Seminar by Prof. Po-Hsuan Hsu, University of Hong Kong
Event details
| Date | 28.04.2017 |
| Hour | 12:00 › 13:30 |
| Speaker | Prof. Po-Hsuan Hsu, University of Hong Kong |
| Location | |
| Category | Conferences - Seminars |
"The Oscar goes to...: Peer pressure, innovation competition, and takeovers"
Abstract
In this paper, we examine how firms react to their competitors’ highly publicized achievements in product innovations. We use the renowned annual R&D 100 Award granted by R&D Magazine since 1965, which has come to be known as the “Oscar of Innovation”, to measure impactful product innovations by rival industry participants. We find that a firm’s propensity to acquire another firm significantly increases following R&D awards won by competitors. A causal interpretation of our finding is supported by our use of the Uniform Trade Secrets Act (UTSA; which exogenously enhances trade secret protection at the state-level) as an instrumental variable, propensity-score matched samples, and comparing the differential effects of winning an award vs. only being selected as a finalist. We also find that this acquisition pattern is stronger for firms with greater industry concentration, more overconfident CEOs, weaker governance, and competitors that do not advertise. These tests suggest that innovation peer pressure drives some acquisitions.
Abstract
In this paper, we examine how firms react to their competitors’ highly publicized achievements in product innovations. We use the renowned annual R&D 100 Award granted by R&D Magazine since 1965, which has come to be known as the “Oscar of Innovation”, to measure impactful product innovations by rival industry participants. We find that a firm’s propensity to acquire another firm significantly increases following R&D awards won by competitors. A causal interpretation of our finding is supported by our use of the Uniform Trade Secrets Act (UTSA; which exogenously enhances trade secret protection at the state-level) as an instrumental variable, propensity-score matched samples, and comparing the differential effects of winning an award vs. only being selected as a finalist. We also find that this acquisition pattern is stronger for firms with greater industry concentration, more overconfident CEOs, weaker governance, and competitors that do not advertise. These tests suggest that innovation peer pressure drives some acquisitions.
Practical information
- General public
- Free