Building on Solid Ground: Foundational Knowledge and the Dynamics of Innovation

Abstract

How do changes in knowledge uncertainty dynamically shape the rate and direction of innovation? I develop a novel typology of knowledge based on the degree of uncertainty and synthesis across individual pieces of knowledge. To empirically explore the role of foundational knowledge—integrative knowledge with low uncertainty—I study how 135 clinical practice guidelines published 1990-2011 by cardiology professional medical societies shape the use of the 14,390 underlying articles and associated research subfields they incorporate. Employing a difference-in-differences approach, I find articles cited by a clinical practice guideline have a marked increase in citations, acting to diffuse the underlying knowledge by bringing in new researchers, compared to control articles carefully matched on observables. Subfields included in the guideline have a large and sustained increase in the flow of articles into the field, which are more likely to be themselves highly cited. Rather than the aperture of subsequent innovation narrowing, subfields shift towards more disruptive, more intellectually distant, and more translational research, with only a small increase in incremental clinical research. In particular, this shift is larger for those subfields that are more technologically immature. As developing foundational knowledge requires the investment of resources and time, this shows how commitment can facilitate breakthrough innovation.