Driving a More Prosperous Future
The Changing Nature of Firm Innovation: Short-Termism and Influential Innovation in U.S. Public Firms
Management Science
We examine the link between short-term pressures and technologically significant innovation in U.S. public firms in 1997–2015. Using a market-based measure of short-term pressure, we estimate its relationship with influential and novel patents. We find that firms facing more intense short-term pressures are less likely to patent highly influential or novel innovations. To evaluate whether this relationship is causal, we use changes in ownership styles following financial institution mergers as instruments. Our analysis suggests that changing short-term pressures from investors had a causal impact on firm innovative outcomes; this finding is robust to a wide variety of empirical specifications. While public firms as a whole retained a constant share of highly influential patents, this activity has become more concentrated in fewer firms. This shift does not appear to be fully compensated by an increase in technologically significant patents by nonpublic firms such as venture-capital (VC)-backed start-ups. These findings raise questions about capital markets’ impact on firm R&D strategy and the nature of innovative activities in public firms
Yuan Shi (Cornell University), Rachelle Sampson (University of Maryland), Brent Goldfarb (University of Maryland), Rafael Corredoira (Newcastle University)
Market Formation, Pricing, and Revenue Sharing in Ride Hailing Services
Manufacturing & Service Operations Management, September 2025
Problem definition: We empirically study the market for ride-hailing services. In particular, we explore the following questions: (i) How do the two-sided market and prices jointly form in ride-hailing marketplaces? (ii) Does surge pricing create value and for whom? How can its efficiency be improved? (iii) Can platforms' strategy on revenue sharing with drivers be improved? (iv) What is the value generated by ride-hailing services, including hosting rival taxi services on ride-hailing apps? Methodology/Results: We develop a discrete choice model for the formation of mutually dependent demand (customer side) and supply (driver side) that jointly determine pricing. Using this model and a comprehensive data set obtained from the largest mobile ride platform in China, we estimate customer and driver price elasticities and other factors that affect market participation for the company's two main markets, namely basic ride-hailing and Taxi services. Based on these estimation results and counterfactual analysis, we demonstrate that surge pricing improves customer and driver welfare as well as platform revenues, while counterintuitively reducing Taxi revenues on the platform. However, surge pricing should be avoided during non-peak hours as it can hurt both customer and platform surplus. We show that platform revenues can be improved by increasing drivers' revenue share from the current levels. Finally, we estimate that the platform's basic ride-hailing services generated customer value equivalent to 13.25 Billion USD in China in 2024, and hosting rival Taxi services on the platform boosted customer surplus by 3.6 Billion USD. Managerial Implications: Our empirical framework provides ride-hailing companies a way to estimate demand and supply functions, which can help with optimization of multiple aspects of their operations. Our findings suggest that ride-hailing platforms can improve profits by containing surge-pricing to peak hours only and boosting supply by increasing driver compensation. Finally, our results demonstrate that restricting ride-hailing services create significant welfare losses while including taxi services on ride-hail platforms generate substantial economic value
Liu Ming, Tunay I. Tunca, Yi Xu, and Weiming Zhu
User Innovation and Product Stickiness: Evidence from Video Games
Journal of Economics & Management Strategy
Prior research on user innovation fails to explain its low adoption rate and neglects its impact on increased product stickiness. To bridge these gaps, we conducted an empirical investigation into user innovations within the video game sector. Our study reveals that embracing user innovation leads to an upsurge in the number of active players for a game. Furthermore, the marginal effect of user innovations varies depending on their recency and quality, with low-quality user innovations leading to user attrition. The effect is also contingent on the stage in the product life cycle in which user innovation is adopted.
Yunfei Wang, UMD and Peng Huang, UMD