Heterogeneous Innovation over the Business Cycle*
نویسندگان
چکیده
Previous research has argued that innovative activities should be concentrated in recessions. However, innovation, as measured by R&D expenditure, seems to concentrate in booms. We argue that R&D expenditures do not capture the different dimensions of firms’ innovative search strategies. We introduce a model of innovative exploration and exploitation over the business cycle and present supporting evidence from a battery of patent-based measures. Exploitation strategies are more prevalent in booms while exploration strategies are more prevalent in recessions.
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