Much research has suggested that independent boards of directors are more effective in reducing agency costs and improving firm governance. How they influence innovation is less clear. Relying on regulatory changes, we show that firms that transition to independent boards focus on more crowded and familiar areas of technology. They patent and claim more and receive more total future citations to their patents. However, the citation increase comes mainly from incremental patents in the middle of the citation distribution; the numbers of uncited and highly cited patents—arguably associated with riskier innovation strategies—do not change significantly.

Abstract We provide evidence that an influx of technical human capital improves regional entrepreneurship, both by increasing firm entry and reducing entrepreneurial failure. The results also indicate negative externalities upon lowtech and competing industries: an influx of inventors in a county shifts the locus of venture capital investment away from low-tech startups to high-tech startups and moreover towards new ventures in the same sector as those inventors' skills. We strengthen causal inference with a shift-share instrument which combines the spatial distribution of surnames in the LM>= U.S. Census with thousands of surnamespecific shifts based on modern inventor mobility.

Abstract Research and development tax credits often aim to increase investment in experimentation, hoping that firms invent fundamentally new technologies that in turn generate positive spillovers. Since most policies require that companies make profits in order to claim credits, they might also shift investments towards less risky refinement and exploitation. Following the availability of credits, we demonstrate that firms do not experiment but deepen invention in areas of extant expertise. We observe stronger shifts for firms operating in uncertain markets where search failures are more likely to reduce credit eligibility.