Welcome to the 2018 AFS Annual Meeting, being held this year, in conjunction with FPA in Chicago!
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Tuesday, October 2 • 9:00am - 9:50am
B3a - Do the Product Markets Matter? The Case of Innovation

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This paper examines the effects of competitive threats on innovation at firm level. Using Hoberg, Phillips and Prabhala’s (2014) product market fluidity to capture competitive threats from rivals, we find that firms with high product market threats will invest more in R&D and generate higher number of patents and patent citations. In addition, that positive effect of competition on innovation is more pronounced for firms with smaller market shares or firms in more competitive industries. We also document that investing in more innovation helps competition-threatened firms increase their market power in the future. Overall, our results suggest that product market threats create incentives for firms to innovate to “escape” competitive pressure.

Author(s):  Lai Van Vo, Huong T.T. Le, Danh Vinh Le


Lai Van Vo

Assistant professor of Finance, Western Connecticut State University

Tuesday October 2, 2018 9:00am - 9:50am CDT
Michigan 1C

Attendees (1)