of different institutional standardization contexts.

Patent Disclosure and Firm New Product Performance: Evidence from China

Dandan XIA, IESE Business School, Strategic Management department

We investigate the effect of information disclosed from patents on firms’ new product performance and its heterogeneous effects across firms. We exploit a patent subsidy program in China as a quasi-natural experiment. With a staggered difference-in-difference method, we find that firms have a significant increase in their sales revenue from new products after the enactment of the patent subsidy policy. The mechanisms we propose is patent subsidies have caused firms to file more patents and more information is disclosed publicly, which can be read and learned by other firms to improve their new products. Highly innovative firms at technological frontier benefit less from disclosed information in patents than those that are closely following them. This is because frontier firms reveal more advanced technologies through patents, and they may already have access to advanced technological information in their areas other than patents.

Online Repositories, Search Costs and Cumulative Innovation

Thomas Schaper, KU Leuven, Management, Strategy and Innovation (MSI)

Efficient access to existing knowledge is essential to technical advance, yet little is known about how access-enhancing institutions shape intertemporal knowledge spillovers. In this paper, I investigate the cumulative technological impact of the CNIDR AIDS Database, the first, disease-targeted, online repository of electronic patent documents, launched in 1994. Tracing references from subsequent patents, I find that the marginal impact of the repository was largest (+30%) among patents for which the established disease-link was previously non-obvious to detect through standard bibliographic search, in line with predictions of stronger reduction of internal search costs. Further findings suggest that increased visibility and attention to more "hidden" prior art particularly benefited private sector HIV researchers and was reflected in enhanced diffusion of technological knowledge across scientific community and geographic boundaries.

Nominees for the DRUID21 BEST PAPER AWARD

Sam Cao, Rembrand Koning, Ramana Nanda: “Biased sampling of early users and the direction of startup innovation”

Using data from a prominent online platform for launching new digital products, we document that the composition of the platform's `beta testers' on the day a new product is launched has a systematic and persistent impact on the venture's success. Specifically, we use word embedding methods to classify products on this platform as more or less focused on the needs of female customers. We then show that female-focused products launched on a typical day -- when nine in ten users on the platform are men -- experience 45% less growth in the year after launch. By isolating exogenous variation in the composition of beta testers unrelated to the characteristics of launched products on that day, we find that on days when there are unexpectedly more women, this gender-product gap shrinks towards zero. Further, consistent with a sampling bias mechanism, we find that the composition of beta testers appears to impact VC decision making and the entrepreneur's subsequent product development efforts. Overall, our findings suggest that the composition of early users can induce systematic biases in the signals of startup potential, with consequential effects -- including a shortage of innovations aimed at consumers who are underrepresented among early users.

Chiara Franzoni, Henry Sauermann, Diletta Di Marco: “When Citizens Judge Science: Evaluations of Social Impact and Support for Research”

The direction of science has for a long time been set by professional scientists, funding agencies, and policy makers. New mechanisms enable 'citizens' or 'lay people' without a professional background in science to shape research agendas by voting on funding proposals or allocating their own resources through crowdfunding. Although there are hopes that such mechanisms can democratize science and steer it towards projects with greater social impact, there are also concerns that they give greater weight to the preferences and needs of selected parts of the population, most notably groups with above-average income and education. Moreover, citizens’ personal experience with certain problems may bias their assessments of projects addressing such problems, potentially leading to inefficient resource allocation and outsized influence of self-selected groups of stakeholders. To assess such concerns, we study over 2,300 evaluations of research proposals made by members of the general public. We find significant differences in project support by income and education, but only if supporting a project imposes a personal cost upon evaluators. Evaluators’ personal experience with a particular problem is associated with greater support but does not appear to inflate evaluations of a project’s social impact. When evaluating a project’s social impact, however, citizens focus on the importance of the problem and pay less attention to whether or not the project is able to deliver a solution. We discuss implications for the literature on the science of science and innovation as well as for funding agencies and policy makers.

Elena Novelli, Chiara Spina: “When do Entrepreneurs Benefit from Acting Like Scientists? A Field Experiment in the UK” 

Prior research suggests that firms in entrepreneurial settings benefit from an approach to decision making that combines cognitive and evidence-based components. But to what extent and under what conditions is this approach to decision-making associated with superior performance? To address this question, we conducted a field experiment with 261 UK entrepreneurs at different stages of business development, training half with an approach that combined a cognitive and evidence-based approach to decision making. Our results show that firms make the most of such an approach when they are at a more advanced stage of development, as they generate higher revenues and productivity. We elaborate on the mechanisms behind this result and the implications for future research.