IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/20902.html
   My bibliography  Save this paper

Killing the Golden Goose? The Decline of Science in Corporate R&D

Author

Listed:
  • Ashish Arora
  • Sharon Belenzon
  • Andrea Patacconi

Abstract

Scientific knowledge is believed to be the wellspring of innovation. Historically, firms have also invested in research to fuel innovation and growth. In this paper, we document a shift away from scientific research by large corporations between 1980 and 2007. We find that publications by company scientists have declined over time in a range of industries. We also find that the value attributable to scientific research has dropped, whereas the value attributable to technical knowledge (as measured by patents) has remained stable. These effects appear to be associated with globalization and narrower firm scope, rather than changes in publication practices or a decline in the usefulness of science as an input into innovation. Large firms appear to value the golden eggs of science (as reflected in patents) but not the golden goose itself (the scientific capabilities). These findings have important implications for both public policy and management.

Suggested Citation

  • Ashish Arora & Sharon Belenzon & Andrea Patacconi, 2015. "Killing the Golden Goose? The Decline of Science in Corporate R&D," NBER Working Papers 20902, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20902
    Note: PR
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w20902.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rebecca Henderson & Iain Cockburn, 1996. "Scale, Scope, and Spillovers: The Determinants of Research Productivity in Drug Discovery," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 32-59, Spring.
    2. Benjamin F. Jones, 2009. "The Burden of Knowledge and the "Death of the Renaissance Man": Is Innovation Getting Harder?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(1), pages 283-317.
    3. Leten, Bart & Kelchtermans, Stijn & Belderbos, Ren, 2010. "Internal Basic Research, External Basic Research and the Technological Performance of Pharmaceutical Firms," Working Papers 2010/12, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    4. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 701-728.
    5. Nicholas Bloom & Mirko Draca & John Van Reenen, 2016. "Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(1), pages 87-117.
    6. Iain M. Cockburn & Rebecca M. Henderson, 1998. "Absorptive Capacity, Coauthoring Behavior, and the Organization of Research in Drug Discovery," Journal of Industrial Economics, Wiley Blackwell, vol. 46(2), pages 157-182, June.
    7. Sull, Donald N & Tedlow, Richard S & Rosenbloom, Richard S, 1997. "Managerial Commitments and Technological Change in the US Tire Industry," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 6(2), pages 461-501, March.
    8. Murray, Fiona, 2004. "The role of academic inventors in entrepreneurial firms: sharing the laboratory life," Research Policy, Elsevier, vol. 33(4), pages 643-659, May.
    9. Lichtenberg, Frank R, 1988. "The Private R&D Investment Response to Federal Design and Technical Competitions," American Economic Review, American Economic Association, vol. 78(3), pages 550-559, June.
    10. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
    11. Murray, Fiona, 2002. "Innovation as co-evolution of scientific and technological networks: exploring tissue engineering," Research Policy, Elsevier, vol. 31(8-9), pages 1389-1403, December.
    12. Zvi Griliches, 1998. "Productivity, R&D, and Basic Research at the Firm Level in the 1970s," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 82-99, National Bureau of Economic Research, Inc.
    13. Michele Meoli & Stefano Paleari & Silvio Vismara, 2013. "Completing the technology transfer process: M&As of science-based IPOs," Small Business Economics, Springer, vol. 40(2), pages 227-248, February.
    14. Koenig, Michael E. D., 1983. "A bibliometric analysis of pharmaceutical research," Research Policy, Elsevier, vol. 12(1), pages 15-36, February.
    15. Gambardella, Alfonso, 1992. "Competitive advantages from in-house scientific research: The US pharmaceutical industry in the 1980s," Research Policy, Elsevier, vol. 21(5), pages 391-407, October.
    16. Fabrizio, Kira R. & Di Minin, Alberto, 2008. "Commercializing the laboratory: Faculty patenting and the open science environment," Research Policy, Elsevier, vol. 37(5), pages 914-931, June.
    17. Samuel Kortum & Josh Lerner, 2000. "Assessing the Contribution of Venture Capital to Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 674-692, Winter.
    18. Gary P. Pisano, 2010. "The evolution of science-based business: innovating how we innovate," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(2), pages 465-482, April.
    19. Hicks, Diana, 1995. "Published Papers, Tacit Competencies and Corporate Management of the Public/Private Character of Knowledge," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 4(2), pages 401-424.
    20. Cohen, Wesley M., 2010. "Fifty Years of Empirical Studies of Innovative Activity and Performance," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 129-213, Elsevier.
    21. repec:bla:jindec:v:46:y:1998:i:2:p:157-82 is not listed on IDEAS
    22. Nicholas S. Argyres & Brian S. Silverman, 2004. "R&D, organization structure, and the development of corporate technological knowledge," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 929-958, August.
    23. Pierre Azoulay, 2004. "Capturing Knowledge within and across Firm Boundaries: Evidence from Clinical Development," American Economic Review, American Economic Association, vol. 94(5), pages 1591-1612, December.
    24. Roach, Michael & Sauermann, Henry, 2010. "A taste for science? PhD scientists' academic orientation and self-selection into research careers in industry," Research Policy, Elsevier, vol. 39(3), pages 422-434, April.
    25. Arora, Ashish & Gambardella, Alfonso, 1994. "The changing technology of technological change: general and abstract knowledge and the division of innovative labour," Research Policy, Elsevier, vol. 23(5), pages 523-532, September.
    26. Guellec, Dominique & van Pottelsberghe de la Potterie, Bruno, 2007. "The Economics of the European Patent System: IP Policy for Innovation and Competition," OUP Catalogue, Oxford University Press, number 9780199216987.
    27. Naomi R. Lamoreaux & Daniel M. G. Raff, 1995. "Coordination and Information: Historical Perspectives on the Organization of Enterprise," NBER Books, National Bureau of Economic Research, Inc, number lamo95-1, June.
    28. Richard R. Nelson, 1959. "The Simple Economics of Basic Scientific Research," Journal of Political Economy, University of Chicago Press, vol. 67(3), pages 297-297.
    29. Markus Simeth & Michele Cincera, 2016. "Corporate Science, Innovation, and Firm Value," Management Science, INFORMS, vol. 62(7), pages 1970-1981, July.
    30. Gambardella,Alfonso, 1995. "Science and Innovation," Cambridge Books, Cambridge University Press, number 9780521451185, November.
    31. Gans, Joshua S. & Murray, Fiona E. & Stern, Scott, 2017. "Contracting over the disclosure of scientific knowledge: Intellectual property and academic publication," Research Policy, Elsevier, vol. 46(4), pages 820-835.
    32. Link, Albert N & Long, James E, 1981. "The Simple Economics of Basic Scientific Research: A Test of Nelson's Diversification Hypothesis," Journal of Industrial Economics, Wiley Blackwell, vol. 30(1), pages 105-109, September.
    33. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
    34. Lee Fleming & Olav Sorenson, 2004. "Science as a map in technological search," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 909-928, August.
    35. Scott Stern, 2004. "Do Scientists Pay to Be Scientists?," Management Science, INFORMS, vol. 50(6), pages 835-853, June.
    36. Lerner, Josh, 1999. "The Government as Venture Capitalist: The Long-Run Impact of the SBIR Program," The Journal of Business, University of Chicago Press, vol. 72(3), pages 285-318, July.
    37. Nathan ROSENBERG, 2009. "Why do firms do basic research (with their own money)?," World Scientific Book Chapters, in: Nathan Rosenberg (ed.), Studies On Science And The Innovation Process Selected Works of Nathan Rosenberg, chapter 11, pages 225-234, World Scientific Publishing Co. Pte. Ltd..
    38. David C. Mowery, 2009. "Plus ca change," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 18(1), pages 1-50, February.
    39. Pierre Azoulay, 2002. "Do Pharmaceutical Sales Respond to Scientific Evidence?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(4), pages 551-594, December.
    40. Evenson, Robert E & Kislev, Yoav, 1976. "A Stochastic Model of Applied Research," Journal of Political Economy, University of Chicago Press, vol. 84(2), pages 265-281, April.
    41. Higgins, Matthew J. & Rodriguez, Daniel, 2006. "The outsourcing of R&D through acquisitions in the pharmaceutical industry," Journal of Financial Economics, Elsevier, vol. 80(2), pages 351-383, May.
    42. Arora, Ashish & Gambardella, Alfonso, 1990. "Complementarity and External Linkages: The Strategies of the Large Firms in Biotechnology," Journal of Industrial Economics, Wiley Blackwell, vol. 38(4), pages 361-379, June.
    43. Ajay Bhaskarabhatla & Deepak Hegde, 2014. "An Organizational Perspective on Patenting and Open Innovation," Organization Science, INFORMS, vol. 25(6), pages 1744-1763, December.
    44. Narin, Francis & Hamilton, Kimberly S. & Olivastro, Dominic, 1997. "The increasing linkage between U.S. technology and public science," Research Policy, Elsevier, vol. 26(3), pages 317-330, October.
    45. Audretsch, David B & Stephan, Paula E, 1996. "Company-Scientist Locational Links: The Case of Biotechnology," American Economic Review, American Economic Association, vol. 86(3), pages 641-652, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sheer, Lia, 2022. "Sitting on the Fence: Integrating the two worlds of scientific discovery and invention within the firm," Research Policy, Elsevier, vol. 51(7).
    2. Choi, Jin-Uk & Lee, Chang-Yang, 2022. "The differential effects of basic research on firm R&D productivity: The conditioning role of technological diversification," Technovation, Elsevier, vol. 118(C).
    3. Rotolo, Daniele & Camerani, Roberto & Grassano, Nicola & Martin, Ben R., 2022. "Why do firms publish? A systematic literature review and a conceptual framework," Research Policy, Elsevier, vol. 51(10).
    4. Pellens, Maikel & Della Malva, Antonio, 2016. "Changing of the guard: Structural change and corporate science in the semiconductor industry," ZEW Discussion Papers 16-050, ZEW - Leibniz Centre for European Economic Research.
    5. Leten, Bart & Kelchtermans, Stijn & Belderbos, Ren, 2010. "Internal Basic Research, External Basic Research and the Technological Performance of Pharmaceutical Firms," Working Papers 2010/12, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    6. Cohen, Wesley M., 2010. "Fifty Years of Empirical Studies of Innovative Activity and Performance," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 129-213, Elsevier.
    7. Añón Higón, Dolores, 2016. "In-house versus external basic research and first-to-market innovations," Research Policy, Elsevier, vol. 45(4), pages 816-829.
    8. Ashish Arora & Sharon Belenzon & Andrea Patacconi & Jungkyu Suh, 2020. "The Changing Structure of American Innovation: Some Cautionary Remarks for Economic Growth," Innovation Policy and the Economy, University of Chicago Press, vol. 20(1), pages 39-93.
    9. Markus Simeth & Michele Cincera, 2016. "Corporate Science, Innovation, and Firm Value," Management Science, INFORMS, vol. 62(7), pages 1970-1981, July.
    10. Ashish Arora & Sharon Belenzon & Lia Sheer, 2017. "Back to Basics: Why do Firms Invest in Research?," NBER Working Papers 23187, National Bureau of Economic Research, Inc.
    11. Simeth, Markus & Lhuillery, Stephane, 2015. "How do firms develop capabilities for scientific disclosure?," Research Policy, Elsevier, vol. 44(7), pages 1283-1295.
    12. Soh, Pek-Hooi & Subramanian, Annapoornima M., 2014. "When do firms benefit from university–industry R&D collaborations? The implications of firm R&D focus on scientific research and technological recombination," Journal of Business Venturing, Elsevier, vol. 29(6), pages 807-821.
    13. Hsu, David H. & Hsu, Po-Hsuan & Zhao, Qifeng, 2021. "Rich on paper? Chinese firms’ academic publications, patents, and market value," Research Policy, Elsevier, vol. 50(9).
    14. Lee Branstetter & Kwon Hyeog Ug, 2004. "The Restructuring Of Japanese Research And Development: The Increasing Impact Of Science On Japanese R&D," Discussion papers 04021, Research Institute of Economy, Trade and Industry (RIETI).
    15. Roberto Camerani & Daniele Rotolo & Nicola Grassano, 2018. "Do Firms Publish? A Multi-Sectoral Analysis," SPRU Working Paper Series 2018-21, SPRU - Science Policy Research Unit, University of Sussex Business School.
    16. Simeth, Markus & Raffo, Julio D., 2013. "What makes companies pursue an Open Science strategy?," Research Policy, Elsevier, vol. 42(9), pages 1531-1543.
    17. Arora, Ashish & Belenzon, Sharon & Dionisi, Bernardo, 2023. "First-mover advantage and the private value of public science," Research Policy, Elsevier, vol. 52(9).
    18. René Belderbos & Marcelina Grabowska & Stijn Kelchtermans & Bart Leten & Jojo Jacob & Massimo Riccaboni, 2021. "Whither geographic proximity? Bypassing local R&D units in foreign university collaboration," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(7), pages 1302-1330, September.
    19. Gans, Joshua S. & Murray, Fiona E. & Stern, Scott, 2017. "Contracting over the disclosure of scientific knowledge: Intellectual property and academic publication," Research Policy, Elsevier, vol. 46(4), pages 820-835.
    20. Becker, Annette & Hottenrott, Hanna & Mukherjee, Anwesha, 2022. "Division of labor in R&D? Firm size and specialization in corporate research," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 1-23.

    More about this item

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:20902. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.