Innovation in Crisis. Findings across Switzerland, Germany, and the United States during the Financial Crisis and the Corona Pandemic.

Innovation in Crisis. Findings across Switzerland, Germany, and the United States during the Financial Crisis and the Corona Pandemic. 2023

The Thesis is exploring the effect of the financial crisis and the corona pandemic on the innovation performance of Switzerland, Germany, and the United States. Further is the thesis contributing to the question of how to measure innovation as well as the different government support plans initiated by the respective countries. The reader is provided with analysis of country and crisis level paired with comparisons of the different results.

Innovation is crucial for economic growth, and therefore essential to enhance welfare by lowering poverty and improving the quality of life. Crises are times when danger and opportunity convergence. The world found itself since the millennium at least two times in this situation. One time with the financial crisis, which resulted in the sharpest decline in economic activity since the great depression 1929. More recently the corona pandemic holds the world captive. Therefore, this thesis is contributing by accelerating the research on innovation by analysis the youngest unprecedented crises.

Measuring innovation is becoming extensive with indices such as the Global Innovation index, which however, still comes short in weighting the metrics.
In the financial crisis Switzerland had no support plan compared to the German plan targeted on banks and the US’s more exhaustive approach. During the corona pandemic the help got multi-layered and more comprehensive, but still represents the country’s characteristics.

Switzerland, Germany, and the United States showed mostly a positive effect in the patent count with the start of the financial- / corona-crisis. During crisis time the patent count decreased, expect for Germany in the corona pandemic.

Implications for practitioners
· More exhaustive government plans do not essentially mean less negative impact. Policymakers should invest in valuing quality measures over quantity.

· Government support plans do not substitute firm level decisions. The focus should lie on reducing the dependence on external financing.

· Entrepreneur and Managers need a sustainable view, to have stable innovation also during the crisis. Short-term decisions as the discarding of all pending projects can be hurtful over time.

A focused literature review is performed to investigate the measurement and behavior in crisis of innovation. Afterwards government data is screened to get an overview of the crisis support plans.

For the quantitative analysis the number of patens per mio. inhabitants were compiled. The population data was interpolated to have a monthly time-series. The methodology is the interrupted time series (its), measuring an immediate and a sustained impact. The regressions of the its are computed using the ordinary least squares approach. Autocorrelation is reduced by including up to twelve lagged dependent variables in the regression. Through ranking according to the autocorrelation and the R2, the suitable its is chosen.