Young, Restless and Creative: Openness to Disruption and Creative Innovations

Abstract

This paper argues that openness to new, unconventional and disruptive ideas has a …rst- order impact on creative innovations— innovations that break new ground in terms of knowledge creation. After presenting a motivating model focusing on the choice between incremental and radical innovation, and on how managers of dierent ages and human capital are sorted across dierent …rms with dierent degrees of openness to disruption, we provide …rm-level, patent-level and cross-country evidence consistent with this pattern. Our measures of creative innovations proxy for innovation quality (average number of citations per patent) and creativity (fraction of superstar innovators, the likelihood of a very high number of citations, and generality of patents). Our main proxy for openness to disruption is the age of the manager— based on the idea that only companies or societies open to such disruption will allow the young to rise up within the hierarchy. Using this proxy at the …rm, patent and country level, we present robust evidence that openness to disruption is associated with more creative innovations, but we also show that once the eect of the sorting of young managers to …rms that are more open to disruption is factored in, the (causal) impact of manager age on creative innovations is small.