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✅   The Rise of Absorptive Research in Corporate America: 1945-1980 -- by Ashish Arora, Sharon Belenzon, Jungkyu Suh, Hansen Zhang

Science

We study the post-World War II “Golden Age” of American corporate research from 1945 to 1980, using multiple indicators of corporate research activity. We use an ensemble learning approach to classify firms as either Science Leaders, Absorbers or Followers. Our analysis reveals that only a small fraction of firms, whom we call Leaders, invest in internal research that is on the scientific frontier, with the objective to generate breakthrough inventions. Absorbers invest in research principally to absorb external scientific discoveries to fuel their inventive activity. Followers typically generate incremental innovations, using older scientific knowledge. Consistent with this, we find Leaders were more likely to be at the technological frontier, enjoy greater market power, and benefit from government ...

nber.org     Apr 21, 2025