How external factors influence inventor productivity?

Abstract

This thesis examines how external factors influence the productivity of inventors, the most creative and precious personnel in many firms. The first factor I examine is terrorist attacks. Using fatal terrorist attacks as man-made disasters that shock the society, I examine their effects on inventor productivity. I find that after experiencing high-fatality attacks, local inventors tend to become more risk-averse and have lower productivity in the subsequent years, while those who witnessed terrorist attacks with low fatality tend to behave more risk-taking and produce more innovation outputs afterwards. I also find that inventors affected by high-fatality attacks are more likely to move to places without any significant terrorist attack history, but there is no such effect for low-fatality attacks. My findings are consistent with the notion that what does not kill you make you more risk-taking, and suggest that shocks to the society can be important external factors to reshape inventors' risk-taking behaviour and affect their innovation. The second factor I examine is air pollution. Using the NOx budget trading program (NBP) as a quasi-natural experiment, I examine whether reduction in air pollution enhances inventor risk-taking, which makes them more innovative. I find that inventors located in the NBP participating states produce more patents after the NBP. These patents also receive more forward citations and have higher economic value. The effect of the NBP is larger for less experienced inventors, or inventors living in high-pollution areas. Further, inventors located in the NBP participating states engage more in experimental innovation and less in specialization innovation after the NBP, which confirms the risk-taking channel. In sum, my thesis shows that external factors, such as terrorist attacks and air pollution, can have significant effects on inventor productivity. I also identify that risk-taking is an important channel of such effects. My thesis highlights the vulnerability of inventors to external factors, and stresses the importance of the external factors in shaping the risk-taking behaviour of inventors in the innovation process.