Scientific publication: Uncertainty and Corporate Innovation: Evidence from Terrorist Attacks

We examine the causal effects of uncertainty on corporate innovation by exploiting terrorism events. During the five-year window after terrorist attacks, firms near the strikes experience meaningful declines in R&D spending, patenting, citations, patent originality, and innovation value. These firms are more likely to have inventors move to distant companies but less likely to hire new inventors. These results prove robust to numerous controls including the influence of the 9/11 attacks. Our findings suggest that terrorism curtails innovation by aggravating the economic uncertainty affecting firms near the attacks and by worsening the uncertainty about personal security faced by their inventors.

Reference: Fich, Eliezer M. and Nguyen, Tung and Petmezas, Dimitris, Uncertainty and Corporate Innovation: Evidence from Terrorist Attacks (August 13, 2020). Available at SSRN: https://ssrn.com/abstract=3394564 or http://dx.doi.org/10.2139/ssrn.3394564