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Idiosyncratic Risk and Innovation: A Firm and Industry Level Analysis

journal contribution
posted on 2023-06-08, 05:56 authored by Mariana Mazzucato, Massimiliano Tancioni
Recent studies find that idiosyncratic risk (IR)—the degree to which firm-specific returns are more volatile than aggregate market returns—has increased since the 1960s and attribute this to economy-wide factors such as the role of the IT revolution. Yet no innovation data is used in these studies. To gain further insights into the relationship between technology and IR, our aricle studies whether firms and industries that are more R&D intensive are in fact characterized by higher IR due to how innovation affects the uncertainty of expected future profits. While the industry-level results prove inconclusive, a clear relationship is found between firm-level R&D intensity and firm-level volatility of returns.

History

Publication status

  • Published

Journal

Industrial and Corporate Change

Publisher

Oxford University Press

Volume

17(4)

Page range

779-811

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2012-02-06

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