Dynamic Innovation

  • 详情 Dynamic Innovation on China-U.S. Industrial-chain Networks and Asset Pricing
    Our study examines dynamic innovation through the U.S.-Sino industrial-chain networks and its asset-pricing and financial-fundamental implications amid U.S.-China network disruptions. Innovation synergy captures similarity between firms’ learned innovation processes, in which firm characteristics and network information are used to predict patent output. Using an annually reconstructed joint network of Chinese and U.S. firms, we form peer-return, peer-R&D, and peer-patent measures and estimate their associations separately in the two markets. The annual R&D- and patent-based measures are positively associated with firms' own R&D intensity in both markets, their gross-profitability associations are stronger for large firms, and tangible-asset associations become more positive after 2017. The R&D- and patent-based long–short portfolios have positive Fama–French three-factor alphas in both markets, while the return-based signal is stronger in China than in the United States.
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