Events

Sophie Quach's work strives to advance our understanding of how users and firms can both benefit from their complementary objectives, roles and resources in joint innovation processes. For firms, adopting, perfecting, producing, and eventually broadly diffusing commercially viable freely revealed user innovations among customers is clearly a great business opportunity. As user innovations originate from different incentives and in different environments than producer innovations, user innovations “generally pioneer functionally new applications and markets prior to producers understanding the opportunity” (von Hippel, 2017). Firms’ commercialization of user innovations is also beneficial from a societal perspective, as it reduces what has been termed the “diffusion shortfall” of user innovations (de Jong et al., 2015, 2018). Many valuable user innovations remain underused because users lack both incentives and resources to produce and popularize them. 

Contact person: Svenja Friess

Social and environmental innovation are important for economic and societal development and to reach the Sustainable Development Goals of the United Nations. However, to date, we lack objective, validated, and non-survey based indicators to measure these two important forms of innovation. To what extent can patent and trademark data be used to construct such measures? Using data from several independent samples, we correlate different survey-based measures of social and environmental innovation with patent and trademark-based measures. Our results show that trademark-based measures can be used to identify social and environmental innovation. The results regarding patent data are mixed.

Contact person: David Heller

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We analyze how the adoption of the California Consumer Privacy Act (CCPA), which limits the acquisition, processing, and trade of consumer personal data, heterogeneously affects firms with and without previously gathered customer data. Exploiting a novel and hand-collected data set of 11,436 conversational-AI firms with rich personal information on U.S. consumers, we find that the CCPA gives a strong protection and advantage to firms with previously accumulated (in-house) data. First, products of these firms generate more customer feedback and exhibit higher product ratings after the adoption of the CCPA. Second, publicly traded firms with in-house data exhibit higher valuations, profitability, asset utilization, and they invest more after the adoption of the CCPA. Third, earnings of such firms can be more accurately predicted by analysts. To rationalize these empirical findings, we build a general equilibrium model where firms produce intermediate goods using labor and data in the form of intangible capital. Data can be traded with other firms subject to a cost representing regulatory and technical challenges. Firms differ in their ability to collect data internally, driven by their business models and/or the size of their customer base, and reliance on data. When the introduction of the CCPA increases the cost of trading data, firms with a low ability to collect in-house data and high reliance on data suffer the most as they cannot adequately substitute the previously externally purchased data.

Contact person: Svenja Friess

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Many established firms have substantially reduced their engagement in upstream scientific research since the 1980s. We examine how two components of public science – scientific knowledge and human capital – affect corporate investment in research and innovation. Empirically, we link firms with public science that is relevant to their innovation and trace funding sources. Identification is based on firm-specific exposure to (i) changes in federal agency R&D budgets and (ii) windfall funding from congressional appropriations. We find that public knowledge crowds out internal research, except for firms at the technology frontier (“frontier firms”), which continue to invest in internal research even when public knowledge relevant to their innovation is abundant. Second, human capital increases internal research and innovation, especially in frontier firms. We conclude that while the rise in public science can partly explain the decline in corporate science, the effect has been uneven across firms, affecting non-frontier firms more than frontier firms, and potentially amplifying the gap between them.

Contact person: Michael Rose 

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The Role of an Open Source Software Compliance Certification in the Software Supply Chain – Insights from a Conjoint Experiment

Presenter: Juliane Wissel (TUM)

Discussant: Ambre Nicolle (ISTO)

First-Party Complements in Platform Markets: The Role of Competition

Presenter: Alexey Rusakov (ISTO)

Discussant: Adrian Göttfried (TUM)

We study belief updating about relative performance in an ego-relevant task. Manipulating the perceived ego relevance of the task, we show that subjects update their beliefs optimistically because they derive direct utility flows from holding positive beliefs. This finding provides a behavioral explanation why and how overconfidence can evolve in the presence of objective information. Moreover, we document that subjects, who received more bad signals, downplay the ego-relevance of the task. Taken together, these findings suggest that subjects use two alternative strategies to protect their ego when presented with objective information.

Contact person: Marina Chugunova

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The Perks of Being Unknown: Implied Costs of Knowledge Seeking on Organizational Platforms

Presenter: Maren Mickeler (ISTO)

Discussant: Carolin Formella (Max Planck Institute for Innovation and Competition)

Everyone Likes to Be Liked: Experimental Evidence from Matching Markets

Presenter: Timm Opitz (Max Planck Institute for Innovation and Competition)

Discussant: Gresa Latifi (TUM)

This paper analyzes the contribution of entrepreneurial activities to gender earnings gaps among university faculty. Administrative data from universities (UMETRICS) linked to the universe of confidential W2 and 1099 tax records allow me to precisely classify earnings sources and measure faculty commercial engagement. I find substantial faculty gender gaps. Female faculty are 20 percentage points less likely to engage in entrepreneurial activities, with the entire participation gap driven by the gap in self-employment. The raw total male-female faculty earnings gap is $63k (on a base of $162k), with the gap in non-university earnings accounting for $18k (29%). Thus, though university earnings account for most of the total gap, commercial engagement opportunities substantially expand the gap. Earnings gaps also exist for all components of non-university earnings, including earnings from self-employment as well as from incumbent, young/startup, high-tech, and low-tech firms. Quantile regressions show that, as faculty move up the earnings distribution, gender earnings gaps grow and entrepreneurial activity becomes a more important contributor to the total gap, which is suggestive of a “glass ceiling” effect for female faculty. I also find that earnings gaps are small at career outset and then grow over time, but that the contribution of entrepreneurial activities to the total gap is relatively constant over the lifecycle.

Contact person: Michael Rose

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Women are underrepresented in patenting and the gap is not closing quickly. One major roadblock is the dearth of causal evidence on the potential effectiveness of interventional policies to address the gender patenting gap. Using a randomized control trial (RCT) at the United States Patent and Trademark Office (USPTO), we identify the heterogeneous causal impacts across gender and technologies of increased patent examination assistance on the probability of obtaining patent rights. Women applicants were about 11 percentage points more likely than men to benefit from this assistance, and the benefits were largest for U.S. inventors, new U.S. inventors, and in technology areas where women had the worst relative outcomes. Our results suggest that a portion of the gender patenting gap could be eliminated through the provision of additional resources and assistance during patent prosecution.

Authors of the paper: Nicholas Pairolero, Andrew Toole, Peter-Anthony Pappas, Charles deGrazia, Mike Teodorescu

Contact person: Svenja Friess