Shared Culture and Technological Innovation : Evidence from Corporate R&D Teams

We open the black box of corporate innovation production by examining its most important input: the employees tasked with creating new inventions. Using a novel within-firm research design involving all U.S.-based corporate inventors, we first find that shared inherited traits (cultural values and gender) are key drivers of inventor team formation. Second, using premature co-inventor deaths as exogenous shocks to team composition, we document both positive and negative impacts of inventor team cultural diversity on team patent production. Less culturally diverse teams produce a higher overall quantity of patents that tend to exploit existing technologies, while more culturally diverse teams produce more risky, exploratory patents with a greater potential for high-impact innovations. Exploring the underlying mechanisms, we present evidence that more culturally diverse teams use more heterogeneous and non-traditional input information sources, but they also face greater knowledge integration challenges