Local creative culture and corporate innovation

The purpose of this study is to investigate the impact of local creative culture on corporate innovation. This paper uses a novel measure of creative culture, namely, proportion of local creative class, and empirically examines the role of local creative culture in corporate innovation for a large sample of US firms in a regression analysis setting. The empirical findings show that firms located in areas with strong local creative culture have more innovation outputs, as measured by the number of patents and patent citations. The findings remain robust after controlling endogeneity via the instrumental variable approach and other econometric techniques. This paper introduces the role of local creative culture in generating innovation for firms. The empirical results are also stronger for local firms, and this finding highlights the local component of corporate innovation as an important determinant of corporate innovation.