High on creativity: The impact of social liberalization policies on innovation

Abstract

Research Summary: We use a large‐sample inductive approach to explore the impact of two social liberalization policies (legalization of same‐sex civil unions and medical marijuana) and one anti‐liberalization policy (passage of abortion restrictions) on innovation. First, we show that liberalization policies increase state‐level patenting, while the anti‐liberalization policy reduces patenting. Next, we examine three possible mechanisms that could explain the findings. The results suggest that liberalization policies can increase the collaboration diversity of inventors, and hence, the rate, novelty, and impact of their innovation output, through promoting more liberal views and more openness to diversity. We also find speculative evidence that social liberalization policies increase entrepreneurial entry through promoting more diverse social interactions. We do not find evidence for liberal policies attracting top inventors from other regions. Managerial Summary: How does the social context impact the rate and direction of innovation? This article examines this question by exploring the impact of two social liberalization policies (legalization of same‐sex civil unions and medical marijuana) and one anti‐liberalization policy (passage of abortion restrictions) on innovation in the United States. We first show that liberalization policies increase patenting, while the anti‐liberalization policy reduces patenting. Further analyses highlight the impact of these policies on individuals’ openness to diversity as a driving mechanism. We show that inventors collaborate with more diverse partners after the implementation of liberalization policies, producing more innovations and more novel and impactful ones. We discuss the implications for firm location decisions, the impact of corporate social responsibility on innovation, and sources of regional competitive advantage.

External Enablers of Entrepreneurship: A Review and Agenda for Accumulation of Strategically Actionable Knowledge

“…Similarly, stringent regulation on information disclosure and on business advisors led to creation of new ventures by inducing venture capital activities and by creating new demand (Cumming & Knill, 2012;David et al, 2013). Further, regulatory change for "non-business" purposes (e.g., environment, social liberalization, prohibition, and digital use) offer a variety of nonobvious, yet effective enablement for new venture creation (Hiatt et al, 2009;Song, 2019;Vakili & Zhang, 2018;York & Venkataraman, 2010). These findings support that disequilibrating environmental changes enable some emerging ventures regardless of their initial intentions and overall effects on the economy.…”

“…Financial resources are the most prevalent (e.g., governmental subsidies and reduced interest rate as obvious enablement; Black & Strahan, 2002;Colombelli et al, 2020;Kromidha & Robson, 2016 vs. reduced cost for acquiring customers and technologies as non-obvious enablement; Gomber et al, 2018;von Briel et al, 2018). Expansion of and reduced cost for acquiring knowledge/information (e.g., Kolympiris et al, 2014) and human resources (Wang, 2006& Vakili & Zhang, 2018 are also recurring key enablement offered by EEs for new venturing. In some cases, the enablement concerns access to rather than expansion of resources (e.g., Roma et al, 2017).…”

“High” innovators? Marijuana legalization and regional innovation

“…A more open and liberal social environment encourages an innovator to tolerate and accept new information (Florida et al., 2008). As such, MMLs may foster the social values of openness and diversity and consequently help innovators generate new ideas (Vakili & Zhang, 2018). Therefore, the adoption of MMLs may facilitate innovators’ idea generation.…”

“…Behavioral research suggests that marijuana use increases individuals’ tendency to engage in social interactions in group settings, even for those that do not use marijuana themselves (Pacula et al., 2015). A more liberal social environment after the adoption of MMLs also encourages inventors’ social interactions (Vakili & Zhang, 2018). Social interactions expose innovators to more opportunities for inspiring conversations, new information, and novel ideas from others (Hasan & Koning, 2019).…”

The Political Economy of Skilled Workers and Innovation

“…Social policies by governments can have an important effect on patents. Vakili and Zhang (2018) looking at US state level laws find that the more "liberal" laws are toward the legalization of same-sex marriages and marijuana use and fewer restrictions on abortions generated higher levels of patent creation. Interestingly, it does not seem to generate patents through the attraction of innovators, but rather through increasing networks and collaboration.…”