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Publications
  • 2010
  • Working Paper
  • HBS Working Paper Series

Growth through Heterogeneous Innovations

By: Ufuk Akcigit and William R. Kerr
  • Format:Print
  • | Language:English
  • | Pages:80
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Abstract

We study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multi-product firms, and entry/exit. Firms invest in exploration R&D to acquire new product lines and exploitation R&D to improve their existing product lines. We model and show empirically that exploration R&D does not scale as strongly with firm size as exploitation R&D. The resulting framework conforms to many regularities regarding innovation and growth differences across the firm size distribution. We also incorporate patent citations into our theoretical framework. The framework generates a simple test using patent citations that indicates that entrants and small firms have relatively higher growth spillover effects.

Keywords

Business Ventures; Decision Choices and Conditions; Economic Growth; Investment; Innovation and Invention; Patents; Size; Research and Development; United States

Citation

Akcigit, Ufuk, and William R. Kerr. "Growth through Heterogeneous Innovations." Harvard Business School Working Paper, No. 11-044, October 2010. (SSRN, HBS WP 11-044.)

About The Author

William R. Kerr

Entrepreneurial Management
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