Research summary: In this article, we document a shift away from science by large corporations between 1980 and 2006. We find that publications by company scientists have declined over time in a range of industries. We also find that the value attributable to scientific research has dropped, whereas the value attributable to technical knowledge (as measured by patents) has remained stable. These trends are unlikely to be driven principally by changes in publication practices. Furthermore, science continues to be useful as an input into innovation. Our evidence points to a reduction of the private benefits of internal research. Large firms still value the golden eggs of science (as reflected in patents), but seem to be increasingly unwilling to invest in the golden goose itself (the internal scientific capabilities). Managerial summary: There is a widespread belief among commentators that large American corporations are withdrawing from research. Large corporations may still collaborate with universities and acquire promising science‐based start‐ups, but their labs increasingly focus on developing existing knowledge and commercializing it, rather than creating new knowledge. In this article, we combine firm‐level financial information with a large and comprehensive data set on firm publications, patents and acquisitions to quantify the withdrawal from science by large American corporations between 1980 and 2006. This withdrawal is associated with a decline in the private value of research activities, even though scientific knowledge itself remains important for corporate invention. We discuss the managerial and policy implications of our findings.

Research Summary: This paper examines the relationship between strategic decision-making at the subsidiary level and organizational structure. In many organizations, headquarters and subsidiaries are separated by intermediate subsidiaries. Building on the attention-based view of the firm, we argue that the greater the "organizational distance" of a focal subsidiary from headquarters (measured by the number of intermediate subsidiaries separating the subsidiary from headquarters), the lower the attention that headquarters devote to the subsidiary. Thus, subsidiary autonomy from headquarters increases with organizational distance. Using a large comprehensive dataset on the structure of corporate groups in Western Europe, we provide several pieces of evidence consistent with these hypotheses. By contrast, we find little support for the view that tall pyramids are created to magnify the voting control of large shareholders. Managerial Summary: Corporate groups-confederations of legally independent firms linked via ownership tiesare common around the world. An important function of headquarters in corporate groups is to allocate resources among member firms. We argue that, because headquarters mostly focus on allocating resources among units that they directly own, subsidiaries near the top of the group perform differently in response to changing external

and the CES conference for helpful comments and feedback. We thank Luis Rios for excellent research assistance. Arora and Belenzon acknowledge research support from the Fuqua School of Business, Duke University. The customary disclaimers apply. Belenzon acknowledges support from the Center for Economic Performance at LSE for help with data collection. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

a b s t r a c tThis paper examines how the relationship between firm value and patent-based indicators of inventive activity has changed over time. We use data from more than 33,000 mergers and acquisitions deals between 1985 and 2007, and distinguish between American (USPTO) and European (EPO) patents. Our results indicate that over time EPO patents have become the dominant indicator of innovative activity, while USPTO patents have no effect on firm value near the end of the sample period. The results are robust to controlling for citations and are especially strong for small firms, for firms operating in the drug and chemical industries, and when target and acquiring firms operate in different industries or countries.

Research summary: Using a large sample of private firms across Europe, we examine how the social context of owners affects firm strategy and performance. Drawing on embeddedness theory and the institutional logics perspective, we argue that embeddedness in a family, in particular the nuclear family, can strengthen identification and commitment to the firm, but can also induce owners to behave more conservatively. Consistent with this argument, we find that family-owned firms have higher profit margins, returns on assets, and survival rates compared to single-owner or unrelatedowners' firms, but also invest and grow more slowly, hold greater reserves of cash, and rely less on external debt. These differences are most pronounced when the two largest shareholders are married. Our results highlight the key role of marital ties in explaining differences in behavior and performance among firms. Managerial summary:Despite the prevalence of the married couple ownership structure in firms, little research has been dedicated to understanding how these firms are managed and perform. We examine the behavior and performance of firms owned by married couples in a large panel of closely held Western European firms. We find that married-owners family firms are managed more conservatively relative to firms with unrelated owners and even to other family-owned firms. In particular, married-owners family firms invest and grow more slowly and rely less on external finance. However, they also exhibit greater performance stability and higher profitability. Our findings suggest that social relationships among owners have a large impact on firm strategy and performance, and highlight some potential trade-offs to performance when married couples control firms.