Recruiting for Ideas: How Firms Exploit the Prior Inventions of New Hires

When firms recruit inventors, they acquire not only the use of their skills but also enhanced access to their stock of ideas. But do hiring firms actually increase their use of the new recruits’ prior inventions? Our estimates suggest they do, quite significantly in fact, by approximately 202% on average. However, this does not necessarily reflect widespread “learning-by-hiring.” In fact, we estimate that a recruit’s exploitation of her own prior ideas accounts for almost half of the above effect. Furthermore, although one might expect the recruit’s role to diminish rapidly as her tacit knowledge diffuses across her new firm, our estimates indicate that her importance is surprisingly persistent over time. We base these findings on an empirical strategy that exploits the variation over time in hiring firms’ citations to the recruits’ pre-move patents. Specifically, we employ a difference-in-differences approach to compare pre-move versus post-move citation rates for the recruits’ prior patents and the corresponding matched-pair control patents. Our methodology has three benefits compared to previous studies that also examine the link between labor mobility and knowledge flow: 1) it does not suffer from the upward bias inherent in the conventional cross-sectional comparison, 2) it generates results that are robust to a more stringently matched control sample, and 3) it enables a temporal examination of knowledge flow patterns.

Why are Some Regions More Innovative than Others? The Role of Firm Size Diversity

Large labs may spawn spin-outs caused by innovations deemed unrelated to the firm's overall business. Small labs generate demand for specialized services that lower entry costs for others. We develop a theoretical framework to study the interplay of these two localized externalities and their impact on regional innovation. We examine MSA-level patent data during the period 1975-2000 and find that innovation output is higher where large and small labs coexist. The finding is robust to across-region as well as within-region analysis, IV analysis, and the effect is stronger in certain subsamples consistent with our explanation but not the plausible alternatives.

Some Simple Economics of Crowdfunding

It is not surprising that the financing of early-stage creative projects and ventures is typically geographically localized since these types of funding decisions are usually predicated on personal relationships and due diligence requiring face-to-face interactions in response to high levels of risk, uncertainty, and information asymmetry. So, to economists, the recent rise of crowdfunding - raising capital from many people through an online platform - which offers little opportunity for careful due diligence and involves not only friends and family but also many strangers from near and far, is initially startling. On the eve of launching equity-based crowdfunding, a new market for early-stage finance in the U.S., we provide a preliminary exploration of its underlying economics. We highlight the extent to which economic theory, in particular transaction costs, reputation, and market design, can explain the rise of non-equity crowdfunding and offer a framework for speculating on how equity-based crowdfunding may unfold. We conclude by articulating open questions related to how crowdfunding may affect social welfare and the rate and direction of innovation

Chloroquine delivery to erythrocytes in Plasmodium berghei-infected mice using antibody-bearing liposomes as drug vehicles

Suitability of anti-erythrocyte F(ab')2-bearing liposomes as vehicles for chloroquine in the treatment of chloroquine resistantPlasmodium berghei infections in mice has been examined. Free chloroquine or chloroquine encapsulated in antibody-free liposomes failed to show much effect on the resistant infections, but the same doses of this drug after being encapsulated in antibody-bearing liposomes exhibited a significant inhibitory effect on this infection. These results indicate that chloroquine delivery in antibody targeted liposomes may help in the successful treatment of the chloroquine resistant malarial infections

The Geography of Crowdfunding

Perhaps the most striking feature of "crowdfunding" is the broad geographic dispersion of investors in small, early-stage projects. This contrasts with existing theories that predict entrepreneurs and investors will be co-located due to distance-sensitive costs. We examine a crowdfunding setting that connects artist-entrepreneurs with investors over the internet for financing musical projects. The average distance between artists and investors is about 3,000 miles, suggesting a reduced role for spatial proximity. Still, distance does play a role. Within a single round of financing, local investors invest relatively early, and they appear less responsive to decisions by other investors. We show this geography effect is driven by investors who likely have a personal connection with the artist-entrepreneur ("family and friends"). Although the online platform seems to eliminate most distance-related economic frictions such as monitoring progress, providing input, and gathering information, it does not eliminate social-related frictions.

Slack Time and Innovation

The relationship between slack resources and innovation is complex, with the literature linking slack to both breakthrough innovations and resource misallocation. We reconcile these conflicting views by focusing on a novel mechanism: the role slack time plays in the endogenous allocation of time and effort to innovative projects. We develop a theoretical model that distinguishes between periods of high- (work weeks) versus low- (break weeks) opportunity costs of time. Low-opportunity cost time during break weeks may induce (1) lower quality ideas to be developed (a selection effect); (2) more effort to be applied for any given idea quality (an effort effect); and (3) an increase in the use of teams because scheduling is less constrained (a coordination effect). As a result, the effect of an increase in slack time on innovative outcomes is ambiguous, because the selection effect may induce more low-quality ideas, whereas the effort and coordination effect may lead to more high-quality, complex ideas. We test this framework using data on college breaks and on 165,410 Kickstarter projects across the United States. Consistent with our predictions, during university breaks, more projects are posted in the focal regions, and the increase is largest for projects of either very high or very low quality. Furthermore, projects posted during breaks are more complex, and involve larger teams with diverse skills. We discuss the implications for the design of policies on slack time

A mix of small and large firms can be key to regional innovation

Areas such as Silicon Valley and Boston are often held up as examples of innovative regions to be emulated, but what makes them this way? By analysing patent data on computers and communication technology, Ajay K. Agrawal, Iain Cockburn, Alberto Galasso, and Alexander Oettl, argue that the mix of large and small firms in a region is very important to regional innovation. He writes that regions where a number of small and large lists coexist are more productive in terms of innovation, when compared to those that have only a small number of large firms or a large number of small ones

Effects of energy release on near field flow structure of gas jets

The primary objective is to understand how buoyancy affects the structure of the shear layer, the development of fluid dynamic instabilities, and formation of the coherent structures in the near-nozzle regions of gas jets. The secondary objectives are to study the role of buoyancy in lifting and reattachment process of diffusion flames, to evaluate the scaling behavior of diffusion flames, and to aid development and/or validation of theoretical models by providing quantitative data in the absence of buoyancy. Fast reacting hydrogen or hydrogen-inert fuels are used to isolate the effects of buoyancy on fluid dynamics without masking the flame behavior by soot and radiative heat transfer. This choice of fuel also permits an evaluation of simulating low gravity in low pressure ground experiments because the similarity constraints are relaxed for the fast reacting, nonsooting diffusion flames. The diagnostics consists primarily of a color schlieren system coupled with computer generated rainbow filters, video recording, and image analysis. The project involves (1) drop tower experiments, (2) ground experiments, and (3) theoretical analysis

Not Invented Here? Innovation in Company Towns

We examine variation in the concentration of inventive activity across 72 of North America's most highly innovative locations. In 12 of these areas, innovation is particularly concentrated in a single, large firm; we refer to such locations as "company towns.'' We find that inventors employed by large firms in these locations tend to draw disproportionately from their firm's own prior inventions (as measured by citations to their own prior patents) relative to what would be expected given the underlying distribution of innovative activity across all inventing firms in a particular technology field. Furthermore, we find such inventors are more likely to build upon the same prior inventions year after year. However, smaller firms in company towns do not exhibit this myopic behavior; they draw upon prior inventions as broadly as their small-firm counterparts in more diverse locations. In addition, we find that inventions by large firms in company towns have less impact than those produced elsewhere, although the difference is modest, and that the impact is disproportionately appropriated by the inventing firms themselves. Finally, the geographic scope of impact realized by company town inventions is narrower, whether produced by large or small firms.

Laminar fluid flow and heat transfer in an annulus with an externally enhanced inner tube

Laminar forced convection in a double-pipe heat exchanger is studied numerically. In this study, an isothermal tube with periodic enhancements (promoters) is placed concentrically inside an isulated circular tube. Pressure drop and heat transfer characteristics of promoters are obtained at various geometric and flow condtions. These are compared to an unenhanced (circular) tube annulus of identical length and heat transfer surface area while the mass flow rate and the Reynolds number are kept the same. A promoter with Gaussian shape established superiority over a cosine shape and other normal distribution shapes, since it provides high heat transfer enhancement with a small increase in the pressure drop. Effects of promoter length and spacing on the pressure drop and heat transfer are small. The pressure drop is influenced significantly by the promoter height and the annular grap, while the promoter height is the only significant geometric parameter affecting the heat transfer. At Reynolds numbers of less than 500, the pressure drop in the enhanced tube annulus is 50 percent more than in the unenhanced tube annulus. Heat transfer enhancement, though small (about 20 percent) at a Peclet number (ReD Pr) less than 200, increases with the Reynolds number and the Prandtl number. At the highest ReD (=1,000) and Pr (=5) investigated, heat transfer from the enhanced tube annulus is about eight times more than that from the unenhanced tube annulus. However, for this case the pressure drop increase by only a factor of two.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/30922/1/0000592.pd