Inventors and Firm Innovation: Evidence from the U.S. World War I Draft

Abstract

I investigate the impact of individual inventors on a firm’s innovation activity using the WWI draft as an exogenous shock to the labor supply of inventors. I find that the loss of inventors working with a firm decreases the firm’s inventions, the loss of other inventors in the same geographical location does not affect the firm’s inventions, and the loss of inventors in the same industry increases the firm’s inventions. Industry level data indicates that the loss of inventors attracts new inventors and firms to the industry. New ideas and generations are generated, given a vacancy in the space of ideas.