Essays in Organizational Economics and Innovation

Abstract

In this dissertation, I explore themes in organizational economics and innovation. The common thread running through all chapters of the dissertation is the recognition that production and innovation are not isolated processes; rather, they are intricately linked to the social networks individuals cultivate throughout their lives, whether they consist of colleagues or individuals who happen to influence them.

In the first chapter, I develop a tractable model of endogenous network formation among co-workers. In the model, workers aim to complete their tasks but may encounter failures, and when they do, they may reach out to one of their connections for help. I show that the extent to which workers invest in social networks is sensitive to the probability of failing to perform a task. For very low or very high failure rates, social networks offer limited value to workers, and therefore investment in connections is low. Intermediate failure rates, on the other hand, promote collaboration and, therefore, link formation. Furthermore, I uncover that excessive investment in social networks may occur because workers fail to recognize that their actions can impede other workers’ access to assistance.

In the second chapter, I study knowledge spillovers between inventors who used to collaborate. Specifically, when inventors move to new locations, they carry knowledge and expertise, which may be a loss to their previous collaborators. But they might also become a bridge between otherwise disconnected innovation hubs, facilitating information flows and idea diffusion. I, therefore, study the effect of an inventor’s relocation on their previous collaborators’ productivity, both theoretically and empirically. The model helps to guide the empirical analysis and to interpret the results. While empirically, I build a novel dataset and find sizeable positive effects on the productivity of inventors whose collaborators have relocated. These effects pertain not only to quantity, as gauged by the number of patents, but also to quality, as measured by the number of citations. I show that the core mechanism driving both effects is greater access to novel information networks and information.

And in the third chapter, my co-author and I develop a spatial growth model with a focus on mobility of innovators across space. The model highlights how inventor mobility, local knowledge externalities, and aggregate knowledge externalities jointly pin down the aggregate and distributional effects of innovation policy with a focus on regional and skill type heterogeneity. We combine the model with a quasi-natural experiment during Word War II, and enrich the data with information on local population size, skill composition, and innovator mobility. We use the reduced form estimates to discipline the model. In future work we will use the model to analyze the counterfactual impact of temporary and persistent innovation subsidies across US labor markets.