Essays on corporate innovation

Xue, Yun (2024) Essays on corporate innovation. PhD thesis, London School of Economics and Political Science.

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Abstract

This dissertation explores the factors affecting corporate innovation. The first chapter examines the role of human capital. I analyse the innovations produced by Chinese organizations after hiring returnee inventors. Following their return, organizations significantly increase patenting and involved inventor counts in technological fields where the returnee has experience. However, the new patents receive fewer citations from abroad. Additionally, there is a decreased proportion of patents involving foreign inventors, indicating that returnee inventors substitute for international collaboration. These findings hold when the timing of the return is plausibly exogenous, and the effects are stronger when the returnee is from the United States. My results suggest that returnee inventors play a significant role in knowledge transfer to Chinese organizations while also reducing the flow of knowledge from China to organizations in other countries through reduced collaboration. The second chapter studies the role of managerial incentives. We examine the relationship between innovation quality and managerial time horizon, measured by the time remaining until the end of fixed-term CEO employment contracts. Firms with longer CEO horizons produce more important innovations on average, as measured by more patent citations. Our results support the view that long-term managerial capital is important for innovation. The third chapter examines tax policy. By using administrative data, I create a novel dataset of UK corporate venture capital (CVC) investments and investigate how CVCs respond to an exogenous return shock. I demonstrate that exogenous financial incentives attract less experienced corporate investors who invest for a shorter period and for less total by leveraging the termination of a corporate tax reform and eligibility requirements based on the size of an investee. Financially driven CVC investments also have a lower trade sale and IPO exit rate, and a lower likelihood of dissolving within five years, but not a lower post-investment asset growth rate.

Item Type:	Thesis (PhD)
Additional Information:	© 2023 Sherry (Yun) Xue
Library of Congress subject classification:	H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management H Social Sciences > HG Finance
Sets:	Departments > Finance
Supervisor:	Jenter, Dirk and Gonzalez-Uribe, Juanita
URI:	http://etheses.lse.ac.uk/id/eprint/4700

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