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Essays on firms, innovation, and culture

Nguyen, Kieu-Trang (2019) Essays on firms, innovation, and culture. PhD thesis, London School of Economics and Political Science.

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This thesis examines innovation and culture within the firm. The first chapter provides evidence on the effect of trust on innovation within firms. I build a new matched CEOfirm-patent dataset, and exploit variations in (i) generalized trust across the countries of CEOs’ ancestry, inferred from their last names, and (ii) CEOs’ bilateral trust towards inventors’ countries ancestry or R&D labs, both yielding an effect of around 6% more future patents for a standard deviation increase in trust, controlling for stringent fixed effects. Trust-induced innovation is driven by higher-quality patents, consistent with a model in which CEO’s trust incentivizes researchers to undertake high-risk explorative R&D. Finally, CEO’s generalized trust is strongly correlated with broader corporate culture of trust, measured from online employee reviews. The evidence provides a micro-foundation for the well-known macro relationship between trust and growth. The second chapter presents evidence of causal impacts of R&D tax incentives on innovation and technological spillovers using administrative data. Our Regression Discontinuity Design exploits a change in the size threshold that determines eligibility for R&D tax subsidies, and uncovers their large effects on R&D and patenting up to 7 years after the change. R&D tax price elasticities are large (lower bound of 1.1), as treated firms are smaller, and more likely financially constrained. Neighboring firms in small technology class with treated firms enjoy positive spillovers. The third chapter shows strong positive spillovers of privatization on firms’ total factor productivity through backward linkages in Vietnam. 10% more market share of privatized firms in downstream industries is associated with 4 percentage points increase in TFP. The effect is driven by privatization in local markets, is stronger (weaker) in upstream industries facing more import (export), and in provinces with higher entry costs. It likely works through elevated pressure from privatized client firms.

Item Type: Thesis (PhD)
Additional Information: © 2019 Kieu-Trang Nguyen
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
Sets: Departments > Economics
Supervisor: Van Reenen, John and Bandiera, Oriana and Thomas, Catherine

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