|
Working Paper
| HBS Working Paper Series
| 2012
Growth through Heterogeneous Innovations
by
Ufuk Akcigit and William R. Kerr
|
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: Endogenous Growth;
innovation;
Exploration;
Exploitation;
Research and Development;
patents;
Citations;
Scientists;
entrepreneurs;