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Innovation policy can be a crucial component of governments' responses to crises. Because speed is a paramount objective, crisis innovation may also require different policy tools than innovation policy in non-crisis times, raising distinct questions and tradeoffs. In this paper, we survey the U.S. policy response to two crises where innovation was crucial to a resolution: World War II and the COVID-19 pandemic. After providing an overview of the main elements of each of these efforts, we discuss how they compare, and to what degree their differences reflect the nature of the central innovation policy problems and the maturity of the U.S. innovation system. We then explore four key tradeoffs for crisis innovation policy---top-down vs. bottom-up priority setting, concentrated vs. distributed funding, patent policy, and managing disruptions to the innovation system---and provide a logic for policy choices. Finally, we describe the longer-run impacts of the World War II effort and use these lessons to speculate on the potential long-run effects of the COVID-19 crisis on innovation policy and the innovation system.
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The Hidden Costs of Securing Innovation: The Manifold Impacts of Compulsory Invention Secrecy
One of the most commanding powers of the U.S. Patent and Trademark Office (USPTO) is to compel inventions into secrecy, withholding patent rights and prohibiting disclosure, to prevent technology from leaking to foreign competitors. This paper studies the impacts of compulsory secrecy on firm invention and the wider innovation system. In World War II, USPTO issued secrecy orders to more than 11,000 patent applications, which it rescinded en masse at the end of the war. Compulsory secrecy caused implicated firms to shift their patenting away from treated classes, with effects persisting through at least 1960. It also restricted commercialization and impeded follow-on innovation. Yet it appears it was effective at keeping sensitive technology out of public view. The results provide insight into the effectiveness of compulsory secrecy as a regulatory strategy and into the roles, and impacts, of formal intellectual property in the innovation system. This paper was accepted by Toby Stuart, entrepreneurship and innovation. Funding: This work was supported by Harvard Business School (Division of Research and Faculty Development) and the National Bureau of Economic Research (Innovation Policy Grant). This material is based upon work supported by the National Science Foundation [Grant 1951470]. Supplemental Material: Data and the online appendices are available at https://doi.org/10.1287/mnsc.2022.4457 .
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- Award ID(s):
- 1951470
- PAR ID:
- 10423994
- Date Published:
- Journal Name:
- Management Science
- Volume:
- 69
- Issue:
- 4
- ISSN:
- 0025-1909
- Page Range / eLocation ID:
- 2318 to 2338
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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- Free Publicly Accessible Full Text
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Accepted Manuscript1.0
- Journal Article:
- https://doi.org/10.1287/mnsc.2022.4457
