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Annual Review of Financial Economics

Volume 12, 2020

Institutions and Innovation

Abstract

Technological innovation is critical to a country's economic development and a firm's long-term success. This article reviews the recent literature that links institutions and innovation. Specifically, we focus on five aspects of the linkage. First, we discuss the literature that explores how the culture of a society or a corporation influences the process, features, and outcomes of innovation activities. Second, we review papers that focus on the role of demographic characteristics in innovation. Third, we describe studies examining the relation between market development and firms’ incentives as well as their ability to engage in innovative investments. Fourth, we discuss the literature on how innovation is shaped by a nation's laws and policies. Finally, we review the academic papers regarding the effects of government regulations and policies on innovation activities. Overall, this article aims to provide a synthetic and evaluative review of recent academic research that links various aspects of institutions and innovation. We also provide our views on potential directions for future research in this area.

Keyword(s): culture and demographics, government regulations, innovation, institutions, JEL G20, JEL G30, JEL G31, JEL G32, JEL G34, JEL G38, JEL J1, JEL K00, JEL O30, JEL O31, laws and policies, market development
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2020-11-01
2024-05-13
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/content/journals/10.1146/annurev-financial-032820-083433
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Institutions and Innovation
Annual Review of Financial Economics 12, 377 (2020); https://doi.org/10.1146/annurev-financial-032820-083433
/content/journals/10.1146/annurev-financial-032820-083433
/content/journals/10.1146/annurev-financial-032820-083433
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