The Innovation Speaker Series is a school-wide faculty speaker series that brings together leading thinkers on innovation, science, and entrepreneurship from a variety of disciplines. We hope that you will join us in welcoming these talented innovators to Kellogg!


For general questions regarding the seminar series, please contact: cssi@kellogg.northwestern.edu

May 6

Heterogeneous Innovation over the Business Cycle

Gustavo Manso
William A. and Betty H. Hasler Chair in New Enterprise Development, Haas School of Business, University of California Berkeley

Schumpeter (1939) claims that recessions are periods of “creative destruction,” concentrating innovation that is useful for the long-term growth of the economy. However previous research finds that standard measures of firms’ innovation, such as R&D expenditures or raw patent counts, concentrate in booms. We argue that these simple measures do not capture shifts in firms’ innovative search strategies. We introduce a model of firms’ choice between exploration vs. exploitation over the business cycle and find evidence with more nuanced measures of patent characteristics that firms shift towards exploration during contractions and exploitation during expansions, with a stronger effect for firms in more cyclical industries.

Suggested Readings:

• "Heterogeneous Innovation over the Business Cycle"