TIES

Maria Roche, Harvard Business School, Business Administration

Proximate (Co-)Working: Knowledge Spillovers and Social Interactions

Vanessa Burbano, Columbia Business School, Management Division

The Effects of a Short-term Community Service Activity on Employee Turnover: Field Experimental Evidence

Walker Hanlon, Northwestern University, Department of Economics

The Rise of the Engineer: Inventing the Professional Inventor During the Industrial Revolution

Petra Moser,  New York University School of Business, Department of Economics

Inequality in Science

Mathijs de Vaan, UC-Berkeley Haas School of Business, Management of Organizations

Social Structure and Organizational Variation

Kramer Quist, MIT

Cognitive Diversity, Organizational Structure, and Exploration: Complementing Diversity with Design

Lindsey Raymond, MIT Sloan

The Market Effects of Algorithms

Lynn Wu, The Wharton School, University of Pennsylvania

Innovation Strategy after IPO: How AI Analytics Spurs Innovation after IPO

Angelino Viceisza, Spelman College

Can the Media Spur Startup Activity? Evidence from "Shark Tank"

Bernard Koch, Kellogg School of Management, Northwestern

The Making of a Modern Science: The Rise, Rewards, and Risks of Deep Learning Monoculture

Hyejin Youn, Kellogg School of Management, Northwestern

Innovation Pathways: The Emergent Structures from Microscale Interactions 

Henning Piezunka, INSEAD

Renewal of Interfirm Collaborations: A Theory of (Mis)aligned Perception

Charlies Fine, MIT Sloan

Innovation and Entrepreneurship in MBA Education: An Accidental Ethnography

Barbara Biasi, Assistant Professor of Economics, Yale School of Management

The Education-Innovation Gap

Khonika Gope, Stanford University

The Impact of Accelerator Training Programs on the Career Trajectory of Individual Entrepreneurs

Jane Wu, TIES PhD Candidate, MIT Sloan School of Management

Innovation for Dummies? Exploring the Role of Metrics in Automotive Safety

Wesley Greenblatt, TIES PhD Candidate, MIT Sloan School of Management

Building on Solid Ground: Foundational Knowledge and the Dynamics of Innovation

Ethan Poskanzer, Economic Sociology PhD Candidate, MIT Sloan School of Management

Learner Before Teacher: Relationship Selection Between Entrepreneurs and Sources of Advice

Simon Friis, Economic Sociology PhD Candidate, MIT Sloan School of Management

Confusing or coherent? How category spanning by livestreamers reflects competing theories of value

Jackson Lu, Assistant Professor of Work and Organization Studies, MIT Sloan School of Management

The Bamboo Ceiling: A Physiognomic Perspective on Why East Asians but not South Asians are Underrepresented in Leadership in US Culture

Jungkyu Suh, Duke University

Science, Startups, and Novelty

Rembrand Koning, Harvard Business School

Biased sampling of early users and the direction of startup innovation

John Van Reenen (London School of Economics), The Impact of Regulation on Innovation

John Van Reenen (London School of Economics), The Impact of Regulation on Innovation

Does regulation affect the pace and nature of innovation and if so, by how much? We build a tractable and quantifiable endogenous growth model with size-contingent regulations. We apply this to population administrative firm panel data from France, where many labor regulations apply to firms with 50 or more employees. Nonparametrically, we find that there is a sharp fall in the fraction of innovating firms just to the left of the regulatory threshold. Further, a dynamic analysis shows a sharp reduction in the firm’s innovation response to exogenous demand shocks for firms just below the regulatory threshold. We then quantitatively fit the parameters of the model to the data, finding that innovation at the macro level is about 5.4% lower due to the regulation, a 2.2% consumption equivalent welfare loss. Four-fifths of this loss is due to lower innovation intensity per firm rather than just a misallocation towards smaller firms and lower entry. We generalize the theory to allow for changes in the direction of R&D, and find that regulation’s negative effects only matter for incremental innovation (as measured by citations and text-based measures of novelty). A more regulated economy may have less innovation, but when firms do innovate they tend to “swing for the fence” with more radical (and labor saving) breakthroughs.

Melinda Baldwin (University of Maryland), In Referees We Trust? Scientific Autonomy, Public Accountability, and the Rise of 'Peer Review'

This essay traces the history of refereeing at specialist scientific journals and at funding bodies and shows that it was only in the late twentieth century that peer review came to be seen as a process central to scientific practice. Throughout the nineteenth century and into much of the twentieth, external referee reports were considered an optional part of journal editing or grant making. The idea that refereeing is a requirement for scientific legitimacy seems to have arisen first in the Cold War United States. In the 1970s, in the wake of a series of attacks on scientific funding, American scientists faced a dilemma: there was increasing pressure for science to be accountable to those who funded it, but scientists wanted to ensure their continuing influence over funding decisions. Scientists and their supporters cast expert refereeing—or “peer review,” as it was increasingly called—as the crucial process that ensured the credibility of science as a whole. Taking funding decisions out of expert hands, they argued, would be a corruption of science itself. This public elevation of peer review both reinforced and spread the belief that only peer-reviewed science was scientifically legitimate.

Ina Ganguli (University of Massachusetts Amherst), Why U.S. Immigration Barriers Matter for the Global Advancement of Science

This paper studies the impact of U.S. immigration barriers on global knowledge production. We present four key findings. First, among Nobel Prize winners and Fields Medalists, migrants to the U.S. play a central role in the global knowledge network— representing 20-33% of the frontier knowledge producers. Second, using novel survey data and hand-curated life-histories of International Math Olympiad (IMO) medalists, we show that migrants to the U.S. are up to six times more productive than migrants to other countries— even after accounting for talent during one’s teenage years. Third, financing costs are a key factor preventing foreign talent from migrating abroad to pursue their dream careers, particularly talent from developing countries. Fourth, certain ‘push’ incentives that reduce immigration barriers – by addressing financing constraints for top foreign talent – could increase the global scientific output of future cohorts by 42% percent. We conclude by discussing policy options for the U.S. and the global scientific community.

Laura Huang (Harvard Business School), Collective Folly and Individual Wisdom: How Decision Framing Impacts Entrepreneurial Investment Decisions

A central question for entrepreneurs seeking growth capital—financial capital from external financiers such as angel investors and venture capitalists that will enable them to grow and scale their startups—is how investors make their investment decisions and what specific criteria they employ. Prior research has attempted to understand investment criteria that range from “hard” data that reflect business viability to more subjective, “soft” data that reflect tacit, non-codified information. Drawing on theories of behavioral finance and entrepreneurial uncertainty, we examine how the lines between investors—whether acting as an individual or institutional investors—have begun to blur, and who investors are impacts how they employ these criteria. We study the phenomenon of private angel investments by individual venture capital partners, outside of their employer and with their personal funds. Specifically, we find that institutional investors who are governed by a collective, “justification-based” decision frame are more likely to require “hard” data and signals of strong business viability data in making their funding decisions, whereas those who are guided by a more individualistic, “discretion-based” decision frame are more likely to invest in deals that are worse on observable business viability characteristics.  Furthermore, our findings suggest that under certain conditions, institutional investors who adopt the latter type of decision framing may be more likely to realize positive investment outcomes in early-stage investment decisions.

Wendy Bradley (SMU Cox School of Business), The Pirate Bay & Box Office Buccaneers

A key concern about digital piracy and weak intellectual property rights protection is that they may reduce innovation by displacing legitimate sales. As most piracy is neither reported nor documented, research on the topic faces significant challenges in identifying changes to piracy and relies on event-studies to aid causal analysis. By introducing a unique dataset measuring piracy directly, and leveraging a positive shock to the supply of piracy, this study solves previous identification issues. It finds that the piracy of films, on average, displaces gross daily box office revenue by as much as 16%. However, the effect of piracy becomes heterogeneous when films are separated by unique characteristics, including genre and budget. At the extreme, whereas comedy films experience a 21% decrease in box office revenue, horror films experience a 34% increase in box office revenue with the introduction of a good quality copy of the film. We conclude that, for specific product characteristics and under certain value-capture strategies, piracy may increase box office sales. We believe these results shed light on potential incentives and directions for growth and innovation for industries confronted with piracy, with academic, managerial, and policy-related implications.

Janet Vertesi (Princeton University), Shaping Science: Organizations, Decisions, and Culture on NASA’s Teams

We typically look to companies, factories, and non-profits for examples of how organizational dynamics impact group outcomes; but do these findings hold for science as well? In this book, I present a comparative organizational ethnography of two of NASA’s high performing space exploration teams who negotiate delicately over how to manage robotic time and resources to do science on other planets. One team works with a flat hierarchy and collective decision-making, while the other embraces a matrix team and hierarchical leadership. The book reveals how organizational culture and structure matter for which scientific questions are asked and answered, how technologies participate in these forms of decision-making, and the career implications for the scientists who participate. Examining how organizations matter to the production of knowledge in this high-tech, interplanetary environment, I argue, suggests new ways forward for the study of our Earth-bound organizations as well, especially as we examine “flat,” remote, and technically imbricated teams.

Khonika Gope, Stanford University

The Impact of Accelerator Training Programs on the Career Trajectory of Individual Entrepreneurs

Adina Sterling (Stanford University), Gender, Self-Beliefs and Closing the Initial Salary Gap in Engineering and Computer Science

Scholars suggest more women should enter lucrative jobs like those in engineering and computer science to reduce the existing gender gap in pay, but also point out women’s self-beliefs in their abilities in these domain’s lack men’s in ways that may reduce women’s pay. We develop theory that suggests even if women’s self-beliefs lag men’s, self-beliefs need not be the pathway by which the gender pay gap closes: this might be achieved by influencing employers beliefs regardless of women’s self-beliefs. Using an original three-wave NSF-funded longitudinal survey of 559 engineering and computer science students that graduated from over two dozen institutions in the U.S. between 2015-2017, we find support for our theory. While women make less than men, the gender wage gap closes when women receive offers after a period of time when employers themselves have been able to verify a woman’s abilities—i.e. in internships—and this has a larger effect than self-beliefs on the salaries of women, while the opposite is the case for men. We close with a discussion of our theory and how recognizing ‘remediation fallacies’ on the way equitable outcomes are achieved advances theory on gender, labor markets, and organizations.

John Horton (MIT Sloan School of Management), Ride-Sharing Markets Re-equilibriate

Following Uber-initiated fare increases, drivers make more money per trip and, initially, more per hour-worked. Drivers begin to work more hours. However, this increase in hours-worked—combined with a reduction in demand from a higher fare—has a business stealing effect, with drivers spending a smaller fraction of working hours transporting passengers. This market adjustment brings the hourly earnings rate back to about the rate that prevailed before the fare increase, in roughly two months. Passengers are partially compensated for higher prices by shorter wait times, but during the period covered by our data, fare increases likely reduced passenger welfare.

Dana Kanze (London Business School), Evidence that Investors Handicap Female Founders for Lack of Industry Fit

 Are female founding CEOs penalized when raising funds for their ventures based on industry served? Across an observational study conducted on ventures seeking funding (N = 392) and an experimental study conducted on investors allocating venture funding (N = 130), we find evidence for a “lack of fit” effect: Female-led ventures catering to male-dominated industries receive significantly less funding at significantly lower valuations than female-led ventures catering to female-dominated industries. In contrast, male-led ventures attain similar funding and valuation outcomes regardless of the gender dominance of the industries to which they cater. We confirm this is because investors perceive lower degrees of fit between founding CEO and venture for female-led ventures catering to male- as opposed to female-dominated industries (with no perceived fit differences for male-led ventures across industries). Degree of investor sophistication emerges as a potential attenuating factor, appearing to help reduce gender bias from perceived lack of fit.

Tania Babina (Columbia Business School), The Color of Money: Federal vs. Industry Funding of University Research

 U.S. universities, which are important producers of new knowledge, have experienced a shift in research funding away from federal and towards private industry sources. This paper compares the effects of federal and private university research funding by linking patent and Census data (including IRS W-2 records) to data from 22 universities that include individual-level payments for everyone employed on all grants for each university-year. We instrument for an individual’s source of funding with government-wide R&D expenditure shocks within a narrow field of study. We find that a higher share of federal funding causes fewer but more general patents, more high-tech entrepreneurship, a higher likelihood of remaining employed in academia, and a lower likelihood of joining an incumbent firm. Increasing the private share of funding generally has opposite effects. It appears that private funding leads to greater appropriation of intellectual property by incumbent firms.

Florenta Teodoridis (Marshall School of Business), Could Machine Learning Be a General Purpose Technology? A Comparison of Emerging Technologies Using Data from Online Job Postings

There has been a great deal of speculation that machine learning might be a general purpose technology. Many other emerging technologies receive similar speculation. However, general purpose technologies are typically identified with the benefit of many years of hindsight. For managers deciding on technology strategy, this classification will come too late. In this paper, we provide an approach to assessing the likelihood that a technology is general purpose before it has widely diffused, so that the classification can be used to inform technology strategy decisions. Using data from online job postings, we compare several emerging technologies in terms of breadth of industries and the importance and breadth of research roles. Our results show that machine learning and related data science technologies are relatively likely to be general purpose.

Nicola Bianchi (Northwestern University), Reconstruction Aid, Public Infrastructure, and Economic Development: The Case of the Marshall Plan in Italy

The Marshall Plan (1948–1952) was the largest aid transfer in history. This paper estimates its effects on Italy’s postwar local economic development. It exploits plausibly exogenous differences between Italian provinces in the value of reconstruction grants they received. Provinces that could modernize a larger portion of their infrastructure stock experienced higher increases in agricultural production, especially for perishable crops that benefited the most from an efficient transportation system. In the same provinces, we observe larger investments in labor-saving machines, the entry of more firms into the industrial sector, and a larger expansion of the industrial and service workforce.

James Utterback (MIT Sloan School of Management), The Dynamics of Competition and the Diffusion of Innovation

The purpose of this paper is to briefly review our understanding of the emergence and diffusion of innovation and to provide a new and more nuanced model of diffusion. The point of departure is to abandon the idea that innovation results only in pure competition, or a zero-sum game, between new and established practices. Given evidence from many cases, the authors believe it more likely that at least at the beginning of races between new and older products, processes and services, growth of one will often stimulate growth of the others. We will term this symbiotic competition. Later the interacting technologies may fall into a cyclic state termed predator-prey competition, and finally a zero-sum game of pure competition may ensue. 

A main contribution is formulation is a general solution for multi-technology, multi-mode competition. The equations derived can be used to model the interaction of any finite number of technologies where the interaction among any pair can either be pure competition, predator-prey or symbiosis.  The model allows determination of the mode and strength of the interactions of competing technologies as they evolve.

Eric von Hippel (MIT Sloan School of Management), Innovating within ‘systems of use’

I define a system of use as the “system” of modules interacting during use with a focal product or service module being developed or improved. The need for any given module in that system of use is the inputs it must receive and process, plus the outputs it must provide to other system modules and to the overall system of use. Innovation development processes prescribed for producers today generally involve a two-step, ‘find a need and fill it’ process. Thus, a firm seeking to develop a new product or service will generally be advised to first deploy marketing research to identify “unfilled customer needs”. Then, when a potentially profitable unfilled need is identified, the firm development department is tasked to develop a responsive solution (Eppinger et. al 2019).  This strategy implicitly or explicitly regards other product and service modules making up the full system of use as fixed.

Research appears to show that broadening the scope of permissible changes to encompass multiple modules in a system of use will open up additional “solution space” for innovative advance.  Or, to state it another way, the party with the most extensive “design control” over system(s) of use will have the most extensive design freedom. Stated in this way, the solution seems straightforward: simply give a single innovator control over “everything.” But in practice there are always limits. It is not feasible to give a single actor control over all of this – which means that in practice choices must be made regarding where best to put the boundaries to any specific designer’s innovation-related control over systems of use.

David Hsu (Wharton School, University of Pennsylvania), Inventor Commingling and Innovation in Technology Startup Mergers & Acquisitions

How does inventor team “commingling” (containing inventors from the acquiring and acquired firms) in technology startup acquisitions relate to innovation outcomes? Commingling reflects collaboration benefits and costs of integrating human resources across organizational boundaries. Commingled team innovation may also depend on the form of inter-organizational R&D, ranging from less (strategic alliance) to more integrated (M&A) structures. M&A control may aid innovation. We study technology startups experiencing a merger, some of which also had a prior alliance with the acquirer. Innovation outcomes (patent counts, forward citations, and patent scope) increase post-merger for firms with more intensive inventor commingling. We exploit direct flights between the M&A parties to instrument for endogenous commingling, and find robust results. Inventor-level commingling is more effective under M&A as compared to alliances.

Rebecca Henderson (Harvard University), Reimagining Capitalism: Towards a theory of systemic change

Capitalism is one of the great inventions of the human race, but an increasing fraction of the world’s population say that “it’s not working for them”. What, if anything is wrong – and if something is wrong, can it be fixed and by whom? In my recently published book Reimagining Capitalism in a World on Fire I suggest that building a just and sustainable society requires bringing the free market back into balance with effective, transparent, democractically accountable government and strong civil society. I suggest that the private sector has both an ethical case and an economic case for supporting these kinds of institutional shifts, and sketch out the pathways through which this kind of change might occur.

Valerie Karplus (MIT Sloan School of Management); Michael Kearney (The Engine), Developing entrepreneurship in regions exposed to low-carbon transition

New sources of dynamic, entrepreneurial growth have the potential to mitigate the local impacts of low-carbon energy transition. Transitions themselves may present opportunities to develop businesses related to clean energy. We find that the antecedents of entrepreneurial activity are generally weak in areas exposed to transition, especially in those places with high shares of fossil fuel extractive industry employment. Using case studies, we examine how interventions focused on building entrepreneurship for clean energy could help regions in transition develop new and lasting sources of economic vitality. Drawing on prior literature, we first describe a set of entrepreneurial competencies that serve as a starting point for regions to identify critical barriers to new business growth. We then examine existing cases of interventions to raise entrepreneurial activity in clean energy in diverse U.S. locations. Our cases lead us to two hypotheses: first, interventions that address a higher share of the gaps in a region's entrepreneurial competencies are more durable and effective. Second, competencies need not always be established locally, but instead can be effectively leveraged from distant sources as long as incentives exist to build and maintain these linkages.

Abhishek Nagaraj (Haas School of Business, University of California Berkeley), Digitization and the Demand for Physical Works: Evidence from the Google Books Project

The age of digitization promised to deliver a centralized, digital repository of all pre-existing knowledge. However, concerns about cannibalizing demand for physical works have led copyright holders to block the realization of this vision. We investigate the effect of digitization on demand for physical works using novel data tracking the timing of the digitization of individual books from Harvard University’s libraries through the Google Books project. Digitization hurt loans within Harvard but increased sales of physical editions by about 35%, especially for less popular works. Rather than harming copyright holders, mass digitization could significantly increase the diffusion of historical works.

Yael Hochberg (Rice University), Launching with a Parachute: The Gig Economy and Entrepreneurial Entry

The introduction of the gig economy creates opportunities for would-be entrepreneurs to supplement their income in downside states of the world, and provides insurance in the form of an income fallback in the event of failure. We present a conceptual framework supporting the notion that the gig economy may serve as an income supplement and as insurance against entrepreneurial-related income volatility, and utilize the arrival of the on-demand, platform-enabled gig economy in the form of the staggered rollout of ridehailing in U.S. cities to examine the effect of the arrival of the gig economy on entrepreneurial entry. The introduction of gig opportunities is associated with an increase of ~5% in the number of new business registrations in the local area, and a correspondingly-sized increase in small business lending to newly registered businesses. Internet searches for entrepreneurship-related keywords increase ~7%, lending further credence to the predictions of our conceptual framework. Both the income supplement and insurance channels are empirically supported: the increase in entry is larger in regions with lower average income and higher credit constraints, as well as in locations with higher ex ante economic uncertainty regarding future wage levels and wage growth.

Ezra Zuckerman (MIT Sloan School of Management); Jaekyung Ha (Emlyon Business School); Stine Grodal (Boston University), The Inauthenticity in Legitimacy: Identity Trade-Offs in Firms’ New Market Entry

A longstanding theme in the ecological and institutional traditions is that it may often be so difficult to establish the legitimacy of an innovative product, service, or organizational form that it is advantageous to enter after early entrants have already established such legitimacy.  Yet recent research on authenticity implies that late entrants will suffer because they are perceived as less original then the first entrants. These expectations are particularly difficult to disentangle since past research has not clarified whether and how demands for legitimacy are distinct from demands for authenticity. The main contribution of this paper is to provide this conceptual clarification and to derive empirical conditions under which the distinctive effects of legitimacy (which pertains to the reliability and validity of the processes employed generally in an industry) may be distinguished from the effects of authenticity (which pertain to a firm’s specific claims to create value.)  The key idea, which is validated in two complementary experiments on consumer reactions to online healthcare startups, is that even though efforts taken by a new entrant to achieve legitimacy will benefit later entrants, these very efforts lend an aura of authenticity to the first entrant.

Dashun Wang (Kellogg School of Management, Northwestern University), Early-career setback and future career impact

Setbacks are an integral part of a scientific career, yet little is known about their long-term effects. Here we examine junior scientists applying for National Institutes of Health R01 grants. By focusing on proposals fell just below and just above the funding threshold, we compare near-miss with narrow-win applicants, and find that an early-career setback has powerful, opposing effects. On the one hand, it significantly increases attrition, predicting more than a 10% chance of disappearing permanently from the NIH system. Yet, despite an early setback, individuals with near misses systematically outperform those with narrow wins in the longer run. Moreover, this performance advantage seems to go beyond a screening mechanism, suggesting early-career setback appears to cause a performance improvement among those who persevere. Overall, these findings are consistent with the concept that “what doesn’t kill me makes me stronger,” which may have broad implications for identifying, training and nurturing junior scientists.

Colleen Cunningham (London Business School), Killer Acquisitions

This paper argues incumbent firms may acquire innovative targets solely to discontinue the target's innovation projects and pre-empt future competition. We call such acquisitions “killer acquisitions.” We develop a parsimonious model illustrating this phenomenon. Using pharmaceutical industry data, we show that acquired drug projects are less likely to be developed when they overlap with the acquirer's existing product portfolio, especially when the acquirer's market power is large due to weak competition or distant patent expiration. Conservative estimates indicate about 6% of acquisitions in our sample are killer acquisitions. These acquisitions disproportionately occur just below thresholds for antitrust scrutiny.

Janet Freilich (Fordham University), Is the Patent System Sensitive to Information Quality?

The patent system assesses information in numerous ways. Examiners evaluate whether an application contains sufficient credible information to be granted and also determine if information in prior art references is adequately reliable that the reference should be used to reject a patent application. Third parties read patents to learn about new technology. Here, we ask whether the patent system evaluates the quality of the information contained in patents in any of these scenarios. We identify patent-paper pairs where the paper has been retracted and the patent contains the retracted information (“unsupported patents”). We follow the trajectories of these unsupported patents both before and after the corresponding paper was retracted. We find that the patent system is not sensitive to information quality. Unsupported patents are prosecuted, maintained, and cited at rates similar to control patents, despite containing information publicly recognized as inaccurate. Examiners, both in evaluating unsupported patent applications for grant and in citing unsupported patents as prior art against downstream applications are largely unaware that the information has been retracted. Downstream applicants whose applications are rejected over unsupported prior art are similarly unaware. Insensitivity to information quality may therefore lead to erroneous grant of patents containing inaccurate information and erroneous rejection of downstream patents due to examiner citation of poor-quality prior art. Though retracted patent-paper pairs are relatively rare, our findings shed light on how the patent system assesses patents supported by incorrect and irreplicable information – a much bigger problem. This has implications for patent quality, patent disclosure, and how patents facilitate knowledge flows. 

Maryann Feldman (University of North Carolina), Funding Emerging Ecosystems

Although prior research argues that location is important for firm performance, we lack an understanding of how resources accumulate in regions and how innovative ecosystems emerge and evolve over time. This paper focuses on the temporal development of an industry in a region and provides a framework for characterizing phase changes in a geographically defined entrepreneurial ecosystem. We add to the literature on entrepreneurial ecosystems by considering emergence as a temporal process and explicating finance as a mechanism that transitions between phases. Emergence is captured by the accumulation of individual entry by entrepreneurs, and punctuated by phase changes as the region accumulates resources and evolves. We use threshold regression to identify inflection points in stages of industry emergence. We then focus on the role of finance, from both public and private sources. Using a dynamic random effects probit model with regime analysis, we demonstrate interrelationships between public and private funding sources that differ over time. Finally, we estimate the relationship between the funding from various sources and firm survival within different phases using a discrete event history analysis. Our results demonstrate that public and private funding sources are complementary but with different impacts on firm survival during different phases. The results have implications for startup firms seeking funding and for policy making trying to encourage industry emergence.

Michela Giorcelli (University of California Los Angeles), Not All the Management Is Created Equal: Evidence from Training Within Industry Program

This paper examines the effects of different managerial practices on firm performance, using evidence from the Training Within Industry (TWI) program. The TWI plan was a business training program implemented by the U.S. government between 1940 and 1945 to provide management training to firms involved in war production. Using newly collected panel data on all 11,575 U.S. firms that applied to the program, we estimate its causal effects by exploiting quasi-random variation in the allocation of instructors to firms. We find that receiving any TWI training had a positive effect on firm performance. Training in human resources management had the largest impact and was complementary to other management practices. Finally, we document substantial heterogeneity in the effects of the program depending on whether top or middle managers were trained. 

Rembrand Koning (Harvard Business School), Female Inventors and Inventions

Does who invents matter for what gets invented? In this paper, we investigate whether female inventors are more likely to generate inventions that benefit women. We link all US biomedical patents from 1975 through 2014 to MeSH terms and disease incidence estimates. We find that patents with women inventors are 20% more likely to focus on female diseases and conditions. Consistent with the idea that women researchers choose to innovate for women, we find that this linkage holds within disease topics and is stronger when a woman is a solo inventor or the team lead. Female solo inventors are nearly 40% more likely to focus on female health outcomes than men. The female inventor-invention linkage holds across time, does not appear to crowd out research on female topics by men, and holds when we control for variation in the demand for female-focused inventions. This suggests increasing the number of women inventors might result in more inventions that benefit women. Overall, our findings highlight the possibility that biased labor-markets engender biased product-markets.

Michael Andrews (National Bureau of Economic Research), Bar Talk: Informal Social Interactions, Alcohol Prohibition, and Intervention

To understand the importance of informal social networks for invention, I examine one of the largest involuntary disruptions of social networks in U.S. history: alcohol prohibition. The enactment of state-level prohibition laws differentially treated counties depending on whether those counties were wet or dry prior to prohibition. After the imposition of state-level prohibition, previously wet counties had 8-18% fewer patents per year relative to consistently dry counties. The effect was largest in the first three years after the imposition of prohibition and rebounds thereafter. The effect was smaller for groups that were less likely to frequent saloons, namely women and particular ethnic groups. I present evidence that the effect was driven by the disruption of social interactions and rule out alternative explanations. I next use the prohibition experiment to find support for two properties of the informal social network. First, I show that individuals benefited from the social network not only by finding collaborators, but also by being exposed to ideas from distant connections. Second, the network structure exhibited path dependence in the sense that as individuals rebuilt their social networks following prohibition, they connected with new individuals and patented in new technology classes. While prohibition had only a temporary effect on the rate of invention, the fact that the post-prohibition network exposed individuals to different ideas means that prohibition had a lasting effect on the direction of inventive activity.

Daniel Armanios (Carnegie Mellon University), Scaffolds and Intermediaries: How Changing Institutional Infrastructure Can Alleviate Normative and Cognitive Barriers to Regulatory Changes Supporting Entrepreneurship

What institutional infrastructure helps overcome normative and cognitive barriers to regulatory change? We focus on two forms: institutional scaffolds that enhance the market relevance of technical knowledge and institutional intermediaries that link two or more disparate parties to bring about activities that would not occur otherwise. To understand how institutional infrastructure can cognitively and normatively support regulatory change, we focus on the case of the Chinese Academy of Sciences (CAS)’ Knowledge Innovation Program (KIP) – a program aimed at better connecting CAS science to markets. Through our qualitative fieldwork, we observe that after institutional changes, public research institutes were better equipped to host institutional scaffolding that could more tangibly demonstrate market applications for its science. In this way, scaffolding serves as cognitive support for regulatory change. We argue that institutional intermediaries help create shared standards across the public and private sector regarding how to structure a high-tech venture, conduct business practices, and develop product specifications to improve market acceptance and fit. Intermediaries serve as normative support for regulatory change. Our quantitative analyses show that after KIP, founding rates increase, especially in those provinces with more local CAS institutes. Moreover, those firms founded after KIP were more likely to subsequently locate inside science parks. These changes to institutional infrastructure seem particularly important in more nascent clusters. Our study contributes to studies at the nexus between institutional change and entrepreneurship by highlighting the role of institutional infrastructure in overcoming cognitive and normative barriers to regulatory changes aimed at increasing entrepreneurship.

Caroline Fry (MIT, PhD Student), Building Bridges: The Impact of Return Migration by African Scientists

Despite significant interest in the potential for ‘returnee’ scientists moving back to developing countries to connect developed and developing countries, prior work has found limited evidence of success. I shift the focus to the broader network of the returnee, and study the extent to which the return home of United States trained HIV researchers to African institutions impacts publication outcomes of non-migrant scientists in Africa. I find that following the arrival of a returnee in their institution, non-migrants experience increased productivity, mostly in HIV research. I find strong evidence that the mechanism driving this effect is that of the returnee providing a bridge to their central connections and subsequent knowledge and resources thus affecting outcomes. In settings where ‘outsiders’ struggle to access knowledge and resources that are usually reserved for exclusive ‘insiders’, this kind of bridge in the network can help through providing legitimacy to the outsiders. These findings inform a network perspective on the consequences of the mobility of skilled individuals, the development of national innovation ecosystems, and the globalization of knowledge production.

Oliver Schilke (Eller College of Management, University of Arizona), The Effect of Organizational Aggregation Structures on Individuals' Voting Behavior: An Experimental Investigation

Research on the structures through which agents’ votes are aggregated into an organizational decision has tended to treat individual voting behavior as exogenous. In contrast, we examine how individual voting behavior can shift as a result of the voting threshold being applied. Results from two experiments reveal that voting thresholds have a non-intuitive effect on individual voting behavior, with more progressive aggregation rules resulting in more conservative votes. This effect is further amplified when actors perceive that they possess inferior information for making a decision compared to their peers. We contribute to research on organizational aggregation by highlighting the dual function of voting rules as they combine votes but also shape voting behavior. We demonstrate that these two functions are diametrically opposed to one another: a smaller voting threshold lowers the bar for a project to be greenlit at the organizational level, but it also reduces individual agents’ tendency to vote in favor of an investment. The combination of both effects explains why the organizational adoption of a new voting threshold may not yield the intended effect.

Dana Kanze (Columbia Business School): Motivations in Entrepreneurship" The Impact of Focus and Mode on Bias

Male entrepreneurs are known to raise higher levels of funding than their female counterparts, but the underlying mechanism for this funding disparity remains contested. Drawing upon regulatory focus theory, we propose that the gap originates with a gender bias in the questions that investors pose to entrepreneurs. A field study conducted on question-and-answer interactions at TechCrunch Disrupt New York City during 2010 through 2016 reveals that investors tend to ask male entrepreneurs promotion-focused questions and female entrepreneurs prevention-focused questions, and that entrepreneurs tend to respond with matching regulatory focus. This distinction in the regulatory focus of investor questions and entrepreneur responses results in divergent funding outcomes for entrepreneurs whereby those asked promotion-focused questions raise significantly higher amounts of funding than those asked prevention-focused questions. We demonstrate that every additional prevention-focused question significantly hinders the entrepreneur’s ability to raise capital, fully mediating gender’s effect on funding. By experimentally testing an intervention, we find that entrepreneurs can significantly increase funding for their startups when responding to prevention-focused questions with promotion-focused answers. As we offer evidence regarding tactics that can be employed to diminish the gender disadvantage in funding outcomes, this study has practical as well as theoretical implications for entrepreneurship.

Adam Jaffe (Brandeis University) "Ex-ante Measure of Patent Quality Reveals Intrinsic Fitness for Citation-Network Growth."

We have constructed a fitness parameter, characterizing the intrinsic attractiveness for patents to be cited, from attributes of the associated inventions known at the time a patent is granted. This exogenously obtained fitness is shown to determine the temporal growth of the citation network in conjunction with mechanisms of preferential attachment and obsolescence-induced ageing that operate without reference to characteristics of individual patents. Our study opens a window on understanding quantitatively the interplay of intrinsic fitness and a random rich-gets-richer paradigm that have been suggested to govern the growth dynamics of real-world complex networks.

Hazhir Rahmandad (MIT Sloan School of Management) "How Rugged Are Performance Landscapes? Theoretical and Case-based Explorations."

Performance landscape -- the mapping between firm choices and performance outcomes— is a construct central to organization theory. Yet prior formalizations span a wide range from unimodal production functions to rugged landscapes with many local peaks. I report on two complementary attempts to narrow this gap. First, introducing a theoretical landscape that captures possible interactions among continuous or discrete organizational choices and includes the well-known NK architecture as a special case, I show that: (a) The growth in the number of local peaks as a result of interdependencies may be much slower than previously hypothesized. (b) Complementarity significantly reduces the number of peaks. (c) Performance enhancing (innovative) mutations induce complementarities and lower the numbers of local peaks, often to a single one.

Second, building on case studies in mass market services we derive the mapping between managerial choice and firm performance excluding positioning considerations. In a strategy space defined by two dimensions—task richness and compensation—two local profitability peaks emerge: one with low compensation and low task richness and one with high compensation and high task richness. Exploring how firms discover, move to, and remain at the high compensation-high task richness peak we find three challenges to this strategy: (i) Context sensitivity: adoption, imitation and replication is harder for strategies that require significant customization to fit a new context; (ii) Schedule variability: just-in-time scheduling practices, in trying to match staffing to demand, drive quality employees away and compromise the strategy; and (iii) Temporal complexity: requirement for long-term investments leads to misleading performance feedback.  These mechanisms can introduce major barriers to adoption and maintenance of promising strategies even if actual performance landscapes are only modestly rugged.

Jana Gallus (UCLA - Anderson School of Management) "Shine a Light (on the bright): The Effect of Awards on Confidence to Speak Up in Gender-typed Knowledge Work."

Collaborative knowledge work may suffer if high-ability individuals do not feel confident to speak up and advance their ideas (e.g., due to self-stereotyping). We test whether recognition through awards increases high-ability group members’ confidence to speak up when working on male-typed knowledge tasks. In a lab context where private feedback was ineffective, we study performance based recognition with different degrees of publicness: private recognition, semi-public award, ceremony. We thus focus on managerial policies that are widely used in practice but have received limited scholarly attention. First, we show that self-stereotyping affects women’s contribution of ideas in mathematics. Second, awards significantly increase recipients' and hence high-ability subjects’ confidence to speak up. Third, the awards’ visibility does not matter much, except when interacted with gender. In our experiment the gender gap in confidence to speak up disappears among high-ability participants when awards are celebrated in a ceremony with face-to-face recognition. Losers remain unaffected.

Jacquelyn Pless (University of Oxford) "Are "Complementary Policies" Substitutes? Evidence from R&D Subsidies in the UK."

Governments subsidize R&D through a mix of interdependent mechanisms, but subsidy interactions are not well understood. This paper provides the first quasi-experimental evaluation of how R&D subsidy interactions impact rm behavior. I use funding rules and policy changes in the UK to show that direct grants and tax credits for R&D are complements for small firms but substitutes for larger firms. An increase in tax credit rates substantially enhances the effect of grants on R&D expenditures for small firms. For larger firms, it cuts the positive effect of grants in half. I explore the mechanisms behind these findings and provide suggestive evidence that complementarity is consistent with easing financial constraints for small firms. Substitution by larger firms is most consistent with the subsidization of infra-marginal R&D expenditures. I
rule out some alternative explanations. Subsidy interactions also impact the types of innovation efforts that emerge: with increases in both subsidies, small firms steer efforts increasingly towards developing new goods (i.e., horizontal innovations) as opposed to improving existing goods (i.e., vertical innovations). Accounting for subsidy interactions could substantially improve the effectiveness of public spending on R&D.

Sandeep Pillai "Learning by Scaling: Am Empirical Exploration of Production Scaling in the Early American Automobile Industry."

This paper makes a context-embedded contribution to the strategic management literature by identifying a specific pre-entry capability that mattered, and by demonstrating that, at least in one case, process innovations are critical from a very early industry stage. This study explores the challenges firms faced while attempting to scale manufacturing during the early American automobile industry (1895-1918). I argue that firms with founding team members who had prior operational experience in a factory that depended upon knowledge of metalworking were able to overcome production bottlenecks and thereby achieve scale. I use multivariate statistics to demonstrate that the founder’s metal factory experience was correlated with both the firm's survival and its ability to increase production capacity. I demonstrate the practical use of historical methods by using them to uncover qualitative evidence of causality. Consequently, this study illustrates that extensive exploration of an industrial context reveals unique insights that (a) can only be generated from such an exploration, and (b) reveal the limits of general theories of strategy that do not take advantage of deep exploration of context.

Julian Kolev (Southern Methodist University - Cox School of Business) "Evaluating Peer Review: Identifying Promising Ideas at the Gates Foundation."

The process of peer review relies on experts to identify promising research for the purpose of funding or publication; however, this approach has been criticized for under-valuing radical innovations and reducing intellectual diversity.  We explore the strengths and weaknesses of peer review by analyzing grant proposal evaluations at the Bill & Melinda Gates foundation.  Our setting features anonymous proposals, diverse reviewers, and champion-based funding decisions, allowing for direct estimates of the quality of reviewer decision-making across a range of outcome metrics. Analyzing a dataset of 16,560 applications and 50,143 application-reviewer pairs, we find that reviewers prefer proposals from their field of expertise, but that this preference diminishes quickly with experience evaluating diverse proposals.  Examining outcomes through subsequent publications, we find that non-traditional reviewers (i.e. those outside academia or outside the US) are more effective at identifying high-quality proposals.  Our findings suggest that greater intellectual diversity within the population of reviewers has the potential to improve the effectiveness of peer review.

Britta Glennon "How Do Restrictions on Hogh-Skilled Immigration Affect Offshoring? Evidence from the H-1B."

The decision to encourage or restrict high-skilled immigration has long been controversial. Advocates argue that high-skilled immigration is critical for firm competitiveness and innovation; critics argue that skilled immigrants displace native workers and drive down wages. The debate, however, has largely overlooked the secondary consequences of restrictions on high-skilled hiring of immigrants: multinational firms faced with decreased access to visas for skilled workers have an offshoring option, namely, hiring the foreign labor they need at their foreign affiliates. This paper documents the impact of restrictive high- skilled immigration policies on the globalization of high-skilled activity by US MNCs.

I use a unique matched firm-level dataset of H-1B visas and multinational firm activity and two different identification strategies to examine three key questions about that impact. First, do restrictions on H-1B visas result in increased foreign affiliate activity? Second, how does any impact differ across firms, industries, and countries? Finally, do these restrictions also affect the location of innovative activity? Both strategies yield the same result: that restrictions on H-1B immigration caused increases in foreign affiliate activity at both the intensive (US multinationals employed more people at their foreign affiliates) and the extensive (US multinationals opened more foreign affiliates conducting R&D) margins.

WonJoon Kim (KAIST - School of Business and Technology Management) "Investigator-initiation vs. Block-funding in Scientific Research: Evidence from Korean Government Research Institutes."

Under ever increasing R&D investment due to its importance in economic growth, investigator-initiated funding systems employing competition mechanisms such as NSF or NIH grants has been accepted as the alternative solution for more efficient and productive system than block-funding for a scientific institution, particularly, in public R&D investment. However, the effect of investigator-initiated funding systems on scientific performance has long been controversial and has remained largely overlooked. In this paper, we analyze how the introduction of the investigator-initiated funding system affects the scientific performance of the researchers in government research institutes (GRIs) utilizing a unique policy change that was introduced in South Korea in 1996. Prior to 1996, the government subsidized GRIs’ major portion of annual budget based on the number of researchers, i.e. block-funding.

However, in 1996, the government enacted a new policy of investigator-initiated funding system for GRIs and began to distribute the R&D funds centrally and publicly to any researchers, including university researchers, based on competition among them. Using a unique matched individual-level dataset of the researchers in GRIs that are located in South Korea and two different identification strategies, we examine three key questions regarding the impact of competition. First, does the introduction of investigator-initiated funding system increase scientific productivity? Second, do researchers migrate from one institution to another due to more competitive funding system affecting the scientific productivity of the original institution? Third, is the effect of investigator-initiated funding system heterogeneous across different performance segments of researchers? 

Hyejun Kim (MIT Sloan School of Management) "Knitting Community: Human and Social Capital in the Transition to Entrepreneurship."

The process by which individuals become entrepreneurs is often described as a decisive moment of transition, yet it necessarily involves a series of smaller steps. This study examines how human capital and social capital are accumulated and deployed in the earliest stages of the entrepreneurial transition in the setting of “user entrepreneurship.” Using the unique dataset from Ravelry—the Facebook of knitters—I study why and how some knitters become designers. I show that knitters who make the entrepreneurial transition are distinctive in that they have experience in fewer techniques and more product categories. I also show that this transition is facilitated by participation in offline social networks where knitters garner feedback and encouragement. Importantly, social and human capital appear to complement each other with social capital producing the greatest effect on the most skilled users. Broader theoretical implications on user innovation, the role of social capital, and entrepreneurship research are discussed.

Daniel Kim (MIT Sloan School of Management) "Hiring Through Startup Acquisitions: Preference Mismatch and Employee Departures."

This paper investigates the effectiveness of startup acquisitions as a hiring strategy. Unlike conventional hires who choose to join a new firm on their own volition, most acquired employees do not have a voice in the decision to be acquired, much less by whom to be acquired. The lack of worker agency may result in a preference mismatch between the acquired employees and the acquiring firm, leading to elevated rates of turnover. Using comprehensive employee-employer matched data from the US Census, I document that acquired workers are significantly more likely to leave compared to regular hires. By constructing a novel peer-based proxy for worker preferences, I show that acquired employees who prefer to work for startups – rather than established firms – are the most likely to leave after the acquisition, lending support to the preference mismatch theory. Moreover, these departures suggest a deeper strategic cost of competitive spawning: upon leaving, acquired workers are more likely to found their own companies, many of which appear to be competitive threats that impair the acquirer’s long-run performance.

Kathryn Shaw (Stanford University - Graduate School of Business) "Serious Entrepreneurs as Serial Entrepreneurs: What Account for Their Success."

Serial entrepreneurs are talked about in the press, but little is known about the performance of their firms.  Until better data becomes available on U.S. firms, we use panel data from Denmark on 216,524 newly founded firms for 2001-2013.  Several key results are uncovered.  First, the serial entrepreneur has higher sales and productivity, relative to the novice, who never opens a second firm.  Second, the serial entrepreneur opens his second firm with much higher productivity and sales than he had obtained when he closed his first firm.   This evidence suggests that the serial entrepreneur learned two things while running his first firm. 

He is learned about his own quality as an entrepreneur.  And he is learned how to be an entrepreneur.  Therefore, on both counts, young people learn the most from running their first firm.  The evidence suggests that young serial entrepreneurs are learning intangible things – such as developing marketing or customer networks – that the older serial entrepreneurs had learned before opening their first business.  Finally, it is posited that there is a group of entrepreneurs – comprised of some combination of serial entrepreneurs, of incorporating their firms at high rates, and of opening the doors of their firms with employees – that we label “serious entrepreneurs” because they appear to both aim for high performance and then achieve high performance. 

Ankur Chavda (MIT Sloan School of Management) "The Downside of Experimentation: Evidence from Netflix's Entry into Television."

Is experimenting through staged development always worthwhile? The theory of commitment says no, sometimes ceding the right to terminate at an early stage improves final outcomes. However real options theory makes the opposite prediction: experimentation can only improve final outcomes by using early stage information to obviate later stages with poor outcomes. To address this theoretical tension, I use a setting that historically relied on staged development, new television show development, but shifted away from staged development due to the entry of Netflix. Using a model of incumbent decision making to econometrically exploit this entry as a shock, I find staged development is not always worthwhile. Commitment improves outcomes when there is an existing relationship between a new show’s creators and the network developing the show.

Jorge Guzman (MIT Sloan School of Management and National Bureau of Economic Research) "Go West Young Firm."

Using business registration records across 25 U.S. states, I study the benefits of migration for all startups that exhibit an observable signal of high growth intention—registering under Delaware corporate law. 4% of startups migrate to an out of state MSA in the first two years, and startup migration is determined by profit-driven economic considerations related to the firm’s potential, region-specific costs and benefits, and quality of living. Using a machine learning approach to control for the selection into migration, I compare the performance of migrants to non-migrants born in the same time and place that look strikingly similar at founding.

Erina Ytsma (MIT Sloan School of Management, Integrated Development Environment)  "Effort and Selection Effects of Performance Pay in Knowledge Creation."

This paper studies the effect of performance pay on research productivity through effort and selection effects. I use the introduction of performance pay in German academia as a natural experiment and a newly constructed data set that encompasses the affiliations and research productivity of the universe of academics in Germany to estimate the pure effort effect in a diff-in-diff  framework. I compare the research productivity of two cohorts of academics: Academics in the treated cohort started their first tenured position after the reform, and therefore do receive performance pay.

John Van Reenen (MIT Sloan School of Management) "Turbulence, Firm Decentralization and Growth in Bad Times."

What is the optimal form of firm organization during “bad times”? Using two large micro datasets on firm decentralization from US administrative data and 10 OECD countries, we find that firms that delegated more power from the Central Headquarters to local plant managers prior to the Great Recession out-performed their centralized counterparts in sectors that were hardest hit by the subsequent crisis. We present a model where higher turbulence benefits decentralized firms because the value of local information and urgent action increases. Since turbulence rises in severe downturns, decentralized firms do relatively better. We show that the data support our model over alternative explanations such as recession-induced reduction in agency costs (due to managerial fears of bankruptcy) and changing coordination costs. Countries with more decentralized firms (like the US) weathered the 2008-09 Great Recession better: these organizational differences could account for about 16% of international differences in post-crisis GDP growth.

Bronwyn Hall (University of California, Berkeley) "Technology Entry in the Presence of Patent Thickets."

We analyze the effect of patent thickets on entry into technology areas by firms in the UK. We present a model that describes incentives to enter technology areas characterized by varying technological opportunity, complexity, and the potential for hold-up due to the presence of patent thickets. We show empirically that our measure of patent thickets is associated with a reduction of first time patenting in a given technology area controlling for the level of technological complexity and opportunity. Technological areas characterized by more technological complexity and opportunity, in contrast, see more entry. Our evidence indicates that patent thickets raise entry costs, which leads to less entry into technologies regardless of a firm’s size.
 

Jana Gallus (UCLA - Anderson School of Management) "Increasing Wikipedia Editor Retention With Non-Monetary Awards: A Field Experiment."

How do awards impact their recipients' subsequent performance and motivation in the context of knowledge production? This talk will draw on results from a study of the John Bates Clark Medal to motivate a field experiment conducted at Wikipedia. The experiment, which will be the focus of the talk, tests the causal effects of a purely symbolic award scheme on the retention of new Wikipedia editors. Randomization assures that award receipt is orthogonal to previous performance. The analysis reveals that awards have a sizeable effect on newcomer retention, which persists over the four quarters following the initial intervention. This is noteworthy for indicating that awards can be effective even if they have no impact on the volunteers' future career opportunities. The awards are purely symbolic, and the status increment they produce is limited to the recipients' pseudonymous online identities in a community they have just recently joined. The results can be explained by enhanced self-identification with the community, but they are also in line with recent findings on the role of status and reputation, recognition, and evaluation potential in online communities.

Diego Comin (Dartmouth College)  "If  Technology Has Arrived Everywhere, Why Has Income Diverged?"

We study the cross-country evolution of technology diffusion over the last two centuries. We document that adoption lags between poor and rich countries have converged, while the intensity of use of adopted technologies of poor countries relative to rich countries has diverged. The evolution of aggregate productivity implied by these trends in technology diffusion resembles the actual evolution of the world income distribution in the last two centuries. Cross-country differences in adoption lags account for a significant part of the cross-country income divergence in the nineteenth century. The divergence in intensity of use accounts for the divergence during the twentieth century.

Juanita Gonzalez-Uribe (London School of Economics) "How Sensitive is Young Firm Investment to the Cost of Outside Equity?"

We estimate the sensitivity of investment to the cost of outside equity for young firms. For estimation, we exploit differences across firms in eligibility to a new tax relief program for individual outside equity investors in the UK. On average, investment increases 1.6% in response to a 10% drop in the cost of outside equity. This average conceals substantial heterogeneity: 1% of eligible firms issue equity in response to a subsidy that would have doubled investors’ returns, implying large fixed issuance costs for the majority of firms. Conditional on issuing new equity, however, firms invest eight times the issued amount. The results imply a large complementarity between outside equity and other funding sources.

Robert Seamans (New York University - Stern School of Business)  "Technology Opportunities and Local Innovation: Early Airmail and Aircraft Inventors."

We study how technology opportunities can stimulate innovation by studying how early US airmail, which added new routes into different cities between 1918 and 1932, stimulated growth in airplane related patents at a local level. We find evidence of an increase in airplane related patents in areas that experienced a route opening; however, there is no evidence of an increase in non-airplane related patents. We also explore whether the increase in patents was driven by entry of new inventors or a change in inventing behavior of existing inventors.

Eric von Hippel (MIT Sloan School of Management) "Free Innovation."

Free innovation involves innovations developed and given away by consumers as a “free good,” with resulting improvements in social welfare. I explain that free innovation is an inherently simple, transaction-free, grassroots innovation process engaged in by tens of millions of people in the household sector of national economies. Unlike producer innovation, free innovation does not require intellectual property rights to function. Indeed, from the perspective of participants, free innovation is fundamentally not about money – it is about human flourishing. I spell out the economics of free innovation relative to producer innovation, and its major economic impacts. These are currently not measured and so hidden from view. I also develop and explore major implications of free innovation for innovation theory, policymaking, and practice.

Lesley Millar-Nicholson (MIT Technology Licensing Office) "MIT TLO - 100 Days and 2020 Vision."

With just over 6 months in the role of TLO Director I will be presenting on some thoughts about the TLO in the MIT Innovation Ecosystem as well as our future role, hurdles and opportunities.

Nahoko Kameo (New York University) "Global Repertoires of Entrepreneurial Action."

Fabian Waldinger (University of Warwick) "Frontier Knowledge and the Creation of Ideas: Evidence from the Collapse of International Science in the Wake of World War I."

We quantify how access to frontier knowledge affects the creation of ideas. We show that citing frontier knowledge is correlated with producing high-quality papers. Because this correlation may be driven by unobserved factors, we identify the causal effect of frontier knowledge by analyzing a sudden collapse of international scientific cooperation. We show that World War I and the subsequent boycott against Central scientists severely reduced the dissemination of international knowledge, including knowledge at the scientific frontier. We then estimate how the reduction of international knowledge flows affected the productivity of scientists. Specifically, we compare productivity changes for scientists who relied on frontier knowledge from abroad, to changes for scientists who relied on frontier knowledge from home. After 1914, scientists who relied on frontier knowledge from abroad published fewer papers in top science journals and produced less Nobel Prize-nominated research. Our results indicate that access to the very best research, the top 1%, is essential for scientific progress.

Danielle Li (Harvard Business School) "Financing Novel Drugs."

The process of drug discovery is expensive and highly uncertain.  In this setting, risk-averse firms facing financial constraints may be more likely to invest in less novel ``me-too" drugs than may be socially optimal.  We examine this hypothesis by studying how resource constraints impact firms' decisions to invest in novel drug compounds.  This paper has two contributions.  First, we develop a new molecule-based measure of the chemical novelty of new drug candidates.  Second, we use variation in the expansion of Medicare prescription drug coverage in the United States (which differentially benefited firms with more drugs targeted toward elderly patients, as well as firms with more remaining patent life on those drugs) to isolate exogenous variation in firm cash flow.  We find that firms which benefit more from the expansion of drug coverage develop more drug candidates as a result and, moreover, this increase in drug development is driven by an increase in the development of more chemically novel drug compounds.

Timothy Simcoe (Boston University - Questrom School of Business) "Tax Credits and Small Firm R&D Spending."

 Using policy-induced variation in tax rates and R&D tax credits, we estimate the after-tax user cost elasticity of R&D for small firms. The response to changes in the after-tax cost of R&D is larger for contract R&D expenditures than for the R&D wage bill, and is larger for firms that perform contract R&D services or recently made R&D-related capital investments. We interpret this heterogeneity as evidence that small firms face fixed adjustment costs that lower their responsiveness to a change in the after-tax cost of R&D.

Freda Lynn (University of Iowa) "Mapping Market Spaces: Referents and Pricing in the Field of Higher Education."

Network scholars typically envision social structure with respect to the ‘hard’ ties that are formed through recurrent interactions and durable affiliations (e.g., exchange relations). In this study, we explore how the fabric of an organizational field is also woven of a set of connections that are far less tangible yet nonetheless consequential. We argue that there is a ‘soft’ or cognitive layer of social structure that arises from shared understandings around “who belongs with whom.” This network of comparability corresponds to what is effectively a field’s latent identity space. Within this space, we note that some producers become routinely paired with other producers while some are left unanchored, i.e., without any “natural” referents in the market.

We then posit that a producer’s level of anchoring, net of status and quality, affects important organizational outcomes. Specifically, we hypothesize that consumers are more likely to favor anchored producers not only because anchoring leads to more competitive pricing, but also because anchoring constitutes a source of organizational legitimacy in itself. These hypotheses are tested with respect to U.S. postsecondary institutions, tuition pricing and admissions yield. To derive the network of comparability in the field of higher education, we draw on a novel data source of peer nominations (self-claimed relational identities), which we convert to a field-level network of comparability (a third-order mapping of who pairs with whom).

Pian Shu (Harvard Business School) "Innovating in Science and Engineering or "Cashing In" on Wall Street? Evidence on Elite STEM Talent."

Using data on MIT bachelor’s graduates from 1994 to 2012, this paper empirically examines the extent to which the inflow of elite talent into the financial industry affects the supply of innovators in science and engineering (S&E). I first show that finance does not systematically attract those who are best prepared at college graduation to innovate in S&E sectors. Among graduates who majored in S&E, cumulative GPA strongly and positively predicts long-term patenting; this result is robust to controlling for choices of major and career. In contrast, GPA negatively predicts the probability of taking a first job in finance after college. There is suggestive evidence that S&E and finance value different sets of skills: innovating in S&E calls for in-depth knowledge and/or interest in a specific subject area, whereas finance tends to value a combination of general analytic skills and social skills over academic specialization. I then provide evidence that anticipated career incentives influence students’ acquisition of S&E human capital during college. The 2008–09 financial crisis, which substantially reduced the availability of jobs in finance and led to a worsening labor market in general, prompted some students to major in S&E instead of management or economics and/or to improve their academic performance. This response to the shock is driven by students with below-average academic credentials who were freshmen at the peak of the crisis.

Alva Taylor (Tuck School of Business) "Watch or Do? Vicarious and Experiential Learning in a Crowdfunding Market."

It is well established that in addition to learning from their own experience, firms seek to learn from the experience of other organizations.   However, an outstanding question is do firms benefit and learn from observing others’ experiences to the same degree that they can build knowledge from their own experiences? To address this gap, we examine experiential and vicarious learning in the crowdfunding setting and investigate the relative impact of these two learning modes on new venture funding success. We argue that learning can be viewed as a process of solving ambiguity in undertaking future action and that direct and vicarious experience differs in impact on this process.   To tease out these constructs, we disaggregate an organizations' prior direct and vicarious experiences into two dimensions, first splitting them along performance outcomes and then by industry relatedness. To test our hypotheses, we use data from the popular Kickstarter platform to construct a sample of 3071 crowdfunding campaigns seeking funding between 2009 and 2015. Drawing on previous research that argues that technology-based crowdfunding campaigns largely go on to become technology ventures and firms, we focus on technology-oriented campaigns aiming to produce physically manufactured products.Our results show strong support that both modes of learning have a positive performance impact, but as ambiguity increases the effects differ, and in some situations, vicarious learning can have a more positive performance impact.

Jorge Guzman (MIT Sloan School of Management) "Entrepreneurial Migration: The Role of the Entrepreneurial Ecosystem."

Entrepreneurial migration is a migration that occurs early in a firm’s lifetime. I study entrepreneurial migration across U.S. metropolitan statistical areas (MSAs) in a large sample of firms registered from 1988 to 2012. Around 15% of all firms migrate, with the bulk of this migration being within the first five years of age. Migration rates represent the revealed preference of firms for regional characteristics, and can shed light on the process of agglomeration in high growth entrepreneurship; but identification concerns make most correlations hard to interpret. This paper focuses on the role of the local entrepreneurial ecosystem (the quality and quantity of the local firms) on migration into an MSA. To identify the effect, I propose a novel identification strategy using localized economic uncertainty shocks that temporarily affect the quality of local entrepreneurship, but not other economic fundamentals of the regions. In Poisson QMLE models, using the change of mayors as a source of localized uncertainty, the local entrepreneurial quality is found to relate to higher migration rates for the full sample of migrants, though not for those of the highest potential. This relationship also holds in models with MSA and year fixed-effects. In contrast, five other “common” measures of regional entrepreneurship quality (venture capital, bohemia, MSA GDP, cost of living, and patenting rates), do not relate to migration consistently in fixed-effects models, even if they do in cross-sectional regressions.

Josh Krieger (MIT Sloan School of Management) "Trials and Terminations: Learning from Competitor's R&D Failures."

Michael Luca (Harvard Business School) "Racial Discrimination in the Sharing Economy: Evidence from a Field Experiment."

Online marketplaces increasingly choose to reduce the anonymity of buyers and sellers in order to facilitate trust. We demonstrate that this common market design choice results in an important unintended consequence: racial discrimination. In a field experiment on Airbnb, we find that requests from guests with distinctively African-American names are roughly 16% less likely to be accepted than identical guests with distinctively White names. The difference persists whether the host is African-American or White, male or female. The difference also persists whether the host shares the property with the guest or not, and whether the property is cheap or expensive. We validate our findings through observational data on hosts’ recent experiences with African-American guests, finding host behavior consistent with some, though not all, hosts discriminating. Finally, we find that discrimination is costly for hosts who indulge in it: hosts who reject African-American guests are able to find a replacement guest only 35% of the time. On the whole, our analysis suggests a need for caution: while information can facilitate transactions, it also facilitates discrimination. Please visit

Ben Jones (University of California , Santa Barbara) "The Reverse Matthew Effect: Catastrophe and Consequence in Scientific Teams."

Teamwork pervades modern production and organizations, yet teamwork can make individual roles difficult to ascertain.  In assigning individual rewards, the “Matthew Effect” suggests that communities presume eminent team members are responsible for great outcomes, reducing the credit that accrues to less eminent team members.  We study this phenomenon in reverse, investigating credit sharing for damaging events.  Our empirical context is article retractions in the sciences and the effect these negative events impose on citations to the authors' prior work.  We find that retractions impose little citation penalty on eminent coauthors, but less eminent coauthors face substantial citation declines, especially when teamed with an eminent author.  These findings suggest a “Reverse Matthew Effect” for team-produced catastrophes. A Bayesian model provides a candidate interpretation and identifies key primitives that may extend to many teamwork contexts.

Sarah Thebaud (University of California, Santa Barbara) "Gender Bias in Entrepreneurial Financing: When Does it Occur, Why Does it Occur, and What Can Be Done About It?"

Unconscious bias is a heavily studied and discussed topic in employment and in work organizations, but to date, it has received relatively less attention in entrepreneurship settings. In this talk, I'll discuss a series of experimental and field studies that aim to measure gender bias in entrepreneurial financing and to identify the mechanisms that drive it. Results suggest that, rather than being rooted in stereotypes about women's lack of commitment or likeability, the disadvantages women entrepreneurs face are rooted in beliefs about women's abilities, skills, and feminine self-presentation, characteristics that don't fit the agentically masculine traits stereotypically associated with successful entrepreneurship. A key focus of discussion will be on the implications these findings have for organizations and individuals whose aim is to mitigate bias and to foster the growth and success of new enterprises.

Karim Lakhani (Harvard Business School) "A Field Experiment on Search Costs and the Formation of Scientific Collaborations."

Scientists typically self-organize into teams, matching with others to collaborate in the production of new knowledge. We present the results of a field experiment conducted at Harvard Medical School to understand the extent to which search costs affect matching among scientific collaborators. We generated exogenous variation in search costs for pairs of potential collaborators by randomly assigning individuals to 90-minute structured information-sharing sessions as part of a grant funding opportunity for biomedical researchers. We estimate that the treatment increases the baseline probability of grant co-application of a given pair of researchers by 75% (increasing the likelihood of a pair collaborating from 0.16 percent to 0.28 percent), with effects higher among those in the same specialization. The findings indicate that matching between scientists is subject to considerable frictions, even in the case of geographically-proximate scientists working in the same institutional context with access to common information and funding opportunities.

Lee Fleming (University of California, Berkeley - Industrial Engineering and Operations Research) "Innovation as Exploration vs. Exploitation: Thousands of Cities (but little evidence)."

The original idea that search and innovation is a process of "exploration vs. exploitation" has been cited almost 16,000 times, yet there remains little causal evidence for the theory.  I'll present results that take advantage of exogenous variation in person, firm, or economy-wide search strategies.  We tie the strategies with new measures to innovation and performance outcomes; exploration leads to an increased probability of novelty and breakthrough but not necessarily better performance for individuals or firms.  Economy wide, exploration appears to be counter-cyclical to the business cycle and exploitation pro-cyclical.

Thomas Hellmann (Oxford Saïd Business School) "Fostering Entrepreneurship: Backing Founders or Investors?"

Governments across the globe want to foster entrepreneurial ecosystems, but there is no consensus on what policies are most effective. This paper considers an entrepreneurial ecosystem where entrepreneurs get funded by angel investors who themselves are experienced entrepreneurs. It develops a dynamic model with overlapping generations, where successful entrepreneurs become investors. The theory finds an intergenerational linkage between current valuations of start-ups and future funding supply. Government policies that back founders by helping them start companies reduce valuations. In contrast, policies that back investors by making investments more attractive drive up valuations, and thereby increase funding for future entrepreneurs.

Jeff Furman (Boston University) "Firm Performance and State Innovation Funding: Evidence from China's Innofund Program."

Can firms leverage public entrepreneurship investments to improve performance and obtain equity financing?  Using administrative data on applicants to China’s Innofund program, we (a) identify which features improve firm chances of winning grants and (b) evaluate the causal impact of grants on firm performance via a regression discontinuity (RD) framework.  We find that firms whose applications report more innovation and better financial performance and whose founders have political connections are more likely to win funding and that the role of political connection is particularly strong in the years in which Innofund grants were more freely available.  Further, firms receiving the Innofund grants are associated with higher performance in terms of survival, patenting and securing venture capital investment.  However, we distinguish selection effects and treatment effects in an RD framework, we find (almost) no evidence that Innofund funding boosts firm performance.  Our results point to the challenges associated with managing an innovation subsidy scheme in an emerging economy context and the value of innovation subsidies for applicant firms.

James Evans (University of Chicago) "How Science Thinks."

Andrei Hagiu (Harvard Business School) "Controlling Versus Enabling."

We study the choice that a firm makes between an employment mode, in which the firm controls service provision by employing professionals, sales representatives, or other types of agents, and an agency mode, in which the firm enables agents to provide their services on terms that they control. The choice of mode is determined by the need to balance double-sided moral hazard problems arising from investments that only agents can make and investments that only the firm can make, while at the same time minimizing distortions in decisions that either party can make. Distortions arise due to the need to share revenues and because of spillovers. Surprisingly, increasing the magnitude of negative spillovers across agents can shift the tradeoff in favor of the agency mode, and provided negative spillovers are not too strong, increasing the agents’ (respectively, the firm’s) moral hazard can shift the tradeoff in favor of the employment (respectively, the agency) mode.

Fabian Waldinger (University of Warwick) "Frontier Knowledge and Scientific Production: Evidence from the Collapse of International Science in the Wake of World War I."

We analyze the role of frontier knowledge for scientific production. First, we show that citing frontier work is correlated with writing hit papers. Second, we investigate a period of reduced international knowledge flows during WWI and the subsequent boycott against scientists from Central countries. During this period, knowledge flows between scientists from Allied and Central countries were substantially reduced, as measured by citations in scientific papers. Even frontier papers experienced substantial reductions in citations from scientists in opposing camps. Additional results indicate that the reduction in citations were driven by a reduction in supply of foreign knowledge, rather than a fall in demand. Third, we show that scientists in field times country combinations that were more dependent on frontier knowledge from the enemy camp published fewer papers after the onset of the war, compared to scientists in field times country combinations that sourced the majority of their frontier knowledge from home. Lastly we provide suggestive evidence that the collapse of international science affected the world-wide scientific progress as measured by the timing of Nobel Prize worthy ideas.

Neil Thompson (MIT Sloan School of Management) and Ben Roin (MIT Sloan School of Management) "Evidence from Claim Narrowing During USPTO Examinations."

Olav Sorenson (Yale University School of Management) "Do Startups Create Good Jobs."

We analyze Danish registry data from 1991 to 2006 to determine how firm age and size influence wages. Unadjusted statistics suggest that smaller firms pay less than larger ones and that firm age has no bearing on wages. After adjusting for differences in the characteristics of employees hired by these firms, however, we observe both firm age and firm size effects. We find that larger firms pay more than smaller firms for observationally-equivalent individuals but, contrary to conventional wisdom, that younger firms pay more than older firms. Moreover, we find that the size effect dominates the age effect. Thus, while the typical startup - being both young and small - pays less than a more established employer, those that grow rapidly often pay a wage premium.

Paula Stephan (Georgia State University) "The Bias Against Novelty: A Cautionary Take for Users of Bibliometric Indicators." 

Research which explores unchartered waters has a high potential for major impact but also carries a high uncertainty of having minimal impact. Such explorative research is often described as taking a novel approach. This study examines the complex relationship between pursuing a novel approach and impact. We measure novelty by examining the extent to which a published paper makes first time ever combinations of referenced journals, taking into account the difficulty of making such combinations. We apply this newly developed measure of novelty to a set of one million research articles across all scientific disciplines. We find that highly novel papers, defined to be those that make more (distinct) new combinations, have more than a triple probability of being a top 1% highly cited paper when using a sufficiently long citation time window to assess impact. Moreover, follow-on papers that cite highly novel research are themselves more likely to be highly cited. However, novel research is also risky as it has a higher variance in the citation performance. These findings are consistent with the “high risk/high gain” characteristic of novel research. We also find that novel papers are typically published in journals with a lower than expected Impact Factor and are less cited when using a short time window. Our findings suggest that science policy, in particular funding decisions which are over reliant on traditional bibliometric indicators based on short-term direct citation counts and Journal Impact Factors, may be biased against novelty.

Mercedes Delgado (MIT Sloan School of Management) "Clusters and the Great Recession."

Martin Watzinger (University of Munich) "Antitrust, Patents, and Cumulative Innovation: Evidence from Bell Labs."

Due to antitrust violations, Bell Labs was forced to license all its patents for free in 1956. In this paper we document that this led to a 10% increase in forward citations to these patents. Consistent with the idea that the free availability of Bell‘s patents stimulated follow-on research, we find that the number of patents in technologies pioneered by Bell grew tremendously. Companies all over the US started to work on research based on Bell patents. This finding is especially true for Silicon Valley, suggesting that free access to Bell's technology was a crucial ingredient in the Valley‘s rise.

Valentina Tartari (Copenhagen Business School) "Dexterity in the Use of Organizational Logics: The Effect of Self-Monitoring." 

Is there any characteristic that can make an individual better apt at spanning across multiple institutional logics? Following recent studies that have evidenced a certain degree of freedom and choice from actors that face multiple institutional requests, we investigate the role of self-monitoring on the ability of actors to comply with the requests brought by institutional pluralism. Our empirical study suggests the relevance of this individual variable, and allows us to consider it together with the role played by institutional compatibility. These findings contribute to the analysis of logics’ compatibility in organizational settings, to the development of micro-foundations of institutional theory, and to the literature on university-industry collaborations.

Wesley Cohen (Duke University) "The Acquisition and Commercialization of Invention in American Manufacturing: Incidence and Impact."

Recent accounts suggest the development and commercialization of invention has become more “open.” Greater division of labor between inventors and innovators can enhance social welfare through gains from trade and greater economies of specialization. Moreover, this extensive reliance upon outside sources for invention also suggests that understanding the factors that condition the extramural supply of inventions to innovators is crucial to understanding the determinants of the rate and direction of innovative activity.

This paper reports on a recent survey of over 6000 American manufacturing and service sector firms on the extent to which innovators rely upon external sources of invention. Our results indicate that, between 2007 and 2009, 16% of manufacturing firms had innovated – meaning had introduced a product that was new to the industry. Of these, 49% report that their most important new product had originated from an outside source, notably customers, suppliers and technology specialists (i.e., universities, independent inventors and R&D contractors). We also estimate the contribution of each source to innovation in the US economy. Although customers are the most frequent outside source, inventions acquired from technology specialists tend to be the more economically more significant in term of their gross commercial value. As a group, external sources of invention make a significant contribution to the overall rate of innovation in the economy. Innovation policies, both public and private, should pay careful attention to external supply of invention, and the efficiency of the mechanisms mediating between inventors and innovators.

Molly Van Houweling (University of California - Berkeley Law School) "Innovation and Intellectual Legacies."

Innovators stand on the shoulders of giants. But what happens when the giants are out of print? How is that even possible in the digital age? As it turns out, much of the scholarship of the 20th Century is no longer in print; many once-influential works are now available only in limited numbers of used copies. Prospects for digital access are bleak until copyrights expire, which won’t happen for many works until well into the 21st Century or even beyond. This situation limits access by readers, and it even limits the autonomy of authors—many of whom would like to reach new audiences through digital distribution but no longer control their own copyrights and, thus, their own intellectual legacies. I will present findings and guidance compiled by Authors Alliance, a non-profit founded to help authors overcome obstacles to reaching readers and advancing knowledge.

Alfonso Gambardella (MIT Sloan School of Management) "Autonomy in Knowledge-Intensive Activities: Efficiency or Incentives?"

As innovation depends increasingly on the creativity of human capital (for example relatively to technical progress embodied in machines), scholars and managers of innovation have recognized that individual traits – like the ability to take decisions or motivation – matter.  We build on this literature to study how firms lever these non-pecuniary elements to improve the management of innovation.  Our framework rationalizes a long debate on decision-making autonomy by suggesting that firms delegate decisions in specific projects for two reasons: efficiency (subordinates take better decisions because they know the problem better) or incentives (autonomy motivates them.)  We show that these two motives have opposite implications for the relationships between autonomy and the firm’s project-specific capital.  Efficiency encourages firms to delegate more in projects where they can deploy more productive assets because of complementarity.  However, poorer project-specific assets demotivate individuals, who are offered autonomy to regain motivation.  Using a detailed dataset at the level of innovation projects we document the existence of both channels.  We think that our analysis raises interesting questions on how firms can use autonomy as an instrument to improve the management of innovation at the project-level.

Abhishek Nagaraj (MIT Sloan School of Management) "The Private Benefits of Public Information: Satellite Mapping and Gold Discovery."

For centuries, the availability of maps of under-explored geographies has provided new opportunities for innovators, and yet mapping as a channel to enable discovery has been rarely examined. To shed light on this topic, I focus on the impact of the NASA Landsat satellite mapping program on shaping the level and distribution of new discoveries between firms in the gold exploration industry. I find that idiosyncratic gaps in mapping coverage (from technical failures and cloud-cover in satellite imagery) had important implications for gold exploration—firms were almost twice as likely to report the discovery of new deposits once regions were successfully mapped and the mapping program disproportionately supported discoveries from smaller, entrepreneurial firms, especially in regions with high quality local institutions. These findings point to the important but under-examined role of mapping as an economic activity in shaping industry performance and entrepreneurship.

Dan Fehder (MIT Sloan School of Management) "Accelerators and Startup Ecosystems: Substitutes or Complements for Entrepreneurial Performance?"

Michael Hannan (Stanford University Graduate School of  Business) "What Does It mean to Span Cultural Boundaries?"

We propose a synthesis of two lines of sociological research on boundary spanning in cultural production and consumption. One, research on cultural omnivorousness, analyzes choice by heterogeneous audiences facing an array of crisp cultural offerings. The other, research on categories in markets, analyzes reactions by homogeneous audiences to objects that vary in the degree to which they conform to categorical codes. We develop a model of heterogeneous audiences evaluating objects that vary in typicality. This allows consideration of orientations on two dimensions of cultural preference: variety and typicality. We propose a novel analytical framework to map consumption behavior in these two dimensions. We argue that one audience type, those who value variety and typicality, are especially resistant to objects that span boundaries. We test this argument in an analysis of two large-scale datasets of reviews of films and restaurants.

Valerie Karplus (MIT Sloan School of Management) "Institutions and Pollution Management in Emerging Markets: Insights from Cities in China."

Environmental pollution is a serious problem in China. Significant variation in rates of pollution cleanup across China’s prefectural cities suggests that local factors play an important role in abatement decisions. Using a panel of 287 Chinese cities, we study the relative importance of local factors, including institutional variation, in explaining pollution cleanup rates for a range of pollution types—SO2 emissions, soot emissions, industrial waste water, and industrial solid waste. We exploit variation in the stringency of policy pressure, both spatially for a given pollutant and across pollutants, over the period 2003 to 2007.

We find that a city’s level of development, environmental investment, urban planning characteristics, intensity of polluting industries, and policy affect cleanup rates. Cities located in designated SO2 control zones showed higher SO2 cleanup rates, while cleanup rates in water pollution control zones were not significantly different from uncontrolled zones. We further find a strong, positive correlation between state ownership share at the city level and the cleanup rates of prioritized pollutants, such as SO2 and soot. We offer two possible interpretations: 1) state firms are more responsive to targeted environmental policy campaigns, or 2) state firms have a stronger incentive to exaggerate the cleanup rates of prioritized pollutants. By contrast, for pollutants that are not prioritized, such as industrial solid waste, we find that cleanup rates fall as state ownership share rises.

Martin Ganco (University of Minnesota - Carlson School of Management) "Marked For Life? Temporary Mobility Constraints and Entrepreneurship Decisions by Foreign Graduates in Science and Engineering?"

Existing literature suggests that the accumulation of experience in a less constrained organizational context enables transitions to entrepreneurship. As opposed to studying constraints within organizations, I focus on the constraints affecting mobility. In the context of foreign graduates of U.S. universities in science and engineering, I utilize a quasi-experimental design and examine the effect of timing of permanent residency (i.e., the green card) on subsequent entrepreneurship decisions. Contrary to the current wisdom, I find that individuals who receive green cards shortly post-graduation (relative to pre-graduation) and face a more constrained labor market are more likely to subsequently start a growth-oriented business. Using the quasi-experiment as an instrument for the career choice shows that entering a career path in which the graduates do not utilize their education is associated with a lower likelihood of starting growth-oriented businesses. This finding is not explained by the differences in opportunity costs and the host of other alternative explanations. Further, the potential positive role that the temporary constraints may play underscores often overlooked beneficial aspects of the current immigration system.
 

Donald Sull (MIT Sloan School of Management) " Simple Rules: How to Thrive in a Complex World."

People struggle to manage complexity every day. We follow intricate diets, juggle multiple TV remotes, face too much data at work, and hack through thickets of regulation at tax time. Sull and Eisenhardt argue there's a better way: By developing a few simple rules and applying them to critical activities, people can manage even the most complex problems. Simple rules are a hands-on tool to achieve our most pressing personal and professional objectives, from overcoming insomnia to growing your business. Simple rules can help solve our most urgent social challenges, from setting interest rates at the Federal Reserve to protecting endangered marine wildlife.

Drawing on more than a decade of timely research, the authors provide a framework for developing and refining effective rules. They find insights in unexpected places, from how Tina Fey codified her Saturday Night Live experiences into rules for producing 30 Rock (“never tell a crazy person he’s crazy”), to burglars’ rules for selecting targets (“avoid houses with a car parked outside”), to Japanese engineers using the foraging rules of slime molds to optimize Tokyo’s rail system. Whether you’re struggling with information overload, pursuing opportunities with limited resources, or just trying to change your bad habits, Simple Rules provides a powerful approach to tame complexity.

Vladimir Bulovic (MIT School of Engineering) "MIT.nano."

Heidi Williams (MIT - Department of Economics) "Missing Markets for Innovation: Evidence from New Users of Old Drugs."

Pharmaceutical innovations are approved to treat a specific disease (say, diabetes), but in many cases evidence accumulates that any given drug can also effectively treat other diseases (say, cancer). However, once the original patent expires on a drug compound, discoveries of new uses of that compound receive little or no effective patent protection: because pharmaceutical firms lack a technology for monitoring the diseases for which physicians prescribe drugs, there is no way for the potential developer of a new use of an old drug to charge a price above marginal cost once generic entry has occurred. We use a simple theoretical model to formalize this distortion and analyze potential policy and market design responses. Our empirical work quantifies the magnitude of this distortion, which effectively creates variation in the patent terms provided to different potential discoveries. We also use this quantification exercise to provide causal evidence on how patent term length affects research investments.

Benjamin  Jones (Northwestern University - Kellogg School of Management) "University Innovation and the Professor's Privilege."

University-based researchers are potentially important sources of marketplace innovation, and public policy in many countries works to enhance innovative outcomes from university workforces. Yet little is known about how university-based researchers respond to incentives to engage in commercial innovation. This paper studies a natural experiment – the end of the “professor’s privilege” in Norway – where two-thirds of the property rights to innovations were transferred from one investing party, the individual researcher, to another, the university itself. Using data on all Norwegian workers, all Norwegian start-ups, and all Norwegian patents, we find an approximate 50% decline in the rate of university-based start-ups and patents after the reform. These findings inform literatures on commercialization policy, innovation incentives, and the link between taxes and entrepreneurship.

Philippe Aghion (Harvard University) "Innovation and Top Income Inequality."

In this paper we use cross-state panel data to show a positive and significant correlation between innovativeness and top income inequality in the United States over the past decades. Our instrumentation at cross-state level suggests that this correlation (partly) reflects a causality from innovativeness to top income inequality. Next, using cross commuting zones (CZ) data, we show that innovativeness is positively and significantly correlated with social mobility, and that this correlation is driven mainly by entrant innovators and less so by incumbent innovators. In addition, the positive effects of innovation on the top 1% income share and on social mobility are both dampened in states with higher lobbying intensity. Overall, our findings are in line with the Schumpeterian view whereby the rise in top income shares in developed countries and particularly in the US over the past decades, is at least partly related to innovation-led growth, where innovation itself fosters social mobility at the top through the process of creative destruction.

Cesar Hidalgo (MIT Media Lab) "Bringing Data to Life: Visualizing the Development of Economies, Cities, Social Networks and Culture."

The rise of computational methods has generated a new natural resource. That new natural resource is data. While it is not clear if Big Data will open up trillion dollar markets, what it is clear is that making sense of data is not easy, and that data visualizations are essential to squeeze meaning out of data. The capacity to create data visualizations, however, is not widespread. To help develop this capacity I have been working on the creation of Data Visualization Engines, which are tools that allow people to quickly visualize any portion of a large dataset and construct visual narratives from which they can draw insight. In this talk I will present five big data visualization engines we created at the MIT Media Lab's Macro Connections group and will show how to use them to improve our understanding of the development of economies, cultures and cities. The data visualization engines I will demo include (i) the Observatory of Economic Complexity (atlas.media.mit.edu), which is the most comprehensive tool for exploring international trade data created to date; (ii) DataViva (dataviva.info), which is a tool we created to open up data for the entire formal sector economy of Brazil, including data on all of the working force, municipalities, industries, and occupations of Brazil; (iii) Pantheon (pantheon.media.mit.edu), a dataset and visualization engine we created to explore global patterns of cultural production; (iv) Immersion (immersion.media.mit.edu), a tool that inverts the email interface, by focusing it on people rather than messages; and (v) Place Pulse and StreetScore (pulse.media.mit.edu & streetscore.media.mit.edu), which are crowd-sourcing and machine learning tools we have developed to help understand the aesthetic aspects of cities and their evolution.

Hong Luo (Harvard Business School) "Copyright Enforcement in Stock Photography."

This paper studies the effects of different enforcement methods on the settlement outcome of commercial copyright-infringement instances. We use a new, proprietary dataset from a leading agency in the stock photography industry. Two field experiments exogenously (1) reduced the requested amount for a subset of cases from the historical level; and (2) varied whether and how the information of this price reduction is provided in the letter. We find that, on average, firms are insensitive to the initial settlement request; and removing a substantial amount alone results in a lower expected revenue. Given the same lowered request, an extra message explaining the price reduction and acknowledging the possible un-intentionality of the infringement has a large positive effect; and imposing a deadline after which the forgiven amount is added has a positive and significant effect on the pre-deadline outcome. Finally, the results reveal large heterogeneity in the response to different messages by firm size.

Alberto Galasso (University of Toronto - Rotman School of Management) "Roads and Innovation."

We study the interplay between transportation infrastructure, knowledge flows, and innovation. Exploiting historical data on planned portions of the interstate highway system, railroads, and exploration routes as sources of exogenous variation, we estimate the effect of U.S. interstate highways on regional innovation. We find that a 10% increase in a region's stock of highways causes a 1.7% increase in regional patenting over a five-year period. We show that roads facilitate the flow of local knowledge and allow innovators to access more distant knowledge inputs. This finding suggests that transportation infrastructure may spur regional growth above and beyond the more commonly discussed agglomeration economies that are predicated on an inflow of new workers.

William Mann (UCLA - Anderson School of Management) " Creditor Rights and Innovation: Evidence from Patent Collateral."

Using a novel dataset of patents pledged as collateral, I show that strong creditor rights facilitate the financing of innovation. I begin by showing that patents are an important form of collateral for innovative firms, and that the debt supported by this collateral finances investment in innovation. Over the last five years, 29% of United States R&D and 23% of patenting is performed by companies that have employed their patents as collateral. Using the random timing of court decisions as a source of exogenous variation in creditor rights, I show that patenting companies raise more debt financing when they can credibly pledge their patents as collateral. Consequently, investment and patenting output also increase, as do the technological diversity and average citation count of the patents produced. Analysis of the debt contracts reveals that covenants and collateral act as substitutes: When creditor rights strengthen, covenants loosen, granting firms more flexibility to invest in longer-term projects.

Mary Benner (University of Minnesota - Carlson School of Management) "Same Old Song? Technological Change, Exploration and Performance in the Music Industry."

Technological change has brought fundamental challenges, as well as opportunities, to the recorded music industry. One set of changes – file sharing – has facilitated unpaid music consumption, eroding the abilities of the existing firms to generate revenues, making it difficult for major record labels to continue releasing new music using traditional modes of production, distribution, and promotion. At the same time, other technological changes have reduced the costs of industry activities, such as producing, distributing, and promoting music products, as well as searching for talent. These twin technological changes – file sharing along with cost reduction – raise interesting questions about the strategies pursued in response by organizations in the recorded music industry. Although economists have recently begun to study technological change, ‘digitization,’ and ‘digital disintermediation’ in the music industry, they have not explored how individual firms change their search strategies in response to the radical technological changes, or the associated performance outcomes for firms. In this study we examine the differing responses of major label and smaller independent label organizations to dramatic technological changes in the music industry. Using data on over 60,000 albums released in the US 1990-2010, we examine changes in strategy for major and independent labels before and after Napster.

We find a scaling back of major label releases along with growth in independent label releases leading to overall growth in new products, as well as a greater reliance of independent labels on new artists and declining reliance of majors on new artists. Related, we find a growing share of major releases featuring previously successful artists; this exploitative approach appears to work as a growing share of major label releases achieve commercial success. Further, the growing success rate for the majors does not arise from just a changed reliance on proven artists; rather, selection is more aggressive even among the artists continuing on the label or transferring from other labels. Finally, we find evidence that exploration has become less risky: majors achieve greater current success on debut albums, possibly reflecting greater availability of information about artists even prior to their first releases (e.g. Bieber discovered on YouTube).

Karim Lakhani (Harvard Business School) "Looking Across and Looking Beyond the Knowledge Frontier: Intellectual Distance and Resource Allocation in Science."

Selecting among alternative innovative projects is a core management task in all innovating organizations. In this paper, we focus on the evaluation of frontier scientific research projects. We argue that the “intellectual distance” between the knowledge embodied in research proposals and an evaluator’s own expertise systematically relates to the evaluations given (and consequent resource allocation). We empirically evaluate effects in data collected from a grant proposal process at a leading research university in which we randomized the assignment of evaluators and proposals to generate 2,130 evaluator-proposal pairs. We find evaluators systematically give lower scores to research proposals closer to their own areas of expertise, and to highly novel research proposals. We interpret the empirical patterns in relation to a range of theoretical mechanisms and discuss implications for policy, managerial intervention and allocation of resources in the ongoing accumulation of scientific knowledge.

Matt Marx (MIT Sloan School of Management) "Comobility."

Sociologists have long examined interorganizational mobility as a vehicle for occupational attainment. Research to date on mobility focuses on solo moves made by individuals, but many examples of joint or “comobility” suggest a little-explored avenue by which workers may capture the value they create via co-production. In both a seven-year snapshot of the Danish economy and several decades of employer-employee matched records from the worldwide automatic speech recognition industry, we find that more than 10% of moves are joint with coworkers compared to a predicted baseline of 1.4%. Employees who have longer tenure and technical skills are more likely to move in groups (conditional on moving). Moreover, we find an 8% wage premium for co-movers vs. those who change jobs on their own, indicating that comobility can be an advantageous avenue for attainment. At the same time, those who move in groups are not promoted as often as those who move individually.

Naomi Hausman (Hebrew University of Jerusalem) "State Non-compete Laws and the Market for Physician Services."

Spending on physician services is rising faster than total medical spending in the U.S. while providers – encouraged to consolidate by national policies such as the Patient Protection and Affordable Care Act – have increasingly grouped together. This consolidation could increase efficiency in provision, reducing prices of services, or increase market power, raising prices and potentially driving up total spending. But the effect of consolidation on prices is difficult to measure because entrepreneurial physicians may choose to consolidate or separate their practices for a variety of reasons that may be correlated with the quality of services, the organization of other providers and insurers in the local market, the nature of demand, and ultimately with prices.
We use new, more comprehensive variation in non-compete laws to instrument for the
concentration of physician services. These laws – which govern the degree to which a state enforces agreements by employees not to compete with their employers and which vary on multiple dimensions across states and time – significantly affect the market concentration of physician practices. Suggestive of efficiency gains from consolidation, we estimate moderately sized service price reductions in response to increased concentration in localized and medically specialized markets for physician services.

Eunhee Sohn (MIT Sloan School of  Management) "Knowledge Spillovers from Industry to Academia: Evidence from the Agricultural Biotechnology Revolution."

In this paper, I provide the first empirical assessment of geographically localized knowledge spillovers from industry to academia. I investigate how local industrial R&D impacts the rate and direction of academic research, and how such "reverse knowledge spillovers" are mediated by the institutional and individual incentives that academic researchers are subject to. To address the endogeneity concerns due to selection of industry location, I exploit the exogenous entry into plant biotechnology R&D by pre-existing agribusiness incumbents in non-biotechnology clusters. Results from the difference-in-differences estimation are consistent with the theory, showing that local industry R&D increases publication output in the industry-relevant fields of science by 1) universities with strong pre-existing organizational capacity for industry boundary-spanning and 2) researchers of younger career age and graduates of less prominent doctoral programs.

Gino Cattani (New York University - Stern School of Business) " From the Margins to the Core: The Legitimation Journey of John Harrison's Marine Chronometer."

We examine the mediating role that social audiences play in affecting the legitimation of novelty originating from a non-certified outsider and challenging the status quo in an intellectual field. We find that whether a challenger’s new offer gains or is denied legitimacy is influenced by (1) the social position the challenger occupies in a particular field, (2) the existence of homologous social audiences that evaluate that offer, and (3) the mutability of the composition of those audiences that result from generational shifts in their membership. The case analysis focuses on the introduction of a new mechanical method for measuring longitude at sea – the marine chronometer – which challenged the traditionally accepted astronomical approach. Although the mechanical method promised to solve the longitude problem, its legitimacy waxed and waned due to the contrasting and changing orientations of the key social audiences in charge of channeling symbolic and material resources to the various offers presented to them.

Joel Mokyr (Northwestern University) "Cultural Entrepreneurs and the Origins of Modern Economic Growth."

The concept of entrepreneur is a central one in economic history. The definition of entrepreneur is extended here to include ‘cultural entrepreneurs’ and show how they can be integrated into the new modern economic interpretation of ‘culture’ as agents who change the beliefs of others. This concept can help us understand one of the central dilemmas of modern economic history, namely how the new institutional economic history can be deployed to understand modern economic growth. Cultural changes in the early modern age led to institutional changes that made Europe more friendly to innovation. In that process, two English figures can be seen as central, Francis Bacon and Isaac Newton. The essay shows how they meet the definition of a cultural entrepreneur and how their work coordinated and focused cultural change that was instrumental in preparing the ground for the Industrial Revolution.