Essays on Institution and Innovation

Abstract

This dissertation explores the complex interplay between institutions and innovation across three distinct contexts: digital protectionism, academic governance, and language policy. The first essay examines whether protectionist policies can foster domestic innovation in the digital economy, focusing on China’s Great Firewall (GFW)—the world’s most extensive system of internet censorship. Leveraging the quasi-random timing of foreign app blockages, I find that Chinese substitute apps experienced a 30% increase in user base following foreign app bans. Using novel data extracted from compiled app code, I show that in-house technological development at these firms rose by 14% two years after blockage. This innovation diffused broadly, as both Chinese and foreign apps subsequently adopted more Chinese-origin technologies. I further document that expanded access to user data—enabled by increased data requests and third-party sharing—was a key driver. Quasi-random introductions of new data access types causally boosted in-house development, and firms receiving shared user data also intensified innovation. These findings suggest that digital protectionism, under certain conditions, can catalyze domestic technological growth. The second essay investigates how powerful institutional actors shape academic research and innovation in China. Using data on publications from researchers at 109 top Chinese universities and leadership transitions within these institutions, I apply natural language processing (NLP) techniques to assess alignment between faculty and leader research agendas. Faculty shift their research toward that of incoming leaders—particularly those appointed by the Communist Party—immediately after leadership transitions. This influence is stronger in fields with histories of political control or academic repression. While some alignment may reflect coordination, I find significant costs to research quality: transitions to low-productivity leaders lead to sharp increases in topic similarity and declines in citation impact, especially for research most closely aligned with new leadership. These results highlight the tension between centralized control and research autonomy in high-stakes innovation environments. The third essay explores how language policy affects national identity formation, analyzing Taiwan’s Chinese language unification campaign. Exploiting variation in individuals’ age-based ability to learn Mandarin and their linguistic distance from it, I implement a difference-in-differences design to identify the policy’s long-term effects. I find that cohorts more affected by the policy became more fluent in Mandarin but were less likely to identify as Taiwanese or support self-determination. The intergenerational disruption of native language transmission plays a key role, with the identity impact comparable to 11% of the effect of losing a parent. The policy also increased consumption of state-controlled media among treated cohorts. These findings underscore how language policies can reshape political identity and social cohesion. Together, these essays show that institutions—through mechanisms of control, exclusion, and cultural shaping—play a pivotal role in determining the direction, diffusion, and societal implications of innovation. JEL code: O33, O38, L86, I23, Z13, C23