Information Accessibility and Corporate Innovation

Abstract

This study identifies information accessibility as a determinant of corporate innovation. Using the sudden termination of Google’s search services in China, we find a persistently large negative effect on the intensity and quality of innovation among firms relying on foreign knowledge. The results are stronger for firms in industries dominated by foreign technology, in regions with local web filters, and for firms with fewer alternative sources of foreign information. We also find that the affected firms cite fewer foreign patents and their innovation efficiency declines after Google’s exit. Overall, the results are consistent with the view that access to information is an important driver of technological progress. This paper was accepted by Kay Giesecke, finance. Funding: D. Kong acknowledges financial support from the National Natural Science Foundation of China [Grants 71802160, 71991473, and 71772178] and the Major Project of National Social Science Foundation of China [Grant 21ZDA010]. C. Lin acknowledges financial support from the National Natural Science Foundation of China [Grant 71790601]. L. Wei acknowledges financial support from the Research Grant Council of the Hong Kong Special Administrative Region, China [Project T35/710/20R]. J. Zhang acknowledges financial support fromthe PRC Ministry of Education Youth Project for Humanities and Social Science Research [Grant 18XJC630008]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2021.4224 .