The Cost of Research Tools and the Direction of Innovation: Evidence from Computer Science and Electrical Engineering

Abstract

Understanding the factors that affect the rate and direction of technical change has been a central aim of research in the study of science and innovation for more than a half-century. Although substantial evidence exists regarding the policies and institutions that affect the rate of knowledge accumulation, substantially less is known about factors that affect the direction of inventive activity. We examine how a change in the cost of access to knowledge influences the direction of inventive activity by exploiting the hack of Microsoft Kinect as an exogenous event that resulted in a sudden, unexpected, and substantial reduction in the cost of motion-sensing research technology. To estimate whether this shock induces changes in scientists’ research trajectories, we employ novel measures based on machine learning (topic modeling) techniques as well as traditional measures based on bibliometric indicators of knowledge accumulation Our analysis demonstrates that the Kinect shock increases the diversity of research of both incumbents and entrants in motion-sensing and that the effect is greater for entrants than for incumbents. Importantly, the increase in diversification of entrants is not fully explained by diversification into motion-sensing. Rather, entrants diversify their research even in projects that do not directly use motion-sensing. Our results paint a picture in which a reduction in the cost of research tools increases the breadth of research activity, expanding the trajectories of scholars both inside and outside of the affected area.