Thank you Paul!

Danielle Graves Williamson

(one of my students and a stunningly original scholar in history/labor, studying "segregation academies" in the US Deep South)

bsky.app/profile/dani...

Thanks for reading!

📄 Full paper 👉 [https://pierpaolocreanza.github.io/website/creanza_jmp.pdf]

📧 pcreanza@princeton.edu

👨🏻‍💻 Website 👉 www.ppcreanza.com
#EconTwitter #EconJobMarket #Innovation #EconHist (13/13)

TL;DR 🧠

💡The Great Merger Wave transformed America’s largest firms into Factories of Ideas. 💡

This paper provides the first quantitative study of the GMW’s impact. Innovation effects were large but uneven—especially strong in science-based fields requiring major R&D investment. (12/13)

This helps explain how the U.S. entered its Golden Age of Innovation (1900–1940), and why corporate labs like DuPont’s and Bell’s became national assets.

It also offers nuanced perspective for today’s debates on Big Tech and innovation. 💻🤖(11/13)

👉🏻Big firms can push the frontier but may crowd out others in well-trodden fields.

NB: Before WW2, public science was weak: federal R&D funding minimal, universities lagged Europe.

Big firms were often the only institutions able to sustain long-term R&D. (10/13)

Did these firm-level gains translate into overall progress? Yes, but unevenly. 📈 📉

Across technological domains (1905–1940):
🔹 Breakthroughs ↑ 13 % overall
🔹 Science-based fields (chemistry, electronics, telecom) ↑ 30 %
🔹 Non-science-based fields ↓ 7 %

(9/13)

I find that:

1️⃣ Firm effects matter greatly in explaining inventive productivity
2️⃣ Lab firms perform better, net of sorting and size/field controls
3️⃣ Joining a lab raises within-inventor productivity
4️⃣ Opening a lab raises firm productivity

(8/13)

Why these surges? Because mergers gave firms resources to organize research systematically. 🔬

R&D labs spread rapidly after consolidation. Lab-owning firms were substantially more innovative than others.

I use an inventor–firm panel and AKM framework to dig deeper. (7/13)

🚩 Main finding #1: Consolidation strongly raised innovation for merging firms.

Among firms that were already patenting before 1895:
🔹 + 6 patents per year (≈ 4× increase)
🔹 + 0.6 breakthroughs per year (≈ 6× increase)

Firms that had never patented became 23 pp more likely to start. (6/13)

My analysis combines three approaches:
1️⃣ Firm-level DiD → effect of consolidation on innovation
2️⃣ Inventor–firm AKM model → mechanism through R&D labs
3️⃣ Technology-level DiD → aggregate impact across fields (5/13)

To study the GMW, I digitized handwritten merger records from Ralph Nelson (1959) and disambiguated firms and inventors in the patent data (1875–1955).

This new dataset links 137,000 firm patent assignees, and 1 million inventors—the first inventor–firm panel before 1940. (4/13)

Why is this question so hard to answer?

Because firms rarely become big for reasons unrelated to innovation.

But here, mergers were driven by a deflationary Depression and a legal loophole. Corporate R&D was only nascent.

→ Firms merged to survive, not to innovate. (3/13)

The largest M&A event in US history opened an era of bigness in American industry 🏭

At the same time, the US entered a golden age of technological innovation 💡

Were these two developments connected? Many influential narratives argue they were, from Chandler to DeLong. (2/13)

Kenneth Sokoloff was an incredibly creative and prolific economic historian—an example anyone should be lucky to follow. Quite fittingly, innovation and business organization were one of his (many) areas of interest, and I'm proud my modest contributions build on his legacy. (2/2) #EconSky