Description:

Speaker: Xizhao Wang

Title: “Human Capital and Firm's Innovation Direction”

Abstract: “This paper studies how the sudden loss of personnel affects the direction of innovation in firms. This paper introduces three different measures (cosine distance, total variation distance, and Wasserstein distance) to quantify changes in firm's innovation direction. I exploit a difference-in-difference approach to assess the change in innovation direction within U.S. public firms following sudden deaths of personnel. I find that the loss of upper-tail inventors significantly alters a firm's innovation trajectory, whereas losses of lower-tail inventors and losses at the management level do not. The findings highlight the hard-to-replace nature and the role of inventive human capital, exploring the dynamic capabilities of firms.”