Three essays on innovation

This dissertation consists of three empirical essays that investigate different topics within the field of innovation. The fi rst paper focuses on the mechanisms available to fi rms to safeguard their intellectual assets in R&D alliances. When examining how to protect valuable technological assets from leakage in an alliance, prior research has largely focused on governance structure, alliance scope and, more recently, partner selection. In this paper, we view R&D employees that work side by side with R&D personnel of the partner as the critical juncture in safeguarding sensitive information, and consider the selection of inventors with speci c characteristics of their embodied knowledge as an alternative response to hazards in R&D cooperation. Speci cally, we claim that inventors who hold knowledge that is better protected against competitors' potential imitation represent a lower threat when technology leakage occurs. Consequently, we expect that managers will be prone to allocate these inventors into collaboration. By relying on patent ownership and authorship data, we analyze the allocation of inventors to collaborative projects from a sample of large pharmaceutical fi rms. Our results confi rm that inventors are strategically allocated to projects according to their degree of preemptive power. The second paper addresses the question of whether options trading enhances or impedes fi rm innovation, an important issue to policy makers as the eligibility criteria for securities in options trading are regulated by the Security and Exchange Commission (SEC). We argue that for fi rm that are listed on options markets, greater trading activity is associated with an increased propensity to innovate because they alter incentives for market participants to gather private information that is especially relevant for long-term investments and trading on such information makes stock prices more e cient. Because prices play an active role when managerial investment decisions are made, this should provide rm management with more incentives to engage in value enhancing innovative activities. We test our hypothesis on a sample of 548 publicly traded U.S. firms during the period from 1996 and 2004, and fi nd that fi rms with more options trading activity generate more patents and patent citations per dollar of R&D invested, after accounting for other confounding factors. These results are confi rmed when we use a propensity score matching procedure and an instrumental variable approach that account for the potential endogeneity of options trading. We then investigate how more active options markets affect fi rms' innovation strategy, and fi nd that firms with greater trading activity pursue a more creative, diverse and risky innovation strategy. We discuss potential underlying mechanisms and show that options appear to mitigate managerial career concerns that would induce managers to take actions that boost short-term performance measures. Finally, the third paper investigates the effect of obtaining a patent on the mobility of employee inventors who are at the beginning of their careers. We suggest that patents make human capital more specifi c to the employer and expect that patenting leads to lower levels of mobility. We use detailed micro data on applications led at the U.S. Patent and Trademark O ce (USPTO) since 2001 and approved or rejected before 2012. To establish causality, we leverage the fact that patent applications are assigned quasi-randomly to USPTO examiners and instrument for the probability that an application is approved with individual examiners' leniency. We document a negative causal e ect of patents on inventor mobility: one additional patent granted decreases the probability of changing employer by about 25 percent. The estimated negative effect is nearly twice as large for discrete technologies (chemicals and pharmaceuticals) for which patent effectiveness is greater. The effect is also more pronounced in cases where the inventor's knowledge can be independently transferred (e.g., inventors with few co-authors) and for moves concerning technologically similar employers. Our results have implications for policies supporting knowledge diffusion through workers mobility.Programa Oficial de Doctorado en Empresa y Finanzas / Business and FinancePresidente: Ashish Arora; Secretario: Bruno Cassiman; Vocal: Karin Hois