Firms that race to innovate first may hold cash not only to invest timely but also to\ud do it faster than the competitors, pushing them to hold more cash. We use data from\ud US patents and their citations to identify and measure the dependency of innovation\ud success on cash holdings in such races. We find that a firm's cash holdings increase\ud its probability of winning a race while its rivals' cash decrease it. The cash sensitivity\ud of winning increases through the mid 80s and the 90s. This increase is due to the\ud increased concentration of incumbency strength among fewer incumbents. Hence, cash\ud holdings have become strategically more important for the average, R&D-intensive,\ud firm
To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.