Crisis Innovation: Evidence from the Great Depression

73 Pages Posted: 28 Apr 2020 Last revised: 10 Nov 2021

See all articles by Tania Babina

Tania Babina

Columbia Business School - Finance and Economics

Asaf Bernstein

University of Colorado at Boulder; National Bureau of Economic Research (NBER)

Filippo Mezzanotti

Kellogg School of Management - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: October 2021

Abstract

We examine innovation after the Great Depression using data on a century’s worth of U.S. patents
and a difference-in-differences design that exploits regional variation in the severity of the economic
crisis. Harder-hit areas experienced large and persistent declines in independent patenting, which
lasted for the next 70 years. This decline was larger for young and inexperienced inventors and lower-quality patents. In contrast, large firms had relative innovation increases, especially for inventors with the largest declines in independent patenting. Overall, the Great Depression contributed to the decline in technological entrepreneurship and accelerated the shift of innovation into larger firms.

Keywords: Great Depression, Economic Crises, Innovation, Independent Inventors, Technological Entrepreneurship, Startups, Firm Boundaries, Organization of Innovation

JEL Classification: G01, G21, O3, N12, N22, N32

Suggested Citation

Babina, Tania and Bernstein, Asaf and Mezzanotti, Filippo, Crisis Innovation: Evidence from the Great Depression (October 2021). Available at SSRN: https://ssrn.com/abstract=3567425 or http://dx.doi.org/10.2139/ssrn.3567425

Tania Babina (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

Asaf Bernstein

University of Colorado at Boulder ( email )

Campus Box 419
Boulder, CO 80309
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Filippo Mezzanotti

Kellogg School of Management - Department of Finance ( email )

Evanston, IL 60208
United States

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