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Social injustice and corporate innovation

Year: 2025

Type: article

Abstract: We investigate the role of local social injustice, measured by racial prejudice and sexism, in corporate innovation. In a sample of U.S. firms, we find that local racial prejudice and sexism negatively affect corporate innovation. The results remain robust after the inclusion of other unobserved local factors. Furthermore, we find that the firms located in states with higher sexism levels continue to have lower corporate innovation outputs in the leading two and three years. The empirical findings imply that social injustice does not only have a social cost but also has economic consequences for firms. • State-level racial prejudice significantly reduces corporate innovation output. • State-level sexism highlights systemic gender-based barriers to innovation. • The "Missing Einsteins" concept explains systemic suppression of innovation potential.

Source: The Quarterly Review of Economics and Finance

DOI: 10.1016/j.qref.2025.101981

Authors: Aslihan Gizem Korkmaz, Erdem Ucar

Institution: California State University, Fullerton

Language: English

Topic: Firm Innovation and Growth

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Reduced inequalities, Peace, justice, and strong institutions, Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $2,740