Shadow of the Great Firewall: The Impact of Google Blockade on Innovation in China

Abstract

Research summary: Building on the search‐based view of innovation, we develop a framework regarding how Google guides innovative search behavior. We exploit an exogenous shock, China's unexpected blockade of Google in 2014, and adopt a difference‐in‐differences approach with a matched sample of patents from China and nearby regions to test our predictions. Our analyses show that the blockade negatively affected inventors in China to search distantly in technological and cognitive spaces compared to those in the control group who were presumably unaffected by the event. The impact was less severe for inventors with larger collaboration networks but became more pronounced in technological fields proximate to science. Our findings contribute to innovative search literature and highlight the theoretical and practical importance of Internet technologies in developing valuable inventions.

Managerial summary: Inventors nowadays depend heavily on Internet search to access information and knowledge. They therefore become vulnerable to barriers imposed on their online search. In this study, we find that China's unexpected blockade of Google and its affiliated services altered the searching behavior of inventors in China such that they became less able to seek distant knowledge. This impact was further contingent on the availability of offline knowledge channels and the reliance of each technological field on science. We also find that the economic value of their inventions decreased due to the blockade. Our findings reveal a neglected but consequential aspect of Internet censorship beyond the commonly found media effect and offer important implications to practitioners and policymakers.

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